MARCH 5, 2015
Humphrey Uddoh wrote a letter to a federal judge in New
Jersey last month about two insurance adjusters who appeared at his Jersey City
home after Superstorm Sandy in 2012 -- one a welcome guest, the other quite
suspicious.
The first man, Uddoh says, assessed that the home had sustained
flood damage totaling at least $80,000. The second man, Uddoh says, showed up
under false pretenses, but eventually admitted the true nature of the visit: An
insurance company had dispatched him to “undercut” the initial estimate.
Incensed, Uddoh threatened to call the police. He then
watched the man “scatter like a vermin,” almost knocking over one of Uddoh’s
neighbors on the sidewalk before he jumped into an SUV and peeled away.
The mysterious visitor “put the ‘pedal to the metal’ and
screeched out of his parking spot so fast that he left burned black tire marks
behind,” according to the 187-page document Uddoh filed with a federal district
court in New Jersey early February.
The letter has won Uddoh a new hearing in a case that
illustrates deeper problems within the Federal Emergency Management Agency’s
embattled National Flood Insurance Program, already reeling
from allegations of widespread fraud. Uddoh said he now has evidence that a
common document was first wrongfully altered and then kept hidden by his
insurance carrier and a powerful private law firm that has served FEMA for
decades.
The document that Uddoh unearthed -- an adjuster’s report --
is the cornerstone of nearly every insurance claim. Thousands more people are
at risk of having received manipulated adjusters’ reports, and reduced claims
payments, attorneys say. “If that part of the process is manipulated, altered,
or tainted, the entire process is manipulated, altered and tainted,” said
Uddoh’s lawyer, Mitchell B. Shpelfogel.
Both Uddoh’s insurance carrier, Selective Insurance Co. of
America, and one of its attorneys from the firm Nielsen, Carter & Treas LLC
declined to comment for this story, citing the pending litigation.
A lawyer for the adjusting firm, CNC Catastrophe &
National Claims, also declined to comment, citing a judge’s dismissal of the
company’s involvement in the case. The firm reached a settlement agreement with
Uddoh in January.
Questions about adjusters’ reports add another dimension to
the public outcry over engineering reports. Allegations that insurers used
altered engineering reports while handling Sandy claims sparked an ongoing
criminal investigation in New York, prompted mass-settlement negotiations
between FEMA and attorneys for homeowners, and this week fueled a demand for
congressional oversight hearings. FEMA administers the program that provides
flood insurance to 5.3 million policyholders. It functions in partnership with
private insurance companies that issue payments to homeowners with federal
dollars, and, in turn, earn fees for selling policies and handling claims.
Cleanup efforts within the agency are under way. FEMA’s
recent settlement negotiations have centered on about 2,000 cases in New York
and New Jersey courts. Yet the U.S. senators from those states have continued
to voice concerns that not all evidence of potential fraud has been revealed
and that more homeowners are entitled to payouts -- leading to a breakthrough
development this week. Sen. Robert Menendez, D-N.J., announced Wednesday
night new commitments from FEMA’s lead negotiator, Brad J. Kieserman, its
deputy associate administrator for insurance, on individual claims and
programmatic reforms.
Kieserman agreed FEMA will review all claims of lowball
payments “due to fraud or bad practices,” even if the homeowners involved did
not file lawsuits. Kieserman also said FEMA will make available “all iterations
of engineering reports,” according to the announcement.
Still, attorneys are moving quickly to obtain and review a
new set of documents: adjusters’ reports. The Merlin Law Group, representing
clients in more than 300 pending Sandy flood-insurance lawsuits, is in the
process of serving subpoenas to the independent adjusters and the adjusting
firms that are contracted by insurance carriers. “We want the draft copies of
the estimates, and email exchanges between them and the carriers,” said lawyer
Charles R. Mathis IV.
If those estimates were pared down by insurance carriers and
if homeowners “were paid a small percentage of what they should have been, then
they were absolutely harmed,” Mathis said.
FEMA paid more than 135,000 insurance claims after Sandy, a
total of more than $8.1 billion. Among those claims, 90 percent had adjusters’
reports. In contrast, between 10 percent and 13 percent had engineering
reports, according to Texas-based attorney J. Steve Mostyn, who is negotiating
the settlement framework with FEMA on behalf of homeowners.
