CLARKSBURG – Chartis and AIG plan to ask a Harrison County judge to toss a $58 million jury verdict involving a leaking tank at a gas station.
On Dec. 20, a Harrison Circuit Court jury awarded $58 million to the owners of a Hess Oil gas station in Mount Storm. That included $5 million in compensatory damages and $53 million in punitive damages. This Hess Oil is not the large national company, rather a small local one.
The story begins more than a decade ago when the owners of the gas station discovered an oil spill near the station in 1998. Legal action followed, including litigation about the environmental cleanup company.
AIG had a policy with the plaintiffs and began to pay coverage when the leaking tank was reported. There was a $1 million limit on the policy, and about $900,000 was paid out. Then, AIG apparently learned the event that triggered the claim occurred before the station was covered under the policy.
Michael J. Romano, a Clarksburg attorney who represented the plaintiffs, said Chartis units -- Commerce & Industry Insurance Co. and Chartis Claims Inc. –- claim Hess Oil misrepresented the facts in its 1997 insurance application and that the company "duped" Chartis. Romano denies that assertion.
Before the trial, Chartis offered a $100,000 settlement that Romano's clients rejected because they "felt they need to be vindicated," Mr. Romano told the website.
But, Chartis and AIG now want their own vindication.
They are asking the judge "to set aside a clearly erroneous jury verdict that awards compensatory damages unsupported by the facts and law and punitive damages that are clearly excessive and unjustifiable," the companies said in a statement. "The inarguable fact is we paid out 90 percent of the limits of the policy over a decade's worth of cleanup to a policyholder who did not provide us with material information when it took out its policy.
"The facts, law and justice do not support the jury's verdict."
The jury found that the two AIG insurance subsidiaries "intentionally, willfully and maliciously" mishandled an insurance claim filed by Hess Oil Company. The jury found that AIG had violated numerous industry claims handling standards and various laws while handling Hess Oil's claim and failed to settle the claim in good faith.
Romano said the evidence presented showed that AIG violated several minimum industry standards and the law including that it did not provide its claims adjustors with formal training to adjust claims, had no written procedures for adjusting claims, had no claims file documentation policies and did not regularly review its claims adjustors files.
He said the jury verdict also recognized that the wrongful denial of Hess Oil's claim was the way AIG conducted its business practices in an effort to deny, delay or reduce insurance payouts. He said information presented at trial also included evidence that AIG's corporate culture led to the wrongful denial of this West Virginia business's claim and other insurance claims around the state.
The jury awarded punitive damages in the case in order to deter AIG and other insurance companies from intentionally and maliciously mishandling future claims filed by West Virginia businesses and families.
"This verdict clearly demonstrates that even the largest insurance corporation much play by the rules and be fair to the West Virginia businesses and residents that pay premiums for peace of mind of insurance coverage. If they don't, they'll be held accountable until they change the way they do business," said Romano, who represented Hess Oil with fellow Harrison County attorney James A. Varner.