[StBernard] Supreme Court overturns St. Bernard Katrina class certification

Westley Annis westley at da-parish.com
Wed Dec 22 21:37:27 EST 2010

Supreme Court overturns St. Bernard Katrina class certification
12/22/2010 5:27 PM By Steve Korris

Property owners alleging Lafayette Insurance improperly denied Hurricane
Katrina claims can't pursue a class action, the Supreme Court of Louisiana
decided on Nov. 30.

The Justices ruled that St. Bernard Parish District Judge Manuel Fernandez
committed an error when he certified a class action across eight parishes.

They found individual questions predominated over questions common to the

Justice Greg Guidry found the claims so highly individualized that class
certification would likely be unfair to those with stronger claims than the
class representatives.

"Also militating against class certification is the fact that individual
suits raising similar insurance adjusting claims have already been filed
widely - and many have been resolved," Guidry wrote.

The Justices reversed Fifth District appeals judges in Gretna, who affirmed

The decision will require individual litigation of about 300 suits that
remain out of thousands that policyholders filed against Lafayette.

Plaintiff lawyer Robert Murphy of New Orleans expected to represent
thousands, not hundreds, in a class action.

At oral argument in September, he said that without a class action, 7,000
homeowners wouldn't be able to pursue claims.

Justice John Weimer said three percent of the 7,000 ended in litigation.

Murphy said a significant number of the 7,000 would step forward prior to

He called on the Justices to resist a trend away from class actions.

"In federal court the last several years class actions have not been looked
on very well, but in Louisiana things have been different," Murphy said.

He said Louisiana's legislature and courts recognize the benefits of class

For Lafayette, Howard Kaplan of Metairie told the Justices that every
Katrina adjusting class action in federal court was dismissed.

He said individual issues predominated over class issues.

Justice John Weimer asked if that would be true if no one received an
appropriate level of payment.

"That is not the factual testimony," Kaplan said.

Murphy's clients sued Lafayette over adjustment of claims in St. Bernard,
Orleans, Jefferson, Plaquemines, St. Tammany, St. Charles, Tangipahoa and
Terrebonne parishes.

They claimed Lafayette denied claims by attributing damage to water rather
than wind.

They claimed repair payments didn't account for price increases after

They claimed repair payments didn't include contractor overhead and taxes.

They claimed Lafayette denied payments for additional living expenses and
for civil authority claims that arise when government orders citizens to
leave their homes.

When the case reached the Supreme Court, the National Association of Mutual
Casualty Insurers opposed a class action as friend of the court.

Adrianne Baumgartner of New Orleans wrote for the association that Fernandez
wrested control of ongoing suits from absent class members.

"Unless those individual class members affirmatively opt out of the class,
they will be unable to fully litigate their cases to their respective
strengths," Baumgartner wrote.

She wrote that their cases would be centrally managed by other attorneys who
have significant financial incentives to settle on terms favorable to

"This judicially endorsed power grab serves class counsel well, but it is
detrimental to the many class members whose cases currently await
adjudication," she wrote.

Though Murphy said at oral argument that Fernandez found his experts
satisfactory, Guidry picked the experts apart.

Guidry wrote that adjuster Wesley Baldwin hadn't written a property estimate
in 25 years.

He wrote that Baldwin didn't view properties of the plaintiffs, didn't know
the dates of pricing that independent adjusters used, didn't know what
software Lafayette adjusters used, and didn't suggest a price list the
adjusters should have used.

"He conceded he had seen nothing in the reviewed files indicating adjusters
were advised either to adjust claims differently from how they had done so
for any of their other client insurance companies or to use a particular
pricing profile," he wrote.

Guidry wrote that general contractor Jonathan Drennan testified that the
roof on each property should be replaced.

He wrote that Drennan conceded that if a roof required repair rather than
replacement, the difference between his estimates and Lafayette's would be

Guidry found no evidence that Lafayette instructed jurors to use pre-Katrina

He wrote that each claim of under pricing would have to be individually
examined to determine the extent and scope of damage, whether from wind or
storm surge.

He wrote that "whether a claim was in fact knowingly under priced will
necessarily turn on a myriad of individual factual issues."

Justice Bernette Johnson dissented in part, finding a class action could
have proceeded on claims that Lafayette improperly denied living expenses
and civil authority claims.

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