CHARLESTON – A federal judge has set aside a $32.7 million insurance verdict from last summer.
On March 4, U.S. District Judge John Copenhaver issued a judgment order setting aside a jury verdict in favor of Ramaco Resources against Federal Insurance Company and ACE American Insurance Company and entering a judgment for almost $1.8 million plus interest.
In the accompanying Memorandum Opinion and Order, Copenhaver says he agrees with Federal Insurance that the jury’s $25 million Hayseeds award “was plainly excessive and punitive in nature.”
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The $32.7 verdict was thought to be the largest insurance verdict in state history.
One of the attorneys who represented Ramaco said they plan to appeal.
“While we have the utmost respect for Judge Copenhaver, we think the jury had ample reason to find for Ramaco and expect the jury to be vindicated on appeal,” Brian Glasser told The West Virginia Record.
In a 1986 ruling titled Hayseed’s v. State Farm, the state Supreme Court held that whenever a policyholder substantially prevails in a lawsuit against its insurer, the insurer is liable for the insured's reasonable attorney's fees in vindicating its claim as well as the insured's damages for net economic loss caused by the delay in settlement and damages for aggravation and inconvenience.
“Yet, mindful of the admonition that Hayseeds damages not comprise ‘punitive damages ... under another sobriquet,’ … it is clear that the jury’s award of $25 million was impermissibly punitive,” Copenhaver wrote. “And because the jury’s $25 million award was punitive, the court finds it excessive.
“Federal Insurance is therefore conditionally entitled to a new trial on Hayseeds damages in the event that the jury’s phase one verdict is upheld or a new phase one trial is ordered.”
In a 12-day trial last summer, the jury returned a verdict in Ramaco’s favor, awarding the company $7,653,057 in contract damages and pre-verdict interest. The same jury awarded Ramaco the $25 million for aggravation and inconvenience damages.
Ramaco had argued the period of restoration should have been nearly four months. Federal Insurance maintained that period should have been less than four weeks.
The jury had agreed with Ramaco, resulting in the $7.6 million award for contract damages. Copenhaver reduced it to $1,633,014 with pre-judgment interest for the total of $1,796,584.
“Ramaco being entitled as a matter of law to $1,633,014, which is the sum of its lost business income and extra expense attributable to the period of restoration, exclusive of prejudgment interest, it is clear that Ramaco did not substantially prevail in this matter and is not entitled to recovery of any Hayseeds damages,” Copenhaver wrote. “Accordingly, the phase two jury award of $25,000,000 is vacated and set aside.”
Ramaco’s original lawsuit stemmed from the insurers’ denial of coverage of damages after the collapse of a coal storage silo at its Elk Creek complex in Logan County on November 5, 2018.
When the insurance company denied coverage, Ramaco filed suit in August 2019 in U.S. District Court for the Southern District of West Virginia.
Ramaco is an operator and developer of metallurgical coal in southern West Virginia, southwestern Virginia and southwestern Pennsylvania. It is based in Lexington, Kentucky, and has an office in Charleston. Right now, the company has five active mines within two complexes.
Ramaco was represented by Glasser, Nick Johnson, Becky Pomeroy, Michael Murphy, Joshua Hammack and Christopher Smith of Bailey Glasser. For the defendant companies, the local attorneys involved were James Jarrod Jordan and Matthew J. Perry of Lamp Bartram Levy Trautwein & Perry in Huntington.
U.S. District Court for the Southern District of West Virginia case number 2:19-cv-00703
