On Monday, April 16, the jury for Weiss v. Allstate in the U.S. District Court in New Orleans slapped the carrier with a $2.8 million verdict--big news. But even bigger jurisprudence could result from "Katrina appeals week"--the week of June 4--in the 5th U.S. Circuit Court of Appeals, according to John Ellison, Philadelphia office managing partner for Anderson Kill & Olick.
Two big issues in appeal are: Louisiana federal district court Judge Stanwood R. Duval Jr.'s ruling from last November that flood exclusions in many insurance policies fail to name manmade events; and Mississippi federal district court Judge L.T. Senter Jr.'s ruling that the anti-concurrent causation clause is ambiguous, thereby requiring insurers to prove on a claim-by-claim basis what proportion of property loss resulted from wind and water.
"It's going to be fascinating," said Ellison, who is participating in the appeals process as an attorney for Louisiana homeowners from the Katrina Canal Breaches Civil Action Consolidated Litigation, in which a class of homeowners is suing insurers, the government and contractors for flood damage. "There are definite inconsistencies in the way the two states have been dealing with things so far."
According to Gary Thompson, however, the similarities in the two judge's rulings are more important than any differences. The partner at international law firm Reed Smith, and a representative for several commercial policyholders in Katrina claims, said both Senter and Broussard applied the legal principle of contra prefentum, lifestyle which roughly translates to the baseball rule: the tie always goes to the runner.
"When you peel back the opinion in each case," Thompson said, "they really are saying the same thing. They're saying to insurance companies: 'It's your job to be clear and unambiguous when you write an insurance contract, and if you fail to do so, it'll be resolved against you.' "
He said the Fifth Circuit could affirm both judges' decisions. Of course, the appeals could end in the insurers' favor, in which case, in New Orleans, said Sean McMurrough, counsel for the Property Casualty Insurers Association of America, "these cases will be very easy for future judges to dispose of."
But McMurrough does not believe the appeals court will find "a nice, easy cut-and-dry issue."
In Louisiana, a Fifth Circuit resolution for policyholders--which could come as early as this summer--could pressure insurers to settle with the class, said Ellison. In both states, a policyholder victory could impact how insurers handle hurricane claims going forward, increasing the burden of proof on insurers.
As for the effect of these appeals and the Weiss case on the commercial side, Thompson said there is also a lesson for commercial carriers, who could soon find their coverage disputes in the same courtrooms and similar jury pools.
"These juries are angry," he said.
June 1, 2007
Copyright 2007© LRP Publications