Judge Senter applies Corban, issues trio of Orders in Bossier v State Farm

Attention now turns to several dispositive motions filed by Plaintiff concerning [77] the issue of the anti-concurrent cause clause in the subject insurance policy; [79] the issue of windstorm; [82] the dwelling extension coverage; and [83] “accidental direct physical loss” suffered by Plaintiff.

At the time these motions were filed, some of the issues were the subjects of an appeal to the Mississippi Supreme Court, Corban v. United Services Automobile Assoc…; the Supreme Court issued an opinion on October 8, 2009, and rejected the principal conclusions reached by the United States Court of Appeals of the Fifth Circuit in Tuepker v. State Farm Fire & Casualty Co…and Leonard v. Nationwide Mutual Insurance Co… However, that does not mean that Plaintiff is entitled to the requested relief.

In addressing Bossier’s dispositive motions, one of the three Orders he issued in Bossier v State Farm last Friday, Judge Senter enters the conversation on the impact Corban will have on the remaining policyholder claims in litigation.

While the Mississippi Supreme Court did not agree with the Fifth Circuit’s interpretation of the anti-concurrent cause clause found in homeowner insurance policies, especially with respect to the “in any sequence” portion of the provision, the decision did not change the essence of this Court’s approach regarding the meaning and–for practical purposes–inapplicability of the anti-concurrent language.

The Mississippi Supreme Court expressly adopted this Court’s analysis in Dickinson v. Nationwide Mutual Fire Insurance Co…Now that the Mississippi Supreme Court has issued its decision, this Court sees no reason to delay trial, for the intention to follow Dickinson and the interpretation of the anti-concurrent cause language has been consistently clear and has merely been affirmed by Corban.

The Mississippi Supreme Court did not go as far as Plaintiff’s counsel (who represented the Corbans) urged, for it upheld the validity of the exclusion for flood damage and the allocation of the respective burdens of proof. The Fifth Circuit’s Erie-guess was wrong, but not to the extent argued by Plaintiff in his motions for partial summary judgment. Corban also tacitly approved the Fifth Circuit’s declarations in Broussard v. State Farm Fire and Casualty Co…that “State Farm’s ‘shifting back’ theory is not the rule in Mississippi . . ., the parties must meet their burdens of proof . . ., and the ultimate allocation of wind and water damages under the . . . [various] coverage[s] is a question of fact for the jury.”

Since Plaintiff filed his Motion for Partial Summary Judgment on the Dwelling Extension Coverage, Defendant unconditionally tendered policy limits plus interest as to the outlying structure, but continues to deny liability for the contents contained therein. This conduct was examined by the Court in the Order denying Defendant’s  Motion for Partial Summary Judgment.

In addition to seeking all benefits under the dwelling extension coverage,
Plaintiff requests a finding that he is already in position to go to the jury on extra-contractual and punitive damages. Defendant, as the non-moving party, is entitled to the same grant of reasonable inferences as was the Plaintiff with respect to Defendant’s own motion for partial summary judgment. Under the Court’s  order, these matters (both of the contractual and extra-contractual nature) are appropriate for trial and not summary disposition. Although the Court is denying Plaintiff’s Motion for Partial Summary Judgment on the Dwelling Extension Coverage, Defendant’s request to file a sur-reply will be granted for the purposes of a full record.

Plaintiff’s final Motion for Partial Summary Judgment regarding accidental direct  physical loss essentially asks for a declaratory judgment on his “claims of coverage for all Hurricane Katrina losses,” reserving to Defendant proof on any applicable exclusion. It is unnecessary for this declaration to be made at this time, particularly in light of Corban. The parties bear their respective burdens of proof, and consideration will be given to the fact that Defendant has acknowledged, through the payment of policy benefits, that certain coverages attach to portions of Plaintiff’s loss. The full extent of Plaintiff’s loss and the applicable coverage will be determined at trial according to the evidence. See generally Corban and Broussard.

