Nationwide Appeals Anti-Concurrent Causation Decision

Nationwide Insurance Co. asked a federal appeals court panel in New Orleans to review a lower court decision and find that the anti-concurrent causation language in its Mississippi homeowners policies is not ambiguous.

"This has a huge practical effect on so many of these cases," Nationwide lawyer Chris Landau told a panel of the 5th U.S. Circuit Court of Appeals. "In so many of these cases, you just can't tell if it's wind or water that is responsible for losses stemming from powerful hurricanes," he said.

The 5th Circuit Court of Appeals is the same court that last week ruled that insurers are not liable to pay for insurance claims resulting from flooding caused when the levee broke in New Orleans in the wake of Hurricane Katrina in 2005.

Mr. Landau made his arguments yesterday as Nationwide sought to reverse certain technical provisions of an August 2006 decision by Federal District Court Judge L.T. Senter Jr.

In general, Judge Senter's decision in Paul Leonard and Julie Leonard v. Nationwide supported Nationwide. The Leonards are from Pascagoula, Miss., one of the coastal areas hard hit by Hurricane Katrina.

The Leonards estimated the total damage to their home at $130,253. Nationwide awarded them only $1,661, claiming the rest of the damage stemmed from storm surge. Judge Senter, who presided over the case without a jury, ordered Nationwide to pay them an additional $1,228 for wind damage.

Insurers claim that homeowners' policies cover wind damage, but not in cases where the damage stemmed from a combination of wind and water. But, in his decision, Judge Senter said these so-called "anti-concurrent causation" provisions are ambiguous and therefore unenforceable.

Nationwide's contention in oral arguments and briefs to the court is that this contract language has been held valid in Mississippi for many years. "This type of language has also been upheld by courts across the country," Nationwide contended.

It further argued that allowing the district court ruling to stand would mean that Nationwide's homeowner policies in Mississippi may have to cover losses it never collected premium to cover. "This could result in higher rates or decreased coverage," Nationwide argued. "In other words, some Mississippi policyholders along the coast would reap a windfall at the expense of customers in other parts of the state," the company said.

When Nationwide appealed, the Leonards, represented by Richard Scruggs, a well-known plaintiff's lawyer, cross-appealed.

But, in court papers filed July 23, the Leonards dropped their appeal and argued that the panel should decline to review Judge Senter's decision now that the Leonards are no longer appealing the case.

"Nationwide, having suffered no injury or prejudice at trial, already brings a moot case; put another way, it has no standing to bring its appeal," the lawyers said in court papers.

In response, during oral arguments, Judge Edith Jones, chief judge of the Circuit and a member of the panel, said the filing was just the latest "in an odd course of events" in this case.