While I’m waiting on mine with mint and lime, let’s pick up the transcript of the oral arguments in Corban v USAA and go in a different direction than we did in SLABBED Daily yesterday.
Justice Pierce brought up the subject of payment for flood damage with both parties.
JUSTICE PIERCE: Real quick, in your brief, you said that you want to use the flood damage receipt by the Corbans to meet your burden [of proof]. How do you propose to do that?
MR. COPELAND: Well, when we talked about this before, one point that did not come up – it came up, but not at the same time – it is, as we clearly accept, if the Corbans come in on the structure — keep this on the structure. If the Corbans come in and say, ‘We have suffered a direct physical loss, ‘ and it’s a request for admission, we would readily admit that. We know they did. And it’s a tragedy that it happened. They can sit back down.
So really we come in with the burden of proof with that established, as we accept the burden of proof. And where that is an issue, and where it comes up in the courtroom is when you get experts that want to say that there was no flood damage. And it simply does not benefit the pursuit of justice for a party, whether it be USAA or the Corbans, or anyone else, to make a claim and accept $350,000 in flood damage, and then put on a paid witness to say that that did not occur. That simply does not benefit the trying to find what’s true and right.
There has to be a name for what Mr. Copeland is describing other than “slimball”. Let’s see if Judy Guice comes up with it when she answers the same question.
JUSTICE PIERCE: Ms. Guice?
MS. GUICE: Yes, your Honor?
JUSTICE PIERCE: If you can touch on the issue on the flood insurance and how that would play out in the trial below, and I would like to hear your take on it.
MS. GUICE: Yes, your Honor. I appreciate the opportunity to do that.
What the insurance industry is trying to do is relieve itself of the burden of proof by the fact that flood insurance payments were made to the Corbans and others similarly situated.
That is an improper avenue for them to follow. The record in this case is clear of a couple of things that are important.
First, that the flood insurance was paid by USAA. They were the right your wrong carrier that made the decision that they could pay flood insurance to the Corbans. So, number one, they’re acting in their own interest in making that determination.
They determined they had enough evidence immediately after the storm to pay the flood insurance, even though they claimed they didn’t know what the cause was, and therefore couldn’t pay any wind damage.
But the other important and perhaps most important factor is that the National Flood Insurance Program determined early on that it would resolve all doubts concerning coverage in favor of the insured, exactly what we’re asking the Court to declare the law of Mississippi to be here.
And if it is of any probative value, that under 403 it should be excluded. It should be excluded because, number one, it’s unduly prejudicial. There is no direct link between the acceptance of flood proceeds under these circumstances and any fact in issue.
So if the doubts are resolved by the flood carriers, and properly so in favor of coverage, and if USAA is the company deciding to make the payments, then how in the world does the acceptance of flood proceeds under an insurance policy that the Corbans have paid for, for all these years, where they don’t have to sign a proof of loss, the check is given to them when they are homeless, when they are trying to determine how they can change an office into living space, where they are trying to determine how to make repairs to their home, and where USAA is saying, “We still have to investigate the wind loss,” your Honor, I would submit that it is of no prohibitive value.
Number two, it should be excluded under 403 because it would constitute an undue waste of time because then we would have to put in all this proof about how USAA did it based on their own self-interest at heart, how the government accounting office has issued reports saying that there was insufficient proof after Hurricane Katrina for payments to be made, making recommendations that there are conflicts of interest under circumstances such as where USAA has both the homeowners and the flood. All of that would have to come in —
JUSTICE DICKINSON: You’re not saying that — you’re not saying that if one of your witnesses at trial testifies, one of your experts or Dr. Corban testifies there was no flood damage to that home, that the Defendant doesn’t have a right to say, ‘Well, you accepted flood insurance benefits?’ You’re not saying that, are you?
MS. GUICE: No, your Honor, I’m not.
JUSTICE DICKINSON: Okay. Well, I understood — maybe I understood Mr. Copeland incorrectly, but I understood him to say they don’t plan to use that, unless it’s a proper predicate is laid, to me meaning that it’s used for impeachment or some appropriate purpose; that he’s not going to stand up and just say that.
MS. GUICE: Well, but he never told us what he thought a proper predicate would be. And we do know from the motion he filed and the pleadings that were filed in the case that he has advocated that it is a judicial admission that the insurance company could talk about it in opening statements. That’s in the record, your Honor.
JUSTICE DICKINSON: So you’re saying his position today is a new one?
MS. GUICE: Yes, sir, it is.
Mrs. Guice explained but gave this practice no name; so, I suppose, “slimball” it is.
