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”