Robert Resources, LLC. v. United Fire and Casualty Company (Fifth Circuit, August 11, 2009)
The action originates from several property damage claims arising from Hurricane Katrina in 2005. The insured sued its insurer alleging that the insurer acted in bad faith by refusing to make any payments under its policy due to the insurer's own financial situation. Due to this financial pressure, the insured alleges that the insurer intentionally characterized the damage arose from flooding issues which was not covered under the policy. After a jury trial, the insured was awarded 20.6 million dollars which included compensatory damages and bad faith penalties. The insurer and the insured both appealed the decision.
On appeal, the Fifth Circuit rejected the insurer's arguments as it found that "the jury was properly charged and the district court did not abuse its discretion in its evidentiary rulings." The Fifth Circuit did, however, accept the insured's argument that the total amount was incorrect. As such, the Fifth Circuit added approximately 1 million dollars to the total amount due an incorrect interpretation of Lousiana R.S. Section 22:1220(A) by the jury.
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By Jeffrey L. Kingsley and Thomas F. Segalla