Vermillion Parish, LA (August 30, 2007) - As Louisiana residents observed the second anniversary of Hurricane Katrina, the Louisiana Court of Appeal Third Circuit ruled that Louisiana's Valued Policy Law ("VPL") allows homeowners whose homes were rendered a total loss by hurricanes to recover the full value of their homes if the loss was caused by a covered peril under their homeowners' policies.

In so doing, the Court of Appeal rejected the insurance industry's latest effort to avoid paying Louisiana homeowners full value for their homes lost as a result of Hurricanes Katrina and Rita.  The ruling, which is an authoritative and binding interpretation of Louisiana law by a Louisiana Appellate Court, also rejected two recent decisions by Louisiana Federal Courts which held that insurance companies could avoid paying policy limits if the homeowner's loss was caused in part by a non-covered peril such as flood waters.

The opinion was issued in the matter of Mark Landry and Barbara Landry v. Louisiana Citizens Property Insurance Company, No, 07-247, which was on appeal from the Fifteenth Judicial District Court in the Parish of Vermillion.  The Court's opinion, which was authored by Judge Sylvia R. Cooks, initially reversed the trial court's grant of summary judgment in favor of the policyholders, finding that the issue of whether the Landrys' total loss was caused by a covered peril was a factual determination not proper for summary judgment.  However, in the course of arriving at this conclusion, the Court rendered key interpretations and affirmations of long-standing Louisiana law which are favorable to homeowners, but which the insurance industry has sought to overturn or reverse when faced with having to pay homeowners for covered losses in the wake of Hurricanes Katrina and Rita.

In reviewing well-established Louisiana law, the Court held that if a policyholder proves that a peril covered under his homeowners policy was the "efficient proximate cause" of the total loss or constructive total loss of his home, the insurance company is required to pay the homeowner the face value of the policy.  The Court expressly rejected Citizens' contention, which was supported by the insurance industry in several Amicus Curiae briefs, that an insurance company is only required to pay the full face value of the homeowners' policy if the sole cause of the total loss was a covered peril.  The Court noted that Louisiana Courts "have not hesitated in rejecting any efforts by insurers to avoid their obligation to pay fully for covered peril because a non-covered peril or event may have contributed in part to a total loss."  The Court further rebuked the insurance industry's efforts to deny coverage and full payment of losses by making it patently clear that insurance companies "bear the clear burden to show that [an excluded peril] was the 'efficient proximate cause' of the total loss" to a policyholders' home.

The Landry decision is a major defeat for the insurance industry, which, despite collecting premiums from Louisiana policyholders for years, have continually attempted to exclude losses caused by Hurricane Katrina and Rita's windstorms or, alternatively, avoid paying the full face value of the policy.  The import of the Landry decision was underscored by the filing of several Amicus Curiae briefs by the insurance industry as well as Louisiana Attorney General Charles Foti, a class of plaintiffs in a Louisiana Federal Court action proceeding under the VPL and United Policyholders, a educational resource for the public on insurance issues and insurance consumer rights including shaping insurance policy issues nationwide. 

John N. Ellison, Esq., lead counsel from Anderson Kill & Olick, P.C., which, together with Ranier, Gayle & Elliot, LLC, and Larry D. Dyess, APLC, served as Counsel for Amicus Curiae United Policyholders and the Federal Class Action Plaintiffs commented:

"The Landry decision represents a Louisiana Appellate Court's faithful adherence to insurance law principles that have long protected Louisiana homeowners.  In the wake of other recent negative rulings in the Federal system, it is critical for policyholders to continue to seek relief in the Louisiana Court system that has been consistently applying principles like those relied upon in Landry to find coverage for the devastating effects of Hurricanes Katrina and Rita."