Late Friday, a jury in the Fourth District Court for the State of Utah awarded Headwaters, Inc., more than $175.3 million in its breach of contract case alleging that the Itasca, Ill.-based insurance broker's synthetic fuel division used Headwaters' patented chemical techniques.

Headwaters, based in South Jordon, Utah, is a holding company that provides products, technologies and services to the energy, construction and home improvement industry. It reported revenues of $554 million in fiscal 2004.

Although Headwaters won the big award, the jury found that the product company had violated an agreement to pay royalties in connection with a financing agreement to Gallagher and should pay $270,734 to the broker, a Headwaters statement said.

The amount of the judgment includes royalties and interest to Headwaters.

In a conference call held today, J. Patrick Gallagher Jr., president and chief executive officer for Gallagher, said, "We are shocked and extremely disappointed by the Utah jury's decision.

"We believe the jury did not understand the technical differences and we hope that the appeal process will bear us out by this," he said.

The judgment, he continued, does not affect Gallagher's core business, since the dispute belongs with a subsidiary, nor will it affect the firm's balance sheet. It does not threaten the company and the firm has "plenty of cash" to pay dividends.

"I do not see us missing any sales opportunities today or in the future," he continued. "We will not miss any opportunity to serve our clients. Frankly, I don't expect any of our people in the field to concentrate on this at all. We will continue to sell new business and service our existing clients without missing a beat."

Mr. Gallagher said the firm's subsidiary, AJG Financial Services Inc., hired Headwaters to create a synthetic fuel process that was unsuccessful. AJG turned to another source to find a successful process.

Douglas K. Howell, vice president and chief financial officer, said the firm has no idea how long the appeal process will take or when, and if, a payment would be made. He said if payment does have to be made, the firm has several sources of cash to tap, and has already contacted bankers about setting up multiyear loans for the purpose if necessary.

Mr. Gallagher said the two sides did engage in settlement talks but were so far apart that they could not come to a resolution.

One outcome of this suit, Mr. Howell said, may be to shut down the synthetic fuel facility depending on the ultimate resolution of the case and if future royalties will have to be paid.