Copeland’s argument reminds me of some similar arguments in a maritime “status” context. Even today, the legal rights of many maritime workers are dependent on their “status” at the time of injury, ie. were they seamen, or covered by some Federal or State compensation statute, the benefits of which are not available to seamen, who are entitled to sue their employer in Federal Court for damages and trial by jury.The argument was that the acceptance of compensation benefits paid by the employer or its compensation insurer at a time while the injured worker was virtually destitute precluded a later argument by the worker that he was a seaman, and therefore entitled to money damages from the employer and/or its insurer rather than mere compensation benefits. The Courts made short shrift of the argument that the injured employee was forever barred from contesting his “status” by the acceptance of compensation benefits. I will try to locate this case law, and inform you and SLABBED’s readers of the name of the doctrine or legal nugget involved. Bottom line: The acceptance of insurance proceeds paid by the insurer to the insured should not bind the insured to one theory of recovery forever-more.
Right after I made the comment, supra, I realized that the principle at issue is a form of “estoppel”, ie., you accept $350,000 for “flood damage”, and pocket it, so you’re estopped from advocating another cause of your loss. This is what I’m saying shouldn’t “fly”. I confess to being more than a bit “confused”, because if the insured has already been paid, what the heck does he (or she) care about the real “cause” of the loss? Who’s really fighting whom? Pardon me for being obtuse about insurance issues, which I didn’t get involved in, on purpose.
Hope you find the case law, Ashton, I’m certain a lot of people would be interested.
It will take Brian or Sop to to answer your question with more than my “educated guess” – re: “if the insured has already been paid, what the heck does he (or she) care about the real
Thank you for the very lucid explanation, nowdoucit. Got it! And a very happy 4th of July. BANG!
The maritime cases I was thinking of are: (1) Southwest Marine, Inc. v. Gizoni decided by the SCOTUS in 1991, and authorities cited therein, including particularly Tipton v. Socony Mobil Oil Co. 375 U.S. 34 (1963). These authorities MAY help counsel for the insureds in the litigation arising out of covered losses suffered by Mississippi policy holders.
Don’t focus just on what Copeland said in oral arguments. In writing, he was asking the Court to mandate jury instructions that would assign 100% of a loss to flooding if flooding contributed to it.
In many of these cases, the homeowners bought all the coverage that was offered to them and expect to collect from both policies. They are not likely to refuse the flood insurance check, but still expect to collect for the remainder of the loss from the homeowners policy.
The insurers knew that homeowners would not refuse the payment of NFIP policy limits, so they rushed out those checks and then used the acceptance of them as evidence against the wind claims.
The insurance company is the party with a contract obligating it to represent the interests of NFIP and federal taxpayers by ensuring that NFIP only pays for flood losses. When Write Your Own insurers placed their own interest ahead of taxpayers’ interests, they violated their fiduciary responsibility.
Good points as always, Brian. Too bad the southern district federal court bought that line – wonder just how many policyholders – other than McIntosh – have experienced the “slimball fraud”. I suppose all of those settled in mediation.
A few points —
1. While there was a cap to the NFIP program, private excess flood insurance was available. Anyone with a $1 million house should have purchased an extra $750K in flood insurance over their $250K structure cap. That’s just common sense. (And, to answer Trent Lott’s complaint that his State Farm agent didn’t have excess flood available, go find an agent that did.)
2. If I accept $250K in flood insurance money for the damage to my house, I need to admit that at least $250K worth of damage to my house was caused by flood. I should not be allowed to say “Well, it was all caused by wind” without giving the flood money back. And that is also just plain common sense.
Newt, if the total loss had been established/proven, I might agree with your contention that accepting $250K in flood insurance money creates “the need to admit that at least $250K worth of damage…was caused by flood”.
However, that’s not what happened after Katrina. People were paid the max on their flood without establishing any proof of loss for flood or wind.
There is testimony – and not always just from policyholders – in one case testimony from an adjuster – that the policyholder was being paid from flood now but when wind loss was determined, there might be change.
Think logically. Your fully insured home is a total loss but you have both flood insurance and private hurricane policy – both purchased from the same company.
The company – fully aware of your total coverage – cuts you a check from flood and tells you government is letting them do that.
You’ve only admitted your home is total loss- i.e., established the loss. It’s the insurer’s job to pay private coverage or prove excluded loss – and it simply is dishonest to try and use the flood check the insurer wrote as proof of loss when no proof of loss was established when the check was issued.
Newt, you guys are lucky that people did not have excess flood coverage because private excess flood insurers would have made you prove that the loss was caused by flooding.
We are still waiting four years after Katrina for ONE case anywhere on the Coast that the insurer can prove was 100 percent due to flooding.
If I evacuated and I come home to a slab, I don’t know how much was wind and how much was flood. The insurer has the obligation to do a legitimate investigation and perform legitimate adjustments. Paying flood limits without investigating and then using that against the homeowner is fraud.