Park v Mobil Oil Guam Inc [2004] GUSC 19; 2004 Guam 20 (16 November 2004)

IN THE SUPREME COURT OF GUAM

MICHAEL JE PARK,
Plaintiff-Appellant/Cross-Appellee,

vs.

MOBIL OIL GUAM, INC.,
Defendant-Appellee/Cross-Appellant.

Supreme Court Case No.: CVA03-001
Superior Court Case No.: CV0844-00

OPINION

Filed: November 16, 2004

Cite as: 2004 Guam 20

Appeal from the Superior Court of Guam
Argued and submitted on November 6, 2003
Hagåtña, Guam

Appearing for Plaintiff-Appellant and Cross-Appellee, Michael Je Park: Lawrence J. Teker, Esq. TEKER CIVILLE TORRES & TANG, PLLC 330 Hernan Cortez Avenue Hagåtña, Guam 96910

For Defendant-Appellee and Cross-Appellant, Mobil Oil Guam, Inc.: David M. Axelrad, Esq. Curt Cutting, Esq. HORVITZ & LEVY LLP 15760 Ventura Boulevard 18th Floor Encino, CA 91436-3000 Richard L. Johnson, Esq. Thomas C. Moody, Esq. KLEMM, BLAIR, STERLING & JOHNSON A Professional Corporation Suite 1008, Pacific News Building 238 Archbishop F.C. Flores Street Hagåtña, Guam 96910

BEFORE: F. PHILIP CARBULLIDO, Chief Justice; FRANCES M. TYDINGCO-GATEWOOD, Associate Justice; PETER C. SIGUENZA, Jr., Justice Pro Tempore

CARBULLIDO, CJ.:

[1] This case arises from a civil action for fraud and breach of contract filed by Plaintiff-Appellant and Cross-Appellee Michael Je Park against Defendant-Appellee and Cross-Appellant Mobil Oil Guam, Inc., wherein the jury awarded Park $50,000 in compensatory damages and $2.8 million in punitive damages. Park appeals from the trial court=s Amended Judgment awarding Park $150,000 in punitive damages despite the jury=s $2.8 million punitive damages award. Mobil cross-appeals from the Amended Judgment, challenging the award of punitive damages. This case presents two issues of first impression. First, we consider whether Mobil, a corporation, may be held directly liable for punitive damages based on the wrongful conduct of its employees, and if so, whether there is substantial evidence to support the jury=s award of punitive damages. Second, assuming an award of punitive damages may be assessed against Mobil, we consider whether the trial court erred in reducing the award of punitive damages from $2.8 million to $150,000. In adopting section 909 of the Restatement (Second) Torts (1979), and applying it to the facts of this case, we hold that substantial evidence exists to support the jury=s award of punitive damages against Mobil. We further hold that in light of the jury=s award of $50,000 in compensatory damages, the punitive damages award of $2.8 million is unconstitutional and therefore, the trial court=s reduction of the punitive damages award to $150,000 was proper. Accordingly, we affirm the trial court=s Amended Judgment.

I.

[2] In 1996, as part of a franchise agreement to sell Mobil Oil petroleum products, Michael Je Park subleased a portion of his Barrigada Heights property to Mobil Oil Guam, Inc. In turn, Mobil constructed the underground storage tanks, canopy and gasoline dispensing units on the leased portion of the property. Mobil later subleased the same property to Park. During this time period, Park decided to construct a three-story building on the property, consisting of an office space, a mini-mart and his personal residence. The total cost of the construction was approximately $3 million. Park paid $2 million from his personal money and borrowed a little over $1 million from Mobil to finance the construction. Park gave Mobil a leasehold mortgage to secure repayment of the note. In September of 1996, Park began operating a Mobil service station on the property (Athe service station@).

[3] The service station is built on sloped, elevated land. Upon delivering fuel to the service station, Mobil=s drivers would park the delivery tanker on the sloped ground. At an incline, Mobil drivers would transfer the fuel from the delivery tank to the service station