In re Katrina Canal Breaches Litigation

On August 29, 2005, Hurricane Katrina hit New Orleans, Louisiana.

• Property owners who turned to their insurers were denied based on coverage exclusions.
• All plaintiffs held insurance policies with "flood exclusions."
• Plaintiffs = Vanderbook, Silva, Harvey, & 4 others = "Vanderbook"
• Defendants are
  • Hanover Insurance Company = "Hanover",
  • Standard Fire Insurance Company = "Standard Fire" ,
  • Unitrin Preferred Insurance Company = "Unitrin" ,
  • State Farm Fire and Casualty Company = “State Farm”
• Defendants collectively = "Unitrin"

• Unitrin lost in the district court.
• State Farm won in the district court.
• The losing parties appealed.

Must a provision in an insurance contract that's un-ambiguous under the plain meaning of the language used be enforced as written?

Vanderbrook argued that the inundation wasn't cause by a natural flood, but by a design flaw in the construction & maintenance of the levees in Louisiana.

Yes. When an insurance contract's terms are clear (un-ambiguous) under the plain meaning of the language used, those terms must be enforced as written.

• Unitrin's coverage exclusions were ambiguous (unclear).
• State Farms coverage exclusions were un-ambiguous (clear).

What happened in New Orleans was clearly a "flood."

Unitrin judgment is vacated; State Farm judgment is affirmed

Judge King: If a contract language is clear & doesn't lead to absurd consequences, then the contract should be interpreted as written.

Reasonable Expectations Doctrine

In short, these cases were a major victory for insurers.