Filed Under:Markets, Litigation

Louisiana Citizens Files Restraining Order on Bank; Cancels Meeting

NU Online News Service, April 20, 2:58 p.m. EDT

A scheduled meeting today between Louisiana Citizens Property Insurance Corp. and attorneys for more than 18,500 policyholders owed about $105 million from the last-resort insurer was abruptly canceled.

According to class-action plaintiffs’ attorneys, Citizens scheduled the meeting to attempt to resolve the long, drawn-out case and gave no explanation for canceling.

“This is just another obstacle to delay the inevitable court-ordered payment to the class,” says policyholder attorney Wiley Beevers.

Earlier this month, the state Supreme Court lifted a stay on the $105 million judgment against Citizens in favor of the class of policyholders who say Citizens did not act quickly enough to adjust claims following hurricanes Katrina and Rita in 2005.

On April 19, Citizens filed a temporary restraining order against its bank to prevent it from releasing its funds to the policyholders.

The state-run insurer filed a request this week for the U.S. Supreme Court to hear the case.

Attempts to reach Louisiana Citizens were not immediately successful.

Beevers says he’ll file a motion to vacate the temporary restraining order placed on Citizens’ bank.

“Eventually, we will prevail,” he says.

Plaintiffs’ attorneys say Citizens signed and delivered the order against its bank at the home of a judge late April 19 and without legal notice to the class of policyholders, which is required.

“This is just another bizarre move that will prove to be as ill-fated as a number of their previous tactics in the unseemly legal process engaged in by Citizens,” Beevers says.

Last December the state high court overruled a state appeals court and reinstated the award to policyholders, given by the district court in March 2009.

Citizens has tried every avenue in an attempt to delay or stop the judgment against it. Insurance Commissioner Jim Donelon called the award to policyholders a “potentially devastating event” because it puts the last-resort insurer of coastal properties at a disadvantage heading into the hurricane season this year.

After the judgment was reinstated, Citizens tried to work out a settlement for less money to the policyholders. The insurer also tried to file court papers to delay payment to policyholders while it appealed the state Supreme Court’s ruling. The insurer was denied a stay by the state high court on Jan. 27.

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