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Jury's $20 million in punitive damages may be record Friday, February 24, 2006 By Joyce Gannon, Pittsburgh Post-Gazette A federal jury in Pittsburgh this week awarded what could be a record amount in punitive damages against an insurance company that denied a claim for damaged coal mining equipment. The jury of six men and two women awarded $20 million in punitive damages to Gallatin Fuels, of Uniontown, on Tuesday after Westchester Fire Insurance Co. refused to cover the value of equipment lost when the Mathies Mine in Fayette County was flooded in 2002. The jury also ordered Westchester, a subsidiary of Ace Ina of Philadelphia, to pay Gallatin Fuels $1.3 million for the lost equipment. "Company policy does not allow us to comment on any kind of litigation," said insurance company spokeswoman Carla Ferrara. "It's very rare to get an award this big in punitive damages," said Christopher Opalinski, an attorney with Downtown firm Eckert Seamans Cherin & Mellot and one of several attorneys who argued the case for Gallatin Fuels. From 2000 to 2002, Gallatin Fuels leased mining equipment to Mon-View Mining, which owned and operated the underground mine. After the mine closed in March 2002, the power was shut off and the mine flooded in April, destroying all of the equipment, said Mr. Opalinski. Among the reasons Westchester cited for denying coverage, Mr. Opalinski said, was that they said the policy covering the equipment had been canceled and that they could not access the mine to determine the damages. When Gallatin Fuels filed suit in late 2002, it asked for punitive damages, claiming that Westchester acted in bad faith. Mr. Opalinski called the $20 million award "off the charts." Keith Crocker, professor of insurance and risk management at Penn State's Smeal College of Business, said he would be surprised if the award is upheld. Punitive damages are "the pot of gold at the end of the rainbow for individuals who figure they have been done wrong by an insurance company," he said. "But a judge can knock those down." The case was argued before U.S. District Judge Donnetta Ambrose. Mr. Opalinski said the jury's award would force Ace "to change the way they do business and will have an effect on other cases in this jurisdiction. Even though Western Pennsylvania juries are considered conservative, somebody will say a Western Pennsylvania jury hit somebody for $20 million. It will send a message to other insurance companies that if you act outrageously, you will be punished and run the risk of being punished big time."
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