Judge stops attorneys from seizing Louisiana Citizens’ Property Insurance money
Jan 30, 2012
The following article was published in the Lakeland Ledger on January 30, 2012:
Judge lifts freeze on Citizens’ money seized
By Alan Sayre
A judge late Monday lifted an order that earlier froze more than $100 million seized for homeowners who claimed that Louisiana Citizens Property Insurance Corp. dragged its feet on 2005 hurricane claims.
The money includes a $92.8 million judgment for more than 18,500 policyholders – plus $11 million in judicial interest. Each plaintiff stands to receive $5,000.
Fred Herman, one of the plaintiff attorneys, said attorneys had seized $104 million from Citizens’ bank accounts before state District Judge Henry Sullivan issued a temporary order freezing the money in an escrow account. Sullivan later Monday dissolved the order, allowing the seizure of assets to continue, Herman said.
It was not immediately known why Sullivan lifted the restraining order or whether a hearing he set for Feb. 8 would stand.
Citizens chief executive Richard Robertson said that although the company has enough to pay the judgment, it intends to appeal to the U.S. Supreme Court.
In a long-running court case, the Louisiana Supreme Court ruled earlier that policyholders were entitled to the money because Citizens failed to begin adjusting their claims after hurricanes Katrina and Rita within 30 days as required by law. Citizens provides property coverage to homeowners and businesses unable to obtain insurance from private companies.
After the state Supreme Court refused to rehear the case, Insurance Commissioner Jim Donelon, who acts as a state overseer of Citizens, said an appeal with the U.S. Supreme Court would be filed. Robertson said that appeal was being prepared Monday.
“We do not feel the judgment is correct,” Donelon said. “We vehemently disagree with and, for a variety of reasons, think it’s erroneous.”
The governing board of Citizens scheduled a special meeting to discuss the case for Tuesday.
One of the lead plaintiff attorneys, Wiley Beevers, said Citizens – before the initial trial – had turned down a proposed mediation that would have “saved tens of millions of dollars” for the insurer. Two other mediation proposals that would have saved Citizens money after the initial judgment also were rejected, Beevers said.
“It is bizarre and one of the strangest things I have seen in my nearly 40 years of law practice,” Beevers said.
Herman said sheriff’s costs and commissions for executing the court judgment would add another $5 million to $6 million to Citizens’ bill. The courts have yet to determine attorneys’ fees in the case, he said.
Robertson said Citizens would be able to pay the entire judgment without a special assessment of private insurance companies. When Citizens reserves used to pay claims gets low, the company assesses private insurers for each property policy – a cost that is passed on to private insurance customers.
Robertson said Citizens had made a $6 million bond to appeal the judgment several years ago and the company believed that would apply until the company exhausted all appeals – including one to the U.S. Supreme Court. But plaintiff attorneys said that bond expired after final action by the state Supreme Court.
Robertson said Citizens is asking Sullivan to make the bond applicable to the U.S. Supreme Court appeal. The court does not have to agree to hear the case.
Find this article here: http://www.theledger.com/article/20120130/APN/1201301085?p=all&tc=pgall