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Damages Slashed in Wyo. Carbon Monoxide Case

(CN) - A woman who suffered brain damage from carbon monoxide poisoning in her Wyoming apartment is not entitled to $25.5 million in "grossly excessive" punitive damages, the 10th Circuit ruled.

Amber Lompe sued Sunridge Partners and Apartment Management Consultants in federal court in 2012.

Lompe claimed that she was exposed to high levels of the odorless gas from a malfunctioning furnace in her Casper, Wyo., apartment in 2011.

Then a 20-year-old college student, Lompe was allegedly evacuated from the unit and taken to a local hospital after a gas employee found the leak.

Lompe claimed that she was treated for acute carbon monoxide poisoning and suffered a host of injuries, including cognitive deficits, chronic headache, sleep disturbance and emotional disorders.

Her lawsuit alleged the defendants violated their duty of care as property owner and manager of Sunridge Apartments.

A jury found the defendants liable for negligence and awarded Lompe $3 million in compensatory damages and $25.5 million in punitive damages.

Sunridge, the jury ruled, was on the hook for $3 million in punitive damages, with AMC being responsible for the balance.

The 10th Circuit last week reversed the award in part, ruling the punitive damages were "grossly excessive and arbitrary" and violated the 14th Amendment.

The appeals court vacated the punitive award against Sunridge and reduced the total against AMC from $22.5 million to $1.95 million.

"Our review of the record convinces us that, 'viewed in the light most favorable to' Ms. Lompe, 'the evidence and all reasonable inferences to be drawn from it point but one way' - that they do not show willful and wanton misconduct by Sunridge," Judge Carolyn McHugh wrote for the three-member panel.

Sunridge, the appeals court found, hired a reputable company to manage the complex.

However, McHugh added, AMC should have taken action to replace old furnaces and non-functional carbon monoxide detectors, and performed regular safety inspections.

Specifically, McHugh wrote, AMC knew that furnaces were nearly 30 years old, despite having a useful life of about 20 years, and failed to act on bids for regular safety inspections of the equipment despite three carbon monoxide leaks at Sunridge prior to Lompe's injury.

"We conclude a reasonable jury could find AMC engaged in willful and wanton misconduct warranting punitive damages under Wyoming law," the 98-page, April 1 ruling said.

AMC "was on notice of the dangerous condition of the complex's fleet of furnaces well before Ms. Lompe's [carbon monoxide] incident," it continued.

The appeals court also rejected the management company's argument that Lompe did not provide sufficient evidence of the company's net worth.

"Lompe chose to present AMC's gross and net income and partner distributions for the eight years prior to trial as 'evidence of a defendant's wealth or financial condition' as a predicate for punitive damages," McHugh wrote.

"To the extent AMC believed this evidence was not representative of its real economic condition, it could have presented rebuttal evidence," the ruling said.

Judge Robert Bacharach, dissenting in part, said the majority reduced punitive damages against AMC "too far," and should have awarded $7.8 million rather than $1.95 million.

"As to AMC, I agree with the majority that the punitive damages award was so large that it resulted in a denial of due process," Bacharach wrote. "But I believe the majority reduces the punitive damages award too far below the constitutional limit."

Bacharach said that the majority downplayed AMC's culpability based on available evidence.

"In my view, even the majority's fresh look at the evidence would support a large assessment of punitive damages," Bacharach wrote.

"Though the majority finds that AMC's 'reckless' failure to conduct inspections endangered the lives of every tenant in the apartment complex, the majority concludes that AMC's conduct was not particularly reprehensible in part because it did not involve 'intentional malice, trickery, or deceit,'" Bacharach added. "I respectfully think that this characterization understates the reprehensibility of AMC's conduct and displaces the jury's finding of willful and wanton misconduct." (Citation omitted.)

Casper, pop. 55,316 in 2010, is the second-largest city in Wyoming.

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