Federal District Court Judge offers tutorial – proof of loss and segregation of damages

Intended as a tutorial or not, Louisiana Federal District Court Judge Sarah Vance wrote one in her pick ’em up – put ’em down examination of the case law on proof of loss and segregation of damages.  Follow her through the process that leads to an insurer must also make a specific showing of what damage was caused by the excluded cause. (Order and Reasons Imperial Trading v Travelers )

The plaintiffs in this case are the owners and lessees of commercial properties that were damaged during Hurricane Katrina. At the time of the hurricane, the properties in question were insured by defendant Travelers Property Casualty Company of America. Plaintiffs submitted a claim to Travelers shortly after the hurricane, and Travelers advanced plaintiffs $1 million for the covered losses to one property on September 25, 2005.  Plaintiffs claim that Travelers failed to participate in the adjustment process in good faith after that point, reimbursing plaintiffs for portions of the covered loss in small increments over the following year but denying coverage for several claims falling under the coverage of the policy.

The plaintiff’s claim at issue in this order is for a loss of more than $8,000,000.  Both parties filed motions for partial summary judgment – plaintiffs’ as to burdens of proof and segregating damages; defendant’s as to plaintiffs’ claim for damages to contents.

The parties agree that such stock was covered by the insurance policy and that it was damaged. The policy notes that the insurer “will pay for direct physical loss or damage to Covered Property caused by or resulting from a Covered Cause of Loss.” “Covered Cause of Loss” is defined as “risks of direct physical loss” unless the loss falls into a particular exclusion.  “Stock” is included among the Covered Property section, and is defined elsewhere as “merchandise held in storage for sale, raw materials and inprocess or finished goods, including supplies used in their packing or shipping.”

(drumroll)

The Lesson: Who bears the burden of segregating covered from non-covered losses once and insurer shows that an exclusion applies to some loss? Continue reading “Federal District Court Judge offers tutorial – proof of loss and segregation of damages”

Putting Kodrin v State Farm in perspective. Slabbed unifies the 5th Circuit decisions

I’ll start this post by publicly thanking Chip Merlin and Rick Trahant for their insight along with David Rossmiller. Rossmiller?? Has Sop lost his mind???? No, it was yesterday’s spirited exchange that I had with the guy, whom we affectionately call Rossie internally here at Slabbed that provided just enough intellectual stimulation for me to gain a greater insight into these cases and indeed unify that which is really happening in downtown New Orleans at the 5th Circuit Court of appeals. We need to begin with Rossie’s last blog entry which happened to be on Kodrin:

Kodrin is the ultimate in single causation questions: that’s all the jury heard, a dichotomy between the Kodrins’ claim that wind alone destroyed their house, and State Farm’s claim that flood alone destroyed their house. This may sound like a strange set-up to you, until you look at the facts of the case: the whole neighborhood was hit by Katrina flooding, which washed the rest of the houses off their foundations and kind of pooled them in one location. These homes, although severely damaged, were not utterly torn down and demolished. The Kodrins’ home, among all of them, was the only one obliterated…………

Now, this gives me some hope that this panel gets it when it comes to an understanding of the proper analysis to differentiate between single and multiple force damage: first determine what the loss is. The example used, flooded carpets and wind-damaged roof, was a fairly common scenario in Katrina damage, but it really doesn’t present any analytical problems, only problems of proof. The real test of understanding is the realization that the carpet itself, or the roof itself, could be damaged by two single forces that caused separate damage, one covered and one uncovered, and that this does not make them concurrent forces.

Although the court left standing the jury verdict on property damage, it vacated the award of punitive damages. The court said, in light of the evidence, there could be an honest dispute about what caused the damage to the Kodrinhome. Again here, I don’t know what happened with the flood payment, whether that was returned or not, or the precise circumstances under which it was applied for, paid and accepted, but the very fact of a flood payment creates an idea in my mind that there could be an honest belief that flood caused the damage.

Here’s what the court said about bad faith, when it exists and when it doesn’t:

State Farm declared that it determined flooding was the more likely cause of the damage to the home because (1) the Kodrins’ neighborhood was inundated when a levee was overtopped during Hurricane Katrina, (2) the Kodrins’ home was just one house away from that levee, and (3) many other houses in the area were lifted off their foundations and destroyed by the floodwaters. The Kodrinsthemselves acknowledged that their claimed wind damage to their home was unusual in their neighborhood, advancing that a tornado must have caused the damage as their speculation why their home was the only one in the area destroyed by wind, not flooding. On these facts, we perceive no probative evidence that State Farm acted in bad faith. State Farm’s refusal to pay was with reason, even if the jury ultimately rejected that reason. The Kodrinshave failed to prove otherwise; they essentially ask this court to find bad faithany time an insurer denies coverage and a jury disagrees. This would unduly pressure insurers to pay out claims that they have reason to believe lie outside the scope of coverage, solely to avoid penalties later. Such a rule would pervert the presumption that insurers act in good faithunless the insured proves bad faith, and this is foreclosed by Louisiana law.

I’ve left out the parts of his post where I thought the legal analysis was shoddy leaving our readers to decide that for themselves from reading the comments there. Rossie, for his part will learn from this post why the jury in Kodrin received single peril jury instructions. Our readers will learn why Kodrin attracted Rossie’s attention back in 2007 while other cases like Dickerson have never graced the pages of his blog AND HOPEFULLY lawyers who read us will gain a greater understanding of what is involved in proving bad faith on part of an insurer, in this case State Farm using standard Katrina slab case fact patterns.

