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Katrina case heads to Supreme Court

PASCAGOULA — A dispute between an insurance company and a retired Navy admiral over coverage of damages from Hurricane Katrina has made its way to the Mississippi Supreme Court.

The case is among dozens the Supreme Court will hear during its May-June term.

The lawsuit involving Admiral James W. Lisanby and his wife, Gladys, and United Services Automobile Association (USAA) was the first Katrina-related case to go to trial in Jackson County.

In 2008, a Jackson County jury returned a $900,000 verdict for the Pascagoula couple.

Lisanby had sued USAA, of San Antonio, Texas, for damage to their Pascagoula beach front home, as well as their rental cottage, garage and other losses. They also asked the jury to award an unspecified amount for emotional distress.

Circuit Judge Billy G. Bridges declined to allow the jury to consider punitive damages.

USAA, of San Antonio, Texas, has appealed the jury award.

USAA lawyers had argued company did not owe more than the about $45,000 it had already paid because the Lisanbys’ homeowners insurance policy did not cover water, even wind driven water.

The Lisanbys’ attorney said USAA failed to properly and fully investigate the claim on the couple’s home before denying coverage.

The Lisanbys have also appealed the trial judge’s decision to bar punitive damages.

The Supreme Court will not hear oral arguments in the case.

Some of the most contentious insurance lawsuits spawned by Katrina dealt with properties that were reduced to slabs, making it difficult to determine if wind or water was responsible.

Insurance companies have said their homeowner policies cover damage by a hurricane’s wind but not its rising water, including wind-driven storm surge. Insurers also have maintained that damage from a combination of wind and flood water can be excluded from coverage by “anti-concurrent cause” language in their policies.

Last October, the Mississippi Supreme Court ruled that insurance companies must cover damage from a hurricane’s wind even if the home is later inundated by storm surge.

That ruling came in a query from a trial judge in a Harrison County who wanted guidance on whether the anti-concurrent causation clause applied to hurricane losses. Some insurance companies interpreted the clause to mean that wind damage is not covered when tidal surge, covered under federal flood policies, contributed to the loss.

The Supreme Court held that the ACC clause does not apply because wind and water cause separate and independent damage. The court said once the policyholder establishes a direct physical loss under an all-perils policy, the burden shifts to an insurance company to prove water caused the loss in order to deny coverage.

The Supreme Court said the exclusion wouldn’t apply if it could be determined that wind damage happened first. It said a jury must decide whether damage to a homeowner’s property was caused by wind or water.


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