Samoa Wins $86.7-Million Judgment Against Insurer

A Los Angeles jury Monday socked a Rhode Island insurance company with a $57.8-million punitive verdict for wrongly rejecting massive damage claims from a 1991 hurricane that devastated the U.S. territory of American Samoa.

The punitive award is double the $28.9 million in actual damages that the Los Angeles County Superior Court jury found was suffered by the government of American Samoa, which held the hurricane insurance policy. The total judgment against the insurer is $86.7 million.

American Samoa’s attorney, William Shernoff, said that it may be the first and is almost surely the largest punitive award ever won by a government entity in a civil lawsuit.

The insurer--Johnston, R.I.-based Affiliated FM Insurance Co.--issued a $45-million multi-peril insurance policy to the American Samoa government in October, 1991.

Two months later, Hurricane Val whipped the South Pacific with 150-m.p.h. winds and 50-foot waves, causing about $50 million in damage to Samoan government property, Shernoff said.

Affiliated rejected much of the claim, he said, contending that damage caused by waves and wind-driven water were excluded.

Affiliated plans to appeal the verdict, said Janette Skeels, one of the company’s lawyers.

The company contends that the trial judge, Henry W. Shatford, made several erroneous rulings. For instance, Skeels said, Shatford ruled that a substantial amount of Samoan government property excluded from coverage in the policy--such as wharves, roadway and pavement--ought to have been covered. Such property accounted for much of the actual damage verdict, she added.