Miss. Katrina Suits: Key Wind-Water Ruling Expected Soon; Other Plaintiffs Seek Joint Trial

Lawyers for hundreds of Mississippi homeowners who sued their insurance companies for denying their claims after Hurricane Katrina are fighting to keep the cases joined in a “mass action” rather than split up and tried individually.

Richard “Dickie” Scruggs, a high-profile attorney whose firm represents about 3,000 Gulf Coast policyholders, argued in court papers filed this week that consolidating hundreds of cases against the same insurer is the only way to ensure that justice is served.

Dividing scores of cases into separate trials “would be tantamount to a final judgment against 99 percent of the severed claims,” Scruggs and his colleagues wrote. “They will never see a day in court and will be denied procedural due process.”

But lawyers for Allstate Property and Casualty Insurance Co. — one of several companies that Scruggs’ legal team is suing on behalf of hundreds of policyholders — said a consolidated trial would “fester with confusion.”

“There is no way that hundreds of claims could be tried together in a single trial because of the idiosyncratic nature of each claim,” attorneys for the Northbrook, Ill.-based insurer wrote.

U.S. Magistrate Judge Robert Walker had asked lawyers on both sides to present written arguments on whether the cases should be tried together or separately.

Meanwhile, a different federal judge in Mississippi is weighing a highly anticipated decision in the first trial to challenge insurance companies for denying billions of dollars of claims after Katrina.

Last month, U.S. District Judge L.T. Senter Jr. presided over an eight-day trial for a lawsuit that Paul and Julie Leonard of Pascagoula filed against Nationwide Mutual Insurance Co. The Leonards sued the Columbus, Ohio-based insurer after it paid them roughly $1,600 for the more than $130,000 in damage to their home.

Senter, who heard the case without a jury, could issue a decision as early as this week. And his ruling could set a precedent for thousands of other cases in which insurance companies have refused to pay for damage from Katrina’s storm surge.

Insurers say their policies cover damage from wind but not from water, including wind-driven surge. Scruggs and other lawyers, however, claim those policy terms are ambiguous and cannot be enforced.

Scruggs also filed a separate lawsuit against Nationwide and State Farm Mutual Insurance Co. on behalf of hundreds of policyholders for each company. His suit against Allstate covers 310 individuals with a total of 212 claims.

Allstate’s attorneys argued that the facts of each policyholder’s claim are too different to be resolved in one trial.

“While there might be some evidence that could be common to some plaintiffs, the overwhelming bulk of the evidence at a joint trial would pertain to over 200 individual circumstances surrounding over 200 individual losses,” the insurer’s lawyers wrote.

Senter is the only federal judge in Mississippi who is presiding over Katrina insurance cases.

“There are only so many cases the court can try at any one time,” said Zach Scruggs, who is Richard Scruggs’ son and law partner. “If these cases are separated, we’ll be trying them for the next 60 years.”