An insurance company said Friday that it would appeal a $17.4-million verdict against it for selling an Inland Empire man a series of annuities that wouldn't mature until he was 97.
A Riverside County Superior Court jury awarded Ernst Hammermueller, 86, of Palm Desert $3.4 million in compensatory damages June 23 and an additional $14 million in punitive damages June 27, according to attorneys in the case.
The jury found that in 2002, an agent for Iowa-based North American Co. for Life and Health Insurance sold Hammermueller $350,000 in annuities.
At the time, Hammermueller was 82, living in an Oxnard retirement home and suffering from dementia and Alzheimer's disease, according to his suit.
Hammermueller signed the documents to buy the annuities. But he wasn't aware that the tax-deferred annuities would lock up his principal for a minimum of 15 years, forcing him to pay steep surrender penalties if he needed access to his money before the annuities reached maturity in 2017, his attorneys said.
Robert Phillips, an attorney for the insurance company, said North American agreed to fully refund Hammermueller's investment after he filed suit in 2003. He said the company would ask the judge to set aside the verdict, but declined to discuss the legal grounds for that request.
Phillips said the annuities were sold by an unscrupulous agent, who told the company that the sale was appropriate for Hammermueller's needs. But he acknowledged that the company erred by allowing the agent to sell its policies.
"This jury verdict arose out of an isolated mistake ... and involved a sale that never should have taken place," Phillips said. "The corrective measures that were taken in the wake of this mistake have been effective in preventing any further similar problems."
Justin Ehrlich, an attorney for Hammermueller, said his client's adult children contacted his law firm after learning the terms of the annuities sales.
Hammermueller sued the insurance company under California's senior protection law, which allows for punitive damages when a senior's money is taken through "deceit, malice, fraud or oppression."
"We felt it wasn't enough to say that when you get caught you'll give the money back, because what incentive is there for the insurance company not to do that again?" Ehrlich said.