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Many coastal Louisiana homeowners were affected by Hurricane Katrina. Too many of those affected are still dealing with the stressful experience of rebuilding their homes, communities, and lives. When natural disaster strikes, the importance of good, quality homeowners insurance becomes starkly evident, and can provide much needed relief for homeowners. Unfortunately, insurance companies do not always make the recovery of benefits easy on the afflicted homeowner. The insurance claims process can be overwhelming, and may be complicated by the often necessary instigation of litigation. Homeowners carrying insurance need to be aware that in some instances the actions of their insurance provider in hindering their expedient recovery can compel a court to award additional compensation to the homeowner.
Louisiana revised statute §22:1892 * governs the recovery of additional damages against an insurance provider. Under §22:1892, an insurance provider who fails to make a payment on a claim within 30 days of settlement or written agreement to pay could be subject to sanctions if the court finds that failure to disburse payment is “arbitrary, capricious, or without probable cause.” If an insurer fails to make a timely payment as per the statute, the court may “subject the insurer to a penalty, in addition to the amount of the loss, of fifty percent damages on the amount found to be due from the insurer to the insured, or one thousand dollars, whichever is greater.” This penalty, if awarded, is either paid out to the insured, or to a designated employee of the insured.

The Fifth Circuit Court of Appeals case French v. Allstate Indemnity Co., addresses §22:1892. Allstate appealed the lower court’s ruling that it was liable under §22:1892 for failing to timely pay an undisputed portion of a wind damage claim made by the French’s. Allstate did not attempt to argue that they did not owe the French’s some amount under the statute, but rather they argued that the penalty amount awarded to the French’s was incorrectly calculated using an outdated version of § 22:1892. The lower court “calculated penalties on the Plaintiff’s entire wind-damage claim, without discounting any amounts Allstate had timely paid.” The court in French held that the lower court incorrectly calculated the statutory penalty to Allstate by failing to subtract a portion of the claim which Allstate timely paid from the penalty calculation. The court reduced the French’s award by $2,500.

It is important to note that had Allstate simply argued that they should not be penalized under the statute they would almost certainly have been unsuccessful. In Louisiana Bag Co. v. Audubon Indemnity Co., the Louisiana Supreme Court ruled that mere failure to pay within the statutory time limit constitutes behavior that is “arbitrary, capricious, and without probable cause,” and the statutory penalty applies. In other words, simply failing to make a timely payment as required by the statute, and nothing more, is sufficient reason for a court to subject an insurer to penalties.

The calculation of damages to be paid out by insurance companies is an often complicated process. Understanding and knowledge of any additional statutory awards that may be available to a homeowner in need can make all the difference. If you or a loved one has been affected by Hurricane Katrina you need an experienced law firm to help you navigate negotiations with your insurance company and to represent you in court should it be necessary.

*Prior to 2009, § 22:1892 was designated § 22:658, and is cited in French v. Allstate Indemnity Co. as § 22:658.

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Nearly six years after Hurricane Katrina struck, Louisiana residents are still dealing with the traumatic and costly effects of the storm. The American Red Cross estimates that approximately 275,000 Louisiana homes were destroyed by the storm and thousands more were damaged. Even those homeowners with insurance can find the recovery of damages to be a difficult and definitely expensive process. This financial burden, regardless of the supposed
Many homeowners filing claims for damages were in for a nasty surprise: the “Named Storm Deductible.” Under Louisiana law, insurance companies can implement deductibles of as much as 5% of the value of the insured property for damage caused by “named storms,” including tropical storms and hurricanes such as Hurricane Gustav or Hurricane Katrina. Frequently these provisions have not appeared on the original policies, but were added during a policy renewal, meaning homeowners are unaware of its existence or don’t understand its implications.

Under a Named Storm Deductible of 5%, for example, damage caused to a home with an insured value of $100,000 would cost the homeowners a deductible of $5,000, rather than the standard $500 or $1,000 deductible ordinarily applied to such losses. Litigation arguing against and interpreting these deductibles can be complicated and frustrating.

Homeowners Mary Williams, Michael Manint, and Susan Manint ran into this problem firsthand when recovering from damage caused to their homes by Hurricane Katrina. While their policy from Republic Fire and Casualty Insurance Company includes a Named Storm Deductible of five percent (5%), it does not specifically designate what the 5% is to be taken from: the damage amount or the dwelling coverage limit. One year, when renewing their homeowners insurance, Republic sent them an Important Policyholder Notice explaining the application of the Named Storm Deductible. The Notice included an example of the Named Storm Deductible which showed that the deductible would be 5% of the dwelling coverage limit. This distinction, however, did not actually appear within the provisions of their policies.

