"There's going to be a lot of activity this fall," said John Ellison, managing partner of Anderson Kill & Olick's Philadelphia office and representative of policyholders in the Louisiana Katrina Canal Breaches Litigation, a class action against insurers, the federal government and private contractors.
Much litigation also occurred through late summer, early fall, much out of the 5th Circuit Court of Appeals. State courts also sounded off, however. More decisions should follow.
For instance, thousands of cases are working their way through the Louisiana court system, where the Louisiana State Supreme Court, at the end of the line, could bring closure to the Katrina insurance recovery issue in the state, according to the plaintiffs' attorney.
"The final word on this belongs to the Louisiana Supreme Court. There's no question about that," Ellison said. "And there's also no question that the Louisiana Supreme Court is going to get this issue."
Gary Thompson, partner at Reed Smith's Washington, D.C., law office, agrees that, for the most part, decisions from state courts could resolve the insurance recovery situation in Louisiana, even if on a case-by-case basis.
"Insurance is traditionally a matter of state law enforced by state courts," he said.
One such case is Landry v. Citizens, decided by the Louisiana 3rd Circuit Court of Appeals at the end of August. This case found the state Valued Policy Law holds in Katrina-Rita cases, which roughly means policyholders are entitled to the full value of their policy limits if a complete loss to their property is proven to be mostly caused by a covered peril. (The dissenting opinion can be read here as well.)
Landry, said Ellison, shifts the burden of proof to insurers. "It puts the insurance company in a very difficult position," Ellison said.
Another 5th Circuit decision--Leonard v. Nationwide from Sept. 7--could lead to similar state-federal judicial conflict in Mississippi as well.
In the Nationwide case, the Appeals Court rejected the ruling from District Court Judge L.T. Senter that the anti-concurrent causation clause in property policies was ambiguous. Instead, the court in its decision stated: "Like the district court, the Leonards provide no support for their argument that the ACC clause is ambiguous."
"The most aggressive interpretation of the anti-concurrent clause is one where the insurers deny coverage even for wind-caused damage if water damage happened to follow to the same property," said Thompson. "State law strongly disfavors such a broad interpretation and reading of policy exclusions, especially in contracts of adhesion like these."
October 15, 2007
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