Katrina lawsuits headed to state court - WDAM-TV 7-News, Weather, Sports-Hattiesburg, MS

Katrina lawsuits headed to state court

A federal judge agreed Tuesday to transfer Attorney General Jim Hood's lawsuit against insurance companies over Hurricane Katrina damages from federal to state court.

U.S. District Judge L.T. Senter Jr. ruled that Hood's lawsuit belongs in state court because interpreting the terms of private insurance policies is traditionally a function of state law.

Senter rejected arguments by insurers that Hood's suit should be heard in federal court because the companies write flood insurance policies that are funded and administered by the federal government.

"While there may be interplay between the benefits available under respective homeowner and flood policies," Senter wrote, "that obviously does not invest this court with exclusive federal jurisdiction."

Senter, who transferred the case to Hinds County Chancery Court, also rejected the companies' claim that the case belongs in federal court because Hood allegedly has "misused his powers to enforce state law," in violation of the Constitution.

Hood filed a civil suit in September 2005 against five major insurance companies for refusing to cover at least $2 billion in estimated damage from Katrina's storm surge. He originally filed the suit in state court, but the companies successfully fought to move it to federal court.

The companies named as defendants in Hood's suit are State Farm Fire & Casualty Co., Allstate Property & Casualty Insurance Co., Mississippi Farm Bureau Insurance Co., United Services Automobile Association and Nationwide Mutual Insurance Co.

Efforts to reach company representatives and a spokeswoman for Hood weren't immediately successful Tuesday.

Senter, who presides over hundreds of lawsuits that policyholders filed against their insurers after the August 2005 storm, heard the first of those suits to be tried in Mississippi.

Senter sided with insurers in that first case, ruling in August that Nationwide's policies cover damage from a hurricane's winds but not from its rising waters, including wind-driven storm surge.

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