Mostyn represents the homeowners in the case that first brought
“secretly” rewritten engineering reports to light, Raimey v. Wright
National Flood Insurance. He has now agreed to represent Humphrey Uddoh, as
well.
“I believe there’s going to be a much larger second group
that has to do with manipulated adjuster reports, in some cases fraudulent,”
Mostyn said.
A FEMA representative declined to comment on Uddoh’s case,
but said, “We expect every insurance company we partner with to share FEMA’s
values of putting survivors first.”
Uddoh said the evidence he now has shows Selective
fraudulently reduced his claim from the $80,000 the original adjuster set
aside. The final estimate he was issued back in 2012 totaled $334. The new
report he obtained shows an estimate of $16,170. Shpelfogel said he believes
even the newly uncovered version was altered, and that repairs to Uddoh’s home
-- which he hasn’t been able to complete -- could ultimately top $150,000.
What’s more is that Selective maintained that no other
version existed, Shpelfogel said. Despite spending nearly two years in
litigation with Selective and CNC, Uddoh managed to obtain the new copy only
when he settled part of the case with CNC in January. “The continued lies and
cover-ups is why we’re still in litigation,” Shpelfogel said.
Until last month, Uddoh, a lawyer by trade, represented
himself in the lawsuit. He was up against a law firm -- Nielsen, Carter &
Treas -- that has a long history with FEMA. Partner Gerald Nielsen has
represented National Flood Insurance Program carriers since 1988. He is a noted
speaker on the workings of the NFIP, and a fixture at the National Flood
Conference, an annual gathering of executives from insurance companies, banks,
adjusting firms and engineering firms.
FEMA pays the legal bills for defense attorneys when
homeowners sue on their flood-insurance claims. Nielsen’s comments about how
much defense lawyers would earn from Sandy litigation have drawn heightened
scrutiny. Last June, he predicted that defense fees from Sandy were “likely to
exceed the total costs” from the previous 20 years combined, reaching $100
million. In December, the two U.S. senators in New York requested that the
Government Accountability Office audit the flood-insurance program’s legal
fees, quoting directly from Nielsen’s statements in the federal
court for the Eastern District of New York. In mid-February, FEMA confirmed it
had so far spent $12.4 million on outside attorneys for Sandy lawsuits.
Shpelfogel and Mostyn argued that they see another troubling
pattern: In several cases involving allegations of manipulated damage reports,
as well as evidence that has not been produced in litigation, the Nielsen firm
is a “common denominator,” Shpelfogel said.
Gerald Nielsen did not respond to requests for
comment.
In the Raimey v. Wright case, U.S. Magistrate Judge Gary R.
Brown found in November the altered engineering report was “concealed by
design” from the homeowners and that Wright’s counsel “violated its
obligations” to turn over evidence. In that same order, Brown sanctioned
Wright’s attorneys, which included lawyers from the Nielsen firm.
Shpelfogel and Mostyn are suing Nielsen, Carter & Treas
in a class-action racketeering suit, alleging the firm took part in a scheme to
reduce flood-insurance payments, based on altered engineering reports.
Uddoh filed suit against Selective and CNC in April 2013,
and attempted to subpoena documents from the original adjuster -- an outside
contractor who was not an employee of the adjusting firm. In a previous
conversation with Uddoh, this adjuster “spoke of the pressure that CNC was
subjecting him to” and “stated his directive by CNC and Selective to lower his
$80,000 damage award,” according to Uddoh’s court filing.
An attorney with Nielsen, Carter & Treas intervened in
that subpoena attempt. Court documents show that lawyer Kristie Mouney emailed
Daniel Jules April 11, 2013, “instructing that you not provide any response to”
Uddoh’s subpoena.
Looking back, Mostyn said, “Uddoh had to fight very, very
hard to get his documents.” A hearing on evidence in the case is scheduled for
May 18.
