Reaction to Fifth Circuit’s Broussard opinion

I base a lot of my evaluation about how good a written product is on how long it takes me to read it.  In this evaluation, time is relative — I don’t mind spending an hour reading something long, as long as I am able to progress from the front to the back without a lot of problems and unnecessary stops along the way to try to decipher the trail.  By those standards, the Fifth Circuit’s Broussard decision was good writing — relatively short, easy to read, easy to understand, not filled with judicial pomposity and ego-mania. I didn’t have time on Monday to post commentary about the case, but I did read it, and because I was pressed for time, I appreciated all those attributes of the opinion.

Before we discuss the decision itself, here’s another copy for you to follow along with.

I think it’s a reasonable decision.  You may remember I have written quite a bit about the Broussard case, and from way back I have said that, in my opinion, a reasonable juror could have found for State Farm on the evidence presented, and therefore Judge Senter shouldn’t have granted a directed verdict.  I can see why he ruled the way he did, I just disagree. I wouldn’t want to commit to whether the jury that was in place at the trial would have found for the insurer — it seems unlikely, given the benefit of hindsight.  But could a hypothetical reasonable juror find for State Farm?

You may remember Judge Senter’s directed verdict from January 2007 — here’s a pdf of it if you haven’t memorized it.  In it, he said that "No evidence has been introduced from which any finder of fact could reasonably determine what part of the loss of the Broussards’ property is attributable to water as opposed to wind."  Now, this has perplexed me for a long time, and I have thought and thought trying to see how this could be right, and it has never quite added up for me. Instead, it has always seemed to me that, based on the evidence presented by State Farm’s expert that there was a 75 percent chance that zero to 35 percent of the shingles on the roof were damaged by wind, and that a big storm surge hit that wiped out the house if it hadn’t already been destroyed by a tornado, that this means you could take your pick as a juror and find along the entire scale.

You could find that no damage came from wind (zero percent of shingles times 75 percent chance of damage is still zero).  You could find that a little bit of damage came from wind.  Or you could find that a tornado destroyed the house and all the damage was due to wind.  I wasn’t there, of course, at the trial, but I have talked to people who were, and I think I have some understanding of the evidence that was presented.  I could be wrong, of course, but this is how I see it.  The Fifth Circuit’s reasoning appears correct.  

The burden of proof argument that State Farm put forward is one that, frankly, I did not understand in their appellate brief and saw as overly technical.  I tend not to pay a lot of attention to this business of who has what burden of proof at what point.  In reality, the practical rule is get the best proof you can, and then at trial, the insurer’s proof has to be way better anyway to overcome the natural desire of the jury to smack them down.  I don’t think much about who has the burden of proof — instead I concentrate my energy on trying to work up the case so it’s not close enough to worry about.  The Fifth Circuit said the State Farm "shifting back" argument wasn’t correct under Mississippi law, and that seems like a reasonable conclusion — the insured has to furnish evidence of an accidental physical loss to property, and the insurer has to prove exclusions.  I just never could buy into this shifting back and forth thing, it was like watching a tennis match, you had to keep turning your head to keep up with it.  I talked about that in some posts last year, too.

On the punitive damages portion of the opinion, it looks like the circuit court struggled for a while with the fact State Farm had paid nothing at all for wind damage even after its expert found evidence that some wind damage probably had occurred. 

Here, the circuit court’s decision seems somewhat troubled by the insurer’s conduct, but doesn’t feel it rises to the level of punitive damages: "on remand the district court should consider whether additional actual or consequential damages are appropriate."  After the Broussard decision in the trial court, in Katrina cases I was keeping track of, I saw State Farm made sure to pay at least something before the case was ready to come to trial — it was the fact they had basically paid nothing that led to the punitive damages, although the Fifth Circuit points out that the Broussards had in fact erroneously been advanced $2,000 for a flood policy that they didn’t have.  This section of the opinion looks like it occupied most of the court’s time and attention, and I think there must have been some considerable debate among the panel about whether the punitive damages should stick. 

The change of venue ruling, I can see that too. 

Of the four big Fifth Circuit Katrina decisions, Broussard, In re Katrina Canal Breaches, Tuepker and Leonard, I have real problems only with the last one. Not long after Leonard came out, I began to believe that the case’s analysis of the anti-concurrent cause provision was erroneously overbroad and would cause mischief down the road unless it was corrected.  I said this because during Katrina litigation, insurers actually did not claim that the presence of any amount of flood damage obviated the requirement to pay for separate wind damage, even if the house was destroyed by flood.  However, now it appears that, based on the Leonard case, some insurers are doing just that. (Read down near the bottom of this post and take a look at the two opinions I cited, the Dickinson opinion by Judge Senter and the Maxus decision by Judge Smith in Missouri). 

Could the Fifth Circuit actually have intended that result, to allow an interpretation beyond that claimed by insurers? I doubt it, but Leonard is a good example of why you don’t say more than you need to to make your point.  It is quite obvious Judge Jones did not fully know what she was talking about — the fuzzy grasp of the terminology in the case, and the substitution with empty buzzwords  like "synergy,"  is a dead giveaway — but that didn’t diminish her confidence or her willingness to press ahead anyway.  There was a lot of loose talk in Leonard, all of it completely unnecessary to the decision too.  I wouldn’t call Leonard judicial activism so much as I would call it proof of the truth of Will Rogers’ maxim: "It ain’t what you don’t know that hurts you, it’s what you think you know for sure that just ain’t so."



Filed under First Party Insurance

10 Responses to Reaction to Fifth Circuit’s Broussard opinion


    This case means that State Farm can continue to pay $0 on a slab case and dare the homeowner to sue. Even where the State Farm expert can not say that 100% of the damage was water. And, this position can not subject the company to punitive damages. Hugh win for State Farm. As Gene Taylor has said many times, during the next hurricane, climb up in your attic with a video camera and an axe. Then your heirs will be paid for your loss.

