Plaintiffs in Louisiana Citizens Insurance Suit Allowed to Seize Cash

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The plaintiffs who won a $92.8 million judgment against Louisiana Citizens Property Insurance Corp. three years ago obtained authority to seize the company’s cash as a result of a ruling late on March 6 in a Jefferson Parish state district court. The ruling gave Regions Bank 10 days to tell plaintiff attorneys in the class-action lawsuit how much of Citizens’ money the bank is holding, said Richard Robertson, chief executive of the state’s property insurer of last resort.

A state district judge rejected a contention by Citizens and Regions Bank that the original seizure request should have made in Baton Rouge, rather than in Jefferson Parish.

Plaintiff attorneys said Citizens’ policyholders would move ahead with the seizure.

Citizens in February offered to settle the dispute for $103 million, an offer that included a $25 million cap on attorneys’ fees. It was rejected by the plaintiff attorneys. An earlier settlement offer of $80 million was also rejected.

The lawsuit was filed following Hurricanes Katrina and Rita in 2005. Citizens’ policyholders claimed the company did not begin to adjust claims within the 30 days required by state law. Citizens has said that it was totally overwhelmed by claims after Katrina devastated the New Orleans area with flooding in August 2005 and Rita followed a month later with flooding in southwestern Louisiana.

The seizure process involves the bank turning over the money to the Jefferson Parish sheriff and then to the court for supervision before the judge decides how to distribute the money.

Lead plaintiff attorney Wiley Beevers said his side could have begun seizing funds on Jan. 29. “But we waited, offering a bit of a cooling off period to reach an out-of-court settlement,” Beevers said. “The longer Citizens waits, the more money they are costing the company and the longer our clients have to wait.”

Citizens is considering an appeal to the U.S. Supreme Court, which has denied an emergency stay to block the seizure. The high court does not have to agree to hear the case.