Source: www.ibtimes.com
//----------------------------------------------//
JUDGE
IN SUPERSTORM SANDY LITIGATION:
Alarmingly, one attorney prominently involved in coordinating the
defense of the WYO carriers has predicted that the defense of these cases could
cost more than $100 million, a figure that likely exceeds the cost of settling
all of the cases at full value
On December 2nd, the Court entered Case
Management Order No. 13 (CMO #13) where the Court explained some of
the obstacles the parties were having with the mediation process. The number of
Hurricane Sandy cases has grown to over 1,200. The Court noted that to date,
approximately 25% of the cases originally filed have successfully resolved
through the expedited discovery and mediation process. Another 490 cases were
since filed and currently over 600 cases are scheduled for mediation or in the
process of mediation.
In order for mediations to proceed more expeditiously, the
Court has ordered additional requirements for the parties in CMO #13:
The Parties must comply with CMO #12 regarding the selection of
a mediator.
Mediations will no longer be conducted in Louisiana.
Plaintiff must participate actively in the mediations. Unless
it is regarding an issue involving privilege, they must be available to answer
questions about their claim since the mediation process is confidential.
Parties should consider having adjusters and/or engineers
present for mediations where the issue involves a difference of agreement
between adjusters’ estimates or engineering experts’ conclusions.
No party can unilaterally terminate the mediation—only the
mediator may decide if the session should be adjourned and reconvened at a
later date.
At least 30 days prior to the mediation, Plaintiff must send a
written demand to Defendant’s counsel that includes a detailed description of
Plaintiff’s position regarding areas of disagreement, including any critiques
of defendant’s experts or adjuster’s conclusions, and which is supported by all
documentation. If documents are not provided 30 days before the mediation, they
will not be used at the mediation and may also be excluded from trial.
Within two weeks of receipt of the Plaintiff’s demand,
Defendant must notify Plaintiff’s counsel about gaps in documentation and any
areas of disagreement.
Mediators will hold a pre-mediation conference two weeks before
the mediation. They will review items listed in a checklist which was directed
to the mediators on November 20, 2014.
It is left to the discretion of the mediator to adjourn the
mediation conference if necessary to obtain more information, however, if
parties indicate they are ready for mediation and later indicate that they
could not settle due to missing information, sanctions may be imposed.
If the parties reach an impasse about issues such as foundation
damage that requires expert testimony, the parties must jointly notify the
court, preferably before the mediation, so that a hearing can be held
expeditiously and allow the mediation to proceed more smoothly.
Finally, the Court reminds the parties that sanctions may be a
possibility if the Court discovers dilatory tactics or a lack of good faith by
a party or its counsel.
UNITED STATES DISTRICT
COURT
EASTERN DISTRICT OF NEW YORK
ORDER
IN RE HURRICANE SANDY CASES
14 MC 41
THIS DOCUMENT APPLIES TO:
ALL RELATED CASES
-------------------------------------------------------------X
CASE MANAGEMENT ORDER NO. 13
In January
2014, the undersigned Committee of
Magistrate Judges
(“the Committee”) was appointed
by
the Board of
Judges in connection with the
more than 800 cases then filed
arising from Hurricane
Sandy. Among other things, the Committee
was tasked Ato recommend procedures
to ensure proper case
filing . . . to establish a plan for expedited discovery, and to facilitate the efficient resolution of
these matters in a manner designed
to avoid the duplication of effort and unnecessary expense.” CMO No. 1 at 1 (Feb. 21, 2014).
The number
of Hurricane Sandy cases
has since grown to more than 1,200. Through
the concerted efforts of the undersigned, who have held hundreds of conferences and issued
more than a dozen case management orders, along with an
unprecedented expenditure of resources by the
Court, the Committee designed and implemented an expedited
discovery procedure. In addition, the Court expanded its mediation panel and provided
training specifically tailored
to the issues raised in these cases.
To date, approximately 25% of those
cases originally filed have been successfully resolved, largely through this expedited discovery and mediation
process. Although
another approximately 490 cases have
since been filed, currently
over 600 cases are
scheduled for mediation or in the process of mediation.
Others, filed more recently, are in various
phases of the Committee’s procedure; some are in the process of being
served; some are awaiting
answers; and still others are exchanging discovery
pursuant to CMO Nos. 1 and 8. While the procedure
has, by and
large, been embraced by the parties, in some instances, resolution of the cases has been thwarted by what can
only be described as
dilatory and unreasonable actions
by
certain counsel.
