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”

Judge Ginger Berrigan, Welcome to the infirmary of the SLABBED

Since I’m not a lawyer, I really just have one standard and that’s does an argument or decision make sense.  A lot of these decisions just don’t. Why?

Judge Helen “Ginger” Berrigan of Louisiana’s Eastern District Federal Court is one judge I had in mind when responding to Chip Merlin’s comment on the need to better educate judges trying Katrina insurance cases.

However, I don’t believe Judge Berrigan needs educating.  Instead, it appears she’s contracted the highly contagious strain of 5th Flu that causes Leonard hallucinations and delusions of coverage.

Now, I’m not a doctor either; but, I could tell Judge Berrigan was was coming down with something when I read the  Order and Reasons she issued in Adams v Lexington. So, I examined the docket and several of the documents; and, then, I read her history.

Based on what I learned, I suspect she had a natural immunity to the 5th flu as she showed no symptoms of Leonard hallucinations in her reasoning when she threw a wrench into FEMA’s effort at redemption with an order barring FEMA from trying to reclaim some of the money it had thrown at anyone claiming to be a Katrina victim.

In her ruling, Judge Helen Berrigan criticized FEMA for writing notification letters laced with “incomprehensible hieroglyphic abbreviations” and urged the government “to return to their original mandate of alleviating their suffering and focus its substantial powers on continuing to help those entitled to relief.” Continue reading “Judge Ginger Berrigan, Welcome to the infirmary of the SLABBED”

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)”

It’s Deja Vu All Over Again: Rossie’s New Appleman’s analysis of Anti Concurrent Causation anyone? Big Insurance Chips in Big Time with AIG’s Lexington unit in Dickerson. Softly spoken magic spells….

Nowdy and I have kicked this news back and forth all afternoon and we’re inspired in completely different directions so I’ll go first with some Pink Floyd. Turn up your speakers, press play and read on.

[youtube=http://www.youtube.com/watch?v=RyL2vAUVOM0]

Every year is getting shorter never seem to find the time.
Plans that either come to naught or half a page of scribbled lines
Hanging on in quiet desperation is the English way
The time is gone, the song is over,
Thought I’d something more to say.

Home, home again
I like to be here when I can
And when I come home cold and tired
Its good to warm my bones beside the fire
Far away across the field
The tolling of the iron bell
Calls the faithful to their knees
To hear the softly spoken magic spells. 

I was reminded of Time as I read the brief submitted by Team Insurance in AIG’s en banc reconsideration motion in the recently decided Dickerson v Lexington. We’ve been here before and as the lyrics in my post title suggests it seems the gang lead by Allstate thinks softly spoken magic spells will put a new spin on well established case law. Let’s take a look at what the best legal minds big insurance could buy have to say about Dickerson: Continue reading “It’s Deja Vu All Over Again: Rossie’s New Appleman’s analysis of Anti Concurrent Causation anyone? Big Insurance Chips in Big Time with AIG’s Lexington unit in Dickerson. Softly spoken magic spells….”

Rebecca Mowbray and the Times Picayune chip in with Dickerson coverage

The importance of the recent Dickerson decision at the Fifth Circuit Court of Appeals can not be understated. Though the case was litgated under Louisiana law IMO some of the logic, including the portion on extra contractual damages that can result from bad faith dovetail well with Mississippi’s Broussard v State Farm and another case I’ll circle back to at the end of this post. First up is Ms Mowbray’s story which includes some analysis from noted insurance defense lawyer Randy Maniloff:

In a rare win for policyholders in an appellate court, the 5th U.S. Circuit Court of Appeals said this week that insurers can be held responsible for mental anguish damages when they show bad faith in paying claims.

The decision upheld a ruling from federal court in New Orleans in the case of Marrero homeowner Dale Dickerson, who was forced to live in his bathtub-refinishing shop and take showers under a cold garden hose while standing on a wooden pallet in an unheated room for a year and a half while fighting Lexington Insurance Co., a unit of AIG , for proper payment of his Hurricane Katrina claim.

A three-judge panel upheld U.S. District Court Judge Carl Barbier’s finding that Lexington acted in bad faith for dragging out payment of Dickerson’s claim without reason and should be held responsible for inflicting unnecessary stress on Dickerson. Bad faith means that an insurer was abitrary and capricious in its claims-handling, and failed to pay without probable cause. Continue reading “Rebecca Mowbray and the Times Picayune chip in with Dickerson coverage”

The Fifth Circuit Gets One Right: Dickerson v Lexington

After butchering the concept of the Anti Concurrent Clause in Leonard v Nationwide and the concept of punis in Broussard v State Farm, the third time was the charm with the Fifth Circuit in Dickerson v Lexington. A big slabbed congratulations to Soren Gisleson and the Dickerson family. I wonder if AIG will be paying this judgement out of the TARP fund LOL. Here is a link to the decision by the Fifth Cirucit.

This blurb sums up why all a good lawyer needs to litigate these cases is some wind damage, a good expert and in the case of the Farm the wind water protocol:

Dickerson’s bad faith claim hinges on the undisputed timing of Lexington’s first inspection and payment. Dickerson had reported the damage to the insured property in mid-September of 2005, and Lexington had sent an adjuster to inspect the damage on October 1, a month after Katrina. A report based on this inspection was sent to Lexington no later than November, yet no payment was made. Another report was sent to Lexington (apparently by the same claims adjuster) on February 4, 2006. Although Lexington representatives took the position that the second report corrected a “mistake” in the November report, we have found no explanation in the record for why Dickerson could not have been compensated in the interim. Indeed, Lexington’s attorney stated at trial that he had no explanation for the five-month delay. Continue reading “The Fifth Circuit Gets One Right: Dickerson v Lexington”