Jury Awards $600 Million in Suit Against Tenneco

WHARTON, Tex. — A state jury on Wednesday ordered a Tenneco Inc. subsidiary to pay $600 million in damages for breaking a contract with an Ohio gas producer.

After three days of deliberations, the 12-member jury ruled 10-2 that Tenneco’s Tennessee Gas Pipeline subsidiary broke a contract to buy natural gas from Floyd Kimball, who was doing business as Red Hill Oil Co. of Dover, Ohio.

The jury awarded actual damages of about $250 million, plus interest, and punitive damages of $350 million, according to Tenneco officials.

Wednesday’s verdict capped a 4 1/2-month trial in State District Judge Daniel R. Sklar’s court in Wharton, about 60 miles southwest of Houston.

Sklar said he could not comment on the verdict.

Houston-based Tenneco issued a statement saying it was disappointed with the verdict and would appeal it.

“I’m amazed, shocked, astonished,” said Walter Sapp, Tenneco’s general counsel. “I find it totally incredible.”

The verdict stemmed from a suit filed against Tenneco in December, 1985, that alleged that the company broke a contract it had with Kimball to buy certain volumes of gas, Tenneco spokeswoman M. A. Shute said.

Kimball was represented by Houston attorneys John O’Quinn and Al Deaton, who were not immediately available for comment Wednesday.

According to a statement issued by a Dallas public relations firm representing O’Quinn, the litigation stemmed from a practice by pipeline companies--when oil and gas prices were higher--of agreeing to contracts guaranteeing the producers that the companies would buy their natural gas at fair market prices.