To be clear, there are many reasons
for heightened diligence in these cases. There are, of
course, victims who,
more than two years after
the storm, remain unable to
get review of their
claims. On the other hand, because
of the structure
of FEMA’s WYO Flood insurance program, the
defense of these claims is funded by the
taxpaying public; thus, care must be taken to ensure both that claims
are legitimate and properly documented
and that they are litigated in an cost-effective manner.
At
the same time, prolonged litigation, with its attendant expense[1] and ultimate delay in the efficient resolution of these cases
benefits neither the storm victims
nor the public. In
CMO No.
3, the Committee reminded counsel of these imperatives:
Counsel for all parties are reminded, as set forth in
CMO #1, that these cases present a massive
undertaking and require the balancing of serious,
competing interests. See CMO #1 at 2 (Athe Court must ensure that victims of the storm,
many of whom were rendered homeless for a time and who may
be left without the necessary records
or
access to qualified contractors
to effect repairs, receive an
expeditious review of their
claims, while at the same time, safeguarding insurers from meritless
or inflated claims@). As such, this is not a time for “business as usual.” Extraordinary circumstances call for extraordinary measures. And counsel are
not only expected, but required, to work diligently,
cooperatively and reasonably to help ensure a
fair and efficient
resolution of these cases.
See
Local Rule 26.4
(requiring cooperation among attorneys).
CMO No. 3 (April 7, 2014) at 7.
Yet, repeated exhortations by the members of the Committee appear to have gone unheeded. In
fact, while the Committee recognizes that many
counsel in these cases have proceeded in good faith,
in an unacceptable number of cases,
attorneys -- in some cases those with responsibility for a large number of
cases -- have acted
in a manner that is objectively unreasonable or seemingly calculated to delay efficient
resolution of the cases.
On November 25, 2014, the Committee held a Liaison Counsel conference (“the conference”) with Plaintiffs’ and Defendants’ Liaison
Counsel, representatives from FEMA, and any other counsel in Hurricane Sandy cases who
wished to attend, in an attempt to address the issues that seem to be hindering
successful mediations. This Order provides
certain procedures to deal
with those problems that have
been identified to the
Committee.
A. Failure
to Participate in Good Faith
During Mediation
Despite the clear mandate
of this Committee, as well as applicable rules and law, directing
counsel to participate in good
faith in mediation and settlement
discussions, in certain instances, counsel
for both plaintiffs and defendants have failed to do so.
In several cases reported to the
Committee, defense counsel
have, while appearing at mediation
sessions, refused to participate in
settlement talks, claiming that
they have not received necessary documents or other
information from plaintiffs. See,
e.g., Weber et al.
v. Allstate Ins. Co., 13-cv-6752 (DE [84]) (explaining that
“Defendant came to mediation with
no offer and no intention of settlement. Defendant refused to discuss or even consider Plaintiffs’ estimate. Defendant
categorically refused to participate in any meaningful,
good faith discussion about resolving
Plaintiffs’ . . . claim”);
Yannello et al. v. Allstate Ins.
Co., 13-cv-6720. These refusals to participate have followed
court conferences in which defendants’ counsel have represented to the Court that they
have received all
of the information needed
to proceed to mediation. Had
defense counsel conferred with counsel for plaintiffs or contacted
the Court prior to the scheduled mediation to indicate
what they still needed,
steps could have been taken to avoid wasting
the time of
counsel and the mediators. Such
conduct can only be viewed as
dilatory.
In another
instance, after mediation had failed to resolve
the case, defense
counsel advised
the Court that “depositions of the Plaintiffs, their engineer, their contractor and the public adjuster are necessary
to complete discovery.” Stapleton v. Wright, 14 CV 470 (DE [57]).
Although counsel are well aware
that the Court has, with
the input of counsel for both sides,
narrowly tailored discovery in
these matters in an effort
to reach a fair and
efficient resolution, without any reasoned explanation
of the need for this additional discovery, the Committee is
left to conclude that
in refusing to settle cases absent such extensive
discovery, defense counsel is
seeking to unreasonably delay
resolution of the these cases and inflate the costs and fees
required to conduct such discovery.
