The Mississippi Supreme Court, in an unanimous opinion by Randolph, has just decided almost entirely for the Corbans and against USAA in the Katrina wind/water insurance case before it.
The court decided, first, that “concurrent” means happening at the same time, so for the effects of water concurrent with any other cause to be excluded, they must have been simultaneous. This means that if wind came in just before tidal force, the damage from the wind is not excluded as concurrent. As more-or-less a corollary, the court decided that a loss occurs at the moment it, um, occurs. This means that wind damage is a loss and later damage from another excluded cause does not make it any less so. Second, the court decided that the insured has the initial burden to prove there has been a loss, and then the insurer has the burden to prove that the loss is subject to an exclusion from coverage. Thus, the insured shows his or her house is damages, and then the insurer must parse the difference between wind and water damage (which, I’ll add editorially, will likely be an issue for a jury to decide).
The case is explicitly a complete endorsement for Judge Senter’s view of how these wind and water cases should be resolved, and an explicit rejection of the view the Fifth Circuit adopted in its cases on the subject. The opinion comes right out and says the Fifth Circuit’s Erie guess was wrong.
It is also a big victory for the Corban’s lawyers, Judy Guice and Flip Phillips and their teams. Congratulations!
Here’s the opinion.
Great decision. Too bad it took four years to get a clear ruling that sequential is not concurrent and that the insurer has the burden to prove the exclusion.
It’s an abject failure of our Judicial system that wind/water claims have had to be litigated since Camille in 1969, and, in Florida, since Andrew in 1992. It’s way past time for a change.
I’m not sure that this decision is as big as some might contend. Even disregarding the ACC clause, the fact still remains that 1) storm surge damage isn’t covered and 2) most of Katrina’s damage was caused by storm surge.
I agree with Southman and not every company applied their particular ACC language in the same way, so I was somewhat surprised when I read the opinion. I’m hoping that Rossmiller comes out of his mammoth work schedule to comment on this decision.
I’m not sure that this decision is as big as some might contend. Even disregarding the ACC clause, the fact still remains that 1) storm surge damage isn’t covered and 2) most of Katrina’s damage was caused by storm surge.
FWIW, this is how I understand USAA to regard the decision — they weren’t looking to get out of going to trial on this one, and they’re happy for the ruling that storm surge is included under “water damage.”
Nationwide, represented I believe by Mike Wallace, was the loser here, as the court squarely rejected its view that subsequent damage could negate coverage for an initial loss.
And the Fifth Circuit did get smacked around a bit. I liked this part (para. 48 n. 24 — all of 48 is good):
We can agree, but not without clarification, that “if wind and water synergistically caused the same damage, such damage is excluded.” Leonard, 499 F.3d at 430 (emphasis added). However, this Court is troubled by the conflation of the terms “damage” and “loss,” and the use of the term “synergistically.” “Synergism” is defined as “[t]he action of two or more substances, organs, or organisms to achieve an effect of which each is individually incapable.” Webster’s II New College Dictionary at 1118. The policy does not require the insurer to establish synergistic damage, only concurrent loss. “Synergism,” like “indivisible,” is found nowhere in the policy, and may be ill-suited for the wind/flood disputes of hurricane claims, generally, and the ACC clause at issue, specifically.
IOW, don’t import your own words into the clauses, silly feds!
Judge Senter of couurse got it right. One of the best judges ever. But there was no suspense here. The Mississippi Court did what you would expect for Mississippi citizens. Its just too bad it took this long.
JoeInna Keys. Whoever you are . . . your insight is exactly right.
Well. USAA told the court 3+ years after the fact that thay accepted the burden of proof but that is not the way they adjusted the claims or responded to disputes.