AIG Loses Big Verdict in Space Case

By Daniel Hays

NU Online News Service, Jan. 10, 11:27 a.m.EST?A Houston space contractor has won a $2 million-plusverdict against two American International Group subsidiaries thatdenied the firm's claim for the costs involved in a legal case.

Asked if the company plans to appeal, an AIG spokesman saidthere would be no comment on the case.

Attorney Curtis Porterfield, with the Los Angeles office ofHowrey Simon Arnold & White, who represented United SpaceAlliance LLC, the NASA prime contractor for Space Shuttleoperations, said the case was unusual.

The insurer, he said, after refusing to pay the claim went tocourt a week later seeking a ruling affirming its action ratherthan waiting for its insured to file a complaint.

The case in U.S. District Court in Houston, Texas, was heard byJudge David Hittner. After one panel member was excused, a sevenmember jury returned a $2,029,625 award against American Home andNational Union.

The legal action began when American Home, having deniedcoverage for a Florida claim against USA, brought suit in Houstonfor declaratory relief.

Mr. Porterfield said legal action developed after USA filed aninsurance claim to cover legal costs that developed when a Floridaconcern sued the space group for terminating its contract andallegedly disparaging the firm's work product.

Responding to the AIG legal action, USA entered a cross-claimagainst AIG for breach of contract and sought the fees for thedefense of the Florida action and for the costs to the USA todefend against AIG.

According to Mr. Porterfield, the jury took less than an hourand a half to find that American Home Assurance Company hadbreached its contract with the United Space Alliance and to awardthe Alliance all of its damages.

USA is headquartered in Houston. The space operations company ischartered to manage and conduct space operations work involving theoperation and maintenance of multipurpose space systems, includingsystems associated with NASA's human space flight program.

It is also involved with Space Shuttle applications beyond thoseof NASA, and other reusable launch and orbital systems beyond theSpace Shuttle and Space station.

Mr. Porterfield said, since a final judgment in the case wasentered Dec. 31, 2002, he has heard nothing from AIG as to whetherthey plan to take the case to the Federal Fifth Circuit Court ofAppeals. AIG's lead attorney was Benjamin Love of Cowels andThompson in Dallas.