Lompe v. Sunridge Partners, LLC
2016 U.S. App. LEXIS 6053
| 10th Cir. | 2016Background
- Plaintiff Amber Lompe suffered acute CO poisoning in her Sunridge Apartments unit in February 2011 and sued the owner (Sunridge Partners, LLC) and the property manager (Apartment Management Consultants, LLC — AMC) for negligence; jury awarded $3,000,000 compensatory and $25,500,000 punitive damages (apportioned $3,000,000 to Sunridge; $22,500,000 to AMC).
- Sunridge was a passive investor that hired AMC to manage day-to-day operations; AMC performed minimal furnace maintenance, provided some CO detectors, and did not implement a preventive inspection program despite aging furnaces and prior CO incidents at the complex.
- Trial evidence included a pre-purchase property condition report recommending furnace replacement reserves, testimony about multiple prior CO incidents (including an employee exposure), expert testimony that furnaces exceeded useful life and were poorly maintained, and financial evidence about AMC’s income/distributions.
- District court denied JMOL, instructed the jury using Wyoming pattern instructions on "willful and wanton" misconduct, and let punitive damages go to the jury; the jury returned the punitive award above and the court denied post-trial JMOL/remittitur.
- On appeal the Tenth Circuit: (1) reversed JMOL denial as to Sunridge (insufficient evidence of willful/wanton conduct by owner), (2) affirmed that punitive issue could go to jury as to AMC, (3) rejected AMC’s challenge to the jury instructions, (4) found the $22.5M punitive award against AMC grossly excessive under the Due Process Clause and reduced it to $1,950,000, and (5) vacated punitive damages against Sunridge.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether punitive damages question was properly submitted to the jury (JMOL) | Lompe: evidence (old furnaces, prior CO events, lack of inspections) shows willful and wanton conduct by both AMC and Sunridge | Defendants: evidence insufficient as to state of mind; Sunridge was a passive owner that relied on AMC | Affirmed for AMC (sufficient evidence of willful/wanton inaction); reversed for Sunridge (insufficient evidence of willful/wanton conduct) |
| Whether plaintiff proved defendant's financial condition for punitive damages | Lompe: AMC’s income, net income, and owner distributions over 2005–2012 adequately show financial condition | AMC: Rosty requires proof of net worth at time of judgment; plaintiff’s proof was inadequate | Rejected AMC’s net-worth argument; income/distribution evidence was sufficient and AMC could have offered rebuttal evidence |
| Adequacy of punitive-damages jury instructions (Wyoming law) | Lompe: pattern instruction correctly states Wyoming standard for willful and wanton misconduct | AMC: requested additional instruction that willful misconduct must approach intent to harm (citing Cramer/Shirley) | Instructions upheld; district court’s pattern instruction and supplemental definition of "wanton" were an accurate statement of Wyoming law in context |
| Excessiveness of punitive damages (common-law and constitutional) | Lompe: award within discretion given reprehensibility and deterrence needs | AMC: award excessive under Wyoming common law and grossly excessive/arbitrary under Fourteenth Amendment | AMC waived common-law excessiveness challenge; under exacting de novo due-process review award against AMC reduced from $22.5M to $1.95M (1:1 ratio to AMC’s compensatory share); punitive against Sunridge vacated |
Key Cases Cited
- Arbaugh v. Y & H Corp., 546 U.S. 500 (federal courts must independently assess subject-matter jurisdiction)
- Cooper Indus., Inc. v. Leatherman Tool Grp., Inc., 532 U.S. 424 (appellate courts must review punitive-damages constitutional analysis de novo while deferring to district court factual findings unless clearly erroneous)
- State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408 (three Gore guideposts for due-process review of punitive damages; guidance on acceptable ratios)
- BMW of N. Am., Inc. v. Gore, 517 U.S. 559 (established factors for determining grossly excessive or arbitrary punitive awards)
- Jones v. United Parcel Serv., Inc., 674 F.3d 1187 (10th Cir. application of State Farm/Gore guideposts; reduction to 1:1 in certain circumstances)
- Cramer v. Powder River Coal, LLC, 204 P.3d 974 (Wyo. 2009) (Wyoming definition/standard for willful and wanton misconduct)
- Danculovich v. Brown, 593 P.2d 187 (Wyo. 1979) (definitions of wanton/willful misconduct under Wyoming law)
- Rosty v. Skaj, 272 P.3d 947 (Wyo. 2012) (discussing need for evidence of defendant’s wealth/financial condition for punitive damages)