M&S Explosion Verdict Affirmed: Appeals Court Approves $7MM Trial Win

In 2017, explosion injury lawyers at Morrow & Sheppard LLP won a multimillion-dollar explosion verdict against CenterPoint Energy Resources Corp. and other defendants.  More information about the trial can be found here.

The other defendants agreed to negotiate in good faith with our clients, which is what our clients wanted, and those claims were resolved.  CenterPoint appealed.

In the appeal, CenterPoint claimed that, even if it violated written safety laws specifically intended to prevent explosions, CenterPoint should not have to pay for harm caused by its violations.  CenterPoint claimed it should be treated differently than other for-profit companies.

On March 25, 2020, in a unanimous opinion, the San Antonio Fourth Court of Appeals rejected CenterPoint’s arguments.  The appeals court affirmed the jury’s unanimous verdict.

The full appeals court opinion can be found here.

The Case

In this home explosion case, the jury found CenterPoint installed its meter loop and initiated gas service without first making sure an unused gas valve in a utility room was plugged, which was a violation of applicable law and safety rules.  The jury found CenterPoint’s failure caused a 2015 home explosion in Laredo, Texas.  The explosion severely burned and injured our client.

The explosion should never have occurred.  As the San Antonio Court of Appeals recognized, and as CenterPoint did not dispute, applicable rules including City of Laredo Ordinances required that “[d]uring the process of turning gas on into a system of new gas piping, the entire system shall be inspected to determine that there are no open fittings or ends and that all valves at unused outlets are closed and plugged or capped.”

A properly plugged valve looks like this:

Following the explosion, the valve in our clients’ home looked like this:

The Trial

Before rendering its unanimous trial verdict, the jury was provided and considered over a week’s worth of evidence.  Two expert metallurgists testified that forensic evidence proved the valve was never plugged.  Further, the evidence showed that the homeowners, who purchased an electric dryer when they moved into the home, had never used or modified the utility room’s gas valve.

The jury also considered evidence from CenterPoint’s technician that CenterPoint’s own rules require technicians to ensure gas valves are plugged before turning on gas, and that the whole reason these rules exist is to prevent explosions.

Finally, the jury heard evidence that when CenterPoint turned on the gas to the home–i.e. when the CenterPoint inspection should have been performed–CenterPoint’s year-end bonus requirements were encouraging technicians to rush through jobs.

The jury unanimously found CenterPoint’s negligence was a cause of the explosion.  During deliberations, the jury voiced its concern that this case was a matter of public safety, asking the Court if it could order CenterPoint to provide a public warning about these dangers:

The Appeal

CenterPoint’s appellate argument was that it should be treated differently, and should not have to pay for safety rule violations that cause harm, because CenterPoint “is not a typical company” and instead is a “heavily regulated public utility.”

It is perhaps worth noting that these “heavy regulations” did not prevent CenterPoint, a Fortune 500 company, from engaging in for-profit activities such as paying five top executives approximately $17 million the year of the trial.

On appeal, CenterPoint did not dispute that it “turned gas on” for purposes of the Laredo ordinances.  CenterPoint also did not dispute that it turned gas on even though the unused gas valve/outlet was not plugged. CenterPoint admitted that its violation of the ordinances could have subjected it to “a fine of up to $500 or up to $2,000.”  Finally, CenterPoint did not dispute that our client was severely injured, or that the compensation awarded was reasonable and appropriate given the injuries.

Instead, CenterPoint claimed that it should be entitled to special privileges because it is a large public utility.  CenterPoint claimed that its violation of important public safety rules should “result only in CenterPoint Energy being answerable to the City of Laredo for failing to perform the required inspection and capping . . . Perhaps that would subject CenterPoint Energy to some fines or other penalties, but nothing in the local ordinance purports to impose private tort liability on CenterPoint.”

In other words, if an ordinary company breaks the rules and hurts somebody, they may have to pay reasonable compensation.  According to CenterPoint, however, it should be treated differently.

CenterPoint also made the somewhat perplexing argument that turning on gas to an unplugged gas valve somehow does not increase the risk of explosion or harm.

The Opinion

The San Antonio Court of Appeals rejected CenterPoint’s arguments and affirmed the jury’s unanimous explosion verdict.

The Court held “the jury could have found CenterPoint failed to exercise ordinary care because [the CenterPoint technician] went inside the home, inspected the valves, but failed to ensure the valve in the utility room was plugged or capped.  Alternatively, based on the expert testimony and CenterPoint’s time records showing [CenterPoint] was not at [the] home for a sufficient amount of time to install the meter loop and inspect the valves inside the home, the jury could have found CenterPoint failed to exercise ordinary care because [CenterPoint] turned on the gas without inspecting the valve in the [] utility room to ensure it was ‘closed and plugged or capped’ as required by the city ordinance.”

Finally, as to the notion that CenterPoint did not increase the risk of explosion by turning on gas to a home with unplugged gas valves, the San Antonio Appeals Court held “[w]e agree with the [M&S clients] that turning on the gas without inspecting or ensuring the valves at unused outlets were ‘closed and plugged or capped’ clearly increased the risk of the explosion.”

Public Safety

We believe this case involves important public safety matters.

We believe CenterPoint should be required to follow important safety ordinances, rules, and policies that are designed to protect the public from gas explosions.  If CenterPoint fails to follow such safety rules, and the failure causes harm, CenterPoint should have to pay reasonable compensation, just like other companies.

We also believe that, as the jury requested, CenterPoint should send out clear notices regarding the dangers of unplugged gas valves.

Morrow & Sheppard LLP’s clients were represented in the appeal by our Firm as well as appellate specialists at Langley & Banack, Inc.  Our trial team also included the Law Offices of Guillermo G. del Barrio, Jr.

The case is CenterPoint Energy Resources Corp. v. Ramirez; No. 04-18-00103-CV; San Antonio Fourth Court of Appeals.