Category: Anti Concurrent Clause

Jim Brown on Chinese Drywall, the Pollution Exclusion and Corban

Thursday, October 15, 2009
Baton Rouge, Louisiana

BLEAK LOUISIANA INSURANCE CLIMATE IN MONTHS TO COME!

There should be plenty of good news on the property insurance front, both in Louisiana and throughout the gulf south. Hurricane season is over, the third year in a row without the threat of a major storm. One would think this would be both good news and the beginning of price drops. But that’s not the case. There are bad financial storm clouds arising that bode ill for Louisiana policy holders in the coming year. Look for higher rates and less coverage. Here are some of the problem areas.

The new troubling insurance buzzword for homeowners? Chinese drywall. Thousands of Louisiana homes have been infested with defective drywall from China that was imported during the construction boom following Katrina to meet heavy demand. For reasons yet unknown, the drywall was contaminated with various sulfur compounds. This reaction causes quick metal corrosion allowing plumbing and appliances to fail. The foul odor that follows makes these homes unlivable and expensive to repair, and the defective sheetrock has to be torn out.

So you call you insurance company – right? Unfortunately, in most cases, insurance companies have been rejecting drywall claims, and even going so far as to not renew the homeowner’s policy. Property insurance companies, particularly in Louisiana, argue that drywall damage was not a “sudden event” like wind damage or flooding. Since 1984, insurance companies have been adding “pollution exclusion” to all their homeowner policies, stating that no coverage exists when a pollutant cases damage. Drywall problems, according to the insurance industry, cause damage over a period of time, and therefore the homeowner should have taken action for damage control.

This is not supposed to be the case in Louisiana. The Louisiana Insurance Department, back in the late 1990s, specifically defined the scope of such exclusion more narrowly than most states and allowed it to be applied “only to those injuries or damage caused by environmental pollution.” Simply put, nothing like drywall damage should be excluded, said the Insurance Commissioner at that time (obviously, a pretty bright guy). The Louisiana Supreme Court followed the Insurance department’s reasoning in the landmark case of Doerr v. Mobil Oil Corp. in 2000. Continue reading “Jim Brown on Chinese Drywall, the Pollution Exclusion and Corban”

The Price We Pay For “Pro-Business” Courts

As I’ve said in prior posts, I firmly believe Americans can no longer claim we’re “a government of laws not of men” as John Adams, our 2nd US President once pronounced. Adams’ words came to epitomize the venerable “rule of law” in America. In his era, the critical debate was “rule of law” vs. “rule of man.” The prospect that America might become “a government of men not of laws,” is exactly what Adams and our founders feared most, and warned us to stay away from. In their day, “rule of man” referred to the British King George III, who . . . well, just take a look for yourself:

In 1776, the year of our Declaration of Independence, Thomas Paine anonymously wrote a pamphlet titled Common Sense which stated: “in America, the law is king. For as in absolute governments the King is law, so in free countries the law ought to be king; and there ought to be no other.” Adams, a contemporary of Paine, expounded on Paine’s Common Sense, and made sure the Massachusetts Constitution of 1780 included the words “a government of laws not of men.”

In Adams’ and Paine’s day, the King was law, and he served no one except himself. Today, billionaire monopolies are the “King makers.” By purchasing our legislatures, individual judges and elected officials, they bastardize “the rule of law.” Their aim is make America a government of men, not law. This is what happens every day in Latin America, and why we call them “third world.” If we acquiesce, and accept their bastardization of America’s founding premise, we’re right back where we started in 1776. Put another way:

we cannot let this ↓ Continue reading “The Price We Pay For “Pro-Business” Courts”

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 Continue reading “Judge Senter applies Corban, issues trio of Orders in Bossier v State Farm”

Da Corban spin continues: AIA prefers denial while the National Underwriter carries III press release calling it news

Robert Hartwig isn’t the only prostitute (I mean shill) who will say or do anything (and I mean anything) for the right amount of money. Not to be left out and preferring denial over Hartwiggian threats the AIA issued the following press release: (Nowdy isn’t it about time we got some more hits out of Montana on my post about former Bush Groupie Marc Racicot)

The decision issued yesterday in the case of Corban v. USAA by the Mississippi Supreme Court confirms that the water damage exclusion and anti-concurrent causation (ACC) clause – two key issues in Hurricane Katrina litigation — are valid provisions of the insurance contract and will continue to be important to insurers in adjusting wind versus water claims, says the American Insurance Association (AIA).

“First, and most importantly, the Corban decision reaffirms the longstanding flood exclusion provision found in most homeowners’ insurance policies, that expressly excludes coverage for hurricane driven water (or storm surge),” said James Whittle, AIA Assistant General Counsel. “The water damage or flood exclusion has now withstood every post-Katrina court challenge, and remains a part of regulator-approved insurance contracts throughout the country.” .

“Second, the court upheld the use of the ACC clause that was at issue before the court,” said Whittle. “With this ruling the court has provided meaningful guidance to consumers and insurers. Nothing in this decision changes the important role that insurers play in recovery by adjusting claims according to their contracts with policyholders.”

Meantime the National Underwriter has emerged from their months long Corban slumber carrying a III / AIA press release billed as a news story. While I don’t necessarily buy into James’ harsh critique of Anita Lee’s report on Corban it is worth pointing out Anita Continue reading “Da Corban spin continues: AIA prefers denial while the National Underwriter carries III press release calling it news”

Corban v. USAA

CORBAN v. USAA – THE 1500 DAY GREEK TRAGEDY

Pardon the obvious patronage, but it’s fitting that Slabbed pay homage to the dedicated lawyers and astute circuit judge who were involved in Corban’s journey to the Mississippi Supreme Court. FOR THE PLAINTIFF: Judy Guice; Clyde Gunn; Richard Phillips; Christopher Van Cleave; Neil Harris; William Corban Gunn. THE CIRCUIT COURT OF HARRISON COUNTY: Honorable Lisa Dodson.

