I give this new lawsuit high marks for creativity. I especially enjoyed the allegations that, because people on the Mississippi Gulf Coast were charged higher premiums because of the threat of hurricanes, the basis of the bargain of their homeowners policies was that everything was covered, even flood. I also really like the re-labeling of hurricane flood waters as "storm surge" — that is pure genius.
The lawsuit also accuses State Farm of monkeying with engineering reports and altering their outcome so that they would fail to show that the damage to homes was caused by wind, which unlike flood damage is usually covered in a homeowners policy. It’s not clear why State Farm would do this, since the theory of the lawsuit is that flood damage is also covered. Just in case this isn’t true, however, the lawsuit has a claim for reforming the insurance contracts to cover flood damage.
This lawsuit was filed by Mississippi lawyer Dickie Scruggs, who is also the plaintiffs’ lawyer in Buente v. Allstate, which I posted about here and here. A lot of this, you have to take with a grain of salt as posturing and publicity. After surviving a motion on the pleadings by Allstate in Buente, Scruggs was quoted in media reports bragging about how he had survived Allstate’s "kill shot." Then, shortly afterward, the same judge in another motion in the same case substantially upheld Allstate’s flood exclusion, which gutted the "storm surge" theory.
Hat tip to Michael Strasavich of Bowron Latta & Wasden in Mobile, Alabama for tipping me to the story and e-mailing me a copy of the complaint.