Newly published Order and Reasons – …if Plaintiff is able to prove that State Farm acted in bad faith and that this led to mold damage, then Plaintiff may be able to recover for this damage.

The newly published Order and Reasons of Louisiana federal district Judge Eldon Fallon (Carpenter v State Farm) gives homeowners’ lawyers across the Country support for arguments to defeat a Motion for Summary Judgment on the mold and ALE provisions of a policy. Judge Fallon also reasoned State Farm can not declare a home habitable and cut off ALE when policyholders attempt to live in horrible conditions.

“…After the Plaintiffs evacuated during Hurricane Katrina, they returned home in September of 2005 to find that their house had been damaged by the storm. The house had not flooded, but the Plaintiffs reported other damage including roof damage and a carpet that was wet and moldy. From the time that they returned home in September until sometime in December, the Plaintiffs lived in their damaged home. In December, the Plaintiffs moved into a FEMA trailer on their property until April of 2006, when they moved to West Monroe, Louisiana. The plaintiffs still reside in West Monroe at this time…

Defendant has filed a Motion for Partial Summary Judgment as to Plaintiff’s Mold Claims. In their motion,State Farm asserts that the Carpenter’s policy unambiguously excluded coverage for mold damage regardless of the cause of the mold and therefore asks that the Court “enter an Order providing that Plaintiffs may not recover for mold damage in this case.” (Rec. Doc. 189, at 2.) The Plaintiffs have responded and argue that the policy does not exclude recovery for damages that would have been sustained even in the absence of mold, that State Farm has not met their burden of proving that any specific damages in this case fit into the exclusion, and that significant issuesof material fact therefore remain making summary judgment inappropriate. Furthermore, Plaintiffs argue that they can recover for mold damage to the extent that it resulted from State Farm’s alleged bad faith in
adjusting their claim.

Defendant has also filed a Motion for Partial Summary Judgment as to Certain Additional Living Expenses Claims. In this motion, State Farm argues that the policy only allows recovery of additional living expenses (“ALE”) when a policy holder’s home is rendered uninhabitable. Because the Carpenters actually lived in their home from September of 2005 until at least December of 2005, State Farm claims that the house could not have been uninhabitable as a matter of law. State Farm further argues that the policy allows for recovery of ALE only for the minimum time required to settle elsewhere. Therefore, State Farm asserts that the Carpenters cannot recover ALE for the time period after they had relocated to West Monroe as a matter of law. The Carpenters have responded and take the position that whether their house was uninhabitable is a question of fact. Additionally, they argue that they would not have relocated but for State Farm’s bad faith failure to timely adjust and pay their claim and that they should not be precluded from recovering for ALE that resulted from State Farm’s alleged bad faith…

As Plaintiff points out, the Defendant bears the burden of proving that an otherwise covered damage falls within an applicable exclusion. Dickerson v. Lexington Ins. Co., 556 F.3d 290, 295 (5th Cir.2009). Considering the exclusion at issue here, which precludes only that damage that would not have occurred in the absence of mold, there remain numerous issues of material fact regarding the cause of themold. Specifically, Defendant will have to prove that any damage they seek to exclude would not have occurred in the absence of mold.  Furthermore, if Plaintiff is able to prove that State Farm acted in bad faith and that this led to mold damage, then Plaintiff may be able to recover for this damage. Thus, it is apparent that many factual questions remain regarding the cause of Plaintiff’s damages and summary judgment is inappropriate…

In this case the Plaintiffs misread the ALE provision as resolutory when in fact, it is not. State Farm’s obligation to reimburse ALE does not terminate when an insured actually resettles, but instead terminates after, “the shortest time required … to settle elsewhere.”  This is not a conditional event. Furthermore, any bad faith by State Farm would not have decreased the amount of time necessary “to settle elsewhere.” Regardless of any alleged bad faith conduct by State Farm, the Carpenters were actually able to resettle in April of 2006…

…IT IS ORDERED that Defendant’s Motion for Partial Summary Judgment as to Plaintiff’s Mold Claims (Rec.Doc.189) IS DENIED. IT IS FURTHER ORDERED that Defendant’s Motion for Partial Summary Judgment as to Certain Additional Living Expenses Claims (Rec.Doc.190) IS GRANTED IN PART AND DENIED IN PART.”

Three cheers for Judge Fallon –  and,  in keeping with the holiday season, ashes and switches for State Farm as the policyholder in this case, Mr. Jewel Carpenter, is blind!

The environmental “clues” that enable the “orientation” necessary to “wayfinding” and provide maximum independence in living would alone provide the blind with motivation to attempt to live in what the sighted would find an uninhabitable home.  Since the blind develop those skills by relying on other senses to compensate for lack of vision, exposure to the smell of molding carpet would pose an additional threat to quality of life –  and, in my non-lawyer opinion, could extend “bad faith” to the level of an ADA violation.  In that light, State Farm’s position on the issues of this case, particularly the ALE and the mold exclusion are, IMO, untenable.  Unfortunately, Carpenter v State Farm is neither the first or only case reviewed on SLABBED evidencing a State Farm position ignoring of the implications of a policyholder’s disability and the Company’s associated responsibility under the ADA.