We don’t (alas) have a general “loser pays” rule in American tort law. But if you’re a corporation, especially an insurer, and you are a defendant, and you lose a tort suit, sometimes we have a “loser REALLY pays” rule.
In this Mississippi case
(here’s the Baltimore Sun summary), State Farm invoked its “flood exclusion” clause to refuse to pay for a home lost in Hurricane Katrina. The federal judge (taking this issue from the jury, interestingly) found State Farm liable (the issue in these cases is often whether a house was lost due to wind or to water — a fine issue often involving conflicting expert testimony).
State Farm had its experts, and though I have not read the trial transcript (and so am a bit tentative here) it’s pretty hard to see how $2.5 million in punitives (right at the multiplier limit established by the Supreme Court in another case involving State Farm) are merited when a bona fide defense can be made.
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