After Hurricane Katrina struck Louisiana, Republic determined that Ms. Williams and the Manints would have to pay deductibles of $7,320 and $4,445, respectively, which were 5% of their dwelling coverage limits. Both homeowners, however, had expected to have to pay only 5% of the covered loss, which would have amounted to costs under $1,000.

Both homeowners filed suit against Republic, asserting that the company had miscalculated the Named Storm Deductible. They argued this on the theory that the Important Policyholder Notice, which showed that the 5% was to be taken from the dwelling coverage limit, could not be considered when interpreting the Named Storm Deductible. The district court however, disagreed and ruled in favor of Republic, confirming that the deductible had been calculated correctly.

On appeal, the court affirmed the district court’s ruling. Under Louisiana law, because the Important Policyholder Notice was physically attached to the renewal policies, it was made a part of them as well. This meant that the Notice’s interpretation showing that the 5% was to be taken from the dwelling coverage limit was part of the policy and thus enforceable against the homeowners.

If you find yourself in a similar predicament, consulting with a legal expert may be your best chance in receiving the justice you deserve.

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If a homeowner insures his home and then suffers damage to the structure, the process of making a claim and being paid for the loss can be long and frustrating. Frequently, the insurance company will arrive at its value of the loss and attempt to persuade the homeowner to accept that value, even if it doesn’t reflect the homeowner’s actual costs of repair. In such a case, the homeowner should check his policy for an “appraisal clause.” This provision provides for an alternative method for setting the value of the property damage. An appraisal procedure requires the homeowner to obtain an independent appraiser to survey the damage and assign a value to the loss. Similarly, the insurance company must hire an independent appraiser to perform the same analysis. The two appraisers must petition the court for the appointment of an umpire who will then oversee the negotiation of the settlement based on the two appraisals. Once any two of the parties–the appraisers and/or the umpire–agree as to the value of the loss, the matter is settled.

In Louisiana, like other states, flood insurance policies are underwritten through the National Flood Insurance Program (NFIP) and administered by the Federal Emergency Management Agency (FEMA). The NFIP authorizes private insurance companies to issue policies and handle the claim settlement process. Claims are actually paid by the federal government. FEMA requires that all NFIP flood insurance policies include an appraisal clause.

After their was heavily damaged by flood in Hurricane Katrina, William and Cynthia Dwyer filed a claim with their flood insurer, Fidelity National Property and Casualty Insurance Company. The Fidelity policy was issued through the NFIP. The Dwyers disagreed with Fidelity’s offer of settlement and took the dispute to the District Court for the Eastern District of Louisiana. The court entered judgment for the Dwyers, and on appeal by Fidelity, the Fifth Circuit Court of Appeals vacated the judgment and ordered the parties to submit to the appraisal process as outlined in the policy. The Dwyers and Fidelity sought appointment of an umpire, who then submitted to the district court an appraisal that included the amount of actual damage to the Dwyer home as well as a “mark-up for overhead and profit” intended to cover the cost of a general contractor to make the repairs. Fidelity accepted the umpire’s figure on damages but objected to the addition of the mark-up because the Dwyers had already sold the house and would not have any role in the repair itself. The Fifth Circuit agreed with Fidelity that “the award of overhead and profit was erroneous” and noted that “Fidelity told the district court that absent the improper award of overhead and profit, it agreed with the umpire’s appraisal.” Thus, determining that Fidelity and the umpire were in agreement on the amount of the loss, the court entered judgment ordering Fidelity to pay the Dwyers $1,552.51. This amount represented the umpire’s appraisal amount less the erroneous overhead and profit, the policy deductible, and the amount Fidelity had already paid out to the Dwyers.

The appraisal process seeks to take the potentially emotional settlement of an insurance claim out of the hands of the homeowner and the insurance company and leave the decision to disinterested, expert third parties who have no connection to the outcome. Although the process is generally more cost-effective and expedient than litigation, a homeowner should consult with an experienced attorney to ensure the procedure is properly followed and his rights are protected.

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Class actions are a common and popular legal tool for cases involving a large group of people who share the same grievance against a defendant. Specifically, the plaintiffs have to have a real and actual interest in order to join a class action. An issue may arise however, if a plaintiff’s interest is called into question. In particular, whether the plaintiff belongs to the class of persons to whom the law grants the cause of action asserted against a defendant. Essentially, the plaintiff’s have to share the same type of complaint and injury in order to form a proper class action. Many times, defendants will allege that the class action was improperly certified (allowed) in order to invalidate any complaints against them.

In a recent Second Circuit Court of Appeal Case in Louisiana, the court explored the certification of a class action in order to determine whether or not it was proper. The facts of the case include the plaintiff, representing a class of individuals, who all share a grievance against a funeral home, owners of the funeral home, and numerous banks. The gist of their complaint is that the funeral home sold prepaid funeral expenses to the plaintiffs and other putative class members. The owner of the funeral home then deposited their payments into certificates of deposit (COD) with one or more of the banks named as defendants. The bulk of COD’s were under names which included the Funeral Home, followed by either “payable on death,” or “for the benefit of” followed by the name of the individual whose prepaid funeral funds were being held on deposit. The issue became that without presentation of a death certificate as required by Louisiana statute, the law governing prepaid funeral services, and in breach of the banks’ contracts, namely, the certificates of deposit, the funeral home was allowed by the banks to withdraw the funds which they converted and appropriated for their own use. The plaintiffs argue that by accepting the deposits, the defendant banks became commonly liable with the funeral home. Yet, the appellate court is charged with the responsibility to determine whether the class action should be certified, despite the fact the trial court denied the class’s certification.

A class action must have certain definite characteristics. First, the class must be so large as to make individual suits impractical. Second, there must be a legal or factual claim in common between all the plaintiffs involved. Third, the claims or defenses must be typical of the plaintiffs or defendants. Fourth, the representative parties must adequately protect the interest of the class. Further, in many cases, the party seeking certification of a class must also show that common issues between the class and the defendants will predominate the proceedings, as opposed to individual fact-specific conflicts between class members and the defendants and that the class action, instead of individual litigation, is a superior vehicle for resolution of the disputes at hand. Here, the class certification, the plaintiffs sought to certify a class defined as “all individuals from whom the funeral home appropriated and converted funds collected by them for prepayment of funeral expenses.” Additionally, the motion asserted common questions of law and fact including:

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With little details available, the residents of New Iberia sit and wait to find out more about an explosion that took place at the Multi-Chem plant. Conflicting reports exist regarding harm caused by the incident, though the most recent release states all plant employees are accounted for and there were no reported injuries.

A 1-5 mile evacuation has taken place with residents encouraged to leave or, at worst, remain inside.

More information will be available on our Personal Injury blog as it becomes available.

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General maritime law holds that there can be no recovery for economic loss absent physical damage to or an invasion of a proprietary interest. The issue in many cases is whether or not any actual damage has occurred. In a recent Fifth Circuit Court of Appeals decision, the court explores this very issue in order to determine whether the plaintiffs damages warranted recovery. Throughout the Mississippi River, refineries and various businesses operate, utilizing the river’s shipping channels to transport their goods and perform many of their business operations. However, if the river is blocked in any way, it hinders their production and hence, their ability to maintain scheduling and perform necessary tasks. The mere absence of access does not constitute physical damage, yet, it does constitute an injury to one’s proprietary interests. Thus, the court has to make the determination of whether or not the injured party was injured and in what way to make a ruling on any potential recovery.

The facts of the recent maritime case involve a plaintiff business who owns and operates a hydroelectric station on a privately owned channel from the Mississippi River. Near the plaintiffs property is the Mississippi River Flood Control Structures at Old River in Concordia Parish, Louisiana. The River Flood Control Station is made up of the intake channel which diverts water from the Mississippi River, a dam structure which contains the turbines, generators, and other machinery of the station, and the outflow channel which directs water from the dam to the Old River/red River/Atchafalaya River. The plaintiff’s owned the station and the surrounding property necessary for their business operations. On December 24, 2007 two tows operated by the defendant and a barge company collided on the Mississippi River approximately 2.5 miles upriver from the plaintiff’s intake channel. As a result of the collision, several barges broke free from the tow then drifted downriver into the intake channel of the plaintiff’s facility and became grounded on the east bank of the intake channel, lodging against the station. The physical damage may have resulted from one of the barges that had become lodged on the station, this physical presence obstructed the intake channel, which provided water to the turbine and generators of the plaintiff’s electric power generation facility. The presence of the barge forced the plaintiff to reduce flow of water in the intake channel into the turbine and thus, its output of electricity to prevent the barge from sinking and to allow safe access to the barge for its removal. After six hours without any progress, the plaintiff’s had to shut down six turbines and reduce the remaining two to minimum power because of the decreased flow of water directed to the turbines from the intake channel. In order to remedy the situation, a barge crane and a vessel were sent to enter the intake channel, offload the grounded barge’s cargo, tow the damaged barge away from the station where a larger barge crane could unload the barge’s cargo, so it could safely re-enter the Mississippi River. The entire process took almost ten hours to complete.

The plaintiff facility filed suit in a Louisiana state court seeking damages for the value of the electrical power it was unable to generate due to the physical presence and intrusion of the grounded barge. However, the trial court granted the defendant’s motion for summary judgment, holding that no physical damage was evidenced and thus, under general maritime law, no recovery was available. Upon appeal, the fifth circuit explored the general maritime law in order to determine whether or not the summary judgment holding was correct. The appropriate legal rule to analyze the initial claim was to apply the Robins rule. The rule of Robins carries numerous legal meanings, including: refusing recovery for negligent interference with “contractual rights,” as denying recovery for economic loss if that loss resulted from physical damage to the property of another. The rule’s goal was to exclude indirect economic repercussions, which can be widespread and open ended. Here, the defendants argued that the plaintiff suffered no physical harm. However, the appellate court agreed with the plaintiff’s, the mere presence of the barge in the intake channel, which was a functional part of the plaintiff’s facility, interfered with the unobstructed flow of water in the channel, impairing the ability of the facility to operate as designed. Thus, the harm qualifies as damage to its proprietary interests as general maritime law indicates warrants recovery. After all, the plaintiff’s had to actually turn off half of their business facilities machinery and reduce the power to the remaining two in order to allow the defendants the safe and speedy removal of their grounded barge. Without the plaintiff’s mitigating acts (turning off the majority of their machinery) they would have ru the risk of incurring physical damage their entire hydroelectric station.

The Fifth Circuit held that based on the fact that the defendants barge entered the plaintiff’s privately owned hydroelectric facility, causing the plaintiff’s physical damage to their property and invasion of their proprietary interest, they reversed the judgment of the district court dismissing its claims on summary judgment and remanded. this case illustrates that maritime law is a difficult and often complicated legal journey. In order to effectively protect your legal rights one should hire a competent and effective attorney.

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A partnership is a legal relationship that carries with it certain rights and obligations. Whether or not two or more persons have alegal partnership may become an issue. Our law defines a partnerhsip as a

“juridical person, distinct from its partners, created by a contract between two or more persons to combine their efforts or resources in determined proportions and to collaborate at mutual risk for their common profit or commercial benefit.”(La. C.C. Art. 2801).

However, a legal and valid partnership may be established without a written agreement or contract, circumstantial proof may be offered to maintain that there was indeed a partnership. All of the surrounding facts are taken into consideration and explored by the court in order to determine whether a partnership had been formed, and to what extent each partner was involved. Thus, the facts are extremely important when an alleged partnership is created without any written documentation to support that contention.

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Sony announced yesterday that the Playstation Network (PSN) is set to return by the end of this week. Reports indicate access began to be provided to users starting on May 15 with different regions being incrementally phased in worldwide. Questions remain, however, as to the extent of previous breaches of the gaming network’s security and just how safe gamers are from having the incidences of May occur again.

With its restoration of access to Playstation and Qriocity users in US, Europe and Asia, Sony is ending a month of outage that was first spurred by a breech of the networks’ security. As we explored previously, that Sony has admitted that the breech occurred due to the exploit of a known vulnerability opens a rather clear inquiry of just how negligent the electronics giant was in the matter. Down since April, the Playstation gaming network and Qriocity, a movie and music service, have been sorely missed by users that frequently accessed the services for their entertainment needs. However, with that access came the disclosure of information that is now likely in the open. What this information can be used for, and the subsequent ramifications for the users, remains to be seen but there is no doubt the courts will begin seeing discussion on the damages caused.

Sony has been adamant about the upgrades they have made to their system, stating they have “been conducting additional testing and further security verification of our commerce functions in order to bring the PlayStation Network completely back online so that [their] fans can again enjoy the first class entertainment experience they have come to love.” This statement, made by Sony Executive Deputy Vice President Kazuo Hirai, also came with an expression of gratitude for the patience and support offered by fans. The reality of the situation, however, is that those whose information was disclosed have zero patience for an invasion of their privacy.

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In what can only be considered a confusing lapse in digital security, Sony announced another breach of their network security in late May. This news comes on the heels of the major shutdown that aggravated a world of gamers. As the length of downtime nears a month, questions linger as to how much knowledge the electronics giant had regarding system vulnerabilities and why a breach was what it took to search for solutions.

Relating to a vulnerability regarding password resets, the most recent security breach is a major headache for Sony. The Playstation 3 Network, albeit free, is relied upon by millions of users for online gaming and, more importantly, includes a wealth of personal information for all of these users. Within the first security breach, this personal information, unfortunately, also includes billing details that could lead to vulnerability for customers who only wished to enjoy their games as sold.

Regarding the most recent breach, reports indicate that users will know their account has been compromised if they received an email indicating that their password had been changed. While the information made vulnerable in this act remains unclear, it is just yet another incident in a problematic series of events that raise significant questions about the protection being utilized by Sony and the amount of negligence that may be at play. Negligence claims involve an injured party suing a defendant for the damages suffered that were avoidable through the direct intervention of that party. In short, negligence claims deal with the ‘avoidable;’ news reports that have come out regarding this matter indicate that Sony was aware of the vulnerability.

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Homeowners across the Louisiana coast were affected by Hurricane Katrina. Many of those affected are still dealing with the stressful experience of rebuilding their homes, communities, and lives. Homeowners insurance is a boon to many when natural disaster strikes. Unfortunately, insurance companies do not always make recovery of benefits easy on the afflicted homeowner. The insurance recovery process can be overwhelming, and may be complicated by the often necessary instigation of litigation. Insurance negotiations can be complicated by differing interpretations of policy provisions. Many different provisions governing recovery are involved in insurance contracts. The interpretation of the language of the contract by the court plays a pivotal role in deciding the amount of damages an insured is entitled to recover.

The recent Fifth Circuit Court of Appeals case French v. Allstate Indemnity Co., illustrates that the recovery of damage benefits from an insurance company is not always a straight forward process. In French , homeowners in Slidell, Louisiana sued their homeowners insurance provider, Allstate Indemnity Co., to recover additional damages resulting from wind damage to their residence caused by Hurricane Katrina. The plaintiffs initially won a judgment in their favor in the United States District Court for the Eastern District of Louisiana , but they appealed, arguing that they were entitled to additional damages beyond the original award. The insurance company paid less than the full amount of the liability limit under the homeowners insurance policy. The District Court held that, since their repair costs would exceed their policy limit, they were entitled to at least the full limit and awarded them judgment accordingly.

On appeal, the plaintiffs argued that they were entitled to further damages under two provisions of their policy, an Extended Limits Endorsement provision and an Additional Living Expenses provision. They argued that the lower court erred in denying them recovery under these provisions. The court applied Louisiana case law which dictates that the language of the policy controls and “constitutes the law between the insured and insurer.” When an insurance contract is subject to interpretation “‘[w]ords and phrases … are to be construed using their plain, ordinary and generally prevailing meaning,’ unless the words have acquired a technical definition.” The appellate court reviewed the original award to determine if the lower court erred in their interpretation of these provisions and in denying recovery to the plaintiffs.

The Extended Limits Endorsement allowed for a certain amount of additional damages above and beyond the actual cash value of the insured’s home. The court found that the language of the provision indicated that, in order to recover under this provision, the insured had to show they had repaired or replaced their damaged property. They must also have insured their home to 100% of its value. The plaintiffs did not meet either of these requirements, and the court found the denial of an additional award under this provision was appropriate.

The Additional Living Expenses provision allowed for recovery of damages for “the reasonable increase in living expenses necessary to maintain [a] normal standard of living when a direct physical loss we cover . . . makes your residence premises uninhabitable.” The court determined that the plaintiffs had to show additional living expenses they had actually incurred. Since they had not yet begun repairs on their home, and continued to live in the residence, they were properly denied additional recovery under this provision.

Knowledge of the interpretation of insurance contract provisions is important when negotiating an insurance settlement or in litigation for recovery of damages. If you or a loved one has been affected by Hurricane Katrina you need an experienced law firm to help you navigate negotiations with your insurance company and to represent you in court should it be necessary. If you are looking for legal representation, the Berniard Law Firm has experience working with the victims of Hurricane Katrina and their families as well as a variety of storm and general insurance dispute issues.

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