La. SC hears Katrina damage case

BATON ROUGE, La. (Legal Newsline) - The Louisiana Supreme Court heard arguments Wednesday in an insurance case that questions a so-called "long-standing legal principle" that the filing of a class action blocks the deadline for filing suit.

The plaintiffs in the case, Sherry Coleman Taranto, Dean Coleman and William S. Coleman, Jr., reported their home near Bayou Sauvage was destroyed during Hurricane Katrina.

When the storm hit in August 2005, state law gave policyholders one year to file a lawsuit if they were unhappy with the results of their insurance claims.

Due to the extensive damage, the Legislature and Louisiana Citizens Property Insurance Corp.'s board decided to give policyholders an extra year to file suit.

For Citizens, the deadline to file was Sept. 4, 2007.

The plaintiffs in the case filed suit against Citizens 10 months after the September 2007 deadline. They sought payment of their policy limits and damages, as well as alleged emotional distress and mental anguish, according to court documents.

At that point, several class-action lawsuits already had been filed against Citizens in the state, according to The Times-Picayune.

The plaintiffs argue -- citing what they call "a long-standing legal principle" -- that the filing of a class-action lawsuit blocks the deadline for filing a suit. Therefore, their June 27, 2008, suit is legitimate, they say.

Citizens argues that its board and the state Legislature extended the deadline for a fixed period of time, and class actions cannot suspend a period of time specified by a contract.

The plaintiffs say the broad concept of contracts is not at risk, and that their position is "well-supported" by the law.

Following the plaintiffs' action being filed, Citizens filed an exception of prescription alleging that the one-year and two-year prescriptive periods expired prior to the plaintiffs filing suit.

In January 2009, the trial court granted the exception of prescription and dismissed the plaintiffs' claims with prejudice.

However, the state's 4th Circuit Court of Appeal found that the court erred in granting Citizens' exception of prescription, as the plaintiffs, it wrote, were not prescribed. The appeals court therefore reversed the lower court's ruling, allowing the plaintiffs' case to move forward.

Following the appeals court's decision, Citizens petitioned the state's high court to hear the case.

Rebecca Mowbray of The Times-Picayune wrote Wednesday that the case is being "closely watched."

Mowbray also reported that various insurers and business groups, including The Louisiana Association of Business and Industry, the National Association of Mutual Insurance Companies and the American Insurance Association, have rallied in support of Citizens.

From Legal Newsline: Reach Jessica Karmasek by e-mail at jessica@legalnewsline.com.