Louisiana High Court Keeps Katrina Decision

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The Louisiana Supreme Court refused July 8 to reconsider its recent ruling that an insurance company isn’t liable for water damage from the failure of levees in Hurricane Katrina’s aftermath.

The court ruled in April that Lafayette Insurance Co. isn’t obligated to pay policyholder Joseph Sher, the owner of a New Orleans apartment complex, for water damage from levee breaches after the August 2005 hurricane.

Sher’s lawyers asked the court for a rehearing on that issue, but the justices rejected their request without giving an explanation.

Last year, a state appeals court ruled that Lafayette’s homeowner policy failed to exclude all forms of flooding because its language was ambiguous. The Supreme Court disagreed, however, and said Lafayette is entitled to limit its liability for damage from a levee breach.

James Garner, one of Sher’s lawyers, said other courts have drawn a distinction between floods that are naturally occurring and those that are man-made. The Army Corps of Engineers is widely blamed for poorly designing and maintaining the levees that broke and flooded 80 percent
of New Orleans.

The Supreme Court’s interpretation of the laws governing insurance contracts mirrored a ruling last year by a New Orleans federal appeals court in a separate but similar case.

The state Supreme Court also ruled on July 8 that Sher is entitled to an additional $42,000 in court costs, on top of what he already has been awarded. A jury and state judge had awarded Sher more than $870,000, but the Court reduced the award to roughly $247,000 in April.

(Editor’s note: For an in-depth discussion of the Louisiana Supreme Court’s reasoning in this and other Hurricane Katrina-related cases, see “Cleaning Up After Hurricane Katrina,” by Robert Redfearn, Jr. on page 124.)