Gulf Coast property owners who lost nearly everything during Hurricane Katrina 16 months ago have won a victory in court. A U.S. District Judge has sided with a property owner, who sued his insurance company over its refusal to pay damage claims.

Judge L.T. Senter, Jr. ordered State Farm Fire & Casualty to pay $223,292 in damages to a Biloxi couple, who suffered the loss of their home in the devastating storm. The judge declined to award punitive damages in the case, but said the jury may choose to do so.

In an unusual move, the judge issued a directed verdict from the bench, then ordered a recess. He sent the jury to the jury room to begin deliberating punitive damages.

Norman and Genevieve Broussard say they lost their home when a tornado spawned by the massive hurricane slammed into it, leaving only a concrete slab.

The insurance company refused to pay, saying the home was destroyed by Katrina's storm surge, and that the policy did not cover water damage.

Attorneys for the property owners accused State Farm of breaching their contract, trying to "chisel" their way out of legitimate obligations. In addition to covering the replacement cost of their home, the plaintiffs are also seeking $5 million in punitive damages.

"We are surprised and disappointed by the court's ruling," said State Farm spokesman Phil Supple. "The expert testimony supported a different result. After the conclusion of this case, we will evaluate our next steps in this lawsuit."