  2. David Rossmiller

    What’s the ax for, to kill the State Farm thugs that come to fake the water damage to the house? By the way, how will the video camera survive the tornadic winds that destroyed so many houses? (Just about every house Tim Slider testified about, strangely enough).

  3. claimsguy

    Gene is misguided.
    Better advice would be: “Next time, buy flood insurance if you want to be covered for flood damages.”
    You don’t get to re-write the policy post-loss to cover the stuff you chose not to buy coverage for.

  4. Coast Boy

    Cowbell apparently knows coastal MS. Having an “axe in the attic” harkens back to past storms, Camille in particular, where people got in their attics as the water rose. Some were able to cut their way out when the water kept rising, others were not so fortunate and drown. A horrible way to go to be sure.
    You didnt spend a lot of time on the proof issue and I understand you would rather have a “slam dunk” instead of getting to the point of marginal proof calls and percentages, etc. But how do you view what they came down with in the decision regarding proof? Good or bad thing for the insurers in slab cases?

  5. WISam

    AH, I love the smell of tongue-in-cheek commentary in the morning. Actually, great posts lately on the cases, decisions, opinions, etc. That is what brought me to your blog in the first place, though ScruggsnHood made checking your blog a daily (sometimes multiple times a day) event rather than weekly. Keep up the good work, and if that book comes out, I’ll try to find a copy here!

  6. S F crony

    Regarding paying $0 for possible minor wind damage: Do you not see that the plaintiff accepted $2000 as an advance for a flood policy that they did not even have. S F took the initiative and offered these advances to policy holders knowing that some didn’t have flood damage and also some didn’t have a flood policy at all. When the flood advance wasn’t warranted they shifted the payment to the wind policy. For the case in question one can argue that the $2000 plus their deductible may not be enough to pay for unknown roof damage. I have first hand knowledge the S F had the attitude of paying what they could for wind damage and only what truly was flood damage under the flood policy. I realize that a conspiracy theorist will find a way to discount that. I sleep very well at night knowing how S F handled itself during that unprecedented event. By the way I am just a grunt, not even management.

  7. Boo

    First of all, I enjoy your posts.
    Throughout all of this, I have often wondered why don’t the courts just consider the “Intent” of the policies. Why is everyone trying to find loopholes in their policies? I have always known, and would guess most know that their homeowners policy does not cover flood. Also, after reading my policy, it is very obvious that my carrier will not pay for any damage that occurs when an excluded event happens as well. It is my understanding that hurricane losses, wind vs. water, is one of the reasons this language exist. By the way, I understand trying to find loopholes. I guess if I lost everthing, I’d try as well, even though I knew my carrier didn’t intend on covering it.

  8. Clarke Holland

    The burden of proof argument was crucial in the face of Judge Senter’s legal position and attitude. He required the insurer to prove that 100% of the damage was flood, or he would rule that 100% of the damage was wind. In theory, State Farm could have proven that 99.9% of the damage was caused by flood and still lost the case. Imagine a breach of contract case where a buyer claims he bought 1,000 pieces of wood that were never delivered, but the lumber yard proves it delivered at least 995 pieces. I agree the jury should then be able to award the buyer 5 pieces of wood, but Senter was saying if you can’t prove you delivered a 1,000 pieces you owe all 1,000, even if you delivered 995. The “shifting back” burden argument was made to counter-act this ridiculous approach. And, Senter completely ignored the fact that on the personal property coverage-named peril coverage-the insured did have the burden. Under Leonard, Tuepker and Broussard now, the plaintiff will be required to do more than stand-up and say it was windy so it must have been the wind. In Broussard, the insureds admitted at trial that during Camille and George, where the winds were higher than in Katrina, their house suffered little or no wind damage. Magically, lower Katrina winds swept the house right off the foundation. Of course, that same wind a few hundred yards away, did little or no damage. What a surprise that the dividing line between total losses and minor roof damage was the surge line.

  9. George

    David, What do you think are the major undecided issues in Katrina coverage law now? It seems to me like the big one is the ACC clause issue- what else is out there on the horizon? Broussard isn’t all that big a victory for plaintiffs IMO because it didn’t even address the ACC issue that has been hanging over plaintiffs’ heads since the Fifth Circuit’s decision in Leonard. If the ACC clause issue goes against plaintiffs (like it did in Leonard) then this vague burden of proof stuff won’t make that much difference.
    Incidentally, I just read Senter’s opinion in Dickinson and was very amused to see that David Rossmiller has overruled Edith Jones’ opinion in Leonard. Way to go, David- they should make you an honorary Fifth Circuit judge!
    Senter did absolutely the right thing as a matter of coverage law, for the reasons Rossmiller has explained. But something still strikes me as very funny about the Chief Judge of the Fifth Circuit bending over backwards in Leonard to interpret ACC clauses favorably to insurers and then when it comes time to apply the law Senter basically says “love ya, Edith, but I gotta go with Rossmiller on this one!”
    I guess when you’ve been around as long as Senter you lose any fear of the Fifth Circuit.

  10. partial coastal

    I guess what perplexes me in these cases is that wind damage gets totally thrown out. In New Orleans, where there was flood and houses sat for 2 weeks in water, many remained intact because wind had died down. Understand that storm surge played a huge role in slabbing Miss. houses, but isn’t that caused by wind? I agree that some damage bears responsibility of flood, but allowing 100% of damage to flood just doen’t seem feasible when it was a combination of both. As I am obviously not a lawyer, why was burden of proof required to prove 100% either way?