Court to Hear State Farm Appeal of $2.7 Million Miss. Katrina Award

A federal appeals court has scheduled arguments in State Farm Fire and Casualty Co.’s quest to overturn a $2.7 million judgment in a Hurricane Katrina insurance dispute from the Mississippi Gulf Coast.

The arguments will be heard Dec. 5, in New Orleans.

In January, U.S. District Judge L.T. Senter Jr. ruled State Farm owed a Biloxi couple $223,292 for their Katrina-demolished home and its contents. Senter ruled that even though their policy excluded flood damage, the company did not prove during trial that the entire loss was caused by flood.

Senter then allowed a jury in Gulfport to deliberate punitive damages. Their verdict: $2.5 million.

State Farm filed an appeal with the 5th U.S. Circuit Court of Appeals, which set the hearing date this week.

Senter had taken part of the case out of jurors’ hands before they awarded punitive damages to State Farm policyholders Norman and Genevieve Broussard.

The Broussards sued Bloomington, Ill.-based State Farm for refusing to pay for any damage to their home, which Katrina reduced to a slab. The couple wanted State Farm to pay for the full insured value of their home plus $5 million in punitive damages. The Broussards claimed a tornado during the hurricane destroyed their home. State Farm blamed all the damage on Katrina’s storm surge.

State Farm and other insurers say their homeowner policies cover damage from wind but not from water, and the policies exclude damage that could have been caused by a combination of both, even if hurricane-force winds preceded a storm’s rising water.

Senter, however, ruled State Farm couldn’t prove Katrina’s storm surge was responsible for all of the damage to the Broussards’ home. The judge also said testimony failed to establish how much damage was caused by wind and how much was caused by storm surge.