Class Action Suit Filed in New Orleans Against 15 Homeowners Insurers

The Insurance Journal
June 1, 2006


A class action lawsuit was filed in the United States District Court for the Eastern District of Louisiana on May 24, 2006, on behalf of Greater New Orleans Metropolitan Area homeowners insurance policyholders who have been denied or refused insurance coverage for losses caused by Hurricane Katrina, the law firm of Anderson Kill & Olick P.C. announced.

The lawsuit, brought against fifteen insurance companies that sold All-Risk homeowners insurance policies to Louisiana residents, was filed as part of the consolidated action Berthelot et al., v. BOH Brothers Construction Co. L.L.C., et al, pending before the Honorable Stanwood R. Duval, Jr.

Originally captioned as Gladys Chehardy, et al. v. J. Robert Wooley, et al., prior to being transferred from the United States District Court for the Middle District of Louisiana, this amended class action was filed in response to Judge Duval's stated intent to consolidate pending homeowners' suits. The consolidated suit will have an unprecedented impact on the interpretation and scope of homeowners insurance policies in the State of Louisiana, the announcement said.

The litigation will also address significant issues regarding the design, construction and maintenance of several New Orleans area levees that were breached during Hurricane Katrina and resulted in vast amounts of water entering the City of New Orleans, causing an estimated $200 billion in damages.

The law firm said the Amended and Restated Complaint filed with the Court seeks compensatory and punitive damages arising out of the insurance companies' alleged conduct designed to avoid payment of claims to policyholders who suffered residential and other property losses caused by Hurricane Katrina.

Central to the policyholders' claims is the fact that the insurance company defendants failed to specifically exclude from coverage hurricane damage or any failure of the New Orleans levees in the policies that they sold in the New Orleans area.

The Amended Complaint alleges a broad range of conduct and wrongful acts by the insurance company that were designed solely to deny coverage of valid policyholder claims. Among the wrongful acts set forth by the policyholders is the insurance companies' mandate and directive that its adjusters arbitrarily and capriciously apply any nearby waterline and ignore all other relevant information and evidence in order to deny full payment of policyholders' claims under applicable "flood" exclusions. The policyholders also detail the insurance companies' failure to follow long-standing legal doctrines by attempting to equate windstorm, storm surge and the negligent design, construction and maintenance of New Orleans area levees with "flooding" to exclude coverage.

Moreover, the policyholders have brought claims against those insurance companies that sell their policies directly to their customers for their failure to advise the policyholders as to all risks to which they were exposed as well as their failure to advise as to the availability of additional flood insurance in excess of the amount provided under Federal law. In addition to the monetary damages sought on behalf of the policyholders, the Amended Complaint requests the Court for declaratory relief that will have a dramatic impact on the interpretation of homeowners insurance policies in connection with Hurricane Katrina as well as in the future.

Although the class action was instituted by a group of twenty-nine named Representative Policyholders, the class of policyholders may ultimately number in the tens or hundreds of thousands as up to 160,000 homes in the parishes of Orleans, St. Bernard and Jefferson are estimated to be unusable as a result of Hurricane Katrina.

The class action was filed on behalf of the policyholders by lawyers from The McKernan Law Firm, Fayard & Honeycutt, P.C., Anderson Kill & Olick, P.C., Ranier, Gayle & Elliot, LLC and Bruno & Bruno.

All of the law firms involved are based in Louisiana, with the exception of Anderson Kill, a national policyholders law firm.

Full case cites: The current action is Berthelot, et al., v. BOH Brothers Construction Co. L.L.C., et al., Civil Action No. 05-4182 "K"(2), which is pending before the Honorable Stanwood R. Duval, Jr. The class action was originally captioned as Gladys Chehardy, et al. v. J. Robert Wooley, et al., C. A No. 05-1140-FJP-CN, Gladys Chehardy, et al. v. J. Robert Wooley, et al., C A. No. 05-1162-FJP-CN; Gladys Chehardy, et al. v. J. Robert Wooley, et al., C.A. No 05-1163-FJP-CN, prior to being transferred from the United States District Court for the Middle District of Louisiana.

Copyright © 2006 by Wells Publishing Company



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