If you read my last post on Gagne v State Farm, you may recall it ended with with the discussion of a motion that referenced Gagne’s motion to reconsider rulings in prior cases on the effect of an insured’s cashing checks offered by State Farm drawn on Federal Flood Insurance funds.
In some recent Hurricane Katrina insurance cases, this court has made statements and rulings indicating that where plaintiffs have been paid flood insurance benefits, they may be estopped from denying that their insured property was damaged by storm surge to the extent of the amount of the flood benefits paid. This court has said this estoppel is based on the fact that receipt of flood insurance benefits constitutes an admission that some damage was caused to their homes by flooding.
Since it’s not an everyday word for most of us, let’s stop and define estoppel.
estoppel: A legal principle that prevents a person from asserting or denying something in court that contradicts what has already been established as the truth.
The motion continues; but, cleverly shifts the responsibility from the court to those bringing similar cases before the court.
Gagné does not believe that the plaintiffs in the cases involving the prior rulings on this point have brought to the court’s attention the appropriate law regarding the prerequisites for either precluding a party from taking a particular position or offering evidence in support of that position under the law concerning either judicial admissions or judicial estoppel nor have they had such compelling factual testimony including an admission by State Farm’s flood adjuster.
Gagne’s opinion of the appropriate law for the court to consider is found in the Memorandum in Support of the motion for reconsideration.
This court has said this estoppel is based on the fact that receipt of flood insurance benefits constitutes an admission that some damage was caused to their homes by flooding….
This court’s prior decisions which state that an insured is estopped from denying that their insured property was damaged by storm surge to the extent of the amount of the flood benefits paid based on the fact that receipt of flood insurance benefits constitutes an admission that some damage was caused to their homes by flooding fails to satisfy several of the requirements for judicially estopping a party from taking a position or presenting evidence inconsistent with prior action.(emphasis added)
First, there is no previous legal proceeding in which the insured took the position that is inconsistent with the position in the current proceeding that all the insured’s losses were caused by covered perils.
Second, without a prior legal proceeding, there can be no satisfaction of the requirement of actual acceptance by a court of a prior in consistent position in a prior legal proceeding.
Third, under the circumstances of Gagné’s explanation of how he came to have and cash the check, his current position is not clearly inconsistent with a prior position.
Gagne cites a recent 5th Circuit decision supporting the positions and, then, note the 5th Circuit has also held that judicial estoppel differs from a judicial admission as judicial estoppel requires the additional element of detrimental reliance by the party asserting the estoppel. (emphasis added)
State Farm did not rely upon Gagné’s cashing of the check in any way. It made up its mind and took its position as to how it would handle the loss without regard to Gagné’s claims or positions.
To the contrary, it is Gagné who relied to his detriment on the representations made by State Farm when he accepted and cashed the check which State Farm is expected to assert now precludes him from offering proof that State Farm was liable for his entire loss under its private homeowner’s policy.
Robert Gagné is not seeking to recover from both policies for a similar loss. He simply wants State Farm to live up to their promise to him. If a determination is made by the finder of fact that the entire home was destroyed by covered losses under his homeowner’s policy, he will expect the court to direct State Farm to reimburse the NFIP program for the funds they improperly paid him prior to (by their own admission) determining causation of the loss of his property.
Now, quoting from the Memorandum where Gagne asserts State Farm should be estopped from claiming Gagne’s acceptance of the check is an admission that any part of his home was destroyed by storm surge or or flood water:
Gagné reported his losses from Hurricane Katrina to State Farm, who was theselling agent and the adjustor on both the private homeowner’s policy and the NFIP policy. In reporting his loss, he stated that the losses were the result of Hurricane Katrina.
However, he made no assertions in his report to State Farm as to the exact cause of the loss, i.e. the role of wind or water or storm surge in causing the loss. He made no representation to State Farm at the time of reporting his loss to them as to which policy his losses were covered under. He filed no claim forms and made no written or sworn proofs of loss for claims under either policy. In fact his written declarations filed with FEMA indicate a loss caused entirely by wind. Instead, he asked State Farm to send an adjustor to adjust the loss.
It was State Farm’s adjustor who made the decision to use federal funds to fund the primary payment proffered to Gagné for his losses. It was Gagné who relied on State Farm’s adjustor’s representations that the payment was a preliminary one which would be reallocated later after an investigation of the cause of the losses and a determination of coverages and who represented to Gagné that his acceptance of the check would not be used against him on his claim under the coverage of his homeowner’s policy.
Gagné relied on those representations in cashing the check which action State Farm not seeks to use against him to his detriment in his claims on the homeowner’s policy. These facts meet the elements of equitable estoppel such that State Farm should now be estopped from asserting that Gagné’s cashing of the check it provided and decided how to fund constitutes an admission by Gagné directly contrary to Gagné’s statements of what he was told by the State Farm adjustor who delivered the check.
Remember, Gagne has the transcript of the desposition given by the State Farm adjustor that verifies the accuracy of his account.
He does not seek a “double payment” and simply wants a valid determination on causation and then the appropriate accounting to occur so that the taxpayers do not pay for losses that should have been paid for under his homeowner’s policy.(emphasis added)
IF the Court determines that all of his losses were covered by his homeowner’s policy then he expects State Farm to reimburse the NFIP program for the improper use of their funds…
State Farm’s Response in Opposition to Gagne’s motion urges the court to deny the Motion and contends:
Plaintiff is not, however, offering to return the $350,000. Plaintiff proposes to retain $350,000 that he now repudiates and seeks the full limits under his homeowners policy, which would result in an impermissible double indemnity.
However, that simply is not what Gagne’s motion says.
Gagné is not arguing that he is entitled to recover duplicate damages or recovery and keep for himself more than the total value of his home or the total amount of insurance purchased on his home…
However, if the jury finds he has met his burden of proof as to coverage and State Farm has not met its burden of proof as to the exclusions it relies upon, it does not follow that State Farm is entitled to a credit for the amount of the government’s funds it decided should be applied to Gagné’s claims.
State Farm should not receive the benefit of having the government pay a portion of its liability to Gagné under the homeowner’s policy. State Farm should be required to accept such a verdict on an issue determined against it after full litigation and to make whatever adjustments on its books and in its reports to FEMA which are necessary to correctly allocate the funds already paid to the homeowner’s policy effectively returning to the government money which the jury finds State Farm incorrectly used to subsidize its own liability.
Alternatively, if the jury finds completely in favor of Gagné, State Farm should be required to pay the entire amount of coverage under the homeowners policy to Gagné with Gagné’s receipt of that amount being subject to the subrogation clause of the Standard Federal Flood Policy which states that… an insured who obtains such a recovery to pay FEMA back first before the insured may keep any of the money recovered for the same loss.
Does State Farm not expect Judge Walker to note this glaring misrepresentation – or is it intended as a distraction from what appears to be evidence of the scheme?
Gagne cites five cases that estoppel applied – Holmes, Tejedor, Dickinson, Gemmill, and Aiken – and implied that in all of these State Farm incorrectly used…[the flood payment] to subsidize its own liability. Settlement agreements would obviously follow; so, we’re talking about a lot of money – the maximum payout from NFIP in many cases, I imagine.
Katrina math doesn’t add up for taxpayers or policyholders – and both are left treading water while the insurance industry is swimming in money!