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South Mississippi Living 4/07

Saturday, September 29, 2007

Jury sides with policyholders in Katrina insurance trial

Associated Press Writer

A federal jury in south Mississippi sided Friday with a couple who sued their insurance company after Hurricane Katrina for refusing to cover more than $1.7 million in damage to their beachfront home and property.

The eight-member jury wasn't asked to specify how much money USAA Casualty Insurance Co. owes Kevin and Sherrye Webster for damage to their home in Bay St. Louis.

But jurors concluded that all of the damage to the couple's house was caused by Katrina's wind, wind-blown debris or wind-driven rain - perils that are covered by the San Antonio-based insurer's policies.

USAA had argued that nearly all of the damage to the two-story home was caused by Katrina's flood waters and wasn't covered by the Websters' policy, but the jury disagreed.

"I think it's a big victory for all the homeowners on the Gulf Coast," said attorney John Cocke, whose law partner, Charles Merkel, represents the Websters.

Friday's verdict capped the first phase of a trial that started last week in Gulfport, Miss. In the next phase, which begins Tuesday, jurors are expected to hear testimony about damage to the contents of the two-story house.

At the conclusion of the trial, U.S. District Judge L.T. Senter Jr. will be responsible for calculating how much money USAA owes the Websters, based on the jury's verdicts.

USAA spokesman David Snowden said he wouldn't comment until after the trial concludes.

USAA and other insurers say their homeowner policies cover damage from a hurricane's wind but not its rising water, including surge. The Websters didn't have a separate flood insurance policy.

USAA blamed most of the damage to the couple's house on Katrina's storm surge, but the couple argues that wind caused the house to collapse before surge reached it.

The Websters' policy had limits of $811,000 for the house, $81,000 for a barn on their property, $162,200 for living expenses and $760,480 for the home's contents. USAA paid them $10,944 for wind damage to the house and $42,929 for the barn.

Cocke said Friday's verdict means USAA will owe the Websters at least $800,000.

The Websters also are seeking unspecified punitive damages for the company's alleged bad faith, plus attorney's fees and expenses. But the request for punitive damages couldn't be considered until later in the trial.

The couple is among thousands of Mississippi and Louisiana property owners who have sued their insurers after Katrina wiped out large swaths of the Gulf Coast in August 2005.

Several federal trials for Katrina insurance cases already have been held in Gulfport, Miss., yielding mixed results for policyholders.

In August 2006, Senter sided with Nationwide Mutual Insurance Co. and ruled that the company wasn't obligated to pay a Pascagoula couple for damage from Katrina's rising water. A federal appeals court in New Orleans later upheld that ruling.

In January, however, a jury awarded $2.5 million in punitive damages to a Biloxi couple who sued State Farm Fire and Casualty Co. for denying their claim. Senter later reduced the award to $1 million, though he said State Farm had acted in a "grossly negligent way."

The Sun Herald published this article on September 28, 2007.

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