Jury awards $15 mil. in mineral rights case
SALYERSVILLE – A Magoffin County jury made the largest bad faith judgment in Magoffin County’s history on Friday, awarding a family over $15 million in an 11-year-old civil case.
Just as a brief synopsis, and at the risk of missing something pertinent in the long and detailed case, around 2003 or 2004 J.D. Carty Resources reportedly drilled a natural gas well where they had not been given the rights. Those rights belonged to the heirs of Ben and Lillian Salyer, who had signed the deed to mineral rights 100 years ago. The well was beyond successful, producing $1.3 million worth of natural gas, even at one point having to evacuate the area around it on Stinson Creek (on Patton Fork). However, the family still hasn’t seen the first dime of the money.
The Salyer family, with over 50 plaintiffs in total, filed suit in 2007, and that’s where it got complicated. The court has ruled J.D. Carty was to pay $628,000, but even though it has been sent to the Court of Appeals, Supreme Court and federal court multiple times, it was evidently never clear whether J.D. Carty or the insurance company, Greenwich Insurance Company, was liable for the payments.
Greenwich evidently paid $20,000 of an agreed settlement, but the rest was never paid and none of the money ever went to the plaintiffs.
The most recent two-week-long jury trial revolved around whether Greenwich had failed to meet their legal demands and if they had done so with gross negligence.
Susan Maines, with Casey Bailey & Maines, PLLC, and the legal defense for Greenwich Insurance Company, argued that though their client, J.D. Carty was “highly enriched” by the trespassing and depriving of minerals, Greenwich Insurance Company did not think they were liable costs since the actions breached their policy and had technically occurred before being hired as the resource company’s insurance agent.
“Greenwich was wrong, but not unreasonable or outrageously,” Maines argued in her closing argument.
Austin Mehr, with Mehr, Fairbanks & Peterson and the attorney for the Salyers, focused on the 52 people in the case and how their lives have been affected by the theft of minerals, and how each of them had been involved in the case. He argued Greenwich Insurance Company did know they were responsible for covering these claims, and they had neglected to do so.
“What’s it going to take for Greenwich to say it’s just not worth it to keep lying to people?” Mahr asked in his closing argument. “The temptation to do, again, to continue this conduct, and for their competitors to do the same. That needs to be considered – the profitability of misconduct to Greenwich.”
Mehr and his law partner, Phil Fairbanks, were asking for up to $23.44 million, which they had calculated as the amount Greenwich had profited during the time span in question, in punitive damages for the family for the gross negligence conducted by the insurance company, and up to $40,000 for each of the plaintiffs involved in the case.
Circuit Court Judge James W. Craft instructed the jury to answer a series of 124 questions, all surrounding whether Greenwich had either unknowingly or calculatedly failed to communicate with the plaintiffs, investigate their claims or compensate the heirs of the mineral rights in this case.
After eight days of trial and over two hours of deliberation, the jury agreed that Greenwich acted with gross negligence in not paying the plaintiffs, awarding each of the 52 plaintiffs to be paid varying amounts for their mental anxiety and anguish. Five of the plaintiffs were awarded $40,000, 13 were awarded $20,000, and 34 were awarded $11,000. Afterward, Mehr explained to the Independent the varying amounts set by the jury seemed to consider the amount the individual plaintiffs were active in the case.
When Judge Craft read the answer to the last quest of the verdict, which reportedly noted Greenwich was to pay $14,300 in punitive damages, the members of the jury were all shaking their heads “no.” The judge polled the jury and then let them go back to deliberate once, again. After a few minutes, they came back out and he read the final verdict, awarding the family $14.3 million in punitive damages.
In total, Greenwich Insurance Company was ordered to pay $15.134 million, counting the lump sum for punitive damages and the individual payments.
Mehr told the Independent, “I’m very pleased with the jury’s decision, sending a message to this insurance company and other insurance companies that they need to follow claims-handling laws in Kentucky.”
He went on to talk about the plaintiffs in the case, stating, “The Salyer family is just a great group of people. Many served in the military. They are good, hard-working people and they had their mineral rights in the family 100 years this October, when their great-grandfather, Ben Salyer signed the deed.”
Another hearing in the case is tentatively scheduled for November 6 at 10:30 a.m. in Whitesburg. Greenwich Insurance Company’s attorneys have already expressed that they plan to file an appeal to the judgment, which will inevitably tie up the case even longer.