A federal appeals court in San Francisco has tossed out a $241 million award won by the state of California in a lawsuit stemming from the 1991 takeover of the failed Executive Life Insurance Company.
The U.S. 9th Circuit Court of Appeals overturned the award against Artemis S.A. Paris, over allegations of fraud against the company.
In its decision issued on Monday, the appeals court remanded the case back to the district court for reconsideration.
Judge Jay S. Bybee threw out the case on the grounds that a jury had awarded punitive damages against Artemis but not compensatory damages. Under California law, a jury may not award punitive damages without also imposing compensatory damages, according to the judge.
Bybee upheld a ruling by a lower-court judge vacating the judgment and ordered a new trial to recalculate the damages that Artemis should pay the state.
The case originated in 1991, when the state’s department of insurance took over Executive Life after the market for its junk bond portfolio collapsed.