© 2015 The Texas Lawbook.
By Natalie Posgate
(Jan. 30) – When Steve Skarnulis and Charlie Cain walked into a Boerne, Texas courtroom for trial in November, Judge Bill Palmer told them if they won their case, it would be the first plaintiffs victory in Kendall County in 13 years.
Though a daunting hurdle, Skarnulis and Cain broke the county’s pro-defendant streak, and in the process, scored what is believed to be the largest jury verdict in Kendall County: an $8.3 million award to their client, Drilling Risk Management, Inc.
The jury awarded the large amount after finding that Boerne-based DRMI’s insurance company and underwriter acted in bad faith by wrongfully denying the repair costs for two severe blowouts in a Louisiana well that DRMI claimed should have been covered.
And the monumental Nov. 20 damages award will likely grow more soon, Skarnulis said. Both sides will meet on Feb. 20 for the final judgment hearing, where Skarnulis and Cain anticipate the amount to grow to more than $9 million.
Attorneys for Houston-based Gemini Insurance Company and its underwriter, Houston-based Berkley Oil & Gas Specialty Services, LLC, declined to comment for the article.
“This was a case of small business versus the insurance industry and we’re pleased that the jury stood up to right the wrong,” said Skarnulis a partner at the Austin litigation boutique Cain & Skarnulis, which he co-founded with Cain in 2007.
“We trust this ruling teaches a lesson to big insurance corporations about fairness and the consequences of underpaying, especially when they’re dealing with smaller companies,” he said.
DRMI insured its well in the Cameron Parish area of Louisiana with Gemini in 2011. After DRMI’s well was insured, two blowouts occurred that required nearly $2 million of repair costs.
Genesis paid some of the repair expenses, but denied the additional $1.7 million needed for a full repair. Skarnulis said DRMI and Genesis were at odds about the interpretation of the policy and what it would cover.
“Their interpretation of the policy was pretty complicated reasoning, and ultimately our position was, that’s not what your policy says,” Skarnulis said.
During summary judgment, Judge Palmer found that DRMI did deserve the coverage, and that DRMI owed Genesis only one $250,000 deductible versus two payments Genesis had claimed it was owed.
The main issue the jury had to decide, Skarnulis said, was whether it was fair for Genesis to deny DRMI’s claim.
“We tried to keep the story very simple,” he said, by framing the story “around the simple issue of fairness.”
“I think it helped that the insurance company’s argument was very complicated,” he added. “They had a lot of expert witnesses that made for a very complicated case, so it was easy for us to kind of contrast it with that.”
In a 10-2 verdict, the jury awarded $1.9 in actual damages, $4 million in punitive damages, $1.5 million in lost profits and about $929,000 in attorneys’ fees.
Skarnulis said he anticipates Judge Palmer to raise the amount by $900,000 at final judgment because carriers can recover 18 percent interest of the amount the policy wrongfully denied.
Gemini and Berkley’s trial team included shareholders George Lugrin and Reece Rondon and senior counsel Amanda Kujda of the Houston litigation boutique, Hall Maines Lugrin.
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