In my post from Monday, I neglected to mention that in addition to Landry v. Citizens Property, the Valued Policy Law case, the Louisiana Supreme Court was also to hear oral arguments Tuesday for Sher v. Lafayette, a case where the lower appellate court found a flood exclusion in a homeowners policy ambiguous. I don’t know why I did, I’ve known Sher was coming up for oral argument for some time, but we all do dumb things. Except Dickie Scruggs, that is, as his famous, rich friends like to point out.
Forgetting to mention the case in the last post also means I missed a chance to rip into the decision in the Court of Appeals again, so I’ll have to make up for it here. Here’s my analysis of the Sher opinion when it came out last year. I note with some degree of nostalgia the date of the post, November 20, which is what I call P.I.O.S. (pre-indictment of Scruggs). Life, and blogging, seemed somewhat simpler back then. And should you need a reprise, here’s my post from Monday on Landry with a link to my analysis from last year on the Court of Appeals decision.
My chief beef with Sher was the title of the case, it should have been Sonny & Sher v. Lafayette — just joking. My real chief beef with Sher is that it contains nothing that one could recognize as an explanation of the reasons the court declared the flood policy ambiguous. The court, in a remarkably analysis-free analysis, said the policy failed to distinguish between natural and man-caused flooding. In first-party insurance, the majority of courts — some say an overwhelming majority of courts — find earth movement exclusions ambiguous to the degree they don’t clearly exclude both natural and man-caused damage. With flood exclusions, this is not so — the vast majority of courts extend the standard flood exclusion to all kinds of flooding. This is something I will be dealing with in the chapter I’m writing on hurricane coverage for the Appleman treatise, and it is something I will discuss here on the blog when I have more time. Now back to Sher: really, not an impressive job by the court, to say the least — one expects a better analysis or at least some citation to authority in cases like this, particularly when diverging from the mainstream.
Here is an Associated Press story by Mike Kunzelman story about oral arguments in both cases. An excerpt about the Sher case:
Lafayette and other insurers say their homeowner policies don’t cover damage from any type of flooding, including water from a levee breach.
"There is not a single case of record where a court has held that a flood exclusion didn’t apply because of a man-made act," Ralph Hubbard, lawyer for Lafayette, told the court.
Justice John Weimer asked Hubbard if it is true some insurers modified some policy language after Katrina to specifically exclude man-made flooding from coverage. Yes, Hubbard responded, but he insisted changing policy language is not an admission that earlier language was ambiguous.
James Garner, a lawyer for Sher, said insurers are to blame for writing policy language that confused policyholders and resulted in conflicting court opinions.
"Judges disagree on this," said Garner, who also accused Lafayette of acting in bad faith in adjusting his client’s claim.
I read the story looking for a clue as to how the court might rule, and saw this quote about the arguments in the Landry case:
[T]he federal appeals court and several federal judges already have rejected similar arguments about the implications of the valued policy law. However, one of the high court judges hearing the case Tuesday indicated she would not be bound by the federal court cases.
"I’m not really interested in what the federal courts have to say about this, frankly," said Justice Catherine Kimball.
At first I thought, hmmmm, very harsh, must not like those cases. Then I considered another alternative reading — because the interpretation of contracts under state law is entirely up to the Louisiana Supreme Court and not to federal courts, what is she supposed to say, "Oh, there are some federal cases? Well, I guess our opinion can be boiled down to one word: Ditto." I would be quite surprised if the court found for the policyholders in either case — I expect both to be reversed.
This is not really something that the court should think about, but just as an aside — if the court found for the policyholders in both cases, it would have a rather severe impact on Louisiana’s insurance market, which is just now beginning to recover after Hurricanes Katrina and Rita in 2005.
Lastly, one more thing. Here is a Rebecca Mowbray story in the New Orleans Times-Picayune on oral arguments. Now, the last graf of the story really caught my eye:
The Landry case was the first of two insurance cases from the 2005 storm season to hit the elegant Royal Street courthouse Tuesday in a blockbuster docket that drew insurance lawyers from around the country and forced people to line up on the steps of the marble building by 7:30 a.m.
Do you see that? Do you see that? It’s what I’ve been saying for years now, insurance is the new rock ‘n’ roll! You see, I chose to interpret the word "people" a la Scruggs, which is a phrase I have coined to describe the act of ignoring all other possible interpretations of language except the one, no matter how strained, that produces the result you want. So here, "people" means people as in Power to the People, We the People, Up with People, thousands of people, fool all of the people all of the time, etc. As evidence for my position, I call attention to the word "lawyers" in the sentence, who are said to have come from around the country.
After the conjunctive "and," we learn that the subject of the sentence — the blockbuster docket — not only drew the lawyers, but "forced people to line up on the steps" early in the morning. Clearly, lawyers are not "people" in any meaningful sense, so the two words must refer to separate classifications of humans. Also, had it been lawyers who were forced to line up on the steps, the sentence would have read "forced them to line up on the steps," or maybe "forced the lawyers to stand in line for once like normal people." Blockbuster docket, people lined up: this stuff is so fascinating, the public doesn’t care about an entertainment writers’ strike, not as long as they’ve got spellbinding insurance issues. Case closed.