Updated October 6, 2022

Introduction

Mardi Gras just ended, but that loud sound you have been hearing coming out of the Gulf Coast was not from New Orleans . The litigation in Mississippi surrounding insurance coverage for damage caused by Hurricane Katrina has produced more noise than even Hurricane-affected tourists (the Pat O'Brien's kind) on Bourbon Street . And most of the hoopla has been heard outside the courtroom.

It has been about six weeks since Mississippi District Judge L.T. Senter, Jr. caught everyone by surprise when he issued the Directed Verdict heard 'round the world in Broussard v. State Farm, 2007 U.S. Dist. LEXIS 2611. On January 11th, Judge Senter cut short a Katrina coverage jury trial and ordered State Farm to pay the policyholders the full limits under their homeowner's policy—the amount of $212,222. That same day, the jury awarded plaintiffs punitive damages in the amount of $2.5 million—later reduced to $1 million.

Then, less than four weeks ago, Judge Senter rejected a settlement agreement that was designed to create an administrative process for a class of as many as 35,000 State Farm policyholders in Mississippi to have their previously adjusted and closed claims reassessed. Under this mechanism, additional policy benefits were to be paid based on a damage matrix, with additional payments guaranteed to be at least $50 million and estimates of State Farm's ultimate exposure running as high as $600 million.

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