Judge Finds State Farm Policy 'Ambiguous,' Affirms Wind, Rain Coverage

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Judge Finds State Farm Policy 'Ambiguous,' Affirms Wind, Rain

Coverage

GULFPORT, Miss. — A federal judge has ruled that State Farm Fire &

Casualty Co. must pay for hurricane wind and rain damage to a

Mississippi couple's home, even if non-covered flood damage

subsequently or simultaneously caused further destruction. Tuepker,

et al. v. State Farm Fire & Casualty Co., No. 05-559 (S.D. Miss.).

In an opinion filed May 24, Judge L. T. Senter Jr. of the U.S.

District Court for the Southern District of Mississippi denied State

Farm's motion to dismiss the complaint of and Tuepker.

The Tuepkers' house in Long Beach, Miss., was completely destroyed

during Hurricane Katrina, and the plaintiffs allege that the damage

was caused by 'hurricane wind, rain and/or storm surge.' The

Tuepkers say they paid premiums on their State Farm homeowners

policy for more than $350,000 in coverage for their house, an

extension, personal property and loss of use.

On Oct. 6, State Farm declined the plaintiffs' claim on grounds that

the destruction of their property was a result of 'storm surge, wave

wash and flood,' Judge Senter noted. The Tuepkers filed suit on Nov.

21, and State Farm moved to dismiss on Dec. 28.

While Judge Senter agreed with State Farm that damage from tidal and

storm surge is not covered under the homeowners policy because of

a 'valid and enforceable' water exclusion, the judge also said the

insurer cannot rely on 'ambiguous' policy language to deny coverage

for wind and rain.

Judge Senter noted that the State Farm policy carried a

specific 'Hurricane Deductible Endorsement,' making it 'apparent

that [the policy] was intended to cover damages sustained in a

hurricane because of the effects of rain, hurricane winds and

objects that might be carried by those winds, whether or not there

was also damage caused by high water.'

The judge wrote: 'To the extent State Farm contends that the

hurricane itself, i.e. the hurricane winds and rain, would

constitute a weather condition that would completely relieve State

Farm of liability for damage to insured property, I find that the

policy is ambiguous and its weather exclusion therefore

unenforceable in the context of losses attributable to wind and rain

that occur during a hurricane.'

Any ambiguity in the terms of an insurance policy is to be resolved

in favor of the insured and against the insurer, Judge Senter said,

adding that he 'cannot say that there is no set of facts the

plaintiffs may establish in support of their claim which would

entitle them to relief.'

The question of how much damage was caused by wind and water is a

fact-specific inquiry that must be decided at trial, Judge Senter

stated. The judge said State Farm bears the burden of proving that

the water exclusion applies to the Tuepkers' claim.

In addition, Judge Senter determined that State Farm could be liable

for the plaintiffs' entire loss if the Tuepkers can prove their

allegation that State Farm agent Elvis Gates, in selling the

homeowners policy to the couple, 'expressly and/or impliedly

represented to plaintiffs that they would have full and

comprehensive coverage for any and all hurricane damage, including

any and all damage proximately, efficiently and typically caused by

hurricane wind and 'storm surge' proximately caused by hurricanes.'

Under Mississippi law, an insurance company's agent, while under no

affirmative duty to advise clients what coverages are necessary for

the protection of their property, does have the authority to make

certain binding representations on behalf of the insurer, Judge

Senter said.

Counsel for the Tuepkers are F. Scruggs and Zach Scruggs of

the Scruggs Law Firm in Oxford, Miss.; Don W. Barrett of the Barrett

Law Office in Lexington, Miss.; G. of , Funderburg,

Sessums, & Lee in , Miss.; and W. Backstrom of

Denham, Backstrom & Hollingsworth in Ocean Springs, Miss.

State Farm is represented by W. Welch III of Baker, Donelson,

Bearman, Caldwell & Berkowitz in , Miss., and C.

Galloway, McRae , P. Lane and C. Henegan of

, Snow, O'Mara, s & Cannada in , Miss.