Texas-based drilling contractor wins $8.3M verdict

A judge in Kendall County Texas has awarded Drilling Risk Management Inc. (DRMI) $8.3 million in a lawsuit filed against Gemini Insurance Co. and its underwriter, Berkley Oil & Gas Specialty Services LLC. DRMI was represented by Cain & Skarnulis PLLC, an Austin, Texas-based law firm specializing in commercial litigation. The judgment comes after Charlie Cain and Steve Skarnulis filed a lawsuit on behalf of the plaintiffs against Gemini and Berkley for an unpaid insurance claim for two underground well blowouts at a DRMI drilling site in Cameron Parish, Louisiana.

The award includes $4 million in punitive damages, actual damages for lost profits, expenses incurred, and a six-figure legal fee. Including penalty interest accrued under the Texas Insurance Code for wrongful denial, Cain and Skarnulis expect the court to enter a final judgment in excess of $9 million in late February.

DRMI insured its Cameron Parish well with Gemini and Berkley in 2011. On two separate occasions, the well went out of control, resulting in major damage to the well and forcing DRMI to make expensive repairs. According to the law firm, Gemini and Berkley paid DRMI on part of its insurance claims, but denied an additional $1.7 million in expenses necessary to repair the well.

Before trial, Kendall County Court at Law Judge Bill Palmer awarded DRMI a partial summary judgment, agreeing that Gemini had in fact breached its contract and was entitled to only one $250,000 deductible, not two separate deductibles, which Gemini claimed DRMI owed. After both parties presented their case at trial, the jury ruled that the defendants acted in bad faith and that Berkley engaged in unfair and deceptive acts by wrongfully denying the repair costs. The jury also found that Gemini violated the Texas Insurance Code in its denial, and awarded penalty damages of $4 million. Additionally, the jury determined that DRMI suffered a profit loss of $1.5 million as a result of the defendants’ actions.

“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. “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.”

It is unknown whether or not the defendants will appeal the decision.

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