Plaintiff attorneys have asked the federal appeals court in New Orleans to review two of its own rulings against class actions by homeowners disputing insurers' treatment of Hurricane Katrina damage claims.
The request for an en banc rehearing by all 17 judges of the 5th U.S. Circuit Court of Appeals follows decisions earlier this month by two of the court's three judge panels that uphold policy language excluding claims for flood damage.
In a petition filed Thursday, lawyers asked the court to set aside the Aug. 8 decision of the panel of the court in Chauvin v. State Farm Fire & Casualty.
That decision upheld an Aug. 2, 2006 ruling by U.S. District Court Judge Sarah S. Vance in New Orleans that dealt with the application of the Louisiana state statute, the Valued Policy Law.
Under the Valued Policy Law, an insurer, is required, when there is a complete loss, to pay the full face value of the policy. The law also precludes a carrier from accepting premiums for one face value and then claiming the loss is a lesser amount.
Judge Vance found that VPL was not intended to expand coverage to excluded perils such as flooding.
The appeals panel also rejected the contention by lawyers for homeowners that the VPL means home insurers have to pay for the full value of a policy when the house is destroyed by a combination of flooding and hurricane wind damage.
Attorneys in their court papers argue that a rehearing is justified because the case constitutes "extraordinary circumstances," according to Jeff Struckhoff, attorney with Lestelle and Lestelle, Metairie, La., the lead law firm in the Chauvin case.
"There is a great deal at stake in these cases, both for the property owners and the insurance industry," Mr. Struckhoff said.
In the second case, lawyers are asking the full court to set aside an Aug. 1 decision by its panel In re: Katrina Canal Breaches Litigation.
In that case, the appellate court decided that flood exclusions apply to manmade as well as natural disasters.
The appeals ruling reversed a November decision by U.S. District Court Judge Stanwood Duval in New Orleans. He found that flood exclusion language in many insurance company policies did not rule out water damage from levee breaches caused by negligent design, construction and maintenance of the levees.
Drew Ranier, a partner for Ranier, Gayle and Elliott based in Lake Charles and New Orleans, La., said lawyers for the plaintiffs asked for review because the 5th Circuit panel should have certified the case to the Louisiana Supreme Court for its interpretation of state law before ruling, among other reasons.
"These are interpretations of Louisiana law at issue here, and it is ultimately the interpretations of Louisiana law that will prevail here," he argued.
In fact, oral arguments in the first case interpreting the Valued Policy Law stemming from losses from Hurricane Katrina, Sher v. Lafayette Insurance Co., will be held Sept. 12 before the 4th Louisiana Circuit Court of Appeals, based in New Orleans, Mr. Ranier said.
The case will then go before the Louisiana Supreme Court, which is the ultimate arbiter of Louisiana law, Mr. Ranier noted in comments to National Underwriter and in court briefs submitted to the 5th Circuit.
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