The State Court of Appeal of Louisiana, Fourth Circuit has held that an insured could pursue her lawsuit for Katrina-related damages against her insurer,  Louisiana Citizens Property Insurance Corporation, even though the lawsuit was filed over a year after the August 2007 filing deadline had expired.  Pitts v. Louisiana Citizens Property Insurance Corp., Case No. 2008-CA-1024 (La.App. 4 Cir. Jan. 7, 2009).  (Click here to read the decision.)

The insured, Brenda Pitts, alleges that payments she received from her insurer for Katrina-related damage, were grossly inadequate.  Ms. Pitts initially pursued her claim through two class action lawsuits, which were both filed in August 2006.  In August 2007, class certification was denied in the first class action.  In January 2008, the class in the second class action was limited by the court to exclude plaintiffs who claimed that their insurance claims were insufficiently paid.  Notice of the class limitation was to be provided to the plaintiffs on April 24, 2008.  Ms. Pitts individually filed suit against her insurer in February 2008 since she was precluded from both class actions.

The trial court dismissed Ms. Pitts’ lawsuit with prejudice as her  lawsuit was filed after the filing deadline for Katrina claims had passed.  However, the Court of Appeal of Louisiana reversed and remanded the case for further proceedings, reasoning that since a class action petition tolls a filing deadline, the deadline for Ms. Pitts’ claims had been suspended as of August 2006 when the putative class actions were filed.   The prescription period did not again begin to run until Ms. Pitts was given notice in April 2008 that she was excluded from the class action, or in her case, until she filed her individual petition on February 20, 2008.

If the ruling by the Court of Appeal stands on appeal, it could have the effect of opening the door to numerous Katrina and Rita coverage lawsuits against insurers  for insureds whose prescription period was tolled due to their initial involvement in a class action from which they were subsequently excluded.

We will continue to monitor related developments and provide updates at InsureReinsure.com.