Given the modest
amounts at stake in many of these cases,
and in light of the fact that litigation
is being funded by the
taxpaying public, it seems highly unlikely that such a broad unilateral
expansion of discovery would
reasonably be warranted.
Counsel for plaintiffs have fared only marginally better. Defendants
cite to the regulations issued by FEMA to
argue that, in the absence
of documentation showing what was repaired,
the costs of those the repairs, and detailed estimates
of the costs necessary to repair any other
covered items, defendants are not authorized to compromise
claims. Defendants complain that
in many instances, plaintiffs
have not produced the necessary items prior to the
date of mediation, only to appear at the mediation
sessions with pages of invoices and documentation that are not tied
directly to specific items of damage, requiring counsel to spend hours sifting
through the documents for the first time during the mediation session.
The problems created by this last minute production of
documents have been further complicated, in some instances, by the fact that
plaintiffs have not actually been present or even available to answer questions
during the mediation.[2] Thus, there have been cases where, without plaintiffs=
assistance, it has been difficult to determine what repairs have been made and
what receipts reflect payments for those particular repairs.
As a result of complaints of plaintiffs’ repeated violations of
their discovery obligations, the Committee has issued multiple warnings to the
firm of Gauthier Houghtaling & Williams, which represents the vast majority
of plaintiffs in these cases. See, e.g., No. 14 MC 41 (DE [472] at 31) (warning
Gauthier attorneys that there will be “most dire consequences” for failure to
comply with the CMOs). In response, John Houghtaling, a managing partner of the
firm, stated to the Committee: “I receive the message,” assuring the Committee
that the firm had the appropriate resources to meet its obligations. Id.
Apparently, though, the message has not been received. On November 7, 2014,
based upon the firm’s failure to comply with multiple discovery orders in two
cases, Magistrate Judge Brown imposed a monetary sanction on the Gauthier firm
pursuant to Fed. R. Civ. P. 37(b)(2)(A). See No. 14 MC 41 (DE [636]).
In part, plaintiffs’ inability to comply with their discovery
obligations stems from the fact that they are often faced with a moving target
in terms of what has been demanded and what is eventually required by defendants.
For example, in at least one case, plaintiff had provided a contractor’s
invoice demonstrating that repairs to storm damaged property had been made. The handwritten invoice, endorsed by the
contractor and signed “paid” was deemed insufficient by defendant’s counsel,
who stated that, in the absence of cancelled checks, the insurer would require
the production of plaintiffs’ bank statements in order to demonstrate cash
withdrawals. In a subsequent letter to
the Court further explaining its position, counsel for defendant Allstate
stated: “[h]andwritten notations indicating that a bill or invoice has been
“paid in full,” however, are not sufficient proof of payment as required by the
NFIP but are merely evidence that a cost has been incurred.” Fitzpatrick v.
Allstate, 13 CV 6768 (DE [78]). At the conference, the representative from FEMA
indicated that this type of proof was in fact acceptable to FEMA because it
could, if necessary, be verified directly.[3]
Defendants report that these problems of insufficient
documentation have been exacerbated in some instances by plaintiffs’ counsel’s
refusal to permit their clients to speak or answer questions at mediation. This refusal undermines one of the fundamental
functions of the mediation process and is contrary to this Committee’s
determination to forego lengthy depositions of plaintiffs in every case, so
long as they were present at the mediation to fill in evidentiary gaps in the
documentation and answer questions about repairs. To the extent that plaintiffs’
counsel expressed concern that their clients might be subjected to a “depositions”
during the mediations or asked irrelevant harassing questions, the Committee
reminded counsel that mediators would help prevent any improper conduct and
counsel will be present and capable of objecting to any improper inquiries.
During the conference, Professor Charles Platto, an expert on
insurance law and one of the Court’s Hurricane Sandy mediators, conveyed his
thoughts on some of the problems he has encountered in attempting to resolve
the NFIP flood cases. In essence, he
indicated that the attorneys often came to the mediation session with no
demand, no offer, and having failed to conduct an analysis of their client’s
evidence. He urged the parties to confer
well in advance of the mediations, to be prepared to explain their positions,
specifically, where their estimates of damage differed and to have provided the
documents supporting the plaintiffs’ claims. Patricia Lambert, Esq., counsel for
Harleysville Worcester Insurance Company and Nationwide Fire Insurance Company,
indicated that she viewed the mediations as a “process,” not a one-time event,
and she described a willingness on the part of her client to continue
discussions even after the first mediation session had ended. Like Professor Platto, she urged plaintiffs’
counsel to be prepared prior to the mediation to not only identify where the
adjusters’ estimates differed but to explain why plaintiffs believed that a
certain item was covered or cost more than the defendants’ adjuster had
allotted.
