Wind vs. flood Katrina lawsuit sent back to state court

The Mississippi lawsuit to force insurance companies to pay for damage caused by storm surge has been remanded back to the state’s Chancery Court of Hinds County. Since the state is seeking injunctive relief, the remand means the case will now be expedited, according to the State Attorney General’s Office.

“As I stated when the insurance companies moved this to federal court, their attempt was nothing but a delay tactic,” Jim Hood, Mississippi Attorney General said. “The insurance industry is using delay tactics in hopes that many Mississippians will give up on their claims and take whatever the insurance companies offer. I hope people will hold on just a little bit longer and let us get a decision on this case.”

Hood filed a civil action in the Hinds County, First Judicial District on Sept. 15 against the insurance industry on behalf of Mississippi property owners without separate flood insurance policies who incurred damage from Hurricane Katrina but who have been denied coverage due to water exclusions in their homeowners policies. The Attorney General’s office maintains insurers should pay for losses caused by water, whether or not driven by wind.

“The insurance companies have already caused a six-month delay by taking this to federal court under a false premise,” Hood said. “I think it is shameful that the insurance industry would drag this out while people are living in limbo. I just want to know how much money they’ve saved themselves holding on to these people’s money?”

Insurers said they were not surprised by the remand. “Although we would have liked for the Mississippi case to stay at the federal court level, the court’s action is certainly not unexpected due to the legal issues involved,” explained Julie Pulliam, American Insurance Association. “We are still confident that ultimately Mississippi state courts will uphold the water damage exclusion, although we have to acknowledge that there may be more pressure at the state court level to provide relief to fellow citizens.”

But William Bailey, director of the Insurance Information Institute, was surprised. “It seemed to me that this was a clear-cut case of federal preemption. This case belongs in the federal court and I thought that was removed and I haven’t seen anything to change my mind about that issue.

“If it is a federal preemption there may lie an appeal at some point that the judge should have not have sent the case back to the state,” Bailey said. “There are several options. The defendant can decide to go to the Federal Court of Appeals and take an interlocutory appeal while the case is in its current posture they can go to the next level of Appellate Court and say, ‘We think that judge was wrong we want you to rule that he was wrong and that this case belongs in federal court.'”