## Facts

- A severe rainstorm on June 18–19, 2006 overwhelmed the stormwater and wastewater systems at CITGO’s Lake Charles, Louisiana refinery, causing storage tanks to overflow and a major oil spill.
- The refinery’s system used large storage tanks and skimming equipment and required maintaining low tank levels to preserve capacity.
- During construction of a third storage tank, portions of the concrete containment/dike system were removed; the expanded containment area had earthen dikes and an unfinished earthen floor.
- Oil escaped beyond containment and affected refinery workers and surrounding residents and property.
- CITGO admitted negligence connected to the spill.
- Plaintiffs sought compensatory damages (personal injury and property damage), damages for fear of future injury, and punitive damages, raising a conflict-of-laws dispute because some corporate decision-making occurred outside Louisiana.

## Issues

1. Whether the trial court’s allocation of fault for the spill was manifestly erroneous.
2. Whether plaintiffs proved entitlement to damages for fear of future injury and, if so, in what amounts.
3. Whether punitive damages were available by applying Oklahoma or Texas law, or whether Louisiana law governed and barred punitive damages.

## Decision

- The Louisiana Supreme Court affirmed in part, reversed in part, and rendered judgment.
- The Court largely upheld the allocation of fault, applying the manifest-error/clearly-wrong standard and declining to reweigh reasonable factual findings.
- The Court reduced or disallowed certain fear-of-future-injury awards for insufficient proof or excessiveness.
- The Court reversed the punitive-damages award, holding Louisiana law applied and did not authorize punitive damages on these facts.

## Legal Principles

- Appellate courts may not disturb factual findings absent manifest error; if the factfinder’s view is reasonable and supported by the record, it must be upheld even when another permissible view exists.
- Fear-of-future-injury damages require reliable evidence of compensable mental anguish or a medically supported, significant risk attributable to the defendant’s conduct; speculative fear is not compensable.
- Under La. Civ. Code art. 3542, the governing law is that of the state whose policies would be most seriously impaired if not applied, considering the place of wrongful conduct, injury, and the parties’ connections.
- Louisiana generally disallows punitive damages absent specific statutory authorization; when Louisiana law governs, punitive damages are unavailable unless expressly permitted by statute.
- For punitive-damages choice-of-law, substantial weight may be given to where the spill occurred, where harm was suffered, and where the risk-creating operations were centered, even if corporate headquarters are out of state.

## Conclusion

The court maintained most liability findings but tightened proof requirements for fear-of-future-injury recovery and applied Louisiana conflict-of-laws rules to hold Louisiana law controlled punitive damages, eliminating the punitive award because Louisiana provided no statutory basis for punitive damages in this case.


Arabie v. CITGO Petroleum Corp., 89 So. 3d 307 (La. 2012)