By: RYAN MYERS, The Enterprise
09/30/2007
Updated 09/30/2007 12:11:31 AM CDT
Has Cutoff Point on Rita Lawsuits Passed?
BEAUMONT - Plaintiffs' attorneys say the storm of Hurricane Rita lawsuits making landfall in the region's district clerks offices will dissipate this week but not disappear.
But a dispute has emerged as to the deadline for filing the lawsuits, with a major insurance company saying the window has closed and bringing into question lawsuits that continue to pour in.
"It's getting serious," Jefferson County District Clerk Lolita Ramos said Thursday regarding the number of Rita lawsuits filed.
"On Monday, I was ready to dismiss it as not a big deal, but now I'm thinking we may have to shift some employees around to accommodate the volume."
Most cases involve policyholders claiming their insurance company shortchanged them on storm damage. Many property owners suing also allege their insurance company used deceptive trade practices or violated the state insurance code.
Rita's second anniversary was Monday, and in Jefferson County attorneys had filed about 300 property insurance lawsuits related to the storm in the last two weeks.
The lawsuits had been trickling in at the rate of a few a week for over a year. The attorneys filing the lawsuits say the vast majority will settle without seeing a jury, as hundreds already have. The first trials could occur in November.
State law provides a four-year statute of limitations for filing contract disputes, but most homeowner policies give property owners two years and a day to file a lawsuit.
Whether that two-year time period begins at the date of the storm, or when a policyholder began wrangling with his or her insurance company, has developed as a point of contention.
The Texas Department of Insurance interprets the deadline as "two years and a day from the cause of action," Ben Gonzalez, spokesman for the regulatory agency, said Friday.
"The cause of action would be when the insurance company either made a denial or chose not to act or made a settlement that was lower than what the person was hoping to get," Gonzalez said. "That's the stipulation we look for when approving policies."
But Allstate, which quit writing windstorm coverage in Texas coastal counties last year, sees the deadline as two years from the date of the storm.
"Our policies intend the deadline to be interpreted as two years and a day from the cause of loss," Allstate spokesman Joe McCormick said by phone recently. "That's a reasonable amount of time for things to be settled."
Outside of litigation, Allstate has paid out about $508 million on about 29,000 property insurance claims stemming from Hurricane Rita, McCormick said.
The Southwestern Insurance Information Service and the Insurance Council of Texas both declined to weigh in on the debate. State Farm, a defendant in many of the lawsuits, did not return phone calls seeking comment for this story.
In Louisiana, where the deadline was calculated from the date of the storm, state lawmakers extended a one-year deadline to file lawsuits stemming from Hurricane Katrina.
If lawsuit filings in Southeast Texas are any indication, plaintiffs' attorneys are confident the deadline has yet to arrive.
In the days since Tuesday - two years and a day from the storm - at least 50 contract lawsuits have been filed against insurers.
"We think it is two years and one day from the date they knew or should have known that they were underpaid. To me that is two years and one day from the date they got their first check," said Clinton Brasher, who is among attorneys filing lawsuits since the storm's anniversary.
Because some claims were not answered until months after the hurricane, Brasher's interpretation pushes the deadline into 2008 for certain policyholders.
"Soon after the hurricane, the reality is most people have not made it back home," said Steve Mostyn, who has about 400 active Rita insurance lawsuits, including ones filed since Tuesday. "So there is no claim made yet, and you certainly can't have a denial yet."
If the deadline to file wasn't Rita's two-year anniversary, why the corresponding surge of lawsuits?
"For those cases we had in the office I decided out of an abundance of caution to file them before the anniversary, and that way there is absolutely no possibility (for contesting the deadline)," said Mostyn, who noted he will continue soliciting clients dissatisfied with insurance settlements.
Many Southeast Texans are only now deciding to go to court.
"I kind of perceive it like going to see the doctor when you are not feeling well," said Mostyn, who signed 110 new cases this September. "People lead busy lives and you don't want to do it if you don't have to, but if it gets to the point where it feels like you have to, you go ahead and do it."
The vast majority of Rita insurance claims were resolved without litigation.
About half a million Rita-related claims were filed with insurance companies, and insurers paid more than $4.8 billion to repair damages, according to the Southwest Insurance Information Service.