New Orleans Couple Drops Suit Against Allstate over Katrina Damage

February 16, 2007

The first federal trial in New Orleans in the wave of insurance litigation spawned by Hurricane Katrina ended abruptly Feb. 15 when a couple suing Allstate Indemnity Co. dropped their lawsuit amid allegations they misrepresented their claims.

Lawrence and Elizabeth Tomlinson, who claimed Allstate underpaid them and acted in bad faith in handling their claims, agreed to drop the suit before jurors could hear closing arguments in the case.

The Tomlinsons’ attorney, Christy Howley, would not specify why they didn’t let a jury decide the case, but Allstate, in court papers, had accused the couple of misrepresenting their claim.

The Northbrook, Ill.-based insurer said it paid the Tomlinsons more than $30,000 for living expenses after they moved into office property that they already owned. Lawrence Tomlinson testified that Allstate knew of their living arrangement when they made the payment.

Allstate paid the Tomlinsons a total of more than $150,000 for damage to their home and its contents, plus living expenses. The couple claimed the company underpaid them after Katrina’s winds tore holes in their roof and let rain pour into their home in the New Orleans suburb of Marrero.

The insurer disputed the extent of the damage and suggested that the couple overbilled them for certain renovations to the home. Allstate attorney Judy Barrasso declined to say whether the company has considered taking further legal action against the couple.

“At the conclusion of the evidence, the plaintiffs decided voluntarily to withdraw their claims and relinquish any right to refile them,” Barrasso said. “The plaintiffs have not received any compensation of any kind from Allstate for withdrawing their claim.”

Lawrence Tomlinson declined to discuss his reason for not pursuing the case, saying only that the trial “has been a long trip.” Elizabeth Tomlinson, an attorney who is due to give birth in about two weeks, left the courtroom in tears.

Howley said her clients were ready to “go back to their lives and rebuild with the moneys they had already been paid” after more than a year out of their home and a long legal challenge.

“A jury verdict, until the jury returns with it, is always an unknown and due to some of the evidence and testimony, Mr. and Mrs. Tomlinson decided they would rather end the litigation than pursue their claims,” Howley said.

She declined to say what evidence and testimony led the couple to that conclusion.

The case was the first federal lawsuit tried against an insurance company by a Louisiana homeowner since Hurricane Katrina. About 1,000 other lawsuits are pending against Allstate alone in federal court in New Orleans.

Tulane Law School professor Ed Sherman said the Tomlinsons’ case is “very individualized” and isn’t likely to have any legal bearing on similar lawsuits. “That’s why I don’t think this (case) sets any precedent,” he added.

Alan Kanner, a lawyer who represents other policyholders with lawsuits against insurers after Katrina, said he isn’t aware of other cases where insurers have accused plaintiffs of misrepresenting Katrina claims. But he isn’t surprised that Allstate would employ that defense.

“It’s a common defense tactic to blame the victims, whether it’s in an insurance case or any other kind of case,” he said. “They do it in lots of different ways.”

U.S. District Judge Martin dismissed the seven-member jury, which had been selected Monday, and apologized to them for making them wait several hours Thursday morning. “The good news is that claims and defenses have been mutually withdrawn,” Feldman told the jury. “This litigation no longer exists.”

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