Chenega Corp. v. Exxon Corp.

Nos. S-7252, S-7512 (Alaska November 22, 1999)

ELR Digest

The court holds that a trial court erred in dismissing Native American corporations' claims for compensation of oil spill damages to federal lands scheduled for transfer but not yet conveyed to the corporations under the Alaska Native Claims Settlement Act. The court, however, affirms the case in all other respects. The case involves damage caused by the Exxon Valdez oil spill. A jury awarded the corporations almost $ 6 million for harm caused by the oil spill. The trial court, however, offset the jury award against pretrial payments made to the corporations under the Trans-Alaska Pipeline Liability Fund and under a settlement with the oil company's co-defendant. Because the offsets exceeded the jury verdict, the trial court ordered that the corporations take nothing from the oil company. Both the corporations and the oil company are appealing.

The court first holds that the trial court did not abuse its discretion in instructing the jury on property damages. Contrary to the corporations' contention, the instructions did not limit the corporations' lost use claims to actual lost uses. The court also holds that the trial court did not abuse its discretion in refusing to instruct the jury that oil is a hazardous substance. The trial court instructed the jury that the oil company was strictly liable for damages caused by the oil spill. There was no need to mention hazardous substance because liability under the state's strict-liability statute was uncontested.

The court then holds that the jury instructions dealing with the selected but unconveyed lands incorrectly interpreted the Oil Pollution Act of 1990 (OPA) and improperly required the corporations to establish their own loss of a federally permitted use. The OPA did not merely grant standing to the corporations to litigate damages to selected but not yet conveyed lands. Rather, the OPA authorized the corporations to assert the federal government's private claims for lost use of the selected but unconveyed lands. Moreover, a consent decree entered into by the corporations and the United States does not foreclose the corporations' land use claims. The consent decree's private claims language does not militate against interpreting OPA § 8301 as more than a statute conferring standing. Thus, the court erred by treating OPA § 8301 as a standing provision in the jury instructions. The court further holds that the OPA jury instructions were prejudicial. By precluding any award to the corporations based on the government's proprietary uses and by allowing an award only for the corporations' own loss of federally permitted uses, the jury instructions virtually foreclosed any damage award for the selected but unconveyed lands. The court, therefore, reverses the case with respect to the corporations' OPA claims.

The court next holds that the trial court did not err in refusing to instruct the jury regarding the corporations' alleged property interest in archaeological resources found on state land below the mean high tide line. Even if a state statute creates a property right supporting a claim for damage to artifacts, the oil company's settlement with the state precludes the corporations from recovering for damages sustained below the mean high tide line. The court also holds that the trial court properly subtracted the corporations' $ 23 million Trans-Alaska Pipeline Liability Fund settlement from their $ 6 million jury verdict. The fund is not a collateral source, therefore, neither the collateral source rule nor state statute bar reduction.

The court then holds that the trial court did not err in denying the oil company's motions for directed verdict and for judgment notwithstanding the verdicts on the corporations' claims for damages to their lands. Lost use damages may be awarded for the tortious impairment of noneconomic uses such as preservation, and the corporations' calculation of lost rental value based on a percentage of the underlying market value of the property was an appropriate method for determining damages. Last, the court holds that the trial court did not err in denying the oil company's motion for a directed verdict or for judgment notwithstanding the verdicts on the corporations' archaeological resources claims. The corporations presented sufficient evidence of actual physical damage to archaeologically significant sites on their lands to support the jury's verdict, and the corporations' claim for loss-of-confidentiality damages is legally sufficient.

The full text of this opinion is available from ELR (45 pp., ELR Order No. L-123).

Counsel for Appellants
Samuel J. Fortier
Fortier & Mikko
2550 Denali St., Ste. 1500, Anchorage AK 99503
(907) 277-4222

Counsel for Appellees
Douglas J. Serdahely
Bogle & Gates
1031 W. 4th Ave., Anchorage AK 99501
(907) 276-4557

[30 ELR 20184]

[OPINION OMITTED BY PUBLISHER IN ORIGINAL SOURCE]