Chad Hemenway is out with a new piece on PropertyCasualty360.com about Hurricane Irene and whether we will see any wind vs. water or anti-concurrent cause litigation. His verdict: no. The damage is mostly just flood damage.
Of course, that didn’t stop cases such In Re Katrina Canal Breaches Litigation from happening several years back when New Orleans flooded due to storm surge. The essence of those consolidated cases was the contention that although water damage and even certain causes of water damage were excluded from coverage, policies generally did not explicitly exclude coverage for losses caused human negligence in construction and maintenance of flood levees. (I wrote about In Re Katrina Canal Breaches here, here and here, among other places).
This human negligence argument has a better chance where an open peril policy excludes causes but does not expressly exclude results, and for some reason it does much better in challenges to earth movement exclusions and some other limitations. However, when it comes to flood or water damage exclusions, human negligence is the Washington Generals to the water damage exclusion’s Harlem Globetrotters. It just gets run off the court, and has its shorts pulled down by Meadowlark Lemon while shooting a free throw. The human negligence argument won out at the District Court level in Canal Breaches, but that was like winning the first quarter — and it got crushed at the Fifth Circuit.
Truth is, flood exclusions have been almost always upheld for a long, long time. If you are looking for a reason why flood exclusions fare better than earth movement exclusions, it is because where earth movement exclusions fail, it is generally not in cases of widespread earthquake damage. Instead, the failure usually comes in isolated cases involving mud slides or similar damage. Courts are reluctant to break exclusions that clearly related to low-frequency, high-severity losses, like floods and earthquakes. Depending on the judge, courts are more willing to see ambiguity involving high-frequency, low-severity losses. That’s my explanation, anyway. Maybe someone has a better one.
OK, enough philosophy for now. Chad writes:
The point here is that any talk about lawyers expecting disputes over wind vs. water is just that—talk…probably from plaintiffs’ attorneys. The case law is plentiful.
As George Simpson, an attorney with North Carolina’s Cranfill Sumner & Hartzog, tells me, “It would be hard to imagine anyone opening a Pandora’s Box of issues that haven’t already been addressed ad nauseum.”
Dude has it right, I think. Read the whole story and see if you agree. Also, thanks to Chad for the shout out.
Speaking of Irene, this gives me an excuse to talk about Frank Sinatra. Here’s a link to his version of Goodnight Irene. If you can get past the really annoying backup vocals that sound like a mix of drunken cowpokes and coked-up banshees, this song is a good example of what an amazing talent Sinatra was — he could take a song that is otherwise pretty forgettable, or that sucks, and sell it. Sinatra, whose theory of singing was to act the part he was singing, is right at the top of singers who could bring sincerity to their work.