Perhaps Lynda can explain why this is the policyholder’s fault?

From the oral arguments in Corban, of which Lynda is obviously not familar. In Nationwide’s world it wasn’t the covered peril that controls, rather the mythical uncovered peril that might have destroyed the property had that pesky covered peril not occured.

JUSTICE PIERCE: So you’re sequencing, if 95 percent of the home was destroyed, and then we have the event of the storm surge, then you would not pay a dime?

MR. LANDAU: Your Honor, if we prove that the storm surge was sufficient to cause – we have that burden, again, and that is absolutely crystal clear.

If we can prove that the storm surge was sufficient to cause all of this, it is no answer then to say, ‘Yeah, but I’m going to show it — I’m going to have somebody come in and say, “Look, guess what, the window was broken before the storm surge came and then wiped away the whole house.

But you don’t get into those kind Continue reading “Perhaps Lynda can explain why this is the policyholder’s fault?”

Henry and June plus Lewis and Scot: An Appraisal Story and Kuehn Update Prequel

I’ve kept fairly quiet since late April on Kuehn v State Farm, a case with a little something for everyone. We have the appraisal clause and State Farm ignoring it. We have a typical State Farm hired gun lawyer in Scot Spragins of Oxford Mississippi and the spectacle of Scot beclowing himself before an audience of political leaders, fellow lawyers and academics across the country as we profile his unethical behavior and abuses of the court system.

The Farm doesn’t break in litigation nor follow their contractual obligations easily and though I’ve been relatively absent here on the blog I’ve been loading up for bear on the concept of appraisal and how State Farm’s treatment of their own contract language in this case illustrates their bad behavior better than most. But before I post a comprehensive update I’d like to point out that just like Rossie’s New Appleman piece on Anti Concurrent Causation is the legal standard on the ACCs meaning and application, the book, The Law and Procedure of Insurance Appraisal by Jonathan J Wilkofsky Continue reading “Henry and June plus Lewis and Scot: An Appraisal Story and Kuehn Update Prequel”

Dedicated to ALL our loyal readers from Yahoo Allstate

With many thanks to Mr CLS and Forrest who continually links our posts. In this episode of “The Slab Turns” Allstate lawyers from the downtown firm of Barrasso, Usdin, Kupperman, Freeman & Sarver wax nonsensical before Judge Barbier.

Judge forget about Grilletta dat dingbat Edith over at the Circuit got it all wrong. Pay attention to Louisiana Bag instead…

Unfortunately for the Barrasso folks Judge Barbier is familiar with Grilletta and Allstate’s questionable claims handling tactics. I submit there are very good reasons consumers maintain such a dim view of the bad hands people. Just ask Ms French who was shafted for the better part of 4 years by the people in Northbrook.

Allstate contends that the Court should not follow Fifth Circuit precedent regarding the amount of penalties to be awarded and should simply ignore the Fifth Circuit’s recent Grilletta case. This Court cannot simply disregard a decision of the Fifth Circuit that is directly on point. Allstate urges the Continue reading “Dedicated to ALL our loyal readers from Yahoo Allstate”

And if you thought insurance companies only shafted people in the flood zone….

Think again Buttercup. Pearl River Community College. located around 40 miles away from the coast in Poplarville is still figthting their private insurer Zurich to cover Katrina losses under their wind policy. Here is a hint for Dr Lewis, you’re wasting your time with endless arbitrations. If the institutions policy has an appraisal provision use it.

sop

A Kuehn Prequel Courtesy of Anita Lee at the Sun Herald

To give our readers a look back at Kuehn and how State Farm made up the rules as they went along in how they adjusted claims after Katrina lets visit with Anita Lee and a story she wrote back in May of 2006 on the Kuehns battle to get State Farm to honor their own policy provisions. An interesting sideline is the fact the Farm used George Dale and his screwed up mediation program as the reason to deny a valid policy provision. The article still exists on the internet courtesy of CorpWatch:

State Farm Fire and Casualty Co. refuses to engage in the appraisal process to resolve Hurricane Katrina claims, even though its own policy mandates appraisal on demand when the amount of an insured loss is in dispute.

Instead, records show, the company is urging policyholders to settle disputes through a mediation program sponsored by the Mississippi Department of Insurance and funded by insurers.

Two attorneys, one who was personally denied appraisal and another whose clients have been turned down, think they know why.

“State Farm is just plundering and victimizing its policyholders in the mediation process,” said Ocean Springs attorney Earl Denham. “That’s why they’re doing this. If you get in the appraisal process, they’re not going to be able to do that because somebody else makes the decision.”

