Anniversary prompts rush to courthouse

Tuesday, September 12, 2006

By Bruce Hamilton

Hundreds of local homeowners and businesses filed lawsuits against their insurers as the anniversary of Hurricane Katrina approached last month, apparently rushing to meet a one-year deadline that has been extended.

Although a newly enacted law gives homeowners until fall 2007 to sue their insurance companies as a result of damage from Katrina, the constitutionality of that extension wasn't certain until the state Supreme Court ruled on it Aug. 25.

Some insurance companies voluntarily extended their cutoff dates, but their last-minute moves, and lingering questions about the legality of later claims, apparently prompted many to file before the original one-year deadline.

In the 22nd Judicial District Court in Covington, 647 lawsuits were filed between Aug. 23 and 29. The influx reached its peak of 236 lawsuits processed Aug. 28, the day before the original deadline.

The court normally receives about 25 to 35 suits a day, according to Deputy Clerk Connie Gennaro. That means the final five days before Katrina's anniversary brought three to four times the usual volume. An overwhelming majority are disputes between individuals or businesses and insurance companies.

Playing it safe

"I had a lot of people coming to me in August worrying about whether the extension was valid," said Alex Peragine, a partner in the Covington firm Peragine and Lea.

"On homeowners' claims, I feel the extension is valid, period. But if a particular homeowner has reached a point in negotiations where it's just not going anywhere, then what is the reason to wait?"

Peragine said the sheer volume of claims is bound to cause some delay, so it makes sense for homeowners to act quickly. He said the issue is more complex for businesses, some of which have two-year policies.

Because it's not clear whether some firms' voluntary extensions apply to businesses, Peragine said, he filed several claims for business clients ahead of Aug. 29.

"If you had a business policy and you're looking at a one-year period, I'm going to err on the side of caution. It's a more complicated calculus."

By state law, policyholders have 12 months to file lawsuits involving insurance claims, a shorter time than any other Gulf Coast state affected by Hurricanes Katrina and Rita. But in its spring session, the Legislature passed two laws to extend the deadlines to 24 months.

Because the constitutionality of those laws had not been affirmed as Aug. 29 approached, the Louisiana Department of Insurance asked insurance companies, under threat of sanction, to voluntarily extend the deadlines for their policyholders.

More than 200 companies extended the lawsuit period to 24 months, and a total of 385 companies agreed to some extension. But some consumer advocates warned those extensions may not withstand court challenges.

Big discrepancies surface

A search of the suits filed in the past month shows a broad range of disputes including claims on condos, trailers, boats, mold damage and lost revenue.

Among the throngs of litigants are Ouachita Parish residents Robert and Carolyn Rispoli, who owned a condominium complex on Lakeview Drive outside Slidell. Katrina destroyed all four units, which were "blown down and washed away by the rising ride," according to their lawsuit.

The suit says their insurer offered them $45,842.31, but they are seeking $414,000, the limit of liability for building replacement under their business property coverage.

Covington's Tap Room and Grill also is suing its insurer, which denied part of its claim March 8. The restaurant suffered damage from the hurricane, including a power outage -- apparently from lines being torn from the building. As a result, it lost two refrigerators, a cooler and their contents, its lawsuit says.

Part of the Tap Room's claim involves lost revenue because of St. Tammany Parish's civil authority restrictions. The parish officially closed -- or prevented residents' re-entry -- until Sept. 9, instituted parishwide curfews and banned the sale of alcohol.

Although the restaurant's insurer paid $12,142 for losses through Sept. 9, it cited an exclusion for loss of power if the failure occurred off-premises. The Tap Room is seeking an unspecified amount for uncompensated losses.

Edward Morquant filed suit on his own behalf for his Preval Street residence near Mandeville, which had wind and water damage. Although his insurer paid $49,163 on his deluxe homeowner's policy, he says that doesn't cover his expenses, including the cost of mold remediation.

Competing evidence

Some of the lawsuits involve disputes over whether damage was caused by wind or water. Janice and Miles Hursey say their Slidell residence was destroyed by winds, "as documented by eyewitnesses" who had remained behind, according to their suit. The couple had evacuated from the area.

Their insurer paid $8,700, but they are asking $146,016. The suit says agencies hired to inspect and assess the damage to their Carey Street residence incorrectly reported the damage was caused by water, based on flood lines on nearby trees.

According to the suit, the insurer has been provided with reports by their own engineers that concluded property in the area had been destroyed by winds.

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Bruce Hamilton can be reached at bhamilton@timespicayune.com or (985) 898-4827.