Judge Senter Reduces Broussard v. State Farm Punitive Damages From $2.5 Million To $1 Million

It’s not exactly confetti-throwing time for State Farm today, but the insurer had the pain eased somewhat in the recent Broussard case as Judge Senter reduced the jury’s punitive damage award from $2.5 to $1 million.  Here is a pdf of Judge Senter’s opinion today, and here is a story by Associated Press writer Michael Kunzelman on Judge Senter’s opinion.   

Senter said he remains firmly convinced that State Farm improperly denied payment to the Broussards by refusing to pay any amount for wind damages, and by attempting to place the allocation of wind v. water damages on the jury, when evidence was presented at trial that at least some wind damage occurred.  At least that amount should have been paid by State Farm, he said. However, he said, the amount of the punitive damage award is roughly 12 times the amount of the $211,000 compensatory damages awarded.  Although there is no bright-line test for the constitutionality of the size of punitive damage awards, the U.S. Supreme Court has said that, except in extraordinary circumstances, punitive damages will seldom comport with due process unless they are no greater than nine times the amount of the main damages.  Senter knocked the punitives back from 12 times to between 4 and 5 times the compensatory damages.


Filed under First Party Insurance

6 Responses to Judge Senter Reduces Broussard v. State Farm Punitive Damages From $2.5 Million To $1 Million

  1. Dave Mann

    I will say that I am fascinated by the ins and outs of the Katrina situation in Miss. and you have done an unbelievable job of covering it so far. Please keep up the excellent work as this coverage truly is second to none.

  2. Daughter for justice

    What difference if any do you think this order will make on State Farms decision to appeal and their willingness to settle these claims? It sounds to me that Judge Senter’s message is that he wants these cases to be settled. The language that he uses is very strong to say the least. His final comment that State Farm’s “conduct was neither isolated nor mere accident” says to the people who are in this battle that they did this on purpose. (New wind-water protocol)
    On behalf of all South Mississippi readers, thank you very much for your recent posts on Katrina litigation, they are always informative and objective.
    Sincerely, Daughter for justice

  3. I think your reading of the opinion is fairly shrewd and insightful, in that Senter seems to be saying that the State Farm claim analysis protocols, at least as far as claims are concerned where the entire house was destroyed, produced harm in every case where they resulted in no payment of wind damage. This would assume that State Farm also had evidence in these other cases that at least some possibility of wind occurred.
    Whether you buy Senter’s point or not, I suppose, depends on whether you believe an insurance company has a duty to pay while a certain threshold of uncertainty exists regarding the claim. What should that threshold be: a 10 percent chance of covered damage, 50 percent, 75 percent, 90 percent? What would Judge Senter’s view have been if State Farm had paid $30,000 in wind damage, but the Broussards’ expert, Tim Slider, said the whole house was destroyed by a tornado? What is the duty to settle in that circumstance?
    By looking at it this way, it seems to me there is substantial doubt Judge Senter’s analysis is correct. Unless the insurer is going to be bound as a matter of law to pay all of a disputed claim, is not some aspect of the damage calculation for the jury to decide? That is where I think the greatest weakness in his opinion is, where he says State Farm improperly tried to put it on the jury.

  4. Also, I forgot to respond directly to your question about what difference it makes to State Farm’s decision to appeal and willingness to settle. I would not expect this latest opinion on punitive damages to have much effect on State Farm, and I expect their appeal to continue. Even though Senter is only a federal judge and therefore his ruling in Broussard is not precedent equivalent to a state appellate court, it is harmful persuasive authority that State Farm would like to do away with, which is why they also appealed the earlier Tuepker case. Certainly, in the broad picture, the verdict is one of many reasons State Farm would like to find a way out, but long before the Broussard verdict, everyone in the process was looking for some kind of way to simplify the resolution of these myriad cases.

  5. Scott S

    If State Farm does end up appealing this decision, how do you foresee things playing out in the 5th circuit? Based on your analysis of the Broussard case, you seem to imply that Senter has contradicted himself a few times, as well as made some questionable decisions. Other people have also pointed out that based on prior rulings, the 5th circuit seems to be a favorable court for State Farm to appeal.
    Thanks for your excellent analysis, please keep up the great work.

  6. As far as offering predictions, it’s hard to do without me doing more research on Mississippi law and researching the 5th Circuit to see if they’ve ruled on similar cases, and I haven’t done this yet. Thanks, you give me a good idea for a post when I can come up from air from the current nasty stretch of 18-hour days I’m in.
    Incidentally, someone asked me the other day why Mississippi law applies, and to lawyers the answer is clear, but to other people not so much. The case is in federal court because it was removed based on the federal diversity of citizenship statute. Traditionally, insurance companies would rather be in federal court for a number of reasons. In diversity cases the law of the state furnishes the substantive law.