My reaction to yesterday’s $2.8 million verdict in Weiss v. Allstate? Wow, the jury really super-sized this one. Much bigger than I thought possible. One is tempted to think it might be a message from the jury, not only in this case, but in others to come: a brushback pitch, sort of a Louisiana version of Sal "the Barber" Maglie, a heater right up about the chin level of insurance companies. One might also think the jury found a way to bypass the judge’s instructions not to allow double-dipping. Let’s discuss. This will take just a bit of time, but stick with me, because I can walk you through this and we can find some answers together.
I have spent a lot of time looking over the jury interrogatories — the form the jury fills out to reach the verdict — as well as the jury instructions, and re-reviewing the pleadings and Louisiana statutes and case law, and I think I’ve figured out the jury’s award, at least most of it. I’ve got a lot of documents to feed you so I’m going to get started, here is a pdf of the interrogatories, take a look for yourself.
Interrogatory No. 5 asks what amount Allstate owes to Dr. Weiss for wind loss to his property. Answer: $411,600 for the house, $150,000 for building contents. Next to that is some chicken scratch in parentheses that means who knows what, maybe the jury foreman was writing out a shopping list for the local Winn Dixie for later. The total owed, disregarding the chicken scratch, appears to be $561,600. Now, Judge Vance’s jury instructions clearly say to subtract the amount received from prior Allstate payments and from payments from the Weisses’ flood policy: those figures are about $42,000 in wind coverage damage plus about $14,800 in living expenses from Allstate, and $350,000 from the flood insurance, including $100,000 in contents. She also instructed the jury the maximum value they could award for breach of the insurance contract is the value of the policy. Here is a pdf of the jury instructions for you to examine. The Weiss policy with Allstate had limits of $343,000 for the dwelling, $34,300 for other structures and $240,000 for contents, plus living expenses for 12 months. This information is contained in one of Allstate’s summary judgment memos and repeated in Judge Vance’s orders. Do you see a problem yet? $411,600 is more than the policy limits of $343,000. UPDATE: A reader has what is probably the answer: the policy may have had a 20 percent allowance for replacement cost: 20 percent of $343,000 is $68,600, which adds up to $411,600. See the comments below.
Here’s another fact to consider. The Weisses claimed the value of their home was $775,000, a figure judge Vance was skeptical of because Weiss is a smart guy, a doctor, and the Weisses had insurance for half that amount. Doesn’t really stand to reason, does it? Check out this pdf of Judge Vance’s denial of Allstate’s summary judgment motion, page 7, to see what I’m talking about. However, the jury must have bought that the home was worth that much, because if you add $411,600 (the amount awarded for dwelling damage), $42,000 (wind damage already paid by Allstate) and $250,000 (dwelling damage paid by the flood insurance), you get $703,600. (I’m not adding in the living expenses because I think they are separate from the dwelling coverage).
Now, if you believe the Weisses’ home was worth $775,000, then the jury had substantial room above the flood payment to pay a wind damage award. If you believe the value of the home was probably the amount the Weisses insured it for — $343,000 — then you also probably believe the jury found a covert way to allow the Weisses to double-dip, which the judge said they could not do. I’m not saying one way or another what I believe, I’m just sayin’. I do know, however, that $411,600 is more than $343,000, and it doesn’t appear to me that excess amount of the award can stand.
Let’s look at the rest of the jury interrogatories. If you read a case called Ibrahim v. Hawkins, 845 So.2d 471 (La.App. 1st Cir. 2003), you will find an explanation of the two Louisiana statutes listed in the jury interrogatories, Section 22:658 and Section 22:1220. These statutes are first-party bad faith statutes, first party referring to insurance that indemnifies you against losses to yourself or your property, as opposed to insuring you against liability to others. Ibrahim says you can’t duplicate damages under these statutes — one allows an award if an insurer in bad faith fails to pay a claim within 30 days of sufficient proof of loss, and the other allows bad faith damages if the insurer unreasonably fails to pay within 60 days. You can get damages under one or the other, but not both. If you want a better explanation of these statutes, look at the jury instructions above, or better yet, read the statutes: here is 22:658 and here is 22:1220.
The jury, in Interrogatory No. 11, says Allstate failed to pay $373,380.50 within 30 days. I have no idea where that number comes from, or why it is so precise, but there it is. Section 22:658 creates a penalty of 25 percent of the policy limits in addition to that amount. But the jury also found Allstate violated Section 22:1220 by failing to pay within 60 days of receiving sufficient proof, and awarded Dr. Weiss (his wife, as it turns out, way not a policyholder and was dropped as a plaintiff) $750,000 in damages, which has to be for mental anguish, anxiety, stress and so forth, all of which are allowed under the bad faith statute. The jury tacked on $1.5 million — what is in effect punitive damages — under the statute’s provision allowing for doubling of the damages. If you add all that up, it’s well over $3.2 million. If you don’t count the stuff awarded under Section 22:658, and the Ibrahim case says you can’t collect under both, the total is somewhat larger than $2.8 million.
What does a verdict like this say? This is about as much as the jury could give out in an award with a straight face. If you’re an insurance company, this verdict says Beware of Dog. Allstate had a pretty good case, but the jury blew it out of the sky like Snoopy being shot down by the Red Baron. They breezed by Allstate’s claims that Dr. Weiss made material misrepresentations — which would have voided his policy — like Kobe Bryant going around a 7th grader for a dunk. This verdict is not only a surprise, but a shock.
Here’s a story about the verdict by Mike Kunzelman of the Associated Press, who ate his Wheaties yesterday and was working hard. Here’s another good story by another hard worker, Lavonne Kuykendall of Dow Jones Newswires. I never worked for a wire service, but I did work for an afternoon paper that had four editions, with deadlines at 6 a.m., 8:30 a.m., 9:30 a.m. and 11 a.m. The time I spent on the morning cops beat, starting work at 4 a.m. and meeting all those deadlines for updates, was the toughest year I spent in journalism, so don’t underestimate how hard it is to do what they do.
For those who stuck with me to the bitter end, here’s a bonus. In other Katrina news, in federal court in Mississippi, Judge Senter dismissed the Woullard v. State Farm case, which had been proposed for class action status but was twice rejected by Senter. This dismissal was like the funeral in Eleanor Rigby: no one cared enough to show up. The class action was to culminate in a revisiting of some 36,000 Katrina claims from coastal Mississippi, but Senter balked at what he perceived was procedural unfairness in the proposed settlement process. Eventually State Farm and plaintiffs’ attorney Dickie Scruggs lost interest in it, as did the named plaintiff, who settled his case. Here’s a story on developments by Lavonne Kuykendall.