We begin back in December 2007 Continue reading “Putting Kodrin v State Farm in perspective. Slabbed unifies the 5th Circuit decisions”

Becky Mowbray Profiles Recent Policyholder Court Wins in the Times Picayune

And of course such a profile had to include extensive quotes from Rick Trahant who needs no introduction here at Slabbed and Soren Gisleson whom Nowdy has had the opportunity to chat with via email. Louisiana Insurance Commish Jim Donelon throws a wet blanket on the Ike theory but then again Rick isn’t on Mr. Donelon’s Christmas list in any event. Here is the profile:

After siding with insurance companies in early rulings after Hurricane Katrina, the 5th U.S. Circuit Court of Appeal has suddenly cranked out a stream of policyholder-friendly rulings in hurricane cases.

In recent weeks, the region’s federal appellate court has affirmed an award in favor of a homeowner, overturned a decision in favor of an insurer, said that homeowners can collect mental anguish damages when insurers don’t pay, and revived a whistle-blower lawsuit alleging that insurers ripped off the government in paying flood claims.

The apparent change of heart has left many giddy plaintiff attorneys wondering whether the Texas judges involved in the favorable decisions have been moved by the experience of Hurricane Ike slamming their home state.

“Now, going to work, they see all the damage a Category 1 windstorm did to downtown Houston,” Rick Trahant said. “I think, as people, they can’t help but to be affected by what they’ve seen in their own state in Texas.” Continue reading “Becky Mowbray Profiles Recent Policyholder Court Wins in the Times Picayune”

Allstate files whiney-titty-baby motion to modify judgment

Hanky, please, Grilletta has Allstate crying for relief  from the Court’s ruling in a Motion to Modify Judgment in French-Sutter v Allstate Indemnity

After a two-day bench trial, the Court orally issued its Federal Rule of Civil Procedure 52(a) findings of fact and conclusions of law and entered its Judgment on February 13, 2009. Based upon its findings and conclusions, the Court awarded the Plaintiffs the following amounts:

$123,000 under Coverage A of the Plaintiffs’ Allstate homeowners’ policy; $10,000 for a retaining wall under Coverage B; and $87,000 in penalties under the 2003 version of La. R.S. §22:658…In so holding, the Court concluded that Plaintiffs established that unpaid damage to their house and a retaining wall had occurred, entitling them to additional money under the policy. The Court further found that Allstate failed to timely pay the undisputed amount due of $70,462 based on the initial adjuster’s estimate. The Court also concluded that it was required to award a penalty of 25% on the Plaintiffs’ entire property claim,which totaled $338,000, rather than on the undisputed amount of $70,462 found to have been untimely paid to the Plaintiffs…

The Louisiana courts have been good to Allstate; but, not every judge is going to make Allstate as happy as Judge-didn’t-have-a-clue who made the big bad Foti anti-trust suit go bye-bye.  However, not pleasing Allstate does not indicate a judge is incompetent and that’s clearly the implication of the convoluted and contradictory reference to Dickerson. Continue reading “Allstate files whiney-titty-baby motion to modify judgment”

Hawaii Five-O: Consumers Protected in Hilo, not on Hilo Way

The good people over at Insurance Law Hawaii picked up coverage of Dickerson where we once again find Mississippi’s lack of a timely payment statute leaves us out in the cold.  Bottom line, if you are lucky enough to live in Hilo or Maui you’re half way protected. On the other hand if you live on Hilo Way or Maui Street you’re pretty much SOL:

The Fifth Circuit also affirmed an award of statutory penalties for arbitrarily failing to pay a claim within thirty days. After receiving the first adjuster’s report concluding that the wind caused the damage, Lexington took no action for over sixty days.

Hawaii’s Unfair Claim Settlement Practices Act lists as an unfair practice the failure to offer payment within thirty days of affirmation of liability if the amount of the claim has been determined and it is not in dispute, Haw. Rev. Stat. 431:13-103 (a)(11)(F), but there is no statutory penalty for such delay.

Congrats to Tred for making the elite list of insurance blogs at Alltop. Keep making like Joe Friday guys and the big time litigators down here such as Rick and Soren will keep you stocked with material.

sop

BREAKING! 5th Circuit issues Order, Substitute Opinion in Dickerson v Lexington (AIG)

Amici or not, No member of the panel nor judge in regular active service1 of the court having requested that the court be polled on Rehearing En Banc (FED. R. APP. P. and 5TH CIR. R. 35),the Petition for Rehearing En Banc is DENIED, according to the Order issued by the 5th Circuit in Dickerson v Lexington (AIG).

Treating the Petition for Rehearing En Banc as a Petition for Panel Rehearing, the Petition for Panel Rehearing is GRANTED, the opinion of the court filed December 22, 20082 is WITHDRAWN, and the revised panel opinion filed herewith is SUBSTITUTED…

When the 5th Circuit judges focus on law and not the science of hurricane damage, the difference in their Opinions is like night and day – and a new day dawned for Burden of Proof in the substitute opinion in Dickerson v Lexington (AIG). Continue reading “BREAKING! 5th Circuit issues Order, Substitute Opinion in Dickerson v Lexington (AIG)”