Scruggs weighs moving Miss. Katrina cases to state court
In a blow to hundreds of Mississippi homeowners whose insurance claims were denied after Hurricane Katrina, a federal judge has ruled that they must file their lawsuits individually instead of in mass actions.
Richard “Dickie” Scruggs, a prominent attorney who represents hundreds of policyholders with lawsuits, said the judge’s ruling could force many of his clients to wait years for their cases to be tried. They may be better off pursuing their claims in state court, he added.
“It does seem to indicate that the federal courts are not going to respond in an effective manner to this disaster,” Scruggs said.
U.S. Magistrate Judge Robert Walker ruled that allowing policyholders to consolidate their cases against insurers would amount to a “quasi class-action lawsuit but without regard for the rigid requirements for class certification.”
“In a superficial sense, the hurricane was a common occurrence; however, the storm was vastly different in its effect depending on the specific geographic location of each particular home,” Walker wrote in a five-page ruling.
“Although plaintiffs each held basically the same standard homeowner’s policy,” he added, “each insurance contract is a separate transaction.”
Thousands of lawsuits were filed in the wake of Katrina by angry policyholders who said insurance companies offered them far too little to cover their losses. Insurers said their standard policies cover damage from wind but not from water, including storm surge.
Mississippi-based Scruggs had asked Walker to consolidate his clients’ cases against State Farm, Nationwide and Allstate into a joint trial against each insurer.
Although Walker ruled that each claim must be severed into separate lawsuits, with separate complaints, he did not rule out the possibility that the cases could be consolidated before they are tried.
State Farm Spokesman Fraser Engerman said the Bloomington, Ill.-based company is pleased with Walker’s decision. “Judge Walker rightly points out that each case should be heard on its own unique merits, because storm damage affects each property differently,” Engerman said.
Scruggs estimated that the fees for filing hundreds of individual cases would cost his clients a total of $500,000. “It’s a real blow for the families down there,” the lawyer added, “especially if they have to pay $350 apiece — people who have lost everything — just to wait in line in federal court.”
Scruggs said his legal team is weighing the options, including refiling the cases in state court. “The game isn’t over,” he said. “We’re going to do something else. I’m not sure what.”
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