WASHINGTON–The Supreme Court today declined to review an appeals court decision in a Hurricane Katrina insurance claim dispute that upheld the controversial "anti-concurrent clause" in policies.
The court's action in a Nationwide Insurance Company case leaves standing insurance contract language which says insurers aren't responsible for paying homeowner's claims in cases where a loss is attributed to two causes–one covered and one not.
The case involves Paul and Julie Leonard, a Mississippi couple that sued Nationwide in 2006 after the company refused to pay for storm surge damage to their home in Pascagoula.
Nationwide argued the home was lost to excluded flood damage rather than wind; according to court documents, the Leonards did not have flood insurance.
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 Paul Senter, who presided over the case without a jury, ordered Nationwide to pay them an additional $1,228 for wind damage.
But Nationwide appealed even though the lower court ruling basically supported them, because Judge Senter ruled that the anti-concurrent clause was ambiguous.
In a late August 2007 decision, a panel of the 5th U.S. Circuit Court of Appeals supported Nationwide, saying the anti-concurrent clause was not ambiguous.
The Appeals Court panel also interpreted Mississippi state law as backing Nationwide on another issue, that insurance agents cannot orally modify the language in insurance contracts, as the plaintiffs alleged in their lawsuit.
Joe Case, a spokesman for Nationwide, responded to the Supreme Court action by saying, "This means the litigation in this particular case is over. Essentially the 5th Circuit decision in August stands. That ruling essentially upheld Nationwide's anti-concurrent clause language as clear and legal."
In seeking Supreme Court review, lawyers for the Leonards asked the court not to review the decision, but merely to throw out the 5th Circuit's decision on technical grounds.
Such an action would have negated the appeals court panel's decision to declare specifically that the anti-concurrent clause was not ambiguous, and allow claims based on oral representations of insurance agents to stand. Those were the only parts of Judge Senter's lower court decision favorable to the Leonards.
But, in asking the Supreme Court not to make any decision at all in the case, lawyers for Nationwide argued that that would have been inappropriate.
Nationwide noted that in its reply brief that "there are thousands of insurance cases in Mississippi arising out of Hurricane Katrina, and virtually all of those cases pending in federal court have been assigned" to Judge Senter.
The insurer's attorneys argued that the plaintiff's sough "to immunize those erroneous rulings from appellate review to pressure Nationwide and other insurers into either settling unmeritorious claims…"
"As the Fifth Circuit put it, with some understatement, '[i]t stretches credulity to suggest that these rulings … do not adversely affect Nationwide's rights or render it an aggrieved party in this appeal'," Nationwide lawyers said in their brief.
The decision is Leonard, Paul, et ux. vs. Nationwide Mutual Insurance Company, 07-880.
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