- The Washington Times - Thursday, January 11, 2007

GULFPORT, Miss. (AP) — A federal judge ruled against an insurance company yesterday in a Hurricane Katrina damage case that may have implications for hundreds of other homeowner lawsuits against insurers who refused to cover billions of dollars in damage from the storm’s surge.

U.S. District Judge L.T. Senter Jr. ruled that State Farm Fire & Casualty Co. is liable for $223,292 in damage caused by Hurricane Katrina to a Biloxi couple’s home, but said a jury must decide whether to award millions of dollars more in punitive damages.

Some of Judge Senter’s earlier rulings in other Katrina cases have favored the insurance industry, but his decision yesterday could give a boost to other lawsuits that homeowners filed against insurers after the storm.

The Broussards claim that a tornado during the hurricane destroyed their home. State Farm blamed all the damage on Katrina’s storm surge. When State Farm refused to pay for the loss, the couple filed suit seeking the full insured value of their home plus $5 million in punitive damages.

State Farm and other insurers say their homeowner policies cover damage from wind but not from water, and that the policies exclude damage that could have been caused by a combination of both, even if hurricane-force winds preceded a storm’s rising water.

Judge Senter announced his decision yesterday in denying a State Farm motion to rule out punitive damages in the case.

The judge said the insurer had not met the burden of proof in challenging the policyholders’ claim that the winds of Katrina were responsible for their loss.

“We are surprised and disappointed by the court’s ruling,” said State Farm spokesman Phil Supple. “The expert testimony supported a different result. After the conclusion of this case, we will evaluate our next steps in this lawsuit.”

The Broussard case isn’t directly involved in recent settlement talks among State Farm Fire & Casualty Co., Mississippi Attorney General Jim Hood and policyholders’ lawyers.

People with direct knowledge of the settlement talks told the Associated Press this week that State Farm, Mississippi’s largest home insurer, is considering paying hundreds of millions of dollars to settle more than 600 lawsuits and resolve thousands of other disputed claims.

Richard Scruggs, an attorney who represents 639 State Farm policyholders in the settlement talks, said he doesn’t know how the judge’s ruling yesterday will affect the negotiations.

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