Monthly Archives: March 2007

Federal judge and State Farm settle case over Katrina damages

John Roper, Sr., a federal Magistrate Judge in the U.S. District Court for the Southern District of Mississippi, has settled his Katrina lawsuit against State Farm, according to this Associated Press story. Terms were not disclosed. The Southern District became the locus of the Mississippi Katrina litigation after insurers removed cases from state to federal court, which they allowed to do under federal statutes when the defendant and plaintiff are citizens of different states.

A federal judge from Michigan was set to preside over Roper’s trial beginning April 9.  Another judge in the Sourthern District of Mississippi, Louis Guirola, also filed a Katrina-related suit against Nationwide. Guirola’s case settled last November.

Here’s a pdf of Judge Roper’s amended complaint, which shows that one of his allegations was that he believed his policy covered all hurricane damage because of representations by the insurance company and its agents.  


Filed under First Party Insurance

The ‘toast’ of Mississippi

Dickie Scruggs has declared Mississippi Insurance Commissioner George Dale "political toast," and took out a full-page ad in a Jackson newspaper depicting Dale as a pig with lipstick.  Yes, you read that correctly. 

The link above has a further link to a TV news video on the ad.  The TV clip contains an interview with Scruggs in which he says something true: the Katrina claims are not just legal battles, they are public relations and political battles.  However, if he thinks this cartoon ad is effective public relations, I’m not convinced. The ad, which when I read about it sounded merely pretty dumb, turned out to be uncreative, childish and disreputable when I actually saw it.  I suppose the only ad that would have been more hackneyed and stale would be a cartoon in the old Marxist style: one that depicts Dale and State Farm officials as top-hatted swells with long-tailed tuxedos standing on the battlements, wielding rolled up insurance policies that they use to club down ragged and desperate Mississippians as the people try to climb the walls to flee rising Katrina flood surge.

UPDATE: Here’s a better view of the ad, which is featured prominently on the Scruggs Katrina Group website. (Originally I said it was the Scruggs blog but was mistaken).  The ad was also linked to on, which has a few interesting comments from state residents about Scruggs and the ad.

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Filed under Miscellaneous

More on Trent Lott v. State Farm

I take it the March 27 settlement conference in Trent Lott’s case against State Farm did not happen, because here is a pdf of an amended scheduling order, filed March 26, that says the settlement conference will be held July 3 and setting a jury trial for September.

Also of interest is a fairly unusual filing the same day of a letter Lott’s attorney and brother-in-law Dickie Scruggs sent to Mississippi Attorney General Jim Hood.  Why this was filed with the court is beyond me, except to try to make some point I can’t quite discern. The letter asks Hood for documents taken from State Farm claims vendor E.A. Renfroe by the "whistleblower" Rigsby sisters, and which Scruggs and the Rigsby sisters were required to return to Renfroe by order of a federal judge in Alabama. I thought the salutation was a bit much: "Dear General Hood."

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The Night They Drove Old Dixie Down

I’m taking a break from all the Katrina coverage today (but don’t forget to scroll below and read my post from yesterday afternoon about Dickie Scruggs being sued).  I was thinking about the many people I’ve gotten to know in Mississippi and elsewhere in the South, and I thought of The Band playing The Night They Drove Old Dixie Down.  Seven great things about this song:

  1. I’m told it’s totally authentic from the South’s perspective, even though it was primarily written by Robbie Robertson, a guy from Canada. He did have a lot of help from Levon Helm, from Arkansas. 
  2. It’s got the right lyrics, not the fake lyrics in the Joan Baez version.
  3. If you ever want to see a singer completely nail a song, watch Levon sing this — nothing but raw emotion.
  4. No Joan Baez, who does a bubblegum version and is not convincing singing a song in which she is supposed to be someone named "Virgil Caine" from Tennessee.  
  5. The line where Virgil’s wife says, "Virgil, quick come and see, there goes Robert E. Lee." Even though it is known Lee never visited Tennessee after the war, the line makes sense, because there were many false sightings of Lee throughout the South.  Just like Elvis, some people wanted to see him so badly, they did.  Similarly, many African-Americans reported seeing Abraham Lincoln. Here’s a link to comprehensive discussion of this song including the interpretation of the lyrics.  Some say the line is a reference to a riverboat named the Robert E. Lee. However, the official sheet music apparently has no "the," and since Levon’s autobiography shows he was anxious that the song pay due respect to Lee, it’s unlikely that respect would take the form of singing about a boat.  Another reason not to believe the riverboat tale: Baez sings "the Robert E. Lee" and this video of her version has a picture of a riverboat.  Al Capp sure had her number when he tagged her "Joanie Phonie." 
  6. The reference to "Stoneman’s cavalry" tearing up the Danville tracks again.  Authenticity.  George Stoneman was passe even before the Civil War was over — no one was talking about him 100 years later, except in this song.  Somehow in Baez’s version it becomes "so much cavalry." So much cavalry came? You’ve got to be kidding me. Who would say such a stupid thing? Not Virgil Caine. Fake.    
  7. The line "You take what you need and you leave the rest, but they should never have taken the very best."  To me, that ranks among the most memorable and chilling lines I’ve ever heard. Number one for me, of course, having grown up in NoDak on tales of the sky turned black at noon as the wind blew the fields away during the Depression, and drove tens of thousands from the land, is T.S. Eliot’s line from The Wasteland: "I will show you fear in a handful of dust." But it’s right up there with Eliot.

