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Hood not surprised by Katrina federal lawsuit outcome, takes shot at State Farm

By John O'Brien | Jan 12, 2007

Jim Hood

JACKSON, Miss. - Still in the middle of his own settlement talks with State Farm Insurance Co., Mississippi Attorney General Jim Hood said he wasn't surprised by Thursday's verdict and Friday's punitive damages amount in a federal lawsuit against the insurance company, which he then referred to as a "robber baron."

He also said that if a settlement isn't reached soon, Mississippi's Congressmen will start pushing national insurance reform.

Thursday, U.S. District Judge L.T. Senter took a couple's case against State Farm out of the jurors' hands by ruling himself that State Farm is liable for $223,292 in damage caused by Hurricane Katrina to the Biloxi home of Norman and Genevieve Broussard.

Friday, the jury got involved by awarding the Broussards the maximum amount of punitive damages: $2.5 million.

"This ruling did not surprise me," said Hood, who has reportedly been getting closer to settling his own lawsuit against State Farm. Hood is also suing four other insurance companies.

"Our learned Judge Senter read the law and applied it," Hood said. "His ruling reflects what we have been saying all along."

Senter ruled that State Farm had no basis to deny the Broussards' claim and gave the jury a bad-faith instruction, which resulted in the maximum amount being awarded.

Senter seemed aware of the disquiet his ruling would create. He ordered a recess immediately after delivering it to give attorneys "time to get over the shock."

The ruling is a setback for Mississippi's gulf-coast home insurers, as they were likely expecting Senter to be more accommodating to insurers given previous rulings. Others in Louisiana, widely expected to be the next target of class-action suits against insurers, could be getting nervous.

The ruling is seen as a huge victory for Hood, who can now point to it in his own settlement talks with State Farm.

Hood's class-action suit claimed five insurance companies -- State Farm, Allstate, Nationwide, Farm Bureau and USAA -- were to blame for the flooding that destroyed billions of dollars worth of property. The companies argued that protection against flooding was not included in their policies but by federal flood insurance.

Senter didn't agree, though, and remanded the case back to a state court. Afterward, Hood asked citizens to call their insurance companies and suggest a settlement.

Hood said that he hopes that his opponents "will come to their senses and reach a settlement agreement."

"However," he added, "if they continue with their 'robber baron' mentality, I think that Congressmen (Gene) Taylor and (Bennie) Thompson and Sen. (Trent) Lott will see to it that we have national insurance reform."

Lott has his own personal lawsuit against State Farm for wind damage done to his beachfront home.

"Robber baron" is defined as "a ruthlessly powerful U.S. capitalist or industrialist of the late 19th century considered to have become wealthy by exploiting natural resources, corrupting legislators, or other unethical means."

It isn't the first time Hood has used an unorthodox method to settle the class-action suit. In late December, he urged citizens to call their insurance companies and push for a settlement.

The suit was filed only a few weeks after Hurricane Katrina hit the area. Some criticized Hood for a "sue-first, ask-questions-later" mentality.

Despite being yesterday's loser in the case, State Farm may be breathing a sigh of relief. The insurer is very close to reaching a settlement with Hood in 639 lawsuits against it in Mississippi. The settlement would cost the insurer $80 million or around $125,000 per homeowner - significantly less than yesterday's $223,000 ruling.

Insurance lawyer Randy Maniloff called Senter's ruling a "huge verdict" for homeowners but also noted: "That settlement is looking awfully good for State Farm now."

Rob Luke contributed to this report.

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