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Class Action Defense Cases-Arias-Benn v. State Farm: Fifth Circuit Holds Class Action Claims Against Insurer For Damages Caused By Hurricane Katrina Properly Dismissed For Failure To State A Claim

District Court Properly Granted Defense Motion to Dismiss Class Action Alleging Insurer Failed to Pay Insurance Benefits Because Court Correctly Determined that Class Action Allegations did not Support a Breach of Contract Claim

Plaintiff filed a putative class action in Louisiana state court against her insured, State Farm, for failing to pay insurance policy benefits for loss suffered as a result of power outages caused by Hurricane Katrina. Arias-Benn v. State Farm Fire & Cas. Ins. Co., 495 F.3d 228, 2007 WL 2230175, *1 (5th Cir. August 6, 2007). Defense attorneys removed the action to federal court, and then moved to dismiss the class action complaint for failure to state a claim; the district court agreed and dismissed the class action with prejudice, id. The Fifth Circuit affirmed, holding that the class action allegations failed to state a claim for breach under the insurance policy.

The basis of the class action complaint was plaintiff’s claim that their homeowner’s insurance policy covered the cost to “replace refrigerators and freezers damaged due to the spoilage of their contents caused by the prolonged power outage that occurred because of Hurricane Katrina.” Arias-Benn, at *1. The Circuit Court held that, based on Louisiana law governing interpretation of insurance contracts, the defense was correct in its argument that plaintiff’s claim did not fall within the scope of insurance benefits, id., at *2-*3. Further, because each of the class action claims depended on the viability of the breach of contract claim, the Fifth Circuit held that they, too, failed as a matter law, id., at *3. Accordingly, the Circuit Court affirmed the judgment of the district court dismissing the class action complaint with prejudice, id., at *4.

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