Merlin Group: 103 paid in State Farm settlement

Merlin Group secured the deal

By ANITA LEE
calee@sunherald.com

GULFPORT -->State Farm Fire & Casualty Co. paid for the peace of mind Curtis and Joan Lee feel after two years of fighting with the insurance company over Hurricane Katrina damage.

The Lees' claim was among 103 settled between the nation's largest property and casualty company and the Merlin Law Group.

State Farm spokesman Fraser Engerman said: "We are pleased that we were able to settle these claims without further costly and lengthy litigation. We continue to hope we can resolve other claims still outstanding in the same manner."

The Lees can't discuss the settlement amount, but the $40,000 check State Farm offered him earlier this year obviously pales in comparison. That offer came through the Scruggs Katrina Group, the law firm then representing the Lees.

The Diamondhead couple had already gone twice to state-sponsored mediation with State Farm, where they turned down offers of $100,000 and then $110,000 for destruction of their South Diamondhead home, valued at $360,000 several years before the hurricane.

They then turned to the Scruggs Group, which has by far the longest insurance client list on the Coast. They assumed the amount would be more than State Farm had previously offered.

"You can imagine what we thought when we were handed a check for $40,000," Curtis Lee said. "We told (the Scruggs Group) what to do with it."

The Scruggs Group could not discuss the Lees' settlement, but the firm secured more than $80 million for 640 State Farm clients. Under that settlement, State Farm deducted any previous insurance payments, even if they came from the federal flood program, which paid the Lees policy limits for water damage.

They depended on wind coverage from State Farm to make them whole.

The Lees picked up their settlement check Monday at Merlin's Gulfport office.

"It was such a relief," said Joan Lee, who is retired from D.H. Holmes department store. "We were so nervous this morning. We've done this before. We were very, very pleased with our settlement."

The Merlin Group still has several lawsuits pending against the company.

"State Farm will never admit it owed anything," said the Florida attorney, William F. "Chip" Merlin Jr., who spent part of his childhood in Bay St. Louis and now specializes in litigation against insurance companies. Boyhood friends William Weatherly and Randy Santa Cruz, now attorneys on the Coast, helped persuade Merlin to join them in representing policyholders after Katrina.

The settlement agreement was signed before a late August ruling from the 5th U.S. Circuit Court of Appeals in the case of Leonard vs. Nationwide. The ruling validated policy language that excludes coverage for wind damage when it occurs simultaneously with destruction from tidal surge, covered under federal flood policies.

State Farm has maintained that its policies cover wind damage only when it is "discernible" and separate from water damage. The 5th Circuit has heard arguments about whether State Farm can exclude coverage for wind damage when water contributes, but has not yet ruled.

Joan Lee said when she and her husband saw the newspaper headlines about the Leonard ruling, they fell into a "blue funk," but were assured their agreement was still good. They're hoping the emotional roller-coaster ride is over.

"It was a fight from day one with the insurance companies," Joan Lee said, nodding toward her husband, a retired Whitney Bank vice president. "He was in the fight mode. I was in the flight mode."

Curtis Lee said, "In the past two years, we've had nothing but turmoil." Now, he said, they plan to travel.

Original article published September 18, 207.

Return to A.M. in the Morning! Home