Judge Senter Rules In Favor Of Nationwide In Leonards’ Katrina Lawsuit

In the first of the post-Katrina coverage lawsuits to make it to trial, and after taking what seemed like a really long time to issue a verdict, Judge L.T. Senter has ruled in favor of Nationwide and against policyholders Paul and Julie Leonard in their lawsuit.  I’ve got paying work to do and have to read the judge’s opinion, which I’m in the process of getting, but for all you Katrina-ites, here is a link to feast on for the time being.  

Remember, this case was somewhat different than the Tuepker and Buente lawsuits before Senter, because the gist of the Leonards’ case was that their insurance agent told them that all hurricane damage would be covered, and that Nationwide was bound by the agent’s statements.  The other cases were about pure coverage: the meaning of insurance policies from State Farm and Allstate.  I have to say, I really do feel sorry for the Leonards, but I had a lot of trouble buying their case and I had an incredibly hard time picturing that any agent would be so dumb as to claim something that was so obviously contradicted by the plain language of the policy.  This result is the one I thought was the most likely.

UPDATE: For newcomers to this blog, there are a ton of Katrina-related posts on the blog, but I don’t have time to link to all of them right now.  So if you want more, just go down and to the right on the screen and put "Katrina" in the search box.

SECOND UPDATE: Here’s another link, from the Insurance Journal.  Here’s a link to RiskProf.  Here is a link to a statement by a pro-insurer group on the case.   Here is a link to another news wire story on the decision.  Of course, the plaintiffs’ attorney, the unsinkable Dickie Scruggs, is spinning it as a win (if nothing else, Scruggs sure does give the impression of fighting like a tiger for his clients).  I’ll link to the decision as soon as I’ve got it.

See this post for a link to the opinion and further analysis.


Filed under First Party Insurance

4 Responses to Judge Senter Rules In Favor Of Nationwide In Leonards’ Katrina Lawsuit

  1. Seth Chandler

    First reaction from a law professor about the Senter opinion.
    1) Page 7 of 13 (paragraph 29). The judge says there is no evidence in the record to establish the standard of care applicable to an insurance agent who is asked about the advisability of purchasing flood insurance and that, absent such evidence, he could not find that the plaintiff’s agent breached a standard of care. Might subsequent plaintiffs attempt to develop such evidence and seek to collect for storm surge losses not from the insurers, but from agents (and their E&O insurers)?
    2) The judge concludes that the exclusion on which Nationwide relies is ambiguous (p. 9) but that Nationwide has a reasonable reading of the exclusion that ends up excluding coverage (p. 10). Perhaps this is correct as a matter of Mississippi insurance law — the case was decided in federal court but it presumably (Erie) applied Misssissippi law — but it would have trouble standing muster in some states, including my own Texas. In Texas, once ambiguity is found, the insured may advance ANY reasonable interpretation of the policy and prevail even if the insurer’s interpretation is “more reasonable.” This may be a little strange and depends on the commensurability of reasonableness, but last I looked it was the law.
    So, clearly a win for the insurers (I don’t think Mr. Scruggs brought this case to get the plaintiffs an extra $1228.16), but not as clear cut as one might be led to believe.

  2. These are some excellent points. I recently did a lot of briefing on the question of ambiguity, and in Oregon also, when amibuity is found the insurer loses, even if its interpretation would win a vote as to which is better. From what I have seen, I suspect that is the law pretty much everywhere. From my reading of those two paragraphs and the rest of the opinion, I think the way to reconcile that is that Senter did not find the plaintiffs advanced a competing interpretation that was reasonable.
    It also appears Nationwide wisely did not insist on the most extreme interpretation of the anti-concurrent cause exclusion, which is going to strike most people as absurd. Also, because of the facts in this case, where the house was left standing and it was possible to apportion damage between wind and water, the exclusion wasn’t such a big deal as it is in other cases. The tougher issue is where a house was demolished, and whether the exclusion precludes payment for earlier wind damage when the house was later completely destroyed by waves. Paragraph 10 indicates that Senter will interpret the exclusion as not completely precluding payment in that instance, but rather requiring payment for wind damage to a structure later destroyed by water to the degree the damages can be proven.

  3. “Judge Rules for Insurers in Katrina”

    Maybe Dickie Scruggs isn’t going to be allowed to destroy the U.S. property and casualty insurance industry after all. U.S. District Judge L.T. Senter yesterday dealt a substantial defeat to Scruggs’ pilot case seeking to force insurers to cover Katrin…

  4. Judge Senter on Katrina, cont’d

    I’m not sure I really intended my first post on this, which reacted to initial news reports, to commit myself to an upbeat, cheery posture (or its reverse). At the time, I hadn’t yet read the actual opinion. The portion…