In fairness, I don’t know if Baez had anything to do with the pictures on the version I linked to above, because you can find the same pictures on another version of The Band’s song on You Tube.  But whoever did the pictures must have lost their mind: one image is of a big sign that says "Danville, Pa."  You think Stoneman, a Union Army commander, is going to be raiding railroad tracks in Pennsylvania? Wake up, Pennsylvania was on his side!  The song is clearly referring to Danville, Virginia and the Richmond and Danville Railroad.  Of course, if you think the words are "so much cavalry," maybe you’d also think there was so much cavalry they got crowded out of the South and had to make do with tearing up whatever they could find up North. 

UPDATE: Here is a version of the song by an older, and I would be tempted to say wiser, Joan Baez, except for the fact that I’ve heard her talk. In this version, she got "Stoneman’s cavalry" right and also left out the "the" before Robert E. Lee.  Still no soul to her singing of the song, however. And what’s with the part where she is still singing "I took the train to Richmond that fell?" Didn’t she just admit that Stoneman’s cavalry tore up the tracks again, and that’s why Virgil isn’t on the Danville train anymore? What did the train travel on, long strings of hippie beads?  A reader gave me some grief for not linking to the Grateful Dead singing this song, which they probably did at every concert.  I love Garcia and the Dead but couldn’t find a video on You Tube. Hard to believe, I know, with all the video that was shot at Dead concerts.

SECOND UPDATE: I get an incredible number of hits on this post and some very positive response, which is good to hear considering I am an insurance lawyer and by no means a music expert.  One inaccuracy in the UPDATE above, but the same reader who gave me grief later informed me it was not the Dead that sang this song (he said he knows of no concert at which they sang this), but it was instead the Jerry Garcia Band that made the song one of its standards.  Different animal entirely. Couldn’t find a link on You Tube, sorry.

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Scruggs sued by fellow lawyers over attorney fees

Sometimes the sue-ers become the sue-ees.  Here is an Associated Press story that says Dickie Scruggs of Katrina and tobacco fame is being sued by a Jackson, Mississippi firm over alleged failure to fork over the firm’s fair share of the $26 million in fees Scruggs received from a recent settlement with State Farm of 640 policyholders lawsuits. 

According to the story, the firm of Jones, Funderburg, Sessums, Peterson & Lee believes Scruggs and others have conspired to "freeze out" the firm from getting a just portion of the spoils for its  "substantial" work on Katrina cases, including lawsuits other than the State Farm cases that settled. The firm says it is owed 20 percent of the attorney fees Scruggs has collected on Katrina cases so far and 20 percent of fees he will collect in the future.  Instead of 20 percent, Scruggs apparently made them an offer they could refuse: "a ridiculously low figure."  In a neat twist on the Katrina cases, the lawsuit also seeks punitive damages.  Hmmmmm, I wonder what the allocation of the burden of proof should be in this case. If Scruggs fails to tender all amounts that it turns out the Jones firm is owed, should he then be hit with punitive damages and chastised for leaving this issue to the jury instead of owning up to his responsibilities? 

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Some stunning numbers on Florida’s insurance gamble

This report from Towers Perrin on the effect of recent legislative changes to the Florida insurance market contains some eye-popping details:

  • The legislation, even without considering future pressures on the state-run insurer and state-run catastrophe pool to take on even more risk, represents a dramatic shift to post-event financing, as opposed to the pre-event financing that is standard in the insurance business.  In other words, if a big hurricane hits this year, Floridians may be paying off the bonds needed to satisfy the unfunded liability for 30 years. 
  • "Even a series of smaller storms across the state, similar to the 2004 season, would lead to assessments that exceed the incremental savings created by the legislation."
  • "[A]n effect of post-event funding through assessments is to have lower hurricane risk areas subsidize higher risk areas."  Look at the map provided on page 7 to see how some areas of the state subsidize others. 
  • Per household assessments to pay for a major hurricane could run as $14,000.
  • Risk is increasingly being spread to auto insurance and commercial premiums through surcharges collected to fund the catastrophe pool. Businesses will have to pass these costs on to consumers and other businesses.

Via blog-re.

