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In Louisiana, an insurer’s duty to defend it’s insured typically depends on the “four corners rule,” in which the court examines the allegations contained in the plaintiff’s petition and the terms of the insurance policy.  If there is the possibility of coverage, the insurer’s duty to defend is triggered. However, in Sibley v. Deer Valley…

On September 30, 2010, the Internal Revenue Service issued guidance providing relief to homeowners who have suffered property losses due to the effects of certain imported drywall installed in homes between 2001 and 2009.  In particular, the IRS issued Revenue Procedure 2010-36 which enables affected taxpayers to treat damages from corrosive drywall as a casualty loss and provides a ”safe harbor” formula for determining the amount of the loss.
Continue Reading IRS Issues Safeharbor Relief for Those Impacted by “Chinese Drywall”

Judges in East Baton Rouge and St. Tammany Parish have issued two of the earliest rulings on the impact of the Louisiana New Home Warranty Act on claims by homeowners against contractors for damages related to Chinese Drywall. Both state district court judges have found that the Louisiana New Home Warranty Act is the exclusive…

The United States Supreme Court recently resolved conflicts among the Circuit Courts about the citizenship of a corporation for determining diversity of citizenship jurisdiction (1). This will allow corporations to analyze with more predictable results whether to remove a case to federal court. In Hertz Corp. v. Friend, et al, No. 08-1107 (February 23, 2010) (a unanimous decision, which is unusual in and of itself), the Court decided that when determining a corporation’s citizenship for diversity of citizenship jurisdiction, the “principal place of business” of the corporation is “the place where the corporation’s high level officers direct, control, and coordinate the corporation’s activities”—something that courts have referred to as the “nerve center” of the corporation.
Continue Reading Supreme Court Clarifies Definition of a Corporation’s “Principal Place of Business”

The Louisiana Legislature has adopted House Concurrent Resolution No. 185, authored by Representative Tim Burns.  The resolution urges and requests that the Department of Health and Hospitals and the Deptartment of Insurance, in consultation with the Louisiana State Licensing Board for Contractors, investigate the health risks associated with living in homes that contain drywall imported…

June marks the beginning of Hurricane Season and should serve as a reminder to review your personal and business property insurance coverage. The effect of recent Hurricanes on the Gulf Coast generally and Louisiana specifically have been significant with respect to both damages and the insurance covering those damages.
Continue Reading Insurance and Hurricanes

In Sher v. Lafayette Insurance Co. (La. 2008), an apartment unit was flooded when levees failed immediately following Hurricane Katrina. The insurer inspected the property to determine the amount of covered loss and concluded that most of the building’s damage was due to poor maintenance, disrepair, and flooding. Checks totaling slightly more than $2,700 were tendered but rejected. Although the term “flood” was not defined in the policy, the Louisiana Supreme Court rejected the argument that the definition depended on whether the event resulted from a natural disaster or a man-made one, instead focusing on the prevailing meaning of the word “flood,” i.e., the overflow of a body of water causing a large amount of water to cover an area that is usually dry. Accordingly, the court did not find the term ambiguous, and found that the levee breaches were covered by the flood exclusion.
Continue Reading Water From Broken Levees Falls Within Insurance Policy Flood Exclusion

In Landry v. Louisiana Citizens Property Insurance Co. (La. 2008), the Louisiana Supreme Court rejected a homeowner’s breach of contract claim against the insurer for failure to pay the face value of the policy after their house was totally destroyed by Hurricane Rita. The parties did not dispute that the insurance in question covered any loss caused by wind and rain, and that the policy specifically excluded damages caused by flood waters. Even so, the homeowner claimed that Louisiana’s statutory law (R.S. 22:695) obligated the insurer to pay the face value of the policy. The insurer responded, asserting several defenses, including damages caused by flood, high tides, and storm surge. The statute in question was the Louisiana Value Policy Law (R.S. 22:695), that sets forth the methodology to compute loss and that its provisions are not altered due to concurrently causing damages, even if one of such damages is not covered.
Continue Reading Louisiana Value Policy Law Does Not Control Amount of Insurance Loss