CHC Investments vs. Starr Surplus Lines Insurance Group

Case Background

On July 8, 2022, Plaintiff CHC Investments filed a Breach of contract in insurance dispute lawsuit in the Mississippi State, Circuit Court of Hinds County (Case number: 22cv237). Judge  Winston Kidd presided over this case.

Cause

CHC Investments, owned by businessman Richard Copeland, purchased the Delphi Packard manufacturing facility in Clinton, MS, in 2014 for $1 million. The 19-acre facility, with 729,000 square feet under roof, had been used by Delphi Packard for 30 years to manufacture electrical components for the auto industry. By the time of purchase, the building was vacant after Delphi Packard closed it in 2009. Despite the apparent low value of the facility (with Copeland estimating its worth around $150,000), he considered it a good investment. Subsequently, CHC Investments bought an insurance policy from Starr Surplus Lines Insurance Group, with a $41.392 million coverage limit, for an annual premium of $75,500. The policy was in effect in August 2018 when the building sustained damage.

Injuries

In August 2018, vandals and thieves targeted the Delphi Packard facility, specifically focusing on large copper and aluminum cables near the substations powering the building. The facility was mostly empty, with a sister company of CHC Investments storing property inside. The theft and vandalism caused significant damage, which CHC Investments valued at $35 million as the replacement cost for repairs. Despite regular checks, CHC Investments had not disclosed the full occupancy status, a central issue in the insurance dispute.

Damages

CHC Investments sought to recover damages from Starr Surplus Lines Insurance Group for the loss incurred due to the vandalism. The plaintiff claimed that before the damage, the building had been in excellent, highly marketable condition for industrial use, describing it as “plug and play” ready. Despite this, Starr Surplus paid only a small portion of the claim, roughly $500,000. The bulk of the loss was denied due to the vacancy clause in the insurance contract. The plaintiff argued that the building had been occupied by its sister company. However, Starr Surplus maintained that the building was vacant. This disagreement led to the insurance dispute and eventual lawsuit.

Key Arguments and Proceedings

Legal representation

  • Plaintiff(s): CHC Investments
    • Counsel for Plaintiff: David Baria | Michael D. Greer
  • Defendant(s): Starr Surplus Lines Insurance Group
    • Counsel for Defendants: Robert L. Gibbs | James T. Malone | Taylor Saris |  Emilie Bakal

Claims

CHC Investments filed a lawsuit against Starr Surplus Lines Insurance Group, asserting that the insurance policy was in effect, the loss had been timely reported, and Starr Surplus failed to pay the proper amount. The plaintiff’s claims included breach of contract and wrongful denial and delay. However, the wrongful delay and denial claims did not progress to the jury. CHC Investments aimed to recover $35 million in damages, with key expert witnesses, including Brian Revere (Public Adjustor) and Charles Ingram (Commercial Electrical), providing testimony regarding the damage and repair estimates.

Defense

Starr Surplus Lines Insurance Group defended against the claims brought by CHC Investments by arguing that it had not breached the contract. The defense focused primarily on the vacancy clause in the insurance policy. Starr Surplus asserted that the building was vacant at the time of the vandalism. According to the policy terms, coverage was limited or excluded if the building was unoccupied. Starr Surplus argued that this was the case here. The defendant also contended that CHC Investments had failed to submit the loss in a timely manner, citing delays in reporting the incident.

Furthermore, Starr Surplus claimed that CHC Investments had not provided sufficient evidence to demonstrate that the damage was directly caused by vandalism. They suggested that the plaintiff’s attempt to treat the vandalism as part of a larger renovation effort lacked credibility. Consequently, Starr Surplus argued that the plaintiff’s claim for the $35 million in damages was not justified under the terms of the insurance contract.

Jury Verdict

On October 15, 2024, the jury returned a handwritten verdict in favor of CHC Investments, awarding the plaintiff $26,885,275 in damages. The jury found that Starr Surplus Lines Insurance Group had breached the insurance contract by failing to pay the full claim for the vandalism damage to the Delphi Packard facility. The insurance dispute ultimately resulted in a favorable outcome for CHC Investments, with the jury siding with the plaintiff’s claims.

Court Documents:

Documents are available for purchase upon request at jurimatic@exlitem.com