After the Wreckage, Hurricane Katrina Spawns Lawsuits

Shortly after Hurricane Katrina devastated parts of Louisiana, Mississippi and Alabama, the U.S. Chamber Institute for Legal Reform issued a statement warning that the financial wreckage caused by Hurricane Katrina could be made worse by lawsuits that would “delay and complicate recovery efforts for hundreds of thousands of the storms’ victims.”

Although the ILR called for citizens and government officials to work together for recovery in the Gulf Coast region rather than rush to the courthouse, not everyone heeded that advice. Several Katrina-related lawsuits have been filed or are being contemplated, including high-profile litigation filed by Mississippi’s attorney general (see story below). One class action filing in Louisiana blamed various companies for the environmental destruction caused by the hurricane and another seeks to force homeowners insurers to pay for damages from flooding in New Orleans that occurred as a result of the failure of the man made levee system.

“We’re concerned about the growing number of lawsuits that have been filed in the wake of Katrina,” stated Lisa A. Rickard, president of ILR. “For example, [the] filing by Mississippi Attorney General Jim Hood against the insurance industry will not help victims’ long-term recovery, and will further burden the state’s already fragile economy.”

In mid-September, attorneys from the New Orleans law firms of Liska, Exnicios & Nungesser and St. Martin & Williams filed suit against a number of major oil companies, claiming that the companies’ exploration and drilling activities in Southeast Louisiana are responsible for the devastation that occurred in New Orleans as a result of Hurricane Katrina.

The lawsuit, filed by Val P. Exnicios and Conrad S.P. “Duke” Williams in the United States District Court for the Eastern District of Louisiana-temporarily operating out of Lafayette, La., and Houma, La.-alleges “the major oil companies’ oil, gas and pipeline exploration and drilling activities throughout Southeast Louisiana resulted in ecological damages to such an extent that coastal marshes were destroyed which previously had protected New Orleans naturally from Katrina level hurricane force winds and tidal surges.”

USDC-ED Louisiana Chief Judge Ginger Berrigan will consider the case (05-4161), which claims “over one million acres of marshlands in Southeast Loui-siana were completely destroyed and have virtually disappeared, and many more millions acres are essentially non-existent, primarily because of the major oil companies’ oil and gas exploration and drilling activities in Southeast Louisiana.”

Announcing the lawsuit, Exnicios said the major oil and gas companies “haphazardly dredged thousands of miles of exploration and drill site canals throughout South Louisiana to extract oil and gas.” The suit alleges that the companies “failed to maintain canals which caused damage to the stability and ecological functions of the marsh property, leading to physical removal of marsh terrain, the creation of spoil banks and impairment of natural ebb and flow of tidal water.”

The lawyers said they seek to represent the interests of all Hurricane Katrina victims in the State of Louisiana, but the lawsuit does not specify a damage amount. According to Biz New Orleans, the suit names as defendants 10 oil and gas companies, including ExxonnMobil Corp., Chevron Corp., BP Corp., Shell Oil Co., Transcontinental Gas Pipeline Corp. Tennessee Gas Pipeline Co., Shell Pipeline Co., Gulf South Pipeline Co., Koch Pipeline Co. and Columbia Gulf Transmission Co.

Wind or water?

Pascagoula Miss.-based attorney Richard F. Scruggs, who successfully sued tobacco companies, announced litigation against State Farm, Allstate, Nationwide and other property/ casualty insurance companies on behalf of Gulf Coast residents who suffered damage from Hurricane Katrina.

According to Scruggs, the lawsuit seeks to force “insurance companies to honor insurance obligations that the companies are seeking to reduce or eliminate through loopholes and deceptively written policy exclusions. These homeowner policies clearly provide for comprehensive coverage for any and all hurricane damage. The insurance companies are attempting to minimize their hurricane coverage by intentionally misclassifying the hurricane’s destruction as mere flooding.” The suit reportedly contends the storm surge that damaged coastal areas was caused by wind borne water, which is typically covered by homeowners’ policies.

The suit is part of an effort by attorneys in Louisiana, Mississippi and Alabama “to recover the damages due to policyholders under their policies,” the announcement said.

Man made or ‘Act of God’?

In a separate action, attorneys Jerry McKernan, Joe Bruno, Calvin Fayard, and Vernon Thomas filed a suit “seeking a speedy, favorable resolution that all property and homeowners in the Greater Orleans area shall have the right to recover insurance proceeds from the home owners insurance company as a result of high water.” The suit, filed in the 19th Judicial District Court, seeks a ruling that clarifies “that the high water in Orleans and Jefferson Parish, which flooded thousands of homes, is caused by a man made neglect and wind damage rather than so called ‘Act of God’ through rising water.”

In announcing the lawsuit, the attorneys speculated that “various insurance companies, who insure the residents of Greater Orleans area, will deny coverage to their insureds on the basis that the damages were caused by an Act of God through rising water.”

They claimed the underlying cause for the high water was result of several breaches in the levees and expressed the opinion that because the dominant act causing the breach led to flooding of the area, the various insurance companies should be responsible under their policies.

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Topics Lawsuits Catastrophe Carriers Natural Disasters Louisiana Flood Energy Oil Gas Mississippi Hurricane Homeowners