Denham represents Henry and June Kuehn of Ocean Springs, who asked State Farm about appraisal after the company offered them only $10,765.48, minus depreciation and deductible, to cover the wind damage to their waterfront home.

A woman who identified herself as Tina, in a State Farm catastrophe office, told Kuehn in a conversation he taped April 17: “That’s what our management is saying. We’re not offering appraisal at all because mediation overrides it.” Continue reading “A Kuehn Prequel Courtesy of Anita Lee at the Sun Herald”

A Kuehn Appraisal Postscript: Hired Guns and Childrens Imagination Station v Prime Insurance Syndicate

Our posts on Kuehn v State Farm have created a good bit of buzz in certain insurance and legal circles as interested parties have flooded us with information on the appraisal clause, insurance cases involving appraisal and of course its misapplication in Dwyer which I profiled earlier today. Chip Merlin picked up our Kuehn coverage on his blog writing a couple of posts that copiously linked us. We’re grateful to be listed on Chip’s blogroll.

Unlike Chip I’ve never worked with Scot Spragins, the partner at Hickman, Goza & Spragins representing State Farm in Kuehn so I do not have that personal experience to add to my opinion of him. Like everyone else who hasn’t worked with Mr Spragins I only have the evidence submitted into the record of Kuehn to judge his professionalism by which I’ve concluded is very lacking. Simply put Mr Spragins and his firm are steppin’ out from literally hundreds of years of case law and insurance lore on both the appraisal clause and its application and he is smart enough to know it.

In my career as a CPA I’ve seen more than a few people refused legal services by ethical lawyers who recognized their prospective client’s legal position was contrary to established law. That is as it should be IMHO, practicing lawyers are the gatekeepers to our judicial system in respects and it keeps crap from clogging the court system. In looking at the Katrina insurance related litigation it has become clear there are certain lawyers, both plaintiff and insurance defense alike that will pump a dog legal position if the money is right. It is there that I still think Scot Spragins and his law firm resides.

Beyond the emails in the Kuehn evidentiary record we found there is a good bit of case law in this area. One such recent case was heard by Judge Louis Guirola little more than a year ago in the Children’s Imagination Station v Prime Insurance Syndicate that addressed these issues spot on. Like State Farm in Kuehn, Prime Synidcate was unhappy with the results of appraisal.  Unlike Kuehn and its blockbuster exhibition of bad faith by Team Spragins, Prime’s lawyers did not try to interfer with the process itself while the appraisal was ongoing. Prime simply tried to negate the results which was quickly bounced out of court house. I noted one final commonality with Kuehn in that appraiser Lewis O’Leary was involved, this time as umpire. Prime fought Children’s Imagination Station tooth and nail from ever getting the appraisal pursuant to the policy provisions, probably because they knew they lowballed the damage.  Here are some snippets from the granted motion for partial summary judgment against Prime: Continue reading “A Kuehn Appraisal Postscript: Hired Guns and Childrens Imagination Station v Prime Insurance Syndicate”

A bit more on the Appraisal Clause NFIP style as Edith Jones strikes again: Dwyer v Fidelity National Part 1

We’ve seen some brain dead decisions out of Edith Jones at the 5th Circuit. Some thought her infantilized analysis of anti-concurrent causation in Leonard could not be beat for setting new lows in judicial ignorance but Dwyer v Fidelity National might give Leonard a run for it’s money. We’ve been sitting on this case for several weeks now trying to find a way to fit it in. With State Farm’s counsels outrageous behavior in Kuehn v State Farm as our foil we’ll find how insurers are using appraisal at the court house steps as a way of dragging out litigation. In Dwyer we’ll also  find some old fashioned wind-water ambiguity and how the NFIP, Fidelity and it’s lawyers successfully exploited it before insurer friendly 5th Circuit Judge Edith Jones.  Let’s start with a short synopysis of the case courtesy of the 5th Circuit Court of Appeals:

The Dwyers purchased an SFIP (Standard Flood Insurance Policy) from Fidelity to protect their home in Slidell, Louisiana, obtaining $250,000 coverage for the building and $100,000 for its contents. Hurricane Katrina’s wind and flood buffeted the home in August 2005. Following inspection by an independent adjuster, Fidelity paid the policy limit for contents and $86,6291 for flooding-related building damages.

