Pass the popcorn (and the Rebel Yell)


The plaintiff’s property was located on the Jordan River in Bay St. Louis, Mississippi which endured the pounding winds of hurricane Katrina’s northeast side for hours before the eye wall crossed it and then endured many more hours of wind after the eye passed. Eventually, storm covered the property, but not before the property endured the maximum sustained winds well as one of the longest periods of sustained hurricane force winds in recorded history. During this onslaught, their entire property was destroyed on August 29, 2005, and the plaintiff’s lost all of their personal possessions located upon the premises as well. [See photo as Exhibit A].

Plaintiff’s reported their loss to State Farm, through its national call center while they were still evacuated in Northwest Louisiana. State Farm eventually assigned adjuster, Heather Keyt, an inexperienced adjuster to adjust the plaintiff’s claims. Ms. Keyt quickly recommended that the claim be denied without supporting evidence except for a alleged report by the plaintiff on the cause of the loss being storm surge

….when asked to explain how she came to determine that the house was a total loss due to flood, Ms. Keyt’s consistent and yet unreliable “fact” was a description made in the initial claim recorded by State Farm at its national call center received immediately following Hurricane Katrina. This section of the claim file that maintained the initial information is referred to as the “Facts” section. [Exhibit F].

Mark Flores, one of the insureds and a joint owner of the home, made the initial reporting of the claim. Mark Flores was evacuated to Natchitoches, Louisiana, approximately 40 miles from the Texas border, at the time he made the call to make a claim, and could not have known the cause of the loss of his home. [Exhibit G; Mark Flores depo., pp. 13-14].

Q. And in this particular case, there was an entry or some information you had from the claim file that the actual insured said property was taken down by a twenty-seven foot storm surge; correct?
A. Correct.
Q. Did you ever ask the insured hey how did you know it was a twenty seven feet of storm surge?
A. Yes. And they said it’s because, you know, the water – – you it’s below water level. They said it was just- – it was taken out by water. They said that, you know, they thought that the water did it.
Q. And how did they come to the twenty-seven foot level?
A. I mean that, I don’t know.
Q. And that’s my question. Did you ask them that?
A. That, no.
Q. Did you ask them had they been back to the property prior to your inspection?
A. Yes.
Q. And what did they tell you?
A. They told me- – before the inspection?
Q. Correct.
A. Yes, they said that they had been back there.
Q. Ok. The entry before that factual section says, probable cause; flood. Who enters that?
A. The people when they first call in, I’m assuming.

A cursory review of the State Farm records would lead one to believe this to be a simple evaluation. The entire house is destroyed, there is no evidence at all to realistically distinguish whether this was a wind or flood event that destroyed the home, but the homeowner has admitted that a 27-foot storm surge took his house down. The reality is that the “27 foot storm surge took it down” statement exists only as a fiction, impossible to have been known by the insured, yet completely relied upon by State Farm as the basis of the denial of their homeowners’ claim.


The question that is raised from State Farm’s creation of an insured’s statement on causation is whether this was an isolated practice. In this case the call center representative entered specific information on the conditions of the property, purportedly from the insured, that the insured would not and could not have known. In fact, Mark Flores, the insured that made the call has declared that he would not have known what took down the house.

In the case of Margiotta v. State Farm, USDC 06-4272, Section S, (E.D.La. 2008), another State Farm slab case involving the call center, the exact creation of false data was exposed. The inquiry on this exact issue was explored in a deposition of Randolph Jackson a State Farm call center adjuster.


Q. And we go down to the bottom of that boxed section. It says, 19 feet, as per insured.
A. That’s correct.
Q. Is that correct? This would have been specifically obtained by Ms.Margiotta?
A. That is correct.
Q. No doubt about that?
A. No doubt about it.
Q. Okay. Do you know or do you have nay recollection of how she determined that level to be?
A. I have no clue, sir. No recollection.
Q. And it says, the section says, did water – water entered the living area,circled yes, and it says, 19 feet, as per insured. Is that correct?
A. That is correct.

The call center adjuster was again questioned on how he obtained the information on the insured’s home,
Q. Okay. So there’s no doubt that she told you that the house was nine feet off the ground, and that there was ten feet of water in the house?
A. Well, I evidently, I wouldn’t have entered that particular information if it wasn’t relayed to me. [Exhibit H; Jackson Depo. p. 72;].


Q. It shows, exterior waterline, yes, and it shows, ten feet zero inches. The same thing for interior water line, yes, nine feet zero inches. Do you know where that came from?
A. That was information provided by Ms. Margiotta, from the insured.
Q. Okay. She told you specifically – – or let me ask you this way. You asked her specifically about an exterior water line and an interior water line?
A. I asked her, standard practice, my standard practice was to ask how much water was in the home, and her indication to me was, the house was nine feet off the ground, according to the file. There is I believe, there is another place in the file that actually states that the house was nine feet off the ground, and there was ten feet of water in the house.
Q. Okay. And that specifically would have come from Ms. Margiotta?
A. That’s correct.
Q. No other location?
A. Not that I’m aware of.
Q. Okay. Were you aware that there was no house there to measure a water line?
A. No, sir, I was not.
Q. Did Ms. Margiotta tell you that her house didn’t exist there any more?
A. No sir, she did not.