Yesterday, October 8, 2009 – exactly one thousand five hundred (1,500) days after Katrina – the Supreme Court unanimously ruled that the Harrison County Circuit Court erred in applying the Fifth Circuit’s interpretation of an ACC clause.  First, when I say “erred,” that doesn’t mean the Judge botched it. She didn’t. As a matter of fact this particular Judge, Lisa Dodson, did exactly what a judge is supposed to do in this situation – defer. Asked to rule on competing summary judgment motions, Judge Dodson was forced to chose between the devil – in this case 5th Circuit Judge Edith Jones – and the deep blue sea – our own Supreme Court. She did the right thing, though it meant walking with the devil a while. More on “Dodson’s dilemma” below.

First, let’s de-bone Corban. The decision says the ACC clause cannot be used to defeat a wind loss, unless the insurer, by a preponderance of the evidence, first proves that wind and water acted indivisibly, and “contemporaneously converged” in causing the loss. Second, the Court trashed the “in any sequence” language in the ACC, finding it “ambiguous.” So, post Corban, “Mississippi Insurance Law for Dummies” might read something like this: “in Mississippi, the ISO-type ACC clause does not apply to all-risk policy losses, and can’t be legitimately invoked, except in one rare instance: when the loss was caused by the indivisible forces of wind and water, and the insurer can prove it.” In a word, Corban says “you get the loss you bought.” But, as astute Bam Bam readers will see, there’s still a problem.

The heart and soul of Corban is on page 22 of the opinion: “The ACC clause applies only if and when covered and excluded perils contemporaneously converge, operating in conjunction, to cause damage resulting in loss to the insured property.” See the problem yet? Let me re-write the quoted part putting “wind” and “water” where they belong:

“The ACC clause applies only if and when [wind] and [water] perils contemporaneously converge, operating in conjunction, to cause damage resulting in loss to the insured property.” Continue reading “Corban v. USAA”

Reaction to Corban Ripple Across the Media

Anita Lee’s story on Corban is here with commentary from head III shill Robert Hartwig himself (picture found here). The bottom line per Judy Guice:

“To me, this was always much more than just a business issue. This was a personal issue to me. Getting the law straight was really one of the critical parts of my recovery and I’m relieved that has now happened.

“The overwhelming feeling I have right now is relief that our children and grandchildren, and everybody else who had to suffer like we’ve all suffered since Hurricane Katrina, will not be stuck with the harsh law, the incorrect law that was previously created and has now been corrected by our Mississippi Supreme Court.”

Chip Merlin has written a series of 3 posts on Corban which address all the fine points of the decision. This is from Part 2:

This ruling confirms State Farm’s Wind/Water Protocol is the wrong test under Mississippi law because it improperly shifted the burden upon the policyholder to prove that the wind caused the damage rather than the insurer having to prove that the damage was excluded. Corban undermines the Fifth Circuit reversal of Judge Senter in Broussard vs. State Farm and as I suggested in Broussard’s Bad Faith Decision Impaired by the Mississippi Supreme Court.

There is one important mistake the Court did make in its decision when it held: Continue reading “Reaction to Corban Ripple Across the Media”

The ACC Bee Is Still In My Bonnet

ACC, the anti-concurrent cause issue, is burning up my head again. With health care insurance all the rage, it don’t hurt to remind ourselves how Big Insurance grew to be cracked-out body slammers. Most people don’t know that way back in 1945 the McCarran-Ferguson Act exempted Big Insurance (“Big-I”) from federal anti-trust law so long as long as the states “regulated” insurance. What a farce. Big-I and ISO hand out cash Tootsee Rolls to puppet commissioners and presto, before you know it, we’ve got regional, full-blown monopolies. Take health coverage: Wellpoint controls 71% of the Maine market; Blue Cross controls 90% of the North Dakota market and 100% of the Alabama market. All that said, keep your fingers crossed, the House Judiciary Committee (Senator Leahy) introduced an amendment to the health bill which would strip Big-I’s anti-trust exemption.

George Dale
George Dale

But, let’s revisit the magnolia ACC a minute. In prior posts, I talked about how Nationwide (probably with ISO’s help) quietly slipped the ACC into Mississippi in the ’80’s. By “slipped,” I mean they submitted a new policy form to the Commissioner for approval. Natch, it was instantly accepted. Recall, Mr Commissioner was indicted in ’94 for taking bribes from Big-I, but never went to trial. Undaunted, a mere 5 years later the legislative PEER committee caught him approving rate requests for State Farm, Allstate, Nationwide et al without any actuarial review. Over 380 rate requests, 59% of all, weren’t even looked at by actuaries.

MID Peer Report

Lee Harrell

  Some of you may recall that Dale’s deputy commissioner was the one who incessantly chatted with sycophantic law clerks overseeing Katrina, and probably caused the so-called “MID mediation plan” to be crammed down the throats of Katrina homeowners. Using Dale to the fullest, State Farm employed this sham mediation procedure to defraud hundreds and perhaps thousands of insureds. Evidence was produced showing State Farm staged the mediations in advance and actively concealed material evidence from homeowners during the “mediation” process. Continue reading “The ACC Bee Is Still In My Bonnet”

Empty handed on hand down Thursday – Corban v USAA

Another great Bam Bam post and once again I am thinking about our supremely slow Supremes, Corban v USAA and counting by the calendar again – empty handed for the 15th Thursday following Oral Arguments.Corban continued2