Chip Merlin addressed the burden of proof the Bossiers face on the contents of the dwelling extension in the second of his three posts on the Corban decision:

There is one important mistake the Court did make in its decision when it held:

With respect to the “named perils” coverage of “Coverage C – Personal Property,” the Corbans are required to prove, by a preponderance of the evidence, that the “direct physical loss” to the property described in Coverage C was caused by wind.

There is no named peril of “wind.” Policies have always required the policyholder to prove damage by the named peril of “windstorm.” In insurance lore and law, there is a big distinction. The most significant for Katrina victims is that a hurricane is a “windstorm.” The policyholder can easily prove that.

Consequently, Bossier is in a better position than the denials in this Order indicate.  His position improves further in Senter’s Order denying State Farm’s motion to exclude the evidence and testimony of Bossier’s expert witnesses.

Judge Senter notes two of the four – Rocco Calaci and Ted Biddy – have qualified as experts in other cases.  Aside from that, Senter points out that State Farm’s objections to…[and concerns about their]… testimony… go to its weight and not to its admissibility.

Senter wrote that the two remaining experts – Daniel Schroeder (Schroeder) and Tim Shaw (Shaw) – have not, to my knowledge, heretofore been tendered as experts in their field of property appraisal.

The appraisal states it was prepared “for income tax purposes.” Presumably, this appraisal was intended to evaluate the casualty loss deduction for Bossier’s income tax returns.  Plaintiff asserts, and State Farm apparently concedes, that Schroeder and Shaw were not specially retained as experts to testify in this action. This being the case, the disclosure requirements for retained experts (set out in Rule 26(a)(2)(B) F.R.Civ.P.) do not apply to these two experts. The appraisers’ report is quite detailed, and and I believe a fair reading of the report is sufficient to disclose the opinions that these individuals have formed concerning the value of the insured property…

State Farm has not shown that the appraisers are not qualified to make an assessment of the value of this property, nor has State Farm shown that these appraisers’ testimony is unreliable or otherwise inadmissible under the standards of  Rule 702 of the Federal Rules of Evidence or under the Daubert analysis.

The third and final Order in the trio is Judge Senter’s decision on State Farm’s nine motions in limine.

There are no surprising decisions here; but, there are several interesting discussions, including reference to Corban.

Judge Senter granted State Farm’s motion for a phased trial and wrote Defendant’s motion is fairly consistent with the above discussion (of similar Court decisions):

However…State Farm…continues to urge, contrary to this Court’s many previous rulings, that the manner in which the claim was handled is not appropriate for the first phase. As the Court has observed on numerous occasions (including Broussard, where similar rulings were made), it is difficult to envision even a standard breach of an insurance contract lawsuit without consideration of the policy provisions, the investigation of the loss, and the overall manner in which the claim was handled, all leading to a decision on coverage and payment of benefits under the policy arising from the loss. The information in Defendant’s possession at the time of its claims decision, as well as the tools it used in reaching that decision, are relevant as to whether Plaintiff is entitled to benefits under the insurance policy, and this would be the case even if punitive or extra-contractual damages were not sought.

…the wind/water protocol adopted by Defendant is admissible, as it is one of the rules and procedures Defendant followed in making a decision on the underlying contract claim. Plaintiff will not be permitted to offer opinion testimony on interpretation of his insurance policy, as will be discussed below.

This Court will make the ultimate call on legal issues. Plaintiff may not argue in the first phase that any reliance on the protocol (or any other part of its investigation leading to a decision on the claim) was reckless or constituted “bad faith”; Defendant may not prevent Plaintiff from introducing evidence in the first phase of the trial concerning the handling of the claim and the basis of the decision to pay/deny benefits. Plaintiff may also offer proof of damages he claims are owed for coverage afforded under the insurance policy and which have not been paid…

The Court has ruled consistently that Mississippi Department of Insurance bulletins and correspondence are not admissible, unless Defendant responded to them in one manner and acted in another, or if Defendant used or relied on those bulletins for other purposes. Whether this comes into play in the determination of compensatory/contractual damages with respect to coverage and the payment of policy benefits, or in a subsequent phase on extracontractual/punitive damages, depends on the way it may have been used. The same exception holds true if Defendant made a statement in the nature of an evidentiary admission in any of these documents. Otherwise, these documents are not relevant to any issue in dispute and will be inadmissible at trial. Except as conditioned above, the Court will grant Defendant’s motion.

