Conflicts Arising in Federal Rulings in Louisiana Hurricane Cases

March 11, 2008

Conflicting rulings by federal judges in New Orleans and in Lake Charles, La., are having major effects on how much money homeowners can collect on damage from the 2005 hurricanes, and there is no quick end to the conflict in sight.

Federal judges in New Orleans have ruled that the amount of money Hurricane Katrina victims can recover from their homeowners insurance policies is limited by the amount they received from the National Flood Insurance Program.

But federal judges in Lake Charles have ruled that Hurricane Rita victims can potentially collect the full value of both the flood and the wind policies, meaning that they could end up with payouts totaling more than the value of their homes.

“This probably is one of the last behemoth issues in the hurricane litigation,” said Soren Gisleson, head of the insurance section at the Louisiana Association for Justice, formerly known as the Louisiana Trial Lawyers Association.

Multiplied across thousands of homes, the court rulings on whether homeowners insurance policies and flood insurance policies should work together or independently are worth big bucks.

Attorneys following the hurricane litigation say they’re aware of no appeals that would bring the split between the federal judges on opposite sides of the state before the 5th U.S. Circuit for resolution, an unusual situation.

“You don’t see it often, but it does occasionally happen,” said Edward Sherman, a dean at Tulane Law School who teaches civil procedure and complex litigation.

Meanwhile, there are only a few cases in state court that have the potential to test the issue.

“Hopefully, the (Louisiana) Supreme Court will take up the issue and resolve it,” Gisleson said.

Information from: The Times-Picayune,

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