You and Pelican got enough popcorn, Whitmergate?

The case of Taranto v. State Farm Fire and Casualty Insurance Co., 1:08-CV-1356-LG-RHW, a case pending in this District, is presently considering this same issue in a pending motion. In Taranto an identical denial of coverage was made based on the insured’s post storm call to the State Farm call center. In the deposition testimony of Rachel Savoy, the State Farm adjuster who handled both the flood and the wind claims for the plaintiff, the same discussion was had on the denial of the claim based on the “facts” section of the claim file, and the entry that the insured expressed that he thought that “storm surge completely demolished the home.”


Q. And if we look back on your claims file, and all of the information in the claims file itself, photos, etc. Was there any indication that this property was damaged as a result of any type of hurricane winds from Katrina?
A. Is there any doubt?
Q. No, any information that would lead you to conclude that this property was damaged by wind at all or was this a completely exclusive flood loss of this property?
A. I believe it was a completely exclusive flood loss. This letter was basically sent to people- – because I did send some of these letter- – saying, we’re not denying that there was wind damage to the property we’re just saying that the flood was dominant. And so my understanding was this letter was saying we weren’t excluding wind. We just didn’t have any documentation to prove that there was wind, but we had substantial documentation to prove that there was flooding.
Q. And the substantial documentation is what?
A. Twenty six foot of tidal surge is pretty substantial to me.

Once again, the supposed facts as submitted by an insured immediately after the storm, and one who could not have had the personal knowledge of the cause of the loss of his home, are recorded by State Farm, and used to deny his claim. In the Flores case, State Farm’s adjuster Heather Keyt specifically relied on a “27 foot storm surge” in denying the claim. This “State Farm fact” is exposed as a “bare assertion fallacy” or the Latin phrase – Ipse Dixit; State Farm says it’s what the insured said, and without question it therefore shall be true. Although Keyt repeated the “27 foot storm surge” as her factual basis, she failed to inquire from the insureds how they came to conclude the “27 foot storm surge” took down their house. What is entered as the most critical fact, if not the only fact, in this case in State Farm’s determination of causation is just accepted as a certainty. A homeowner with actual knowledge of a 27-foot storm surge cause is just as unlikely as an insured who would know that a tornado destroyed his home.

In comparison to what State Farm suggests, a dispute between wind and water, an interesting portion of the State Farm training video includes a depiction of a slabbed property identical to that of the Flores property with only piling remaining. In comparing the different types of property destruction, the instructor ends the video while showing a slabbed property and states, “some we’ll never be certain.” [Exhibit E;].

Even with a tremendous tidal surge, State Farm possessed knowledge of similar properties where the cause was unknown. The unresolved determination that existed at the start of the Flores claim still exists today, but we may never know the cause.


The comparable cases above are evidence of the routine practice of State Farm in recording and utilizing data to suit its own financial benefit. Rule 406 of the Federal Rules focuses on Habit and Routine Practice, and reads:

Evidence of the habit of a person or of the routine practice of an organization, whether corroborated or not and regardless of the presence of eyewitnesses, is relevant to prove that the conduct of the person or organization on a particular occasion was in conformity with the habit or routine practice.

In the case of S.E.C. v. Lyon, 605 F.Supp.2d 531(S.D.N.Y. 2009), the court was faced with a similar issue on admitting deposition testimony regarding an investment organization’s routine practice in the communication with its investors. “Rule 406 provides that ‘evidence of … the routine practice of an organization, whether corroborated or not … is relevant to prove that the conduct of the … organization on a particular occasion was in conformity with the habit or routine practice.’ Fed.R.Evid. 406. The SEC’s proffered testimony falls squarely within that Rule’s ambit. It is relevant, and therefore, presumptively admissible.” Id., at 543.

Permitting three witnesses to testify on the “process” or “procedure” or a “script to read” in handling investors communications is on point with the present case, is consistent with the literal reading of Rule 406, and supports the use of the deposition testimony above in similar State Farm cases. See also Spartan Grain & Mill Co. v. Ayers, 517 F.2d 214 (5th Cir. 1975).The issue of the processes and practices of the call center information gathering is not a surprise to State Farm. State Farm anticipates the issue of the propriety of the call center processes as it has recently added Christina Richards a call center representative as a witness, who purportedly took down the information from the insured in the “facts” section of the claim file. [Exhibit L]. Anticipating the question of fact on the impropriety of the information gathering, State Farm apparently will have Ms. Richards as a representative who can dispute or explain the information gathered by State Farm in the immediate aftermath of Katrina. Whatever her testimony includes, her knowledge and involvement of the gathering of hurricane data will absolutely eliminate any prejudice to State Farm, or confusion to the jury on this issue. See Fed.R.Evid. 403.

