Fifth Circuit hears oral arguments in Tuepker v. State Farm Katrina case

Insurers have been successful in their Katrina appeals to the Fifth Circuit, and given the appellate court’s analysis in two big cases — Leonard v. Nationwide and In Re Katrina Canal Breaches Litigation — I would flat out drop my red Yellowstone mug of decaf with the white moose silhouette in amazement if the result were any different in State Farm’s interlocutory appeal of Tuepker v. State Farm, even though none of the three-judge panel in this case was on the panel for either of the other two cases. 

I read the briefs again, and I have a very hard time seeing it go the Tuepkers’ way.  Here is their brief — as you may know, Dickie Scruggs is their attorney.  Here is State Farm’s brief. The Tuepker brief deals a lot with their supposed reasonable expectations that they would be covered for all hurricane damage — a tough sell, considering that the Water Damage exclusion lists "surface water" and "waves … whether driven by wind or not" as uncovered, not to mention that they issue a pretty fair number of federal flood insurance policies in coastal Mississippi to supplement homeowners policy coverage and people know this.  Why else would there be flood policies?

Just to recap, the State Farm brief is not saying wind damage that can be proven is uncovered because of the policy’s anti-concurrent cause language.  State Farm admits that that damage, if proven as a distinct loss due to a distinct physical force, would be covered.  Just in case someone has not heard me say it, anti-concurrent language applies only to multiple causes of the same loss.  That didn’t happen here.  The loss, in cases like the Tuepkers (assuming they can prove separate wind damage), involves multiple causes — wind and storm surge — but the damage is not the same.  Under this scenario, each force caused its own distinct property loss.  Multiple causes of separate loss is another way of saying each loss has a single cause, therefore there is no need to bring anti-concurrent language to the table. Within a few days you will be able to read me talk about this for 42 pages, if you care to, when I get back the final printer’s proof of my Appleman’s anti-concurrent article.  As usual, I did my best to add a little entertainment value to it.    

Here’s a story previewing the oral argument, by Mike Kunzelman of the Associated Press.  Here’s another story by him reporting on the arguments after the fact.  Which reminds me, there has been some excellent daily reporting done on Katrina litigation and developments, and some of the very best has been done by Kunzelman, by Anita Lee of the Sun Herald and by Becky Mowbray of the Times-Picayune. Folks shouldn’t underestimate how tough it is to do what they do, trying to figure stuff out and explain it to people in a simple way under tight deadlines.  They sure have made it easy for me to follow what is going on.  

Here’s a take on the case by Martin Grace, the RiskProf, citing the first Kunzelman story. He’s right, it does bring a smile to your face to hear the Tuepkers’ argument about how crafty State Farm was in hiding the secret intent of their policy language.  Why, not since Edgar Allan Poe’s The Purloined Letter has anyone so cunningly hidden something in plain sight!  Incidentally, if you have not read this short story, I highly recommend it, it is one of Poe’s best and, along with two other Poe stories about C. Auguste Dupin, created the archetype for the brilliant amateur detective solving cases that befuddle the rather obtuse regular police. Better than the later Sherlock Holmes, and that’s saying something.  (I love Poe — I studied all his works in a Major Writers class in college.  Did you know that his poetry was looked down upon by contemporaries like Emerson, who called him "the Jingle Man"?  (Scroll down a bit on the link to see).  His poetry is not T.S. Eliot or Yeats for certain, but I like it.  Emerson, on the other hand, never did much for me).  

One final thing: all this talk of poetry makes me think of one of my favorite poems, one that is poignantly apropos when considering all the losses Hurricane Katrina caused — W.H. Auden’s Musee des Beaux Arts.  Don’t feel put off by its fancy-shmancy title, it is a wonder of expression on the subject of human suffering — see if you agree


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3 Responses to Fifth Circuit hears oral arguments in Tuepker v. State Farm Katrina case

  1. Circuit Check: Insurance and Copyright Case Updates

    Circuit Check: Insurance and Copyright Case Updates

  2. Cato

    If I read the briefs correctly, this is an appeal of the denial of a 12{b}{6} Motion to Dismiss.The only facts at issue are those plead in the Complaint.Plaintiffs plead damage caused by wind. State Farm admits wind damage is covered.State Farm does not even ask the 5th Circuit to give it judgment as a matter of law.It simply wants the Court to re-write the Trial Judges’ opinion on issues not germaine to the determination of whether or not the Complaint states a claim on which relief can be granted.In Tuepker, the Court has a case or controvery before it, but should go no further than necessary to find that a claim for relief has been stated.In Leonard, the Court lacked jurisdiction, not because of Scrugg’s dismissal of the cross-appeal, but because Nationwide sought neither a reversal of the judgment below nor the return of a single penny.It, like State Farm, sought a re-write of the Trial Court opinion. I am interested in your opinion of what Leonard actually says. It could be read to bar recovery for provable wind damage.

  3. You are correct on what the underlying decision was and its scope — it was a motion to dismiss on the pleadings, so all well-pleaded facts must be accepted as true. As my anti-concurrent article will say, the legal issue before Judge Senter did not involve anti-concurrent causation language, and so it was unnecessary to rule on it much less to say it was ambiguous. I have suggested the easiest road for the Fifth Circuit in these cases is to look at the facts pleaded and say there does not appear to be an issue involving concurrent causes, and therefore reverse the trial court’s ruling on ambiguity to that extent. But in Leonard, they for some reason not only ruled directly on the interpretation of the anti-concurrent cause language, they seem to have gotten terribly confused about concurrent causation. Just because two things happen at once does not make them concurrent in the legal sense — they are only concurrent causes if they are concurrent causes of the very same property damage. I think that distinction, which seems so obvious to me, escaped them. Not even the insurers deny that wind is covered when it produces distinct damage — neither the timing nor the ultimate destruction of the house by storm surge makes a difference: the wind damage is compensable if proven because it happened. It doesn’t cease to have happened merely because some greater uncovered destructive force came along later and took out the entire house. The destruction of the house goes only to the degree of damage, it is not the property loss itself. Just a common sense analogy: if I steal $100 from your bank account, I don’t cease to be liable for that merely because someone else had plans to steal the entire bank account and shortly afterward came along and emptied it out.
    It was also somewhat troubling to me that the Fifth Circuit in Leonard didn’t seem to understand that whether flood surge damage itself can be theoretically said to involve concurrent forces of wind and water, that question is not one the court should address because the language of the policy defines flood surge as one cause. This is not too much to ask for smart judges to understand this distinction, especially when they are talking about the primacy of the contract’s language. If the policy can legitimately alter the causation methodology, it certainly can choose to define a given force as one cause rather then two causes. You may be right, this decision could sow more confusion — this is what happens when people get ahead of themselves in insurance analysis and don’t take it step by step. I will write more on the Leonard case next week. Also, I am doing a follow up article for Appleman’s Critical Issues on the appellate decisions, but the publication has a substantial lead time and won’t be out until next year. So I will likely talk some about the appellate decisions in the national teleconference on my anti-concurrent article on October 16.