Appeal -Opinion Overturns Punitive Damages in Broussard vs State Farm

April 8, 2008

Judge overturns the punitive damage award on this major wind vs water insurance case in  Broussard vs State Farm.

Read what State Farm has published about the Appeal Court decision:

And here is an earlier post State Farm has up on their website about filing the Appeal on this case which explains all of the issues they felt were pertinent:

Note that this second link on the State Farm site has links to the appellate brief they filed.

The FOLO story carries the Judge from the Fifth Circuit’s Opinion which overturned the punitive award here:

There are numerous comments well worth the read to understand various opinions about this decision from both sides of the fence (policyholder attorneys and insurance carrier lawyers as well as the public).

Here is an AMBest link to a webcast done by Attorney, David Rossmiller (of InsuranceCoverageBlog fame) that everyone should take the time to listen to that explains the uphill battle insurance carriers faced on Katrina litigation cases with juries understanding coverage and hearing these cases in the midst of devastating views of Katrina damage as they arrive at the courthouses. This webcast was done after the initial decision on the punitive damages that were initially set at 2.5 million but later reduced by the judge to 1 million. Although those damages are now overturned, this is great information for adjusters and adjusting firms and carriers to listen to and a good training tool to understand or provide more insight into the view from an insurance carrier counsel standpoint:

Attorney Chip Merlin of the Merlin law group who represents policyholders versus insurance carriers had written about the Broussard initial case after attending the Appellate hearing as a spectator and I think it’s an important blog post to understand the policyholder’s attorney side of the wind versus water debate-especially his discussion about the difference in the burden of proof for insurance carriers as well as policyholders depending on the policy type as a named peril coverage or an all risk coverage which should provide good training information for adjusters who may not yet understand the issues. I always think we need to be trained for both sides of the issue so we better understand EVERYTHING we need to take into consideration when determining the absence or presence of coverage. Here is the link to Merlin’s blog on the case:

Note that Chip Merlin is conducting a 6 month “countdown” for policyholders in MS on the Katrina Statute of Limitations deadline and with the down fall of the SKG-Scruggs Katrina Group and the group by the remaining partners- KLG-Katrina Litigation group after last week’s court decision (I’ll post on that in a seperate topic shortly) I’m guessing that many of those policyholders with pending cases that must now find new counsel will be heading Merlin’s way with this advertising campaign and with the strong reputation of his firm for handling these type of issues for policyholders. Here is a link to a webcast interview he did on 2/29/08 on the 6 month to go to the statute advertising the looming deadline this coming August on the 3 year anniversary:

This additional policyholder perspective blog on the slab cases from Katrina ties all of these articles as well as the Sun Herald story together and you should take the time to read this article:

David Rossmiller, Attorney at the Insurance Coverage blog has posted a pdf of the opinion and comments are starting to come in but he hasn’t posted too much info on it yet but I’d check back to see his full post when he has time to get it up. (Rossmiller is an attorney who represents insurance carriers):

I’ll continue adding links to other relevant news stories on this topic throughout the day as more opinions become available. To keep the link to check back for updates, just click on the blog title and you can copy and paste the link to yourself or for others to check back late today for new additions to this blog entry.

 I’ve stressed many times I think it’s important that those of us in claims understand not just what we are hearing at the carrier level but also what policyholders and others writing about these issues have to say so we have the full picture and can better understand how important the decisions we make as adjusters can be with all of the ramifications those decisions can have in future litigation when not properly handled.

The days of sending new folks out to adjust claims without an experienced mentor should be long gone in our industry for the sake of policyholders and for the improved image of adjusters in the eyes of the public. No one should have blinders on who has been following Katrina litigation. I pray those in the claims community are learning from any mistakes that were made during Katrina to improve claim handling in the future. We all know that you cannot please all insureds all the time due to coverage restrictions in various policies but we should be able to avoid mistakes of the past by learning from them and by joining mentoring partnerships between carriers, adjusting firms, and carrier claim staff and independent adjusters. The time for training is not AFTER the event at induction centers but by holding seminars all year long for folks certified to handle a carrier’s claims. Too often, nothing is done until POST event other than the initial carrier certification requirement which often is limited to estimate issues and code of conducts but normally includes little information on hot topics and issues that develop during the year that independents may need an update on. Many of the more regional type of carriers provide no training for independents and we are forced to learn their carrier file requirements as closed files are returned for corrections to meet their reinspector or supervisor guidelines. Independent adjusters find this an extremely frustrating situation when files are rejected for correction when they weren’t given carrier specific  guidelines to begin with. While there are general claim handling standards in the insurance industry, each carrier has their own company interpretations adjusters need a handle on BEFORE they go out and meet with the public. I’m hopeful that together we can improve on that mentoring relationship throughout the year when adjusters can study and retain information much better without the added stress of hundreds of pending claims on their desk after a storm.

***Update 4:30 pm 4/8/08- here’s another interesting blog by a Punitive damage blog group:

Update- here is a punitive damage website blog that says this ruling means that at the new trial ordered that even if the carrier loses, the insured cannot be awarded punitive damages: (when you click on the link, scroll way down to get to the blog entry)

This blog says in part:

“More relevant to our purposes, the court held that, regardless of the outcome of the retrial, State Farm could not be liable for punitive damages”

Here is another article located quoting the Broussard’s attorney as to why part of the court’s ruling is favorable to policyholder’s for just another view on this decision from the insured’s lawyer’s standpoint which says in part :

“William Walker, a lawyer for the Broussards, said he was disappointed but not surprised by the court’s ruling.

“If we retry the case, we fully anticipate that we will be able to get a jury verdict in our favor for the entire policy limits,” he said.

Walker also hailed a portion of Monday’s ruling as a victory for policyholders: The 5th Circuit rejected State Farm’s claim that the Broussards had the burden of segregating covered damages, such as wind, from non-covered damages, like flood water.

“It will help every other person who has to sue an insurance company in Mississippi,” Walker said of that finding.”

Here’s a link to that full AP article: