Appeals Rulings Change Climate for Katrina Suits

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A series of appellate rulings favoring insurance companies has worsened the outlook for homeowners who haven’t yet reached settlements to rebuild homes damaged by Hurricane Katrina.

Earlier this year, the climate was better for Katrina lawsuits, the Wall Street Journal reports (sub. req.). In January, State Farm Insurance was ordered to pay $1 million to a homeowner who lost a home and agreed to pay $79.5 million to 640 families in a settlement.

The settling families were represented by Richard “Dickie” Scruggs, indicted last week on charges he conspired to bribe a judge in an attorney-fee dispute. He has also obtained settlements for more than 500 homeowners against other insurance companies. His remaining Katrina cases will be taken over by other plaintiffs lawyers.

Since the initial settlement, the New Orleans-based 5th U.S. Circuit Court of Appeals has issued several rulings for insurers allowing them to refuse to compensate homeowners for flood damage under policy exclusions. The policies permit recovery only for wind damage.

ABAJournal.com noted the previous rulings here and here.

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