U.S. Judge to Decide if Levee Break Cases go Forward in La.

People who want insurance companies to pay for their losses after levee breaks in New Orleans following Hurricane Katrina are waiting for word from a federal judge.

U.S. District Judge Stanwood Duval, who is in charge of 33 federal court lawsuits seeking compensation from insurers, public agencies and others for New Orleanians flooded out of their homes by levee breaks last August, held a daylong hearing Aug. 25 to decide if the cases will go forward at all.

Homeowners’ policies, attorneys for companies that issued them said, expressly state they exclude coverage for flooding. “Regardless of the cause of the flood, it is not a covered loss,” State Farm attorney Wayne Lee said.

But the homeowners maintain what damaged or destroyed their property was not a flood in the ordinary sense but water intrusion caused by breaks in levee walls.

Duval said his first task will be deciding whether the insurers’ policy language is ambiguous “because it does not say ‘flood except flooding caused by (events) other than natural causes.’ “

If he concludes the language is ambiguous, Duval said he’ll explore whether policyholders had a reasonable expectation that the insurers would cover damage from the levee break flooding.

A federal judge in Mississippi earlier in August ruled a Gulf Coast couple cannot collect damages from storm surge caused by Hurricane Katrina because their insurance companies’ policies did not apply to wind-driven water damage, though he acknowledged that the policy’s key provisions are ambiguous.

During the Aug. 25 hearing, attorneys for engineering companies named in the lawsuit asked that they be excluded because the cases were filed too late – more than five years beyond the dates that government agencies accepted the companies’ work. The five-year limit is set by state law.

Information from: The Times-Picayune, www.timespicayune.com.