Judge wipes $1.2M exemplary damage award in Hurricane Ike trial

A Beaumont judge has set aside a $1.2 million exemplary damage award scored by the Mostyn Law Firm following a Hurricane Ike trial.

On Oct. 15 a jury found in favor of plaintiffs Rene Lampson and Justina Henriquez, levying a $400,000 verdict against National Security Fire & Casualty, plus a separate award of exemplary damages.

As previously reported, Judge Milton Shuffield, 136th District Court, sealed the award in order to facilitate mediation.

Court records show that the mediation attempt failed and on Thursday Judge Shuffield granted National Security’s motion to set aside the question of exemplary damages and ordered the verdict amount unsealed.

In a letter dated Jan. 7, Judge Shuffield writes to counsel that, at the time, the court indicated that it did not believe the issue was submitted under the proper instruction as to the burden of proof as to support an award of exemplary damages, but allowed the question to proceed to the jury in order to avoid a new trial in the event the court was in error.

“Due to defendant’s concern, the Court temporarily sealed that portion of the verdict inasmuch as the Court felt that, by doing so, settlement might be facilitated,” writes Judge Shuffield in the letter.

“Having been advised that mediation was unsuccessful and the parties were unable to settle this matter, the court believes the defendant’s motion to set aside the jury’s award of punitive damage should be granted.”

In a transcript taken before the jury was handed the question of exemplary damages, defense attorney Robert Killeen Jr. is quoted as saying: “Judge, this affects our bond. You know they want a million dollar ring-your-bell finding on fraud on the improper standard and then I’m going to have to post the bond. This is not right.”

The award of exemplary damages was for alleged fraud, which Judge Shuffield set aside “based on the lack of factual and legal evidence,” according to his Jan. 8 order.

Case background

Through Mostyn attorney Gregory Cox, Lampson and Henriquez filed suit against National Security and Renee Snellgrove on Sept. 3, 2010, in Jefferson County District Court, alleging the defendants wrongfully denied the couple’s property damage claim after Hurricane Ike ravaged their Port Arthur home in 2008.

Jurors found National Security knowingly failed to honor the terms of its insurance policy with Lampson and Henriquez, awarding the couple more than $166,000 in damages and finding the Mostyn Law Firm was entitled to $237,000 in attorney’s fees.

Judge Shuffield had bifurcated the question of exemplary damages to the jury at the conclusion of the trial and then sealed the amount of the award.

On Oct. 21, National Security and Snellgrove filed a motion to set aside the question of exemplary damages, arguing that it “is crystal clear the trial” ended when the jury awarded the plaintiffs $403,700.

Three days later, on Oct. 24, the plaintiffs filed a response to the motion to set aside, asserting the motion is untimely and without merit.

Killeen is an attorney for the Houston law firm Killen & Stern.

Cox’s firm, the Mostyn Law Firm, has reaped hundreds of millions from suits filed against insurers after Ike pummeled Southeast Texas.

Case No. D187-954