GULFPORT, Miss. - While the end result of each "slab case" is plainly obvious to the naked eye, a federal judge on Thursday ruled that a similar acceptance can not be made as it relates to the means by which the result occurred.
U.S. District Judge L.T. Senter said "slab cases" -- homes that were totally or near totally destroyed by Hurricane Katrina in 2005 -- will not be given class certification in a lawsuit brought by Judy Guice, who alleges that State Farm Insurance Co. has wrongly denied coverage to her home.
Senter said in his memorandum opinion the same wind and water damage totals can not be applied to each case, nor can be a pattern proving that State Farm acted similarly to each case.
"He was saying because the wind on various parts of the coast could've been so different that the proof of wind or amount of wind damage aren't similar enough to have commonality of the classes," said David Rossmiller, an insurance attorney and partner at Dunn Carney in Portland, Ore., who has been analyzing the Gulf Coast's insurance situation for LegalNewsline.
"It's actually a very shrewd and well-written opinion."
Senter said three of the "slab cases" -- there is estimated to be between 800-1,000 of them -- have already been tried to verdict, and he has learned four lessons from them:
-The force of Hurricane Katrina was felt differently in different locations along the shoreline;
-The forces exerted on buildings vary substantially depending on the building's proximity to the shoreline;
-The damage varied depending on each building's age, quality of construction and design;
-And different claims were handled differently by State Farm.
Last week, high-profile plaintiffs attorney Richard Scruggs, who was the subject of a contempt hearing Monday in an Alabama federal court, withdrew his motion for Senter to approve a proposed settlement for the proposed Woullard class.
Scruggs' firm earned $1.4 billion when it was hired by then-Mississippi Attorney General Mike Moore to negotiate the Tobacco Master Settlement Agreement, and recently made $26 million when 640 lawsuits against State Farm that made up part of Attorney General Jim Hood's class action suit against five insurance companies were settled.
A report from The Associated Press said Scruggs stood to make another $20 million if the second part of that settlement had been approved. It grouped together 35,000 policyholders who had not sued yet but still could. Senter rejected that settlement, which had no cap and was estimated to be worth approximately $500 million, for several reasons.
"From the perspective of State Farm... State Farm would've much rather had a certified class action on Woullard than what they ended up having to do," Rossmiller said.
What State Farm did was agree on Monday with state Insurance Commissioner George Dale to re-investigate previously denied claims. Rossmiller said the proposed settlement with Hood would have been better for the company because there was a binding arbitration process for policyholders who were unhappy with State Farm's initial offer, which would have been at least 50 percent of the structure's value according to the policy.
"There was a degree of certainty," added Rossmiller, whose blog can be found here. "There was a process that was set up that would have resulted in finality for each of the claims."
Now, policyholders unhappy with State Farm's offer can proceed with a lawsuit.
"There's a voluntary claims review," Rossmiller said. "If they don't like it, they can sue."