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Decision in Katrina Levee Breach Case Gives Policyholders More Time To File Lawsuits

Jun 23, 2009 | Parker Waichman Alonso LLP

Nearly four years after the  storm, some Hurricane Katrina victims who were unhappy with the way an insurance claim was handled will have another chance to file suit against their insurer.  Policyholders  previously had only two years after Katrina hit in 2005 to file such a lawsuit,  but according to The New Orleans Times-Picayune, a federal judge's decision to  dismiss class action allegations against insurers in the Katrina Canal Breaches Consolidated Litigation has reset the clock.

Typically, insurance does not cover damage to a business or home if it is caused by flood.  But plaintiffs in the Katrina Canal Breaches Consolidated Litigation have argued that flood damage that resulted from levee breaches which occurred after Hurricane Katrina made landfall should be covered by insurance, since such flooding was not specifically excluded by insurance policies.  

Last Tuesday in New Orleans, U.S. District Court Judge Stanwood R. Duval Jr. granted a request by insurers to be severed from the consolidated litigation. According to the Times-Picayune, the Judge ruled that disputes against insurers were individual, and not suitable to be handled as part of a class action.

When a class action petition fails to get certified, or as in the case with the Katrina litigation, some defendants are severed from the proceedings, individual plaintiffs can file their own lawsuits.  According to the Times-Picayune, the deadline for filing such suits will depend upon the amount of time that remained between when the insurance portion of the levee breach litigation was filed and the original Aug. 30, 2007, deadline for filing suits.

In his decision, Judge Duval rejected a request from the plaintiffs committee to require insurers to inform their policyholders that they can now file individual lawsuits, saying he had no power to issue such an order.

According to the Times-Picayune, the original Katrina canal breach litigation names virtually every insurer operating in Louisiana.