A groundbreaking case that challenges one of the nation’s largest insurers for refusing to cover damage from Hurricane Katrina’s monster storm surge went into the hands of a federal judge on Wednesday.
U.S. District Judge L.T. Senter Jr., who presided over an eight-day trial without a jury, heard closing arguments and promised a ruling “just as rapidly as possible.”
Paul and Julie Leonard of Pascagoula sued Nationwide Mutual Insurance Co. after the Columbus, Ohio-based insurer paid them roughly $1,600 for the more than $130,000 in damage to their home.
Their attorneys asked Senter to award them more than $158,000 for the damage to the house and its contents, plus interest and attorneys’ fees and expenses.
The suit is the first of hundreds of Katrina insurance lawsuits to be tried since the storm laid waste to homes and businesses all along the Gulf Coast last Aug. 29.
Both sides agreed that Senter’s decision could hinge on a 1999 meeting between Paul Leonard and Jay Fletcher, the Nationwide agent who sold the Leonards their homeowners’ policy.
Paul Leonard testified earlier that Fletcher told him he did not need flood insurance, and he claims the agent misled him to believe his policy covered all hurricane damage. Fletcher denied saying that to Leonard or any other policyholder.
Don Barrett, an attorney for the Leonards, said in his closing argument that Fletcher “bound Nationwide to full coverage, wind and water, through his representations to Paul Leonard.”
“If Jay Fletcher had been hooked up to a lie detector test, you could have heard it ringing all the way to Memphis,” Barrett said. “Fletcher’s denial just doesn’t pass the smell test.”
Nationwide attorney Dan Attridge told Senter that the terms of the Leonards’ policy cannot be rewritten after Katrina to give them coverage from flood insurance. All homeowner’s policies exclude damage from flood water, including wind-driven storm surge, he added.
“The evidence shows that Nationwide has fully complied with its obligations under the policy,” he said.
On Wednesday, Attridge questioned Paul Leonard’s account of the 1999 meeting with Fletcher, arguing that Leonard was mistaken about the date and substance of the conversation.
Attridge said that Leonard “got on the stand and told an embellished story” about that conversation.
Several other Nationwide policyholders also testified that Fletcher either told them they did not need flood insurance or convinced them that their policies covered all forms of hurricane damage.
Attridge said Fletcher had an “impeccable record” as an agent and had not misled the Leonards.
Richard “Dickie” Scruggs, one of the Leonards’ attorneys, said meteorologic and engineering evidence do not figure as prominently in the Leonard case compared to many others still awaiting trial. Instead, Scruggs argued that Fletcher’s alleged assurances about the scope of coverage make Nationwide liable for all the damage, be it wind or water.
“The case rises and falls on that,” Scruggs said in an interview earlier this week. “The focus of this case is Jay Fletcher and his integrity versus Paul Leonard and his integrity.”
Scruggs’ legal team represents about 3,000 policyholders on the Mississippi Gulf Coast, including his brother-in-law, U.S. Sen. Trent Lott. The firm also has sued Allstate Insurance Co., Metropolitan Life Insurance Co., State Farm Insurance Co. and United Services Automobile Association.
Scruggs “filed a flood versus wind case, and the facts have gotten in the way of that claim,” company spokesman Joe Case said.
“They can’t make their claim on the facts surrounding the actual damage to the home,” Case added. “They’re playing musical chairs, trying to hang their case on anything other than the actual claim.”
Nationwide says it has resolved 97 percent of the 21,000 claims filed by Mississippi policyholders following Katrina and paid homeowners a total of $230 million.
Senter gave both sides one week to give him written summaries of the trial before he issues a ruling.
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