The Dwyers seem very responsible homeowners buying both the maximum amount of flood insurance allowed by law as well as wind insurance. Fidelity National, the nation’s largest WYO “Write Your Own” (Government backed Flood insurance) carrier wrote the NFIP coverage while Travelers underwrote the Dwyers wind coverage. As we’ll see this case is somewhat strange and includes the intersting undercurrent in that Dave Maurstad’s expedited claims procedures were evidently not followed in terms of the blanket tender of the flood policy, perhaps because the inherent conflict of interest involved when the WYO carrier also underwrites wind coverage was not present in this case as the Dwyers used a dedicated NFIP WYO underwriter to handle their coverage and thus their adjustment. (Rebecca Mowbray’s coverage of the linked GAO report can be found here.)

On February 21, 2006, Dwyersent a certified letter to both Fidelity and Traveler’s Insurance Company (“Traveler’s”), whose homeowner’s insurance policy on the Dwyer dwelling covers wind damage. The letter stated that a contractor’s estimate to repair the house was roughly $100,000 more than the combined amounts paid by Fidelity and Traveler’s. Dwyer wrote that neither he nor the contractor could accurately distinguish between wind and flood damage, so Dwyer recommended each company pay the additional expenses in proportion to the amount it had already paid. Based on this calculation, he requested an additional $85,471.89 from Fidelity.

We get a hint Ms Jones marches to the beat of a different insurance law drummer to the point of judicial activism preferring to ignore literally hundreds of years of case law as the case synopsis concludes: Continue reading “A bit more on the Appraisal Clause NFIP style as Edith Jones strikes again: Dwyer v Fidelity National Part 1”

More on $enator Chri$ Dodd’$ Relation$hip with AIG and Countrywide’$ Angelo Mozilo. Liddy educates WaPo readers on contract sanctity

I noted Time Magazine has come out with a list of the guilty in their 25 People to Blame for the Financial Crisis. This topic is special to me in a personal way and I’m reminded of a conversation I had with a reporter Tuesday as we discussed the now locally infamous Shred-it Trucks that became parking lot fixtures at the local State Farm offices in the spring of 2006. Steve took pictures but not for this blog as we had no concept of slabbed in those days. Rather he gave the pictures to former SKG lawyer Zach Butterworth. In that sense we feel some ownership for that piece of news, no doubt the same sense of ownership felt by the Rigsby sisters who saw from the inside what was being fed into the shredder.

Similarly Russell, Steve and I feel a similar ownership on that subprime thang as we were posters on the Countrywide Yahoo board at that time. It was Katrina that landed the company on my radar screen as I was surprised to learn some friends that had their mortgage with them could not get their insurance money released so they could repair their house. In fact Countrywide (CFC) was holding far more of their insurance money than they owed on their mortgage. I’m a sucker for this type of stuff so I alerted Steve and Russell and the cyber attack began.  We made short work of CFC that day and my friend had their insurance money back the next day.  Others saw those posts and one reporter asked some questions.  Two weeks later this story appeared on page C-1 of the Wall Street Journal. Evidently someone at LSU thought enough of the article to copy it to a word doc where it resides today for all to see (it is still in the WSJ archives and a PDF I kept as well) and it is there we’ll begin as we explore what kind of company Senator Chris Dodd keeps:

Hurricane Victims Battle Banks — Gulf Coast Residents Complain Lenders Hold Insurance Money While Demanding Late Payments
The Wall Street Journal
April 27, 2006
By Valerie Bauerlein

AS HOMEOWNERS along the Gulf Coast try to recover from the devastation of hurricanes Katrina and Rita, some say mortgage lenders are refusing to turn over insurance proceeds while demanding immediate payment on overdue loans.

Hurricane victims in Louisiana and Mississippi have filed nearly 1,000 complaints with state regulators claiming mistreatment by mortgage lenders. About 800 of the complaints have been resolved, often as a result of mediation initiated by regulators.

Jim Wolf of Pass Christian, Miss., a DuPont Co. technician currently living in a company trailer, for example, wanted to use proceeds of an insurance settlement for a down payment on a new home. On Dec. 10, he sent his $40,000 insurance settlement check to giant Countrywide Financial Corp. to pay off $5,000 remaining on the mortgage of his destroyed home, expecting to get $35,000 back. He said he called Countrywide, based in Calabasas, Calif., every business day for a month, spoke to a dozen representatives and couldn’t get the balance returned. Continue reading “More on $enator Chri$ Dodd’$ Relation$hip with AIG and Countrywide’$ Angelo Mozilo. Liddy educates WaPo readers on contract sanctity”

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”