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Hurricane Katrina Information.
September 2005
Kreindler & Kreindler LLP, its partners, attorneys and staff, joins the nation in supporting and praying for the residents of the Gulf Coast who were affected by the destruction of Hurricane Katrina. The stories and images of lives lost, homes and businesses decimated, and families torn apart or uprooted will stay with us for our lifetimes.
The Kreindler & Kreindler family is committed to providing whatever assistance and support we can offer, as our friends in Louisiana and Mississippi begin the long and difficult task of rebuilding their homes, their businesses, their towns and their lives.
The process of rebuilding will not be easy. It will take time and tremendous resources. We have heard many people express concerns about the cost of rebuilding. Others fear that their insurance carriers will not voluntarily pay their claims. Business owners wonder how they can even calculate the magnitude of their losses.
The following information may be helpful in assisting victims in taking the first steps in their long journey home.
Potential Claims Resulting from Hurricane Katrina
Claims to recover damages, costs and expenses resulting from a disaster may be against private entities and/or governmental organizations, depending on the circumstances.
Private Claims
There are two avenues for private claims: insurance claims and liability-based claims (suing those non-governmental persons or organizations that are responsible for the losses at issue).
Insurance Claims
Insurance claims are brought by people who purchased policies to protect them from loss in the event the hurricane damaged their homes, properties or businesses. Claims are first submitted to the insurance company, but frequently disputes arise that unfortunately require litigation.
Business Interruption Insurance
Business Interruption Insurance ("BII") provides coverage for income you lose as a result of an interruption in business due to the physical damage of certain covered property. Stated more simply, BII is designed to cover actual loss of income due to loss of physical property.
"Business income" losses include interruption of utility services, the inability of customers or vendors to reach retailers or distributors, and even damage suffered by a critical supplier or customer. Are these losses covered? It depends on your policy. A policy covering property damage loss will not necessarily cover a business income loss. Your commercial property policy must specifically include a BII endorsement. If it does, then the first major hurdle is overcome. However, BII provisions can be complex and the scope and extent of the coverages they provide are often misunderstood.
Collecting on BII policies can be complicated when all of the documents and records which support the claim were destroyed in the catastrophe. In that case, the business must be painstakingly recreated to guarantee a maximum recovery.
Very often, business owners are forced to sue their insurance company in order to obtain a coverage decision or to force the insurer to pay fair and reasonable sums to replace lost income.
For more information, click here.
Homeowners or Other Property Damage Insurance
Homeowner's insurance policies typically cover damage caused by wind, wind-driven rain and fire, theft and vandalism. Flood damage is not covered under most homeowners policies. Flood insurance is separately available through the federal government's National Flood Insurance Program.
In the case of natural weather-related disasters like Katrina, insurance companies have the right to, and often do, challenge whether particular damage was caused by wind and wind driven rain (in which case they have to pay the claim) or by flooding (in which case they do not have to pay).
Another common issue is proof of loss. With Katrina's destruction so complete, the challenge for a policy holder to show what they lost in the storm and the value of their home and property when making a claim? Again, the insured must carefully prove the value of their home and property to ensure that they are treated fairly.
Private Liability Claims
Victims with and without private insurance can also file lawsuits in court to attempt to recover for damage to their property, for physical injuries, and for wrongful death if a loved one was killed by the devastation. Lawsuits against government entities are discussed in the section titled Public Liability Claims.
The key to successfully prosecuting a liability suit is to find a culpable party at fault for causing, contributing to, or magnifying the extent or the intensity of the flooding. This can prove to be very difficult in the case of a natural disaster, like Hurricane Katrina.
There is evidence that a barge tore loose from its moorings and caused the levee breach on the Industrial Canal in New Orleans. If the barge was not properly moored under the circumstances of the impending storm, the barge's owners and insurers can be held responsible for the damage caused by that levee breach. Hospitals and nursing homes that failed to properly care for their patients in the face of Hurricane Katrina and during its aftermath are liable to their patients or, in the case of wrongful deaths, their patients' estates. We are also investigating potential claims against other parties and defendants.
Public Liability Claims
Government Liability for Hurricane Katrina Losses
The federal, state and local governments failed Gulf Coast residents beginning years before Hurricane Katrina stuck and their failures continued in the days and weeks after it brought devastation to the region. However, the liability of the government for their failures is uncertain.
The United States enjoys sovereign immunity and may only be sued to the extent that it has waived its immunity. The party bringing a claim against the United States must prove an unequivocal waiver of this immunity.
The United States broadly waived its sovereign immunity in the Federal Tort Claims Act (the "FTCA"). The FTCA waives immunity for (1) negligent or wrongful acts, (2) committed by government employees, (3) while acting in the scope of employment, (4) if a private person would be liable under like circumstances, (5) according to the law of the place of the harm. The federal courts have exclusive jurisdiction to hear the claims and there is a pre-litigation administrative review process that must be satisfied. But FTCA didn't waive all of the government's immunity.
There are a number of exclusions to the FTCA's immunity waiver. The most relevant to claims arising from Hurricane Katrina is 28 U.S.C. § 2680(a), which provides, that the waiver does not apply to any claim "based upon the exercise or performance or the failure to exercise or perform a discretionary function or duty on the part of a federal agency or employee of the Government, whether or not the discretion involved be abused." This provision is generally called the discretionary act exception.
Courts have found it difficult to define the discretionary act exception's scope. The Supreme Court, in Dalehite v. United States, 467 U.S. 797 (1953), stated: "[w]here there is room for policy judgment and decision there is discretion." Based on this definition, it seems likely that the government will not be liable for many of its actions — regardless how ill-advised.
Claims against the federal government alleging improper flood management face another hurdle, the Flood Control Act, which bars law suits against the U.S. or its agents acting within the scope of their employment, that relate to flood damage. See 33 U.S.C. § 702c.
Holding the federal government liable for its negligence that led to so much suffering in the Gulf Coast is a substantial undertaking. The promise of any claim against the government will depend on the particular facts of the loss at issue. The facts must be carefully studied for non-discretionary government failures for which the government is not immune.
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