Federal Judge Says Katrina Cases Must Be Separate

It seems that homeowners with outstanding lawsuits against their insurer will have to proceed with those cases as individuals.

Unfortunately, it's a bit of a "David and Goliath" story. Your average homeowner (especially one that just lost everything) is not going to have a "war chest" of money to take an insurer to court. However, you can bet that the insurer does! And any insurer that is attempting to deny claims from Katrina has a huge vested interest in winning each case, in order to ensure that all this claim money isn't paid out.

Another problem: each individual lawyer on each suit will have to basically re-do a lot of the same footwork in building a credible case. In a class action lawsuit, the footwork can be leveraged, allowing all claimants to benefit from one large fact-finding project, at less cost to each individual claimant.

The federal judge who ruled against class actions, U.S. Magistrate Judge Robert Walker, indicated that consolidation of a hundreds of policyholder claims against several major insurers did not meet requirements for class certification.  The law firm who attempted to get certification is considering refiling the action in state court, now that the federal court has denied it.

The insurers are obviously happy. Of course they want each case heard on its own merits, as opposed to a judgement which throws their policy wording or claims processes into question, and allows a whole group of people to collect without having to fight each claim individually. It makes it easier for each claim to be settled either for less than it should be (because the homeowner runs out of money to pursue the action, and has to settle). It also allows the insurer's legal team the advantage of doing a lot of the footwork once and then being able to bring that knowledge into the courtroom on multiple cases.

If each case is heard individually, I predict the insurers will win a lot more cases, a lot of other cases will be dropped, and a lot more homeowners will find themselves with a devastating financial loss that no one will be covering. It may take even longer for parts of Louisiana to be rebuilt, given that this legal decision stands.

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