Class Action Certification of Slab Case Insurance Claims Against Homeowners’ Insurer Inappropriate Because Individual Proof Issues Exist in Each Case so the Claims Fail to Satisfy the Typicality Requirement for Class Actions Under Rule 23 Mississippi Federal Court Holds
Plaintiff filed a class action against her homeowners insurance carrier, State Farm, alleging that after Hurricane Katrina totally destroyed her home, State Farm had improperly denied coverage “on the grounds that the destruction of the insured property was caused solely by water in the form of storm surge flooding, a peril excluded under the terms of the policy at issue.” Guice v. State Farm Fire & Cas. Co., Civil Action No.1:06CV001 LTS-RHW (S.D. Miss. March 22, 2007) [Slip Opn., at 1]. Plaintiff moved the court to certify a class action against State Farm on behalf of homeowners whose properties fall within the category of “slab cases” – viz., homes where Hurricane Katrina left only the foundation. Id. The district court denied plaintiff’s motion, id., at 2, and plaintiff requested reconsideration of the class action certification issue, id., at 1. The district court denied plaintiff’s motion, reaffirming that the slab cases against State Farm are not appropriate for class action treatment.
The federal court began its analysis by noting that the practical effect of granting plaintiff’s motion would be “entry of judgment as a matter of law for the liability limits application to the ‘slab cases’ under the State Farm homeowners policies that applied to those properties.” Slip Opn., at 1. However, while at the time of the first class action certification motion none of the individual “slab case” lawsuits against State Farm had been tried, the federal court now had the benefit of having presided over three such cases, explaining at page 2:
When the plaintiffs’ previous motions for class certification were considered and rejected, no case against State Farm related to insurance coverage for hurricane damage had been tried. Three “slab cases” have now been tried to verdict, and I have learned some important lessons from these trials, lessons that are relevant to the merits of this motion: 1) the forces exerted by Hurricane Katrina varied substantially from one location along the Mississippi Gulf Coast to another; 2) the forces exerted against a particular building varied substantially depending on the building’s proximity to the shore line; 3) the damage any given building may have sustained varied substantially depending on its age, quality of construction, and even its design (e.g. gable roof compared with hip roof) and orientation to the forces exerted by the storm, particularly the wind; and 4) claims were handled by Defendant in a variety of ways. These lessons confirm the reasoning of my decisions on the plaintiff’s previous motions for class certification and inevitably lead me to the conclusion that there are as many differences between the “slab cases” as there are similarities in terms of the evidence available to ascertain the cause of the destruction and damage to these properties. For this reason, I do not believe there is any procedural advantage in creating a class of State Farm “slab cases” that would not be offset by the factors that will ultimately require the individual treatment of these claims. (Italics added.)
Under Mississippi law, the court explained, the plaintiff-insured has the burden of establishing that the loss falls within the scope of the policy; thus, “the plaintiff’s burden is to show that she sustained an accidental direct physical loss of the insured property (under Coverage A-Dwellings and Other Buildings) and to show that she sustained an accidental direct physical loss of the insured property from a windstorm (under Coverage B-Contents).” Slip Opn., at 2. Hurricane Katrina included “strong winds, storm surge flooding, wind-driven debris, water-borne debris, and heavy rains”; importantly, however, “only some of them are within the coverage of State Farm’s homeowners insurance policy.” Id. Moreover, State Farm will have the burden of proving the applicability of the policies’ water damage exclusion, id., at 2-3, and this too will vary from case to case.
The bottom line is that the factual proof in “slab cases” will not be sufficiently typical to satisfy Rule 23: “the plaintiff’s case lacks the element of typicality necessary to sustain a class action.” Accordingly, the district court denied the motion for reconsideration.