Plaintiff will not be allowed to challenge the validity of the water exclusion, and this Court will be guided by the Mississippi Supreme Court’s decision in Corban v. United Services Automobile Association…with respect to other relevant provisions in the subject insurance policy. The extent of the policy’s coverage has been established by Corban (adopting this Court’s rulings in Dickinson v. Nationwide Mutual Fire Insurance Co…and evidence dealing with waiver or estoppel of its provisions to expand coverage will not be allowed. Defendant’s motion will be granted.

Defendant seeks to exclude evidence regarding properties other than Plaintiff’s property. Plaintiff may intend to offer evidence concerning other properties in close proximity to his where wind damage was allegedly sustained, but not with respect to claims practices or decisions by other insurers. This Court has not allowed the introduction of evidence of claims adjusted by different insurance companies.

On the other hand, Defendant’s own adjusting practices, policies, and procedures are fair game for cross examination. While the wholesale introduction of evidence of this type will not be allowed, Plaintiff will not be prohibited from developing fact-specific proof of Defendant’s own claims adjusting in any case where the property(ies) are in reasonably close proximity to Plaintiff and was/were exposed to similar storm conditions. Along this line, Plaintiff, with a proper predicate, may also be allowed to develop evidence of damage to other properties in his surrounding neighborhood, but at some point this may cross the line into confusion or misleading the jury. Thus, Defendant’s motion will be granted in part and denied in part, without prejudice…

Finally, Defendant’s [153] motion seeks exclusion of evidence of or reference to other properties purchased by Plaintiff following the loss to the insured premises, 1987 Bayside in Biloxi. This motion is premised on the loss settlement provisions relating to payment for replacement cost…The Court agrees that these provisions are clear and unambiguous, and do not apply to replacement structures not located on the insured premises. Neither may Plaintiff offer evidence surrounding the adjustment of the loss to his rental property, as it is not the subject matter of this cause of action.

In the interest of fully reporting this Order, Judge Senter’s decision on each motion follows:

Defendant’s Motion for a Phased Trial and to Preclude any and all Testimony, Evidence, and Argument Regarding Negligence, Other Tort Claims, and Claims for Extra- Contractual and Punitive Damages Prior to a Finding of Coverage Under the Insurance Policy is GRANTED IN PART and DENIED IN PART, subject to the above comments ;

Defendant’s  Motion to Exclude any and all Testimony, Evidence, and Argument Relating to the Market Conduct Report is GRANTED;

Defendant’s Motion to Exclude Evidence, Testimony, or Argument Relating to Mississippi Department of Insurance Bulletins and Related Correspondence is GRANTED, subject to the above comments;

Defendant’s Motion to Preclude Plaintiff from Introducing Testimony or Evidence that Waiver or Estoppel Create or Modify Coverage is GRANTED;

Defendant’s Motion to Exclude any and all Testimony, Evidence, and Argument
Regarding any Grand Jury or Government Investigation of the Insurance Industry’s Response to Hurricane Katrina is GRANTED;

Defendant’s Motion to Exclude Evidence Regarding Properties Other than Plaintiff’s is GRANTED IN PART and DENIED IN PART, subject to the above comments;

Defendant’s  Motion to Exclude Testimony, Evidence, and Argument Relating to
Interpretation of Insurance Policy Provisions or Principles of Mississippi Law and to Exclude the  Wind/Water Claim Handling Protocol is GRANTED IN PART (as to interpretation of the
policy and law) and DENIED IN PART (as to the wind/water protocol);

Defendant’s Motion to Exclude Evidence, Testimony, or Argument Concerning Evidence of Dissimilar Out-of-State Conduct is GRANTED; and

Defendant’s Motion to Exclude Evidence of or Reference to Plaintiff’s Other Properties is GRANTED.

As expected, Judge Senter makes the point that the sole focus of the trial of this cause of action is Plaintiff’s and Defendant’s contractual relationship, and any liability arising therefrom.