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Sen. Lott considers Katrina settlement with State Farm

Some time ago,  I read an opinion article in the Wall Street Journal slamming Trent Lott for using his power as a U.S. Senator to go after State Farm because he was mad over unpaid Katrina damage to one of his three homes. I then looked up the electronic docket for his case because I wanted to see if his case had been settled and dismissed.  Remember that Lott is among the 640 Mississippi policyholders included in an $80 million settlement engineered by attorney Dickie Scruggs and State Farm, and I figured Lott was done. Not so.  The docket showed that an amended complaint was filed in the case after the date of the announcement.  This story confirms that Lott is still trying to decide whether to accept the settlement or go to trial in June.  If you’re like me, you’d love to see that trial happen. I also see on the docket that a settlement conference is set for March 27.

And just in case you’ve got a fever and the only prescription is reading some briefs in this case, I have your medicine right here. Here is a pdf of State Farm’s motion to dismiss and here is a pdf of Lott’s opposition brief, both filed last year.  Here is Judge Senter’s opinion denying the motion to dismiss.  As with most Senter opinions, it is economical with words. 

One thing to note in Senter’s opinion, which followed his ruling in the Tuepker case deciding many of the same issues, is what the judge says about the ambiguity of the State Farm anti-concurrent provision.  Remember that the flood exclusion falls under the anti-concurrent language, and Senter upheld the exclusion as unambiguous.  In contrast, he said the anti-concurrent provision is ambiguous, but only to the extent it would be interpreted to exclude wind damage from coverage.  As I’ve explained in other posts, that is no big deal because you can’t have a good faith reading of the language that excludes wind: the anti-concurrent provision says that the policy does not under any circumstances insure "such loss," with those words plainly referring to the exclusions that follow and not to wind. That also raises a substantial question of whether the provision is actually ambiguous, or whether it is as clear as a baby’s conscience.

One interesting footnote in the State Farm brief takes a swing at Lott for alleging his house was entirely destroyed by wind when he made a claim under the National Flood Insurance Program for the flood insurance he had on the home.  Check out a pdf of Lott’s amended complaint, paragraphs 14 and 15 — he’s still saying the same thing!  The house was destroyed or nearly destroyed by wind, then destroyed again by surging flood waters. That’s bad luck. No matter what you think of Trent Lott, you’ve got to feel sorry for a guy whose house is destroyed twice in the same day. 

And yes, for those of you paying close attention, I did purposely write about State Farm, Scruggs and the Wall Street Journal in the same post, as an homage to some in the comments who have variously accused me of shilling for one or all of them. 


Filed under First Party Insurance

Louisiana’s Blanco says state won’t mimic Florida insurance fix

This editorial in the Washington Post is on the money about Florida’s recent insurance package pushed by Gov. Crist and passed by the Legislature. 

 What Florida did was bet against Mother Nature with a plan that is neither fiscally sane nor environmentally smart. The state-run insurance company expanded its portfolio of policies to include fire and theft — the better to spread the risk. And the threshold for troubled insurers to get at the state’s catastrophe fund was lowered while the upper limit on the state’s liability after a major storm was doubled. This makes it attractive for people to call their very own dangerous piece of hurricane alley home — much to the delight of developers. Never mind that Florida has nowhere near enough money to cover all the promises made to insurers and taxpayers. If the big one hits, they’re out of luck.

The way Florida’s state-run insurer, Citizens Property, is taking on risk is immensely dangerous. As we saw two months ago when Florida legislators rolled back premium increases Citizens needed to attempt to adequately fund its risk, a state-controlled entity is going to be subject to endless monkeying around in response to whatever the latest insurance crisis is in a state with a never-ending supply.  Sure, legislators can also mess with private insurers, as Gov. Crist did when he put price controls on homeowners premiums, but they can respond to economic foolishness by keeping the good stuff and dumping riskier homeowners that Citizens then has to pick up.  This in fact is what private insurers are doing in the Florida homeowners market. 

As for Gov. Blanco, the jury is still out.  She wavers between saying she doesn’t want to step on the toes of the private market and issuing rash statements about expanding the state’s own insurer of last resort to compete with private insurers.  Some threat, considering the state insurer can’t even find its records for the last two years.

Also, since we wouldn’t want to leave Mississippi out of this discussion, here’s a story about a modest change to Mississippi’s state-run wind pool.

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Scruggs Katrina Group weighs in about State Farm deal with Commissioner Dale, Senter’s rejection of Guice class action

You may not be aware that the Scruggs Katrina Group has its own blog, which is a pretty decent site, but could have been much more of a nexus for Katrina news and opinion if they had hired a full-time blogger.  Maybe Dickie Scruggs could have scrimped a little on the $150,000 consulting contracts to the ‘whistleblower’ Rigsby sisters and hired one.  In any event, I found two recent posts by Zach Scruggs interesting: one was about Senter’s rejection of the Guice class action and another about State Farm’s cooperation with Commissioner Dale in reopening thousands of claims.  

As a matter of blogger protocol, I also say thanks to the Scruggs Group for including me on their blogroll. 


Filed under First Party Insurance

Mississippi statute of limitations for Katrina lawsuits

Someone asked me a question recently about how long people in Mississippi have to make up their minds whether to accept the claims adjusting they received or sue over Katrina damage.  The answer is three years from the date of loss. 

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