Overview and update on Corban v USAA

Marilyn Haverty, whose house in Waveland, Miss., was buffeted by wind and surging water in Hurricane Katrina, thought her homeowner’s insurance would cover at least the wind damage. But it never paid her a penny…

The insurance companies say they paid for damage to homes in areas where there was no flooding. Where there was flooding, they say, they paid for damage that could have come only from wind, like the loss of a roof and broken upper-story windows — above the highest marks left by flood waters. But they have generally refused to pay for damage to houses, or parts of houses, that were hit by both wind and flood water…

From the NYT’s August 2006 Small Clause, Big Problem, fast forward (or slow forward, as it turned out to be) to  Spring 2008 and Sop’s three posts on Corban v USAA – The Absurdity of Judge Jones’ Reasoning Manifested (April 18); Corban v USAA Makes the News (May 13); and, The State Supreme Court Agrees to Hear Corban (May 20).

Sop used Anita Lee’s story in the Sun Herald for background in his April post and it’s well worth repeating.

The Mississippi Supreme Court is being asked to decide whether Katrina’s wind damage is covered when tidal surge contributes to the loss.

Attorneys filed the appeal Thursday in Corban vs. USAA Insurance Agency. USAA covered only $39,972 of damage to the Long Beach home of Magruder S. and Margaret Corban, whose policy exceeded $1 million in total coverage. Their home near the waterfront was a near-total loss, although portions remained standing.

The insurance agency cited policy language, called an “anti-concurrent cause clause,” that is interpreted to say wind damage is not covered when excluded tidal surge contributes “concurrently or in any sequence to the loss.”

In denying coverage, the insurance agency cited policy language, called an “anti-concurrent cause clause,” that says water is excluded from coverage “regardless of any other cause or event contributing concurrently or in any sequence to the loss.” The homeowners maintain wind damage that occurred hours before the tide surged ashore should be covered.

The Fifth U.S. Circuit Court of Appeals has upheld anti-concurrent language in Nationwide and State Farm policies, based on how the appellate court believes the state Supreme Court would rule. Because insurance contracts are governed by states, the state Supreme Court has authority over how the contract is interpreted.

“The court finds that such review will resolve issues of general importance in the administration of justice relative to critical legal issues present in Hurricane Katrina litigation,” Circuit Court Judge Lisa Dodson wrote in approving the appeal, which will be decided before the case proceeds.

Attorneys Judy Guice and Richard T. “Flip” Phillips, and the law firm of Corban, Gunn & Van Cleave, filed the lawsuit and appeal on behalf of the policyholders.

No one expected the Mississippi Supremes to take the case; but, just over a  month later that’s exactly what they did – and, again, Anita Lee had the story.

The Mississippi Supreme Court has agreed to decide how an insurance policy should be interpreted in a wind vs. water dispute over Hurricane Katrina claims.

In Corban vs. USAA, Long Beach policyholders argue the insurance company should cover wind damage to their property, regardless of damage caused by water. Water damage is excluded from coverage. USAA and other insurers argue that policy language also excludes coverage for a combination of wind and water.

The Supreme Court is expected to resolve the issue before the case goes to trial in Circuit Court…

With another 18 days in December and even fewer in this, the sixth and last sitting of the Court for the year, the question becomes, when will there be a decision?

If blog posts are any indication, it must be getting closer.  A few days after Thanksgiving, Chip Merlin went up with A chance for Mississippi courts to get it right.

Mississippi Court’s ruling is binding on federal courts and can overrule the Fifth Circuit’s poorly reasoned decisions in Broussard and Leonard.

If you haven’t seen Merlin’s redesigned site, be sure and stop by and read the rest of his post.  The amicus brief he wrote for United Policyholders is linked there, here, and on the  Insurance Law Hawaii blog.

A case before the Mississippi Supreme Court asks whether the anti-concurrent causation clause in homeowners policies is ambiguous…The Amicus Brief appears to misunderstand the criteria for implementing the anti-concurrent causation clause. (emphasis added)

If you visit the blog, you’ll see my request for clarification; then, this response…

My quibble is with the analysis of anti-concurrent causation clause in the Amicus Brief. The clause would appear to not be applicable in some of the hypotheticals mentioned in the brief.

…and my reply:

As to your “quibble” I don’t believe those are hypothetical situations – which is why we’ve had all the quibbling in court!

As I said I would do, I pulled the brief and took another look – and decided that I needed to better understand what an amicus brief was intended to accomplish.

one (as a professional person or organization) that is not a party to a particular litigation but that is permitted by the court to advise it in respect to some matter of law that directly affects the case in question. (emphasis added)

In other words, this “friend of the court”  pleads or defends some, not all, matters; or, as another source stated:

volunteers to offer information on a point of law or some other aspect of the case to assist the court in deciding a matter before it.

