Federal judge and State Farm settle case over Katrina damages

John Roper, Sr., a federal Magistrate Judge in the U.S. District Court for the Southern District of Mississippi, has settled his Katrina lawsuit against State Farm, according to this Associated Press story. Terms were not disclosed. The Southern District became the locus of the Mississippi Katrina litigation after insurers removed cases from state to federal court, which they allowed to do under federal statutes when the defendant and plaintiff are citizens of different states.

A federal judge from Michigan was set to preside over Roper’s trial beginning April 9.  Another judge in the Sourthern District of Mississippi, Louis Guirola, also filed a Katrina-related suit against Nationwide. Guirola’s case settled last November.

Here’s a pdf of Judge Roper’s amended complaint, which shows that one of his allegations was that he believed his policy covered all hurricane damage because of representations by the insurance company and its agents.  


Filed under First Party Insurance

6 Responses to Federal judge and State Farm settle case over Katrina damages

  1. Drewski

    Doesn’t anybody find it odd that Judge Roper bound coverage on his homeowner’s policy the very day the Katrina was bearing down on the Gulf Coast? Is it possible that a judge would ask leading questions of the agent under those circumstances to make sure that he could allege that there was unrestricted coverage for any and all hurricane damage?
    I must be too cynical — I think that the judge’s suit was only the last part of a series of actions that were intended to insure what might otherwise have been described as a “burning building.” Obviously, we can’t tell from the amended complaint whether or not this was jsut a renewal effected on otherwise fortuitous date, but the dates just seem to scream out that this was a transaction that was not one of forutitous loss, but of what could well have been considered a sure thing.

  2. I don’t find the timing particularly odd, unless the policyholders were completely without homeowners insurance before Katrina approached, which is unlikely. For example, my homeowners policy renews annually on a given date which I am not aware of without looking it up, and as long as I keep paying the premiums, it will continue to do so. Although insurance has a foundation of fortuity, this isn’t always rigidly followed. For instance, you can bind flood insurance on your home up to 30 days before a flood, and in many cases the government and others issue warnings to people in river valleys that the crest may be expected to be above flood stage and that people should purchase flood insurance. Likewise, if I’m in a hurricane area and a storm is approaching, and I want to lower my wind deductible, there is nothing wrong with doing so as long as I don’t commit a material misrepresentation in changing the terms of the coverage (assuming changing the coverage meets the insurers’ underwriting guidelines).
    For me what is most interesting about the complaint, and obviously there are a number of concurrent and alternative theories pleaded within it, is the allegation that the insurer and its agents represented that the policy would cover all damage caused by any hurricane. This theory was used in the Leonard case but went nowhere, both because it is implausible that people didn’t know the policy failed to cover flooding when there was publicity saying you need to purchase special flood insurance, and because in that case the agent made no specific representation of fact, much less a misrepresentation of fact. I see this from time to time where someone smashes their face on the brick wall of policy language, and then says someone made an oral contract that differs from the writing. This has more of a chance of success where the actual contract issued was in error and provides coverage (as a defense against the insurer’s attempt to reform the policy). But in most cases it’s going to very tough to beat a contract that says it constitutes the entire agreement and supercedes any prior oral agreements or representations. Conceivably there is a remedy against an agent for failure to purchase the insurance someone told the agent to, but generally speaking there is no affirmative duty on the part of agents to provide you with the optimal insurance it turned out you needed.

  3. daughter for justice

    Hi David
    I think both you and Mr. Drewski are miss reading the complaint concerning the date insurance was purchased. “The Plaintiffs purchased a homeowner’s insurance policy from the Defendant that was effective on August 29 2005.” It says it was effective on August 29th 2005 not purchased on August 29th 2005. I know for sure you guys don’t live in hurricane country because if you did you would know that NO one sells homeowner insurance if there is a storm in the gulf. We have an option of a 2% Hurricane deductible in order to keep your premiums down. I could see how someone would think by paying the 2% Hurricane deductible they could be covered. (I knew better) Why could they not just call it a wind deductible? Thanks again for your wonderful coverage on Katrina litigation. I look forward to reading you daily.
    Daughter for Justice

  4. Yes, Daughter for Justice, you are absolutely right. The complaint merely says that it was effective on that date and not that it became effective on that date. Thanks for pointing that out and for the additional information about how no one sells these policies when a hurricane is approaching. I think I vaguely knew this and perhaps even wrote about a case from North Carolina on the blog last year about a certain window of time when a hurricane is approaching where you can’t get coverage. If I’m remembering correctly, the insured in that North Carolina case had let the policy lapse because of non-payment, realized the mistake and then tried to get the policy reinstated but was unable to because the storm was approaching and the window had closed. Thanks again for your sharp eyes, knowledge and contributions to the conversation on this blog, all of which help me and others to discuss the law and events more intelligently.

  5. Brian

    Do not pretend this was about that one issue in the complaint. I doubt State Farm would have lost or settled over the oral representations of the agent. The key issue in this as in the other cases is whether State Farm has the burden to prove damage was caused by flooding in order to exclude coverage or the homeowner has to prove that damage was caused by wind and only wind in order to collect on his windstorm coverage. State Farm will lose or settle every one of these cases over its failure to prove the exclusion, but it will drag them out as long as possible so that desparate people will settle for much less than they are owed.

  6. Brian, I pretend nothing, I merely comment on what interests me, such as that a federal judge who has ruled in contract cases would include allegations about misrepresentations changing the written contract. Of course, this was just the standard language that was included in many of these complaints, but each litigant is responsible for the content of his own complaint.