INSURER SECURES REVERSAL OF $8 MILLION KATRINA/RITA VERDICT IN DALLAS FEDERAL DISTRICT COURT

Last Tuesday, Mid-Continent Casualty Company won a major federal court victory when U.S. District Court Judge Sidney Fitzwater overturned a multi-million dollar verdict in favor of an insured in a case involving claims for damages from Hurricanes Katrina and Rita.  In Mid-Continent Casualty Co. v. Eland Energy, Inc., Nos. 3:06-CV-1576-D and 3:06-CV-1578-D, 2011 WL 2417158 (N.D. Tex. June 14, 2011), in a highly detailed opinion, Judge Fitzwater found insufficient evidence to support the extra-contractual causes of action asserted by Plaintiffs Eland Energy and Sundown Energy (collectively “Sundown”), upheld the jury’s finding for Mid-Continent on Sundown’s contract claim, and entered a judgment that Sundown take nothing.

In  2005,  Hurricane  Katrina  caused  an  oil  leak  from  Sundown’s  oil  and  gas  facility  in  Louisiana. Following  Hurricane  Rita,  the  oil  escaped  a  containment  system  built  during  the  Katrina  cleanup. Sundown was the target of a number of lawsuits, one of which Sundown settled for $2 million.  Last summer, a jury returned a verdict awarding in excess of $8 million to Sundown based on its claims against Mid-Continent under the Texas Insurance Code and for alleged breaches of the duty of good faith and fair dealing.  (Sundown asserted a number of other claims, some of which were defeated before trial, and some of which the jury rejected.)

Judge Fitzwater determined that the jury’s bad-faith finding could not stand because there is no cause of action in Texas for breach of the duty of good faith in the third-party insurance context.  The judge then turned to Sundown’s statutory claims, and found that Sundown had presented insufficient evidence to support the jury’s verdict.  At length, the opinion examines and firmly rejects each of Sundown’s grounds of recovery.  The judge found insufficient evidence of the claimed Insurance Code violations, and also found insufficient evidence that the violations, if they existed, caused Sundown’s damages.  The court therefore reversed every portion of the jury’s verdict in favor of Sundown, sustained every portion in favor of Mid-Continent, and entered a new judgment entirely in Mid-Continent’s favor.

Martin, Disiere, Jefferson & Wisdom was proud to represent Mid-Continent in this case, with a team led by Chris Martin, Robert Dees, and Ethan Carlyle, along with many other MDJW lawyers and staff.  The firm wishes to congratulate Mid-Continent and its personnel involved in this case for having the courage to try the case and for taking a strong stand for what it believed to be right.