Mississippi Litigation

The Broussard Case

• A federal judge on May 11 denied our March 9 motion to request a new trial in the case of Broussard v. State Farm.
  
  
• A verdict in January did not go in our favor, and Judge L.T. Senter Jr. ordered State Farm to pay policyholders Norman and Genevieve Broussard policy limits of $223,272 and $1 million in punitive damages. Jurors originally awarded a $2.5 million punitive amount, but Judge Senter later reduced it.
  
  
• State Farm plans to appeal Judge Senter’s decision in the Fifth U.S. Circuit Court. We do not believe the Broussards proved their personal property items were damaged by a covered peril. In addition, State Farm does not believe the expert who testified on behalf of the Broussards was qualified to do so. Our own experts told the court that wind could not have damaged more than 35 percent of the Broussards’ roof.
  
  
• We also argued that we were not given the benefit of an impartial jury. Judge Senter stated that media coverage of Hurricane Katrina and subsequent litigation had “no impact on the outcome” of the trial.
  
  
• The Broussards did not purchase flood insurance. They had a State Farm homeowners policy. Mr. Broussard testified at trial that his home was destroyed by a tornado. The expert retained by the Broussards could not verify this at trial and stated that at some point during Katrina the home likely was under 12 feet of water. Following the storm, all that remained was a concrete slab.
  
  
• Judge Senter issued a ruling from the bench instead of asking the jury to decide the case. Judge Senter acknowledged the evidence was overwhelming that the storm surge was sufficient in force and duration to destroy the dwelling, or to remove the debris of the property if the home had collapsed before the storm surge. He said State Farm offered no evidence which would meet its burden of proof as to the damage caused by water and, for this reason, determined State Farm should be liable for the entire home and contents loss. State Farm's expert witnesses had testified the home was predominantly destroyed by storm surge. Judge Senter awarded the Broussards the policy limits for the loss of their home.
  

The Williams Case

• Michael and Michelle Williams were seeking payment for their Ocean Springs, Miss., home that was swept away by tidal surge from Katrina. Flood damage is not covered by the Williams’ policy. The case was settled within policy limits.
  
  
• After hearing evidence presented in court about our claim investigations and decisions made under the extreme conditions and circumstances created by Hurricane Katrina, Judge Peter Beer suggested there was a “misunderstanding” in the way the claim was handled, and any disagreements could be handled under the terms of the contract.   He also determined this dispute did not warrant payment outside of what the terms of the policy called for.
  
  
• While we believe the claim was properly handled and the proper decision reached; we are always open to settling litigation.  And, we’re glad we were able to come to an amicable settlement with the Williams’ today.

The Gemmill Case

• A settlement was reached March 15 in the case of Gemmill v. State Farm, effectively ending the case.
  
  
• The Gemmills had previously been paid $128,000 under their National Flood Insurance Program policy and were offered $5,746.00 by State Farm for roof damage. Earlier in the day, the jury awarded compensatory damages totaling about $66,000, which is nearly 26 percent of what the plaintiffs were seeking.
  
  
• The jury decided State Farm should pay $39,464.49 on the home, which was reduced to a slab by Hurricane Katrina floodwaters in 2005. The jury indicated they believed 47 percent of the home was damaged by wind. In addition, the jury said Ed and Lisa Gemmill were owed $26,770 for their personal property.
  
  
• Although the jury found some damage was caused by wind, the verdict indicates that they believed there was substantial damage done by flood.  This supports our claim investigation and testimony.
  
  
• After the jury awarded compensatory damages, but before the discussion of punitive damages, a compromise settlement was reached to include both compensatory and punitive damages. This brings the matter to a final conclusion for all parties without protracted litigation.
  
  
• The evidence and testimony presented, and the outcome achieved in this case, show each claim presents its own set of circumstances which need to be considered individually. We also believe it showed that State Farm handled this claim fairly and properly.

Woullard v State Farm

• On January 23, Mississippi Attorney General Jim Hood notified State Farm that he would terminate his criminal investigation and his civil suit against State Farm.
  
  
• Proposed Class Action Settlement (Woullard v. State Farm) – On January 23, State Farm presented a class action settlement agreement to U.S. District Court Judge Senter in Gulfport for his review and preliminary approval. On January 26, Judge Senter rejected the settlement “without prejudice,” which allowed the parties to present more information to satisfy his concerns. We looked forward to addressing his questions.
  
  
• The proposed settlement agreement would have assisted the citizens of the Gulf who were members of the class to move forward with the rebuilding of Harrison, Hancock, and Jackson counties, the three Mississippi coastal counties hardest hit by Katrina. State Farm agreed to pay an aggregate minimum of $50 million to class members.
  
  
• Judge Senter held a hearing on February 28 to clarify the terms of State Farm’s proposed class action settlement in Woullard v. State Farm. The judge has stated he requires more information about the proposal. He and State Farm have publicly stated they want to ensure any settlement is “fair, balanced and reasonable.”  Judge Senter said his primary concern was that policyholders not be forced to submit to binding arbitration.
  
  
• On March 12, the Scruggs Katrina Group filed a motion to withdraw their original motion seeking certification and approval of the settlement proposed in the class action, Woullard v. State Farm. The Scruggs Katrina Group is counsel of record for the class.  This motion came as a surprise to State Farm. We have worked very hard to address Judge Senter’s questions on the proposed settlement and were waiting further direction from the court.
  
  
• Earlier Settlement--Prior to the January 23 settlements, State Farm had reached an agreement in November 2006 with attorneys Richard Scruggs and Don Barrett to settle the equivalent of over 600 lawsuits for a confidential amount. Negotiations to resolve these cases and those referenced above began following Judge Senter's plea for all trial counsel involved in Katrina litigation to seek alternative methods of disposing of litigation in a just, efficient, and fair manner.
  
  
• A federal judge on April 16 issued an order dismissing the case after State Farm reached a settlement of the Woullard’s individual claim.
  
  State Farm and Mississippi Insurance Commissioner George Dale have entered into an agreement in an effort to resolve any outstanding issues with foundation-only claims. State Farm will continue to explore efficient and fair ways to resolve disputes on Hurricane Katrina-related claims.
  
  Mississippi Attorney General Jim Hood asked U.S. District Judge L.T. Senter Jr. to allow him to intervene in order to argue that State Farm’s agreement with Mr. Dale does not go far enough. Judge Senter said Mr. Hood’s request is moot.