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AIG units' policyholder awarded $55 million in products liability dispute

Posted On: Aug. 6, 2015 12:00 AM CST

AIG units' policyholder awarded $55 million in products liability dispute

A jury in Oakland, California, has ruled that three American International Group Inc. units must pay a more than $55 million award, including $46 million in punitive damages, to a valve and piping manufacturer in a products liability coverage dispute.

The Alameda County Superior Court jury ruled Wednesday after a six-week trial that the AIG units should pay Easton, Pennsylvania-based Victaulic Co. $46 million in punitive damages and $9.3 million in compensation for breach of contract and bad faith, according to a statement issued by Victaulic's law firm, Pillsbury, Winthrop Shaw Pittman L.L.P.

Pillsbury said in its statement that the case, Victaulic Co. vs. America Home Assurance Co. et al., involves more than 10 years of commercial general liability insurance that the three AIG companies — American Home Assurance Co., National Union Fire Insurance Co. and Insurance Co. of the State of Pennsylvania — issued to Victaulic from 2001 to 2012.

According to a court document in the case, the dispute is over defense and indemnity coverage for nine underlying actions brought against Victaulic in California, Colorado, Oregon, Washington, Massachusetts and West Virginia.

Plaintiffs in these cases have charged Victaulic with negligence and products liability for property damage allegedly resulting from Victaulic's products, according to the court document.

An issue in the litigation between AIG and Vicatulic has been whether the damage involved is an occurrence under the relevant insurance policies.

Pillsbury said in its statement that AIG first initiated the litigation against Victaulic in Pennsylvania in 2012.

Mark Van De Voorde, Victaulic's chief legal and administrative officer, said in the statement, “This matter is critically important to Victaulic. AIG was, in our view, seeking to take back years of insurance it wrote to Victaulic.”

Lead lawyer Joseph D. Jean, a New York-based Pillsbury partner, said in the statement, “We are happy to have proven to the jury not only that AIG breached their contracts, but that they did so in bad faith, and that their conduct warranted punitive damages. This decisive outcome demonstrates that significant punitive damages are attainable even in complex commercial litigation.”

AIG said in a statement that it “respectfully but strongly disagrees with the verdict and is exploring all of its options. We maintain that we handled our customer's claims properly and did not engage in bad faith.”