UPDATE 1-Court throws out much of $1.6 bln leak case vs Exxon

Tue Feb 26, 2013 6:59pm EST

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Feb 26 (Reuters) - Exxon Mobil Corp has won the reversal by Maryland's highest court of a $1 billion punitive damages award stemming from an underground leak at a gas station, and also won the reversal of portions of nearly $650 million of compensatory damages awards.

The Maryland Court of Appeals said in a ruling on Tuesday Exxon's "shortcomings" in remediation efforts did not rise to the level of fraud, removing the basis for the punitive damages award.

Some compensatory damages were reversed because the plaintiffs failed to show the spill reduced property values permanently, the court said.

"We are reviewing the court's decision," a spokesman for Exxon said in an email. "The evidence showed that we acted appropriately after the accident and the court has agreed."

Exxon has apologized to the affected community and will continue the cleanup, the company said.

The case arose from the leak of about 26,000 gallons of gasoline from beneath a fueling station in Jacksonville, Maryland.

Exxon reported the leak on Feb. 17, 2006, but the leak had its origins five weeks earlier from a drilling puncture caused unknowingly by a contractor, the Court of Appeals said.

Several hundred residents and businesses sued Exxon, alleging damages from contamination of their water supply and a variety of misrepresentations by the oil company.

A Maryland jury awarded the damages in 2011. At the time, Exxon said it spent $46 million on the spill's cleanup and had been fined $4 million by the state.

The case is Allison, Et Al Vs Exxonmobil Corp, Et Al, Circuit Court for Baltimore County - Civil System, No. 03C07003809.

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