And of course such a profile had to include extensive quotes from Rick Trahant who needs no introduction here at Slabbed and Soren Gisleson whom Nowdy has had the opportunity to chat with via email. Louisiana Insurance Commish Jim Donelon throws a wet blanket on the Ike theory but then again Rick isn’t on Mr. Donelon’s Christmas list in any event. Here is the profile:
After siding with insurance companies in early rulings after Hurricane Katrina, the 5th U.S. Circuit Court of Appeal has suddenly cranked out a stream of policyholder-friendly rulings in hurricane cases.
In recent weeks, the region’s federal appellate court has affirmed an award in favor of a homeowner, overturned a decision in favor of an insurer, said that homeowners can collect mental anguish damages when insurers don’t pay, and revived a whistle-blower lawsuit alleging that insurers ripped off the government in paying flood claims.
The apparent change of heart has left many giddy plaintiff attorneys wondering whether the Texas judges involved in the favorable decisions have been moved by the experience of Hurricane Ike slamming their home state.
“Now, going to work, they see all the damage a Category 1 windstorm did to downtown Houston,” Rick Trahant said. “I think, as people, they can’t help but to be affected by what they’ve seen in their own state in Texas.”
There’s no way, of course, to get into the minds of the 10 Texas judges on the three-judge panels reviewing the four cases. But the panels also shatter any notion that political tea leaves explain insurance rulings: Seven of the 12 judges in the four unanimous decisions were appointed by Republican presidents.
Trahant said that one of his cases underscores how closely tied proceedings were to Ike.
Arguments in his case, Grilletta v. Lexington Insurance Co., were originally scheduled to be heard in the 5th Circuit in New Orleans right after Labor Day. But because of Hurricane Gustav, arguments were rescheduled for mid-September in Houston, where they were promptly postponed by Hurricane Ike and moved back to New Orleans later in the fall.
After the proceedings were tossed back and forth by the back-to-back hurricanes of 2008, the appellate court found in favor of Trahant’s client, homeowners Xavier Grilletta Jr. and Randy Lauman, in late January in the loss of their Lake Pontchartrain home.
Trahant said he believes that after witnessing first-hand the damage that a hurricane can cause and watching people in their communities work through insurance claims, the Texas judges may have greater appreciation for the insurance battles Louisianians have been fighting.
When they read stories that the original adjuster concluded a property was destroyed by wind only to have the insurer hire an engineering firm to review the conclusion from afar and decide that the home was destroyed by flood, judges with more experience with hurricane claims may have a better sense of what could be going on.
Lawyer Soren Gisleson, head of the insurance section at the Louisiana Association for Justice, has a different interpretation. He said he believes that the difference between earlier 5th Circuit rulings, when the court ruled that levee-breach water should not be covered by homeowners policies and upheld rulings that Louisiana’s valued policy law didn’t pertain to hurricane claims, is that now the appeals court is looking mostly at full trial records.
Instead of dealing with abstract legal questions, Gisleson said, the court is reading the full story of the home or business owner’s experience. And three and a half years after the storm, the court has had plenty of time to learn about Louisiana law — and the court’s cumulative experience with hurricane claims shows.
But, he said, the Ike experience can’t hurt.
“You can’t help but be influenced somehow by natural disasters like that. The closer you are to it, the more it affects your day-to-day understanding of the issues,” said Gisleson, who handled the case involving a mental anguish damage award, the Dickerson case.
Mitchell Crusto, a professor at Loyola Law School who teaches the insurance law class, agrees with Gisleson that the appeals court’s growing experience with hurricane cases and a shift in the type of cases it is getting probably explains the rulings.
“I think that Louisiana’s insurance jurisprudence is more developed today than it was a year ago, so the courts have a little more guidance,” Crusto said. “I don’t think analysis of the sociology, unless there’s further proof of it, would be the one I would want to hang my hat on.”
Randy Maniloff, an insurance coverage defense lawyer in Philadelphia who has written extensively on Katrina issues, said the early cases before the 5th Circuit involved interpreting policy language for wide-reaching decisions, while the more recent round of opinions are fact-specific and with limited application — so they’re really apples and oranges.
“Only a bad fortune teller in the French Quarter would read the recent pro-policyholder decisions as some sort of Texas-influenced shift on the 5th Circuit,” Maniloff said.
Insurance Commissioner Jim Donelon also said he thought the notion of Ike-empathy from Texas was ridiculous. “I would give much more credit than that to the judges of the 5th Circuit,” he said.
Another explanation, of course, is that the trend is simply a consistent set of decisions on one company’s behavior, since three of the four cases dealt with Lexington, a unit of AIG. Lexington did not respond to phone and e-mail requests for comment.
Allan Kanner, president of the Louisiana Association for Justice, said the recent policyholder-friendly decisions from the 5th Circuit are affecting cases that are still pending in U.S. District Court in New Orleans.
In the Jan. 13 decision in the case of the Slidell apartment complex Pontchartrain Gardens Inc. v. State Farm General Insurance Co., for example, Chief Judge Sarah Vance quotes from the 5th Circuit’s ruling in Gisleson’s Dickerson case in saying that State Farm misapplied the burden of proof.
“It’s also having a trickle-down effect,” Kanner said. “This will probably accelerate the resolution of the remaining cases and lay a good foundation if there’s another storm in the future.”
Gisleson said he doesn’t expect to see another string of rulings like the current one to come out of the 5th Circuit. Although there are still many hurricane cases in federal court in New Orleans, most cases have been getting resolved through a settlement rather than going to trial.