Western Hat Manufacturer’s $18 Million Verdict Upheld After Plant Consumed By Utility’s Alleged Negligence

Following a catastrophic Texas grass fire that consumed a hat manufacturing plant and the nearly 500,000 western hats inside the plant, the owner of the plant (the Manufacturer) brought suit against the Utility that owned the utility pole where the fire originated.  Specifically, the electrically-charged overhead service line became disconnected from one end of a connector, and the disconnected line contacted the ground wire on the pole, which caused electrical arcing and melted the ends of the metal wires in the disconnected line.  When the molten metal fell to the dry grass underneath, a fire that consumed more than 1,200 acres resulted.  After a five-day bench trial, the trial court awarded the Manufacturer more than $13 million in personal property damages and approximately $5 million for past lost-profit damages.

The Utility appealed arguing that the trial judge’s findings were not sufficient to support the Utility‘s negligence and the Manufacturer‘s damages, but the Court of Appeals of Texas delivered an opinion yesterday that affirmed the trial judge’s findings.  The Utility had argued at trial that there were multiple possibilities as to why the service line became disconnected, including potentially by high winds or by someone intentionally disconnecting it, but the appellate court concluded that the evidence at trial supported the trial judge’s findings that the service line became detached because one of the Utility‘s lineman negligently installed the service line into the connector by failing to crimp the end of the connector that became disconnected and by failing to perform a tug test on the line.

The appellate court, however, did remand the case for a new trial on the issue of an offset award of more than $2 million for amounts received by the Manufacturer from its insurer based on a lack of evidence at trial supporting the details of the insurance payment.