Gemmill v. State Farm Katrina trial gets underway

Trial began yesterday in federal court in Mississippi for Edward Gemmill v. State Farm.  According to this story in the Sun Herald, Gemmill, who is a Biloxi city councilman, was in his home when the water surge hit and flooded it, forcing him to climb to the attic for safety. I note that the Pre-Trial Order in the case says the home was destroyed and reduced to a slab, so at some later time before the home was destroyed obviously Gemmill  successfully fled. 

UPDATE: I am informed by someone on the scene in Mississippi that Gemmill was not in his house when the storm hit.  So the way the Sun Herald story reads is misleading.  Here’s an excerpt, you decide.

In other testimony this morning, Gemmill’s neighbor, retired Biloxi building official William Prince, described how he watched the roof of Gemmill’s home fly off around 5:45 a.m. Gemmill said he climbed in his attic several hours later after rising water forced its way through his front door.

Apparently, the story means to say that Prince climbed to the attic of his own house, and the "he" in the second sentence refers to Prince, not Gemmill.  This is why newspapers have copy editors, to make sure that pronouns in a sentence clearly refer to the right antecedent noun, although it is possible the sentence seemed to clearly refer to Gemmill’s description of his own actions, and the copy editor didn’t think to question it.  Why the story would have Gemmill describe what Prince did, when the preceding sentence had Prince describing what Prince did, is one of those mysteries that, for now, must remain unsolved. Now back to our regularly scheduled post.   

Also according to the Pre-Trial Order, which in federal court is an outline of the facts and law to be tried, Gemmill had a flood insurance policy that paid him $128,000, but he had no coverage for the home’s contents in the flood policy. (Flood insurance policies go as high as $250,000 for the structure and $100,000 for contents).  His State Farm homeowners policy, which does not cover flooding, had a policy limit of $142,000, with contents coverage of $107,000 and coverage of a dwelling extension of $14,000.  The actual value of the home was allegedly about $218,000.  Recently, State Farm paid him roughly $5,700, minus a deductible of $2,700, for wind damage to his roof. 

Gemmill’s lawsuit was over alleged bad faith by State Farm for failure to pay for covered wind damage.  As you can see from paragraph 15 of the Pre-Trial Order, Gemmill claims he is owed $89,000 for covered wind damage, $107,000 for contents coverage and $14,000 for the dwelling extension, whatever a "dwelling extension" is, probably a garage.

Those numbers don’t add up for me: I take it $89,000 represents the difference between what the flood insurance paid and the value of his home, but if the State Farm policy limits were $142,000, I’m not sure on what basis you get to the purported $218,000 full market value.  Also, acceptance of $128,000 in flood payments on a $218,000 home tends to bely the statement in paragraph 14 that "the greater damage was caused by the wind."  Theoretically, this could be true if you accept that somehow the $218,000 value of the house is relevant, add $107,000 worth of contents and the $14,000 outbuilding and get $339,000.  Then, if $169,501 in damage was caused by wind, and $169,499 by flood, this would be a correct statement.  However, and you can see where I’m going with this so I’m not going to walk through every step of the math, it really doesn’t look that likely because, you see, when you take away the $128,000 flood payment, that leaves only another $41,000 in flood-caused damages.  But that’s why they have juries, to sort this stuff out — or as in the Broussard case, that’s why they have a judge, to give a directed verdict and not let the jury sort it out. 

Incidentally, Gemmill is also asking for $5 million in punitive damages for State Farm’s alleged bad faith failure to pay what Gemmill is owed.

Here’s a couple more pdfs for those serious researchers out there who love this stuff:

State Farm’s trial brief (plaintiff didn’t file one).

State Farm’s summary judgment memorandum.

Gemmill’s memorandum in opposition to summary judgment.

