With the continuing drama of the Scruggs scandal unfolding daily, sometimes hourly, I almost forgot to blog about the Katrina case that I have written about perhaps more than any other — Broussard v. State Farm. As this story by Mike Kunzelman of the AP says, oral arguments were held before the Fifth Circuit in New Orleans on State Farm’s appeal of the $1 million punitive damage award — reduced by Judge L.T. Senter Jr. from $2.5 million awarded by the jury.
Broussard is not about the anti-concurrent cause provisions of policies, as some of the other well-known cases have been, it is about who is allocated the burden of proof of damages, and it is about whether bad faith punitive damages are justified when an insurer fails to pay when some small amount of covered damage may have occurred, but the insurer believes the evidence indicates that almost all if not all the damage was caused by an excluded force. As I mentioned, I have written a great deal about the case, and if you have more interest you can go to my blog’s search bar on the right, type "Broussard" and hit the enter key. (Frequent readers may tire of me explaining how to do this, but this is far and away the number one question I get asked — how do I find something on your blog).
The Broussards were Mississippi Gulf Coast residents whose home was destroyed by Katrina, one of the so-called "slab" cases where nothing was left. State Farm was their homeowners insurer, and at the time of trial had paid nothing, saying there was substantial evidence of flood destruction and that the Broussards had failed to present sufficient evidence of wind damage (their expert said the home was destroyed by a tornado). In case you are wondering, the Broussards were represented by William Walker, not the Scruggs Katrina Group.
In the case, Judge Senter directed a bad faith verdict against State Farm, saying no reasonable juror could have found otherwise. He based his decision on the fact that State Farm’s expert testified that there was a 75 percent chance there was zero to 35 percent damage to the Broussard’s roof. With all due respect to Judge Senter, I’m skeptical that this means the verdict must be directed. Why couldn’t the jury have been allowed to decide? When you multiply a 75 percent chance times zero, you still get zero damage, so in my mind a reasonable juror could have decided State Farm was correct. They could also have decided the other way.
Most of the time with other big Katrina cases, I would have already read the briefs at this point. But to tell the truth, Broussard slipped right out of my mind on Scruggs Nation: Day One, and even if I had remembered, I wouldn’t have had any time to read the briefs. However, reading the tea leaves of the Fifth Circuit’s recent Katrina decisions, seeing who is on the judicial panel (notably, Edith Jones) tand seeing some of the comments by Judge Jones in the story, I’d say there is a pretty good chance this one will be reversed. See what you think after reading this excerpt from the story:
State Farm attorney Clarke Holland said Senter made "numerous errors" in evaluating evidence in the case and shouldn’t have allowed jurors to weigh punitive damages.
"There was clearly an arguable basis for State Farm’s position regarding coverage," Holland told Judges Edith Jones, Jacques Wiener Jr. and Edith Brown Clement.
William Walker, a lawyer for the Broussards, defended Senter’s rulings.
"He viewed this in a very rational and careful way," Walker said.
Senter concluded State Farm acted in a "grossly negligent way" by denying the Broussards’ claim. The judge also said the company denied policyholders’ Katrina claims based on a new "wind-water" protocol that is "at odds with other express terms of the insurance contract."
State Farm claims Senter erred when he ruled the company had to prove that the Broussards’ home didn’t sustain any wind damage or that it had to segregate wind and water damage to the residence.
Jones, the 5th Circuit’s chief judge, questioned why Senter didn’t let a jury decide whether Katrina’s wind or water was responsible for destroying the Broussards’ home.
"All (State Farm) had to prove is that storm surge was a cause, and then a jury had to prove how much was storm surge and how much was wind," Jones said while questioning Walker.
The exchange between Jones and Walker grew testy, as the judge accused the lawyer of "playing with words."
When Walker punctuated one of his points by saying, "I don’t mean to be flip," Jones responded by saying, "Most of your argument has been flip."
"Thank you, ma’am," Walker said. "I hope it was sincere."
"It was sincere," the judge said.
State Farm also argues that Senter shouldn’t have allowed jurors to consider punitive damages and that he abused his discretion in refusing to transfer the case from Gulfport, Miss., to northern Mississippi.
State Farm’s lawyers say the company couldn’t get a fair and impartial jury on the Gulf Coast due to "pervasive and extreme negative publicity regarding Katrina insurance claims."
State Farm is asking the 5th Circuit to throw out the verdict and either rule in the company’s favor or order a new trial, preferably in north Mississippi.
I’m not sure if I follow the nuances of the flip/sincere dichotomy posited here. Can one be flip, yet still sincere? I would have thought not — for example, I have never heard the phrase, "he was flipply sincere," nor have I heard "he was sincerely flip" — but apparently William Walker and Judge Jones disagree with me.