With that understanding, I moved to the Petition coast attorney Judy Guice filed on behalf of Dr. and Mrs. Corban as the amicus brief was filed in support of the Corban’s position.

The lower court expressed its opinion that the language of the water damage exclusion, including the anti-concurrent cause clause, would not exclude wind damage merely because water later came onto the property.

However, the trial court then rejected its own interpretation and followed the contrary holdings of the Fifth Circuit Court of Appeals in Leonard v Nationwide Muf Ins. Co., 499 F.3d 419 (51h CiL 2007), and Tuepker v. State Farm Fire &Cas Co, 507 F3d 346 (51h Cir 2007).

Thus the lower court concluded “the anticoncurrent causation clause will be applied herein as interpreted by the United States Fifth Circuit Court of Appeals, thereby barring coverage under the homeowner’s policy for any damage caused by water as defined in the policy or caused concurrently or sequentially by wind and water in combination”.

This ruling effectively reverses decades of this Court’s precedent in hurricane cases.  By virtue of the lower court ruling, Dr Corban, and thousands of other policyholders, will not be permitted to recover for damage caused by wind if water subsequently impacted the property.

Indeed, counsel for Defendant acknowledged during oral argument that houses destroyed by wind would not be covered if “you had water in there” later. (Exhibit 6at 39)

Interestingly, it was David Rossmiller who predicted “trouble down the road” like that encountered by the Corbans.

Of the four big Fifth Circuit Katrina decisions, Broussard, In re Katrina Canal Breaches, Tuepker and Leonard, I have real problems only with the last one. Not long after Leonard came out, I began to believe that the case’s analysis of the anti-concurrent cause provision was erroneously overbroad and would cause mischief down the road unless it was corrected.

I said this because during Katrina litigation, insurers actually did not claim that the presence of any amount of flood damage obviated the requirement to pay for separate wind damage, even if the house was destroyed by flood.

However, now it appears that, based on the Leonard case, some insurers are doing just that…

Could the Fifth Circuit actually have intended that result, to allow an interpretation beyond that claimed by insurers?

I doubt it, but Leonard is a good example of why you don’t say more than you need to to make your point.  It is quite obvious Judge Jones did not fully know what she was talking about — the fuzzy grasp of the terminology in the case, and the substitution with empty buzzwords  like “synergy,”  is a dead giveaway — but that didn’t diminish her confidence or her willingness to press ahead anyway.

There was a lot of loose talk in Leonard, all of it completely unnecessary to the decision too.  I wouldn’t call Leonard judicial activism so much as I would call it proof of the truth of Will Rogers’ maxim: “It ain’t what you don’t know that hurts you, it’s what you think you know for sure that just ain’t so.”

Rossmiller expanded on his concerns about Leonard in these comments on Judge Senter’s opinion in Dickinson v Nationwide.

In this opinion from Dickinson v. Nationwide, a Katrina case in the Southern District of Mississippi, on Friday Judge Senter favorably cited the anti-concurrent cause analysis of the New Appleman: Critical Issues article above, in deciding that an anti-concurrent cause provision did not apply to the facts because the wind and water damage were separate losses caused by separate, single forces.

Anti-concurrent cause language is relevant only where multiple forces cause the exact same loss, and where those forces meet the criteria of acting concurrently or sequentially within the strict meaning of those terms of art.  Anything else is merely single-force damage.  In the opinion, Judge Senter declined to give a broad interpretation to the Fifth Circuit’s decision on anti-concurrent cause in the Leonard case.  Incidentally, I have another Critical Issues article coming out sometime this month.  It is called Katrina in the Fifth Dimension, and it is about Katrina cases before the Fifth Circuit.

I spent by far the most time looking at the Leonard case, finding some fault, OK, a lot of fault, with the Fifth Circuit’s anti-concurrent cause analysis.

Amicus made and supported a very specific related point (request):

Ultimately, it is difficult to imagine a more incomprehensible policy provision than the ACC clauses. They do not clarify what the policy is intended to cover, and instead, merely lead
to increased litigation and opportunities for insurers and their counsel to rewrite the policy’s meaning after a catastrophic loss. Either these clauses’ lack of clarity should result in a finding of ambiguity, based on Mississippi’s body of case law finding that policy language that is susceptible to more than one reasonable interpretation must be construed in favor of coverage, or the clauses should be interpreted so as to clarify that the Fifth Circuit’s reasoning does notcomport with the plain reading of the policy language.

I was able to obtain the Petition by searching the web; however, I found nothing about the brief filed by USAA or any of those filing amicus briefs on their behalf.   I was able to obtain a listing of attorneys involved who have filed or requested to file amicus briefs.

The bottom line here has to be that the Katrina cases have gone on so long that ambiguity has given birth.

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