The Fifth Circuit Gets One Right: Dickerson v Lexington

After butchering the concept of the Anti Concurrent Clause in Leonard v Nationwide and the concept of punis in Broussard v State Farm, the third time was the charm with the Fifth Circuit in Dickerson v Lexington. A big slabbed congratulations to Soren Gisleson and the Dickerson family. I wonder if AIG will be paying this judgement out of the TARP fund LOL. Here is a link to the decision by the Fifth Cirucit.

This blurb sums up why all a good lawyer needs to litigate these cases is some wind damage, a good expert and in the case of the Farm the wind water protocol:

Dickerson’s bad faith claim hinges on the undisputed timing of Lexington’s first inspection and payment. Dickerson had reported the damage to the insured property in mid-September of 2005, and Lexington had sent an adjuster to inspect the damage on October 1, a month after Katrina. A report based on this inspection was sent to Lexington no later than November, yet no payment was made. Another report was sent to Lexington (apparently by the same claims adjuster) on February 4, 2006. Although Lexington representatives took the position that the second report corrected a “mistake” in the November report, we have found no explanation in the record for why Dickerson could not have been compensated in the interim. Indeed, Lexington’s attorney stated at trial that he had no explanation for the five-month delay. In its brief, however, Lexington states that its adjuster revised the first report to account for rising construction costs attributable to Katrina’s aftermath. Dickerson did not receive the payment of $11,335 until March 2, 2006 — five months after the inspection and four months after Lexington received the inspection report.36 Another inspection in the spring of 2006 produced an additional $2,274 payment, again a mere fraction of the aggregate $300,000 limit of Dickerson’s homeowner’s coverage. It was not until the eve of trial, following a third inspection and more than a year and a half after Katrina struck, that Lexington finally acknowledged that the insured property had suffered substantial wind (as opposed to flood) damage and made a substantial payment.

The court then turned to the question of mental anguish. Lexington seemed to think Mr Dickerson needed some sort of doctors excuse to prove how badly they hurt him. The Fifth recounted some testimony that brings back memories for all of us who went through the Katrina experience and how an insurance company made a bad situation worse by screwing a policyholder whose house was destroyed by the storm:

Both Dickerson and his daughter, Cindy Bane, testified about his living situation following Hurricane Katrina. Bane testified that the year and a half of fighting with Lexington caused her father’s mental health to deteriorate. Bane said that her father became increasingly withdrawn and short-tempered over the course of his ordeal. She noted that he has been living in the bathtub showroom of a store and showering with a garden hose while standing on a wooden pallet in an unheated back room. Dickerson testified that the stress caused a rash for which he eventually had to seek a doctor’s care.

Lexington asserts that for an insured to succeed on a claim of mental anguish, the law requires more evidence than Dickerson offered. “[B]are allegations of depression and embarrassment” are insufficient, Lexington contends; mental anguish must rise to the level of medical significance. Lexington insists that Dickerson should have offered the testimony of an expertwho could attest to his mental state before and after the storm and to any nexus with the ensuing battle with the insurer. Furthermore, argues Lexington, much of the suffering was of Dickerson’s own making; he could have saved himself significant hardship by moving into the FEMA trailer that sat unoccupied on his front lawn for months. His unilateral and arbitrary choice to live in a bathtub showroom instead of the trailer should not provide a basis for Lexington’s liability……….

These cases are necessarily fact-specific, so outcomes vary. The case law provides only anecdotal guidance as to what may or may not suffice to prove compensable mental anguish. “Mental anguish which gives rise to a claim for damages must be a real mental injury that one can reasonably expect a person in such a position to suffer.” It “does not require proof that medical or
psychiatric care was required as a result of the incident, but minimal worry and inconvenience should not be compensated.” Neither is expert testimony mandatory, as Lexington contends………

The case Lexington cites as setting the standard at “psychic trauma requiring medical treatment” is inapposite here. That case concerned a property owner’s claim of psychic trauma as a result of physical damage to his property resulting from a property dispute; it is a specific type of mental anguish claim and thus distinct from the instant situation.

Dickerson did not offer expert or medical testimony, but he did offer more than“bald assertions.” His daughter’s testimony of watching her father’s mental state deteriorate and his becoming short-tempered and anti-social is more than bare or conclusional. The same holds for Dickerson’s testimony that he suffered a rash from the stress, for which he did seek medical care. Although Lexington contends plausibly that Dickerson could have mitigated his suffering, the district court was best positioned to make credibility determinations of the witnesses, and it found the weight of the evidence tipped in favor of Dickerson. On review, we find no clear error in the district court’s conclusions grounded largely in credibility determinations.

Included in the mental anguish section was a length discussion of the ramifications of the impact Sher on those type damages.  Evidently certain district court judges with insurance defense backgrounds in the La Eastern District have gutted out mental anguish from several cases that resulted from their faulty interpretation of Sher; the Fifth Circuit has set that right go forward.

I’m interested to hear from Proximo and Claimsguy on this latest development. Without Dickie Scruggs, Jim Hood, Trent Lott or others for industry apologists to blame, these so called defenses that large insurers go into court with melt away faster than a December snow in New Orleans.


3 thoughts on “The Fifth Circuit Gets One Right: Dickerson v Lexington”

  1. IMO the 5th was a “voice in the wilderness” in its early decisions but it really found its way one this one and took the opportunity to address some of the major issues in a way that can’t be mis-understood/applied. It’s the first of these that I’ve read where you got a sense they had an internalized understanding of the issues.

    I tried to find their order in the “Foti – antitrust” case and couldn’t but will look for it again. The parts that were quoted sounded like it, too, was well thought out.

    Hopefully, we’re seeing the beginning of a trend.

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