…Perhaps State Farm had an arguable basis to conclude that some of the damage to the plaintiff’s property was caused by storm surge. What they didn’t have was an arguable basis to conclude was that ALL of the damage to plaintiff’s property was caused by storm surge. That is the decision they made, and it was made on information that simply could not have existed. Given the obligation of good faith and fair dealing, unverifiable information on the cause of the damage of a home or conditions of the property following the storm should not be the basis of the denial of a homeowners’ claim. Using information that is known to be unconfirmed, and likely erroneous, whether provided by the insured or anyone can only be considered anecdotal evidence and certainly not the type of reliable information to be used in determining cause of a loss, especially where there is no evidence remaining of the property.

State Farm’s unjustifiable claims handling and denial gave them a tremendous economic advantage over their customer. That decision made it unlikely that the plaintiffs could rebuild their home. That decision was, plaintiffs’ suggest, an overly aggressive business/litigation decision and not a fair and reasonable adjustment of the claim. Based on what is shown to be an intentional manipulation of the claims data and denial of this claim, plaintiffs assert that they are entitled to a jury determination of whether State Farm abandoned its obligations as an insurer of good faith and fair dealing.

When we return from intermission, SLABBED will welcome Lorrie Beno, the call center adjuster in Weatherly v State Farm. Hey, Pelican, how about  you guys passing  the Rebel Yell?

6 thoughts on “Pass the popcorn (and the Rebel Yell)”

  1. Trust me Nowdy, this is not the Rebel Yell talking. deBrief and I feel that you should receive “The Scamy” award for best editor in the special category, SCREW THE PEOPLE, for ” The Shameless Katrina Insurance Saga “. I have connections on the west coast, so you should have your people contact my people, we’ll do lunch, and please do not include Theriot, I’m not talking to him at the moment.

    After watching these “deer in the headlight” depositions I am reminded of why I can’t and do not practice law…a legal system that will allow this type of BS to be introduced as evidence is proof positive of the spiraling moral decay that we are victimized by in this overly litigious society we live in (the US has 70% of the world’s lawyers, 90% of the lawsuits filed, with 40,000 suits filed a day).

    Wait hold on a minute…Pelican another Rebel Yell s’il vous plait… Popcorn ?… I can’t eat any more if we don’t have any more budda. To continue…

    Legal parlance has devolved into an almost non-sensical and illogical semiotic relationship to common experience. We know that when we say the word tornado, our thoughts are of a horrific WIND tunnel that causes damage as a result of that WIND. Likewise, a tsunami confers a semiotic transfer of a abnormal WATER surge causing damage. So I ask myself why do we have a WIND and WATER distinction as to coverage of damage, when the word HURRICANE is understood by all to be both WIND and WATER ! And that’s my argument, the legalese parsing of words is nonsense as it relates to hurricane damage; and as a result, spawned too many un-necessary lawsuits by too many un-needed lawyers.

    Pelican suggests that when you go to LA, pitch documentary…that could prove fertile ground for additional “Scamy” awards for Producer, Director etc.

    We’re gone back for re-runs…I’m telling ya, this is some good stuff…

  2. The problem is that NOBODY CARES! This case could present problems for the plaintiffs unless the jury “gets it.”

    In every State Farm case I have handled the probable cause of loss was always “flood” even in a case where my client rode out the storm in his home and called State Farm at 6:00 in the morning to telll them the roof of his home was damaged and water was pouring in. State Farm’s Activity Log confirmed it.

    Once again, you are not assured of jurors who fully understand or want to understand how all-risks homeowner’s insurer policies work.

  3. I’m not a lawyer NRB but I think juries would get it better if the concepts behind an All risk policy were explained to them instead of harping on flood Coverage.

    The second a jurors mind is polluted by flooding instead of the covered perils is the exact time a plaintiff loses.

    Or to put it another way, to paraphrase an experienced litigator in Mississippi who explained how such bad verdicts happen: Something was not addressed that was important to the jury. Jury verdicts are almost universally reached from a big picture standpoint.

    I think a South Mississippi jury is capable of understanding that a company did not properly investigate a claim before denial. Once you get into causation without that foundation is when Plaintiffs lose the juries. All IMHO.


  4. You are correct. The jury must be reminded that the only important thing is what occurred prior to denial, i.e. what did the ins. co. know or more importantly, not know, when the decision to deny was made.

    I just worry the jury says “hell there was a ton of storm surge, they got it right anyway.”

    Also, she is hot.

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