[StBernard] State Farm liable in Katrina case

[Westley Annis]

State Farm liable in Katrina case 
Judge finds  insurer liable, jury awards punitive damages to couple
The Associated Press
Updated: 3:58 p.m. CT Jan 11, 2007

GULFPORT, Miss. - A jury on Thursday awarded $2.5 million in punitive
damages to a couple who sued State Farm Fire & Casualty Co. for denying
their claim after Hurricane Katrina, a decision that could benefit hundreds
of other homeowners challenging insurers for refusing to cover billions of
dollars in storm damage.

A federal judge only hours earlier had taken part of the case out of jurors'
hands before they awarded punitive damages to State Farm policyholders
Norman and Genevieve Broussard.

U.S. District Judge L.T. Senter Jr. ruled Thursday morning that State Farm
is liable for $223,292 in damage caused by Hurricane Katrina to the
Broussards' home. Senter left it to a jury to decide whether to award
punitive damages.

Senter's decision to make a directed verdict rather than let the jury decide
the entire case appeared to surprise everyone in the courtroom. After he
explained his ruling, Senter ordered a recess to give attorneys time "to get
over the shock."

After the jury announced its award, the Broussards left the courthouse arm
in arm. "It's a great day for South Mississippi," Norman Broussard said.

Some of Senter's earlier rulings in other Katrina cases have favored the
insurance industry, but his decision Thursday calls into question the
companies' refusal to cover billions of dollars in damage from Katrina's
storm surge.

Storm surge vs. tornado
The Broussards sued State Farm for refusing to pay for any damage to their
home, which Katrina reduced to a slab. The couple, who wanted State Farm to
pay for the full insured value of their home plus $5 million in punitive
damages, claimed that 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 that 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 that State Farm couldn't prove that Katrina's storm
surge was responsible for all of the damage to the Broussards' home. The
judge also said the testimony failed to establish how much damage was caused
by wind and how much resulted from storm surge.

State Farm: 'Surprised and dispappointed'
State Farm spokesman Phil Supple said after the jury's verdict that the
company is likely to appeal the decision. "We are surprised and disappointed
by both the judge's ruling on the coverage issues and the amount awarded by
the jury for punitive damages," he said in a written statement. "We believe
the expert testimony supported a different result."

Jack Denton, one of the couple's attorneys, said they are "very pleased"
with the jury's verdict but declined further comment. "Obviously we have
other trials coming up and don't want to jeopardize those cases," he added.

In his closing argument Thursday, one of the Broussards' attorneys, William
Walker, said State Farm had breached their contract "in a bad way" by
denying their claim. State Farm "acted like a chiseler," he said, adding,
"The pocketbook is what they listen to."

State Farm attorney John Banahan urged jurors to "use your head and your
heart" in deciding on punitive damages and to reject an attempt by the
Broussards' attorney to demonize the company as an "evil empire."

Robert Hartwig, chief economist for the Insurance Information Institute in
New York, said before the jury announced its decision that a punitive damage
award would be "distressing" for insurers.

"It adds even more cost and more uncertainty to the other problems that
already exist in the Mississippi homeowners insurance market," he said.

Settlement possible in other cases

The Broussards' case isn't directly involved in recent settlement talks
between State Farm Fire & Casualty Co., Mississippi Attorney General Jim
Hood and policyholders' lawyers.


People with direct knowledge of the settlement talks told The Associated
Press this week that State Farm, Mississippi's largest home insurer, is
considering paying hundreds of millions of dollars to settle more than 600
lawsuits and resolve thousands of other disputed claims.

Richard "Dickie" Scruggs, an attorney who represents 639 State Farm
policyholders in the settlement talks, said he doesn't know how the judge's
ruling on Thursday will affect the negotiations.

Randy Maniloff, a Philadelphia-based lawyer who represents insurers and has
closely followed the Katrina litigation, said Senter's ruling is a "huge
verdict" for homeowners even if the jury didn't award punitive damages.

"That settlement is looking awfully good for State Farm now," he added.

C 2007 The Associated Press. All rights reserved. This material may not be
published, broadcast, rewritten or redistributed.
URL: http://www.msnbc.msn.com/id/16579242/


----------------------------------------------------------------------------
----

C 2007 MSNBC.com