A federal judge who ruled that a jury could impose punitivedamages on State Farm for its mishandling of a Hurricane Katrinaclaim, has decided that the $2.5 million award should be reduced to$1 million.

U.S. District Court Judge L.T. Senter Jr. in Gulfport, Miss.,said that even though the company's conduct was "reprehensible," alesser award was more appropriate.

State Farm said it would appeal the case in any event.

At issue was a claim brought by Norman Broussard and GenevieveBroussard, whose Biloxi, Miss., home was torn off its foundationslab.

The company, according to the judge, fought the claim on thebasis of policy language excluding flood damage, and ignored theprobability "that some damage occurred from a cause other thanflood."

Judge Senter, after hearing evidence at trial, had awarded thecouple $211,222 in contractual/compensatory damages before sendingthe case to the jury to set punitive damages.

He said that in his opinion, the damages the panel assessed werealmost 12-times the amount of compensatory damages, and a moreappropriate assessment was a sum between four- and five-times thecompensatory damages.

"The judge's order will not change our intention to appeal theruling and the jury's punitive damage award," State Farm said in astatement. "There remain critical legal issues that need to beaddressed in the Broussard trial. Those include the location of thetrial, which party should have the burden of proof, and the factthat the jury was not permitted to deliberate the facts of thecase."

Judge Senter, in his latest ruling, said the company had"attempted impermissibly to place the burden of proof on theplaintiffs to establish that their losses were caused bywind..."

A few days after the Broussard verdict, State Farm announced ithad reached a proposed class-action settlement to reimbursehomeowners in three Mississippi counties with pending or potentialclaims.

However, Judge Senter has rejected the proposed language asunfair, sending the negotiators back to the drawing board, withrepresentatives for both sides expressing confidence a dealsatisfactory to the judge will be worked out.