Apartment firms' punitive damages slashed for tenant's injuries

A federal appeals court has drastically reduced the punitive damages jury award to a woman who suffered severe injuries from carbon monoxide poisoning in her apartment, in a closely watched case.

Amber Nicole Lompe, a then 20-year-old college student, was exposed to high levels of carbon monoxide from a malfunctioning furnace in her apartment at the Sunridge Apartments in Casper, Wyoming, in February 2011, according to Friday's ruling by the 10th U.S. Circuit Court of Appeals in Denver in Amber Nicole Lompe v. Sunridge Partners L.L.C.; Apartment Management Consultants L.L.C.

Ms. Lompe was evacuated from her apartment unit and taken to the hospital after a gas company employee detected high levels of carbon monoxide emanating from her apartment.

She was treated for acute carbon monoxide poisoning, and as result of the incident has suffered from various neurological conditions including cognitive deficits, chronic headache, sleep disturbance and emotional disorders. She has been prescribed a variety of anti-seizure, migraine, mood stabilizing and sleep stabilizing medications.

Ms. Lompe filed suit against Sunridge and AMC, both of which are based in Salt Lake City, in U.S. District Court in Casper, in May 2012, charging defendants violated their duty of care as property owner and manager respectively of the Sunridge apartments. After the District Court denied defendants' motion for summary judgment, the case proceeded to trial.

In December 2013, a jury found both defendants liable for negligence and awarded Ms. Lompe compensatory damages totaling $3 million, with AMC's portion totaling $1.95 million and Sunridge's $750,000. It also awarded punitive damages $25.5 million, of which the jury apportioned $3 million against Sunridge and $22.5 million against AMC, and the defendants appealed.

Amicus briefs in the case on the defendants' behalf were filed on behalf of the Chamber of Commerce of the United States of America; the American Tort Reform Association, and the National Federation of Independent Business and the National Association of Manufacturers, all of which are Washington based.

In its 2-1 ruling, the appeals panel dismissed the punitive damages award against Sunridge holding, “the evidence was insufficient to submit the question of punitive damages to the jury as to Sunridge.”

It also reversed the award of punitive damages against AMC of $22.5 million, which was an 11.5:1 ratio to AMC's share of the compensatory damages, to $1.95 million, which reflected a 1:1 ratio to compensatory damages “to comport with constitutional due process under the 14th Amendment.”

“Because we have concluded that the amount of compensatory damages awarded to Ms. Lompe is substantial, an award of punitive damages equal to the compensatory award — $1,950,000 — may represent the outermost limit of the due process guarantee,” said the panel.

The dissenting opinion, which affirmed the majority ruling in part, said, “the evidence was sufficient for the jury to assess punitive damages against Sunridge” and that the majority reduced the punitive damages award against AMC “too far below the constitutional limit” and should have reduced the award to $7.8 million rather than the $1.95 million.