Finally, apart from the issue of counsels’ conduct during the
mediations, in many cases, counsel for both parties have chosen to conduct
mediations in Louisiana for the convenience of the lawyers, even though
plaintiffs generally do not travel to attend these sessions. While Louisiana may be convenient for the
lawyers, many of the plaintiffs live in New York; the properties at issue are
located in New York, as is the evidence and potential witnesses, such as
experts and adjusters, who are generally from New York. The need for plaintiffs, and sometimes
adjusters and experts, to be present at the mediations has proven to be a
critical factor in some mediations. As
noted, the absence of the plaintiffs at the mediations defeats one of the
purposes of the mediation - namely, to facilitate the informal exchange of
information to help resolve disputes about repairs and costs of repairs. In at least one instance, counsel cited the
absence of the plaintiffs at the mediation, who could only be available by
phone, as the central reason behind the failure of the process. Since defendants have not been permitted to
depose plaintiffs, it is no longer acceptable to conduct mediations if the
plaintiff is not present and available to answer questions.
Furthermore, the scheduling of mediations - particularly those
in Louisiana - has unnecessarily delayed resolution of these actions. Frequently, the Court has set short deadlines
for mediation only to be informed by counsel that the mediations had been
scheduled months into the future. In one
case, Denora v. Allstate Ins. Co., 14-cv-6925, even though the Order sending
the case to mediation had issued on September 2, 2014, defendants indicated
that the reason the mediation could not be scheduled until March 2015 was an
inability to coordinate the schedules of the chosen mediator and the one and
only corporate representative assigned to attend the mediations in all 200 plus
cases involving this defendant. In
another set of cases, counsel reported that they were unable to retain a
mediator from the Eastern District of New York panel, even though there are 85
trained mediators ready and willing to undertake mediations in these cases. The Committee member in charge of monitoring
that case was obliged to assign a mediator.
The conduct that has led to these delays will no longer be
tolerated. While there are some insurance carriers on both the wind and flood
sides that have been able to successfully settle a good percentage of their
cases, others have had less success. Accordingly,
after hearing the complaints and suggestions of the parties and considering the
helpful comments of Professor Platto, the Court ORDERS as follows:
1) The parties are to comply with CMO No. 12, which sets forth
a new procedure for the selection of mediators and should obviate any
complaints that Eastern District of New York mediators are not available to
conduct mediations within the time frame ordered by the Committee. If the
parties are unable to select a mediator themselves, the Committee will select
one for them.
2) There will be no further mediations conducted in Louisiana. The presence of the plaintiffs, and in some
instances, the adjusters and/or other experts, is critical to the success of
the mediation process. To the extent
mediations are currently scheduled to proceed in Louisiana in the next 30 days,
they will be allowed to proceed, with the caveat that plaintiffs are to be
available in person or by telephone during the entire mediation session.[4]
3) Plaintiffs shall participate actively in mediations. In absence of an issue involving privilege,
instructions to plaintiffs not to answer questions are deemed inappropriate. The mediation process is confidential;
anything said during the mediation may not be used against the plaintiffs later
in the litigation and if counsel believes that the questioning is improper or
harassing, they can appeal to the mediator to intercede.
4) Where the issue involves a difference of agreement between
adjusters’ estimates or engineering experts’ conclusions, the parties are
strongly encouraged to have their adjusters and/or engineers present for the
mediation.
5) No party shall unilaterally terminate a mediation session;
mediation shall continue until the mediator determines that the session has
concluded. It will be up to the mediator to decide if the session should be
adjourned and reconvened at a later date.
6) At least 30 days prior to the scheduled mediation,
plaintiffs shall convey, in writing, a demand to defendants= counsel, along
with a detailed description of plaintiffs’ position regarