Allstate might have struggled in the New Orleans public court of opinion, but a lawsuit that was dropped this week by the plaintiffs shows that policyholders aren't always the victims in a claim dispute.

Allstate began facing the first of about 1,000 cases against it in New Orleans earlier this week. The first federal trial it faced involved plaintiffs Lawrence and Elizabeth Tomlinson. As in the Tomlinson case, a majority of the other pending cases involve disputes about claim payments, determinations, and charges of bad faith made after Hurricane Katrina struck in Aug. 2005.

According to reports, Allstate paid the Tomlinsons $150,000 for damage to their home, contents, and additional living expenses prior to litigation. The main dispute came when the company began questioning some of the claim costs that were being reported.

"Based on reviewing the pre-trial motion practice, it looks like Allstate shifted the focus to alleged material misrepresentations made by Ms. Tomlinson (an attorney) as to the submission of claims for living expenses," said Steven Kluz, an attorney with Mohrman & Kaardal in Minneapolis, Minn. "Allstate struck gold with admissions plaintiffs made that a residence Ms. Tomlinson claimed to have rented was actually owned by the other plaintiff, Mr. Tomlinson, and no lease was ever executed."

The case, however, is not expected to materially impact the other remaining cases still to be heard, but it could cast a wide shadow of skepticism.

"My guess is that the purported fraud in this case is an anomaly," said Kluz. "Unfortunately for plaintiffs, this was the first case partially tried, and it could create doubt about other plaintiffs' claims."

Based on Allstate's response, there is no doubt that the result is being viewed by the company as a great start on what looks like a long journey.

"At the conclusion of the evidence, the plaintiffs have decided voluntarily to withdraw their claims and relinquish any right to re-file them," said Mike Siemienas, spokesperson for Allstate. "They have not received compensation of any kind from Allstate for withdrawing their claim. We believe that result speaks for itself."

Interested in more legal news and in-depth articles? Head over to Claims' legal channel for more information.

Special Reports /

First Allstate Suit in New Orleans Dropped by Plaintiffs

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