The winds and waters of Hurricane Katrina struck Michael and Mary Robichauxes' home, detached garage, shed and personal property. Their home, which had been located one block north of the Gulf of Mexico, was destroyed. Mr. and Mrs. Robichaux made a claim on their Homeowner's Policy with Nationwide after the resulting destruction and damage.
The Robichauxes' Homeowner's Policy with Nationwide provided limits, in pertinent part, of $131,000.00 for Coverage A for their Dwelling, $13,100.00 for Coverage B for Other Structures, and $97,405.00 for Coverage C, or Personal Property Coverage. Robichaux v. Nationwide Mutual Fire Insurance Co., 2011 WL 6224472 *1, ¶ 4 (Miss. December 15, 2011), Download Robichaux v. Nationwide Mutual Fire Insurance Co. (Miss. Case No. 2010CA00109, Opinion Filed December 15, 2011) PUBLIC ACCESS. Their Nationwide Homeowner's Policy carried "a hurricane rider," said the Mississippi Supreme Court, "which covered damage occurring as a result of a 'windstorm during a hurricane.'... The hurricane endorsement covered damage to the dwelling and other structures, as well as personal property." Id.
The Homeowner's Policy provided coverage for damage to the dwelling and to other structures caused by "all risks," while coverage was extended to damage to personal property which was caused by named perils. Id. at *7, ¶ 26.
Finally, the Policy also contained a Flood Exclusion and an Anti-Concurrent Cause Exclusion as well. See id. at *4, ¶ 16.
Nationwide at first denied the Robichauxes' claim "based on a finding that the loss was caused by water or water-borne material as defined by the policy." Id. at ¶ 5. Nationwide's denial of all coverage was based on various investigative reports "as well as the flood exclusion and anti-concurrent language in the subject policy ...." Id.
On an unreported date, Nationwide changed its mind and offered small amounts to settle the Robichauxes' claims "for potential dwelling damage" and for "potential damage to other structures". The reasons for Nationwide's change of position are not given by the Mississippi Supreme Court in its opinion. In any event, Mr. and Mrs. Robichaux returned the checks to Nationwide, uncashed. Id. at *2 ¶ 6. Instead, they sued Nationwide for "declaratory and injunctive relief, including indemnity under the insurance contract, compensatory and punitive damages, specific performance of the insurance contract, attorneys' fees, and ... [for] fraud and bad faith by the insurer and its agent." Id. at *1, ¶ 1.
Following a peripatetic journey from Mississippi State Court to Federal Court and back to State Court again, the Trial Court entered Summary Judgment for Nationwide. The Robichauxes appealed.
1. The Anti-Concurrent Cause Clause Does Not Apply Every Time That Water Appears.
The Mississippi Supreme Court first held in pertinent part that the Homeowner's Policy at bar is not ambiguous. The joint appearance in the same Policy of both a Hurricane Endorsement and an Anti-Concurrent Cause Clause does not provide an ambiguity, the Court held. Id. at *4, ¶ 17.
However, neither that ruling or the evidence in this particular case answers the question whether wind damaged the Robichauxes' property before Hurricane Katrina's flood left behind only the slabs of their home and their detached garage:
However, the trial court erred in concluding that no genuine issue of material fact existed as to whether wind damaged the property prior to its destruction by storm surge. Whether Nationwide had a duty of indemnity under the policy for wind damage, if any, occurring prior to the storm surge presents a triable issue of fact.
Id. at *5, ¶ 18.
This ruling was applied not only to the Dwelling Coverage Claim under Coverage A, but also to the "Other Structures" Coverage under Coverage B, id. at *6, ¶ 24, and to the Personal Property Coverage Claim under Coverage C. Id. at *7, ¶ 25. However, before the Supreme Court could determine whether the Trial Court's Summary Judgment should be reversed on any of these issues, it needed to address another issue: whether the Policyholders in this case were recovering two times for the same damages.
2. Apparent Overpayment of Flood Insurance for a Dwelling is Not a Double Recovery For Uncompensated Damage to Other Structures.
