State Farm, Mississippi Couple Settle Case During Trial After Judge Rules Punitive Damages Not At Issue

Michael and Michelle Williams, who had sued State Farm over alleged failure to pay Hurricane Katrina wind damages,  reached a settlement with the insurer during a trial on their insurance claim after the judge removed a punitive damages claim from the case, this story  from the Sun Herald says

The case had been in the court of Judge L.T. Senter Jr., but a few days ago he reassigned the trial to Senior Judge Peter Beer.  This case was one of the "slab" cases: the Williams’ home in Ocean Springs had been completely wiped out by flood surge, and State Farm denied coverage under the policy’s flood exclusion.  Here is a pdf of the pre-trial order, which is very similar to the pre-trial order in the recent Broussard case — the same attorneys were involved for both sides.  For those who don’t deal with this stuff all the time, a pre-trial order is a feature of federal court in which the parties are supposed to agree to the extent possible on the facts and legal issues to be presented at trial.  Sometimes a judge will waive the pre-trial order, but most don’t.  If you scroll through it, you can see the facts and issues as each side framed them.  

The Sun Herald story doesn’t say why the judge removed the punitive damages claim from the case, but once he did, the Williams were left with only a $44,000 claim — their policy limits.  If you read the portions of this pdf of the State Farm trial brief on the burden of allocation of damages and punitive damage, you will see they are presented pretty much as State Farm framed the issues in the Broussard case, where State Farm got dinged for punitive damages following a directed verdict. 

Obviously, Judge Beer accepted State Farm’s position that there was an arguably reasonable basis for it to deny wind payments, and he apparently also accepted State Farm’s view that it is was not bad faith in and of itself to send the issue of allocation of damages to the trier-of-fact. This is different from Judge Senter’s view in Broussard. But remember, Judge Senter also saw testimony by a State Farm expert that there was some percentage chance that some damage was caused to the Broussards’ roof by wind, and he leaned on State Farm heavily because, despite this evidence, State Farm had paid nothing.  One-and-a-half days into the Williams trial, I’m not sure if the evidence presented or upcoming was similar or not.  Nevertheless, it’s apparent to me Judge Beer’s take on the law was quite different from Judge Senter’s. 

The amount of the settlement was not disclosed, but this paragraph from the story might be an indication: 

"I will say I feel like we’ve won a moral victory," Michelle Williams said as she and her husband left the courtroom.

Moral victory? Uh-oh. Isn’t that what the candidate says who finishes third in the Iowa caucuses?



Filed under First Party Insurance

5 Responses to State Farm, Mississippi Couple Settle Case During Trial After Judge Rules Punitive Damages Not At Issue

  1. Daughter for Justice

    In the Broussard’s case State Farm hired an engineer after their suit was filed the results from that report found wind did have a contribution to the loss of the Broussard’s home. State Farm of course continued to deny the clam and eventually hired the wind expert from Miami to testify at trial. Could the fact that the State Farm ignored the first report have any bearing on the reason why punitive damages were allowed in Broussard?

  2. Scoot S

    This comment is unrelated to this post, but refers to some of your earlier posts about the public comments made against insurance execs, and state farm in particular. Recently insurance execs have been compared to child molesters, and state farm has been called robber barons, a cult, and decadent, all coming from elected officials in public office. It seems like these statements would clearly have a detrimental effect on State Farms bottom line, and do a lot to hurt their image. At what point can state farm take action against someone for making slanderous comments such as these?
    Thanks again for your excellent blog.

  3. Daughter for Justice,
    Two things I don’t think are supported from Judge Senter’s opinion: that State Farm ignored a first opinion, and that whatever was going on with the first report had anything to do with punitive damages.
    As I continue to say, it is a curious ruling to me that says that an X percent chance that X percent of the roof could have been damaged equals bad faith denial, especially as the remedy was not just payment of the roof damage or twice the amount of the roof damage or three times, but the whole damage to the whole house! No State Farm report of which I am aware said there was a chance the whole house was destroyed by wind.
    Witness Judge Beer’s decision, which found no bad faith. Now, it may be shown that there are additional differences between these two cases that account for the different rulings, and not just a different way of looking at the law. But it appears to me based on the pleadings that there is a possibility Judge Beer came up with a different view of both bad faith and the allocation of the parties’ burdens of proof.
    By the way, haven’t heard from you for a while, nice to have you back.

  4. Scott, in reality State Farm cannot do a thing about the things that are being said, so there is no use in even talking about potential remedies. If an individual within State Farm were specifically fingered for these outbursts, these folks might have a remedy. I would not jump to conclusions that State Farm’s bottom line has been hurt. In my part of the country, I hear no one talking about State Farm or how they can’t do business with State Farm. No one cares, they go solely by the insurer’s rates and service or maybe sometimes by a relationship with a certain agent. State Farm showed some concern over its brand by agreeing to the big settlement with Scruggs, but realize that State Farm is not out of the cases with attorney William Walker or others, and there is a lot of action still to come. The effect on goodwill towards State Farm as a result of that settlement thus far appears pretty close to zero, as far as I can see. I’d be curious to know whether within State Farm some folks are looking at those that advocated the settlement like they are the guy that came up with the idea for New Coke.

  5. Around the web, March 20

    Updating some ongoing Point of Law stories: New Jersey Supreme Court hears oral argument on Engineers Vioxx class certification (Apr. 3; Apr. 5; Oct. 16) [AP/Business Week] No certification in Milberg Weiss-led securities suit because of firm’s miscond…