State Farm Settles a Miss. Katrina Lawsuit Before Trial

State Farm Fire & Casualty Co. settled out of court last Friday with a Mississippi policyholder whose lawsuit over Hurricane Katrina damage was scheduled to be tried next week in federal court.

State Farm settled with Richard Tejedor of Long Beach only eight days after jurors awarded $2.5 million in punitive damages to a different policyholder — a couple who sued the Bloomington, Ill.-based insurer for denying their claim after the Aug. 29, 2005, storm.

Terms of the settlement in the Tejedor case will not be disclosed, said State Farm spokesman Fraser Engerman. “We are pleased that we were able to resolve this issue before it went to (trial),” Engerman said.

Jack Denton, one of Tejedor’s attorneys, confirmed that the case has been settled but declined further comment.

Tejedor was one of hundreds of homeowners on Mississippi’s Gulf Coast who sued their insurers for refusing to cover billions of dollars in damage from Katrina’s storm surge.

Katrina destroyed his home, leaving nothing but a slab. A federal flood insurance policy paid him the maximum $200,000 for the home and $80,000 for its contents. Tejedor, however, said State Farm refused to pay for an additional $263,190 in damage to his home and its contents.

State Farm and other insurers say their homeowner policies cover damage from wind but not from water, and that the policies exclude damage that could have been caused by a combination of both, even if hurricane-force winds preceded a storm’s rising water.

State Farm invoked that policy language to deny a claim filed by Norman and Genevieve Broussard of Biloxi, whose lawsuit was tried last week in a federal court in Gulfport.

U.S. District Judge L.T. Senter Jr. took part of that case out of jurors’ hands, ruling that State Farm is liable for $223,292 in storm damage to the Broussards’ home. Jurors awarded the Broussards an additional $2.5 million in punitive damages.

The trial for Tejedor’s lawsuit was scheduled to start today. Jan. 22. State Farm attorneys had asked for the trial to be postponed, but Senter refused.

State Farm attorneys argued in court papers that a “barrage of publicity” about last week’s multimillion dollar verdict may have tainted the jury for Tejedor’s case. Senter, however, said postponing the trial would needlessly disrupt the court’s schedule.

State Farm also is the defendant in the next four Katrina insurance cases set for trial in Gulfport. The first is scheduled to start March 12.