5 Comments

Filed under First Party Insurance

5 Responses to Gemmill v. State Farm Katrina trial gets underway

  1. Brian

    You should praise Gemmill and his lawyers for making clear that they are NOT asking State Farm to pay for flood damage, even though that is what State Farm, Bob Hartwig, the Wall Street Journal editorial board, and others claim to be the subject of these cases.
    Do you seriously believe that accepting a flood check, when that is the only coverage offered by State Farm, forfeits the homeowners’ right to claim that more damage was caused by wind? If so, then there is another way that insurers can cheat taxpayers and homeowners concurrently.
    Hurricane Katrina destroyed the home. It is State Farm’s job to figure out how much was due to wind and how much was due to flooding, and pay accordingly.
    The deck is already stacked in State Farm’s favor and now you are suggesting that the homeowner has to refuse the flood check in order to collect what the wind insurer really owes?
    Also, your explanation of anticoncurrent causation is not the way that State Farm interepreted and implemented it. This is State Farm’s interpretation:
    “Where wind acts concurrently with flooding to cause damage to the insured property, coverage for the loss exists only under flood coverage.” State Farm Wind/Water Claims Handling Protocol, Sept. 13, 2005
    State Farm believes that covered wind damage becomes uncovered when the water shows up. How can you keep defending that?
    All Judge Senter has done is affirm that State Farm has the burden of proof that the damage is excluded. After that, all of State Farm’s cases fell apart.
    Before this is over, they will lose every case, even those where they threatened/bribed engineering firms to rewrite their observations and conclusions to blame flooding for everything.
    Please do not settle any more cases until all the documentation of State Farm’s fraud is in the open.

  2. Brian, I have seen many of your comments at RiskProf, and I thank you for joining the conversation at Insurance Coverage Law Blog. I do not work for Gemmill, State Farm or the Wall Street Journal, so I am not bound by what any of them say or do, and I take no responsibility for their positions. I merely comment on what I see. I neither blame anyone for claims they have brought nor do I promote their claims. Insurance coverage law is a highly abstract and intellectual field, and sometimes people become uncomfortable with what they perceive as discussions that do not acknowledge human suffering. At some level, this is a good point, one which, if you have read my blog for any length of time, you will know that I not only acknowledge but endorse. I have berated courts and lawyers who fail to recognize that at the root of all coverage disputes is a human being who suffered. However, to examine legal questions at a complex level requires some distance from emotion, even one’s own. Certainly, it is heartbreaking to see the devastation brought upon the people of Mississippi. To lose one’s home is to lose not only an investment but memories and a part of one’s life. However, my primary purpose in writing is not to bring relief to Mississippians, but to analyze legal matters. Others fill other roles and I commend them for doing so.
    As a matter of law, which is reflected in the Sun Herald story where Gemmill’s lawyer said he can cash the State Farm check for his roof without prejudicing his rights to pursue a claim for additional wind damage, taking a flood payment does not preclude a claim for wind damage. I neither say nor suggest otherwise. It is evidence, however, of what happened. All I did was run the numbers. If you don’t like my math, you can suggest different calculations. When you take a flood payment for a certain amount, that is evidence at the very least you believe you had flood damage in that amount, because to get the payment, you must file a flood claim.
    I do not defend State Farm’s position and, in fact, there have been times when I am not sure what their position is or if they knew what their position is. I am not invested one way or another with what happens to State Farm. I have given interviews and written posts in which I say that an interpretation of anti-concurrent language that would exclude covered damage, rather than merely make sure uncovered damage can never be covered, seems extreme and is contrary to my understanding of the origins and purpose of the language in insurance policies. These interviews and posts are available on the internet to anyone who wants to search. One must ackowledge, however, that anti-concurrent language is a fairly recent addition to ISO policies and there can be a variety of interpretations. Mine is not necessarily correct, and I am open to other views. There may be a time where I decide someone has a superior argument and I will think that interpretation makes more sense than mine. I do not think I have all the answers. I merely try to ask the right questions. Again, thanks for your comment.

  3. Allstate victim

    I understand Mississipi case law uses primarily the proximate cause legal application.

  4. I wouldn’t swear that is correct. State Farm has disputed that in their briefing. I myself have read some Mississippi cases, not as many as State Farm, but some, and they indicate to me that the proximate cause analysis may be used in Mississippi. Some of these things, people make them overcomplicated. I do that from time to time myself.

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