Dwelling Coverage. Mr. and Mrs. Robichaux had a Flood Insurance Policy in addition to their Homeowner's Policy. "The flood policy paid $136,500 for flood damage to the dwelling and $70,400 for flood damage to the contents of the home, amounts which constituted the policy limits." Id. at *2, ¶ 6. Even assuming the highest possible value of the Robichauxes' home which was supported by the evidence in the amount of $185,000.00, the Trial Court found that the land value was $53,860.00, resulting in a difference of $131,140.00 in the best possible case for the Policyholders here. Since there could be no claim for Dwelling Coverage under the Nationwide Policy without double recovery here, the Summary Judgment for Nationwide was affirmed in this regard. Id. at *6, ¶ 22.
Other Structures Coverage. The Trial Court found that the Robichauxes' shed and garage had a value of $5,000.00. Given that the Robichauxes received $136,500.00 from their Flood Insurer for a dwelling with a value of at most $131,140.00, the Trial Court also "found" that the Robichauxes were effectively over-compensated for their Other Structures as well.
This ruling was reversed on appeal. "However, the record does not show that the payment of $136,500 for flood damage was intended to compensate for losses to other structures. In fact, the estimate prepared by the flood insurance adjuster was described as an 'estimate to replace the dwelling,' with no mention of other structures." Id. at *6, ¶ 24. Accordingly, the issue of "whether wind damaged the other structures prior to their destruction by storm surge" was remanded for "a jury determination". Id.
Personal Property Coverage. As noted, the Flood Insurance Carrier here paid its Contents Coverage Policy limits of $70,400.00. The total damage to the Robichauxes' Personal Property was claimed to be $186,144.00. Reversal on this issue was required in this case, wrote the Mississippi Supreme Court. "Since the Robichauxes have not been compensated for the full value of their personal property, we remand this case to the trial court for a jury trial on the issue of whether wind damaged the Robichauxes' personal property prior to the flood damage." Id. at *7, ¶ 25.
3. The Anti-Concurrent Cause Exclusion Only Applies in Mississippi, the Mississippi Supreme Court Continues to Hold, When Wind and Noncovered Causes Concur to Cause Damage, Not Just Because There is a Noncovered Cause in a Case.
The Robichaux Court adhered to its earlier ruling in Corban v. United States Automobile Association, 20 So. 3d 601 (Miss. 2009), and to other settled Mississippi law concerning All Risks Coverage, Named Peril Policies, and Anti-Concurrent Cause Clauses. Here is how it did so.
As noted, the Homeowner's Policy which Nationwide issued to Mr. and Mrs. Robichaux contained "All Risks" Coverage for the Dwelling and Other Structures, and "Named Perils" Coverage for their Personal Property.
In virtually all American jurisdictions, the burden of proof that an Exclusion applies to a claim under an Insurance Policy is a burden belonging to the Insurance Company. This rule of law applies in Mississippi as in other States, and it was applied to Anti-Concurrent Cause Exclusions by the Mississippi Supreme in Corban.
As in Corban, the Mississippi Supreme Court in Robichaux held that the burden of proof belongs to the Homeowner's Insurance Company that its Anti-Concurrent Cause Exclusion applies. Here, however, the Anti-Concurrent Clause does not apply, according to the Court:
The evidence in the present case shows that not all of the damage to the Robichaux residence was caused by the simultaneous convergence of wind and water; accordingly, the ACC clause was inapplicable.
Id. at *5, ¶ 19.
In sum, in this case, in accordance with universally accepted rules the Policyholder bears the burden of proof on Insurance Coverage in the first place, and the Insurance Company bears the burden of proving that its Exclusions apply:
[U]pon remand, Nationwide has the burden of proving that the other structures under Coverage B were damaged by an excluded peril. The converse is true with regard to the Robichauxes' burden of proving that personal property under Coverage C suffered accidental, direct, physical loss as a result of one of the enumerated perils, namely windstorm.
Id. at *7, ¶ 28.
4. The Bad Faith Claims Alleged by the Robichauxes May Still Exist After The Mississippi Supreme Court's Decision in this Case, Although That is Not Free From Doubt.
In many Courts, there can be a Bad Faith Claim only when there is Insurance Coverage. That appears to be the case here, but this conclusion is uncertain. After announcing that the Robichauxes sued Nationwide for alleged Bad Faith, among other things, the Mississippi Supreme Court never mentioned Bad Faith in this case again.
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