A federal court of appeals Thursday reinstated a $7.6 million jury award to a coal company in litigation filed against Chubb Ltd. units and approved a new damages trial in connection with a coal hopper collapse.
A hopper, which regulated the flow of coal onto a conveyer belt operated by Lexington, Kentucky-based Ramaco Resources LLC, collapsed in November 2018, according to the ruling by the 4th U.S. Circuit Court of Appeals in Richmond, Virginia, in Ramaco Resources LLC v. Federal Insurance Co.; ACE American Insurance Co. and Chubb INA Holdings Inc.
Ramaco sued the Chubb units in U.S. District Court in Charleston, West Virginia, after Federal denied the company’s claim, contending corrosion caused the hopper collapse, which was not covered by its policy.
Ramaco sought two types of damages: contract damages under the policy for its lost business income and extra expenses incurred, and damages under West Virginia’s “Hayseeds” doctrine, which allows an additional recovery for an insured party that substantially prevails in a lawsuit against its insurer.
After an 11-day trial, a jury awarded Ramaco $7.1 million in contract damages and $500,000 in prejudgment interest. It also awarded the company an additional $25 million in Hayseeds damages for aggravation and inconvenience.
After the trial, the district court reduced the contract damages to $1.8 million and vacated the $25 million award on the basis that the reduction in contractual damages meant Ramaco did not substantially prevail, as required under Hayseeds.
In reinstating the $7.6 million award, a three-judge appeals court panel said the district court misread how the policy defines “period of restoration.”
The policy’s “plain language extended the period of restoration until Ramaco’s operations were restored to the level generating the net profits that would have existed but for the collapse,” it said.
“Using the proper measure of the period of restoration, there was sufficient evidence to award” the $7.6 million.
It also held that a new trial on Hayseeds damages could now be held, because the $7.6 million award’s restoration means the policyholder had substantially prevailed.
Attorneys in the case did not respond to requests for comment.
