Judge for Katrina Insurance Lawsuits Seeks Lawyers’ Advice

A federal judge presiding over most of the insurance lawsuits spawned by Hurricane Katrina is soliciting advice on the best way to resolve hundreds of cases in a “just, speedy and inexpensive” manner.

In a letter sent Aug. 14 to roughly 180 lawyers involved in these cases, U.S. District Judge L.T. Senter Jr. asked whether lawsuits that homeowners filed against insurers for refusing to cover storm damage should be tried individually or in groups of plaintiffs.

“I would be interested in knowing whether you and your clients believe that some form of representative trial is a feasible alternative to individual trials,” Senter wrote.

In Gulfport last month, Senter heard testimony in the first trial to challenge insurance companies for denying billions of dollars of claims after Katrina. He presided over the eight-day trial without a jury and released his decision Aug. 15. His ruling upheld the flood exclusion in the homeowners policy.

Senter’s decision could set a precedent for hundreds of other homeowners who sued their insurance companies after Katrina but are still waiting for a trial date nearly a year after the storm.

Richard “Dickie” Scruggs, a lawyer who represented Paul and Julie Leonard of Pascagoula when their case against Nationwide Mutual Insurance Co. was tried last month, also has filed several lawsuits against other major insurers on behalf of hundreds of homeowners.

Scruggs has called for using a “bellwether” process for trying cases by groups of representative policyholders. The outcomes of those trials could be applied to other cases where plaintiffs have similar claims, he argues.

Scruggs said Senter’s appeal for advice is a “very encouraging sign for the homeowners.”

“Ninety-nine percent of my clients lose if they don’t get a day in court, and 99 percent won’t if you do them one by one,” he said.

Attorneys for insurance companies have argued that the lawsuits should be tried individually because the facts of each policyholder’s claim are different.

“Allstate believes that each customer’s claim is best addressed individually on its own unique facts and circumstances,” said Allstate spokesman Mike Siemienas. “We are working with the judge to efficiently resolve these claims.”

Scruggs, whose firm sued Nationwide, Allstate Property and Casualty Insurance Co. and State Farm Mutual Insurance Co. on behalf of hundreds of policyholders for each company, is fighting to keep those cases joined in a “mass action” rather than split up and tried individually.

U.S. Magistrate Judge Robert Walker is expected to rule on whether those cases, in particular, should be tried together or separately.

Meanwhile, Senter is asking every attorney involved in Katrina-related insurance litigation to weigh in on trial alternatives by sending him confidential memos by Aug. 25. After he reviews those memos, Senter said he will schedule a hearing to discuss their suggestions.