An $80 million damage award involving a breach of contract lawsuit was thrown out of court on Monday by the Mississippi Supreme Court in Jackson. The justices said the case was erroneously filed in Mississippi and should have been filed in Texas.
Hood claimed he had an exclusive marketing agreement with Titan Indemnity Co. that was broken in 1997 when Titan was acquired by United States Fidelity and Guaranty Co., which in 1998 merged with St. Paul Fire and Marine Insurance Co.
In 2001, a Copiah County jury awarded Carroll V. Hood $1.2 million in compensatory damages. His company, HICO Inc., was awarded $1.3 million in compensatory damages and $75 million in punitive damages. Defendants were Titan Indemnity Co., United States Fidelity & Guaranty Co. and St. Paul Fire and Marine Insurance Co.
In its appeal, the insurance company argued that “HICO complains St. Paul wronged it by reducing HICO’s commissions and raising rates, but HICO agreed to the decreased commissions, so that agents could be paid more, motivating them to sell more policies. HICO remained profitable.”
The verdict was largely the product of consistent errors by the trial judge that encouraged the jury to favor local plaintiffs and punish out-of-state insurance companies, according to St. Paul.
The Supreme Court did not get into the issue of rates and commissions. Instead, Justice Jess Dickinson, writing for the court, said the trial judge should have dismissed Hood’s lawsuit. Dickinson said the “forum selection clause” in Hood’s contract with the defendants barred him from bringing the legal action in Mississippi.
Dickinson said when Hood signed the deal with St. Paul, he consented to disputes being heard in the state and federal courts in Texas. St. Paul is headquartered in Bexar County, Texas.
“Consistent with the language of the forum selection clause, personal jurisdiction and venue in this cause is vested exclusively with the state and federal courts located in Bexar County, Texas,” Dickinson wrote.
Dickinson said since the Mississippi Supreme Court had no power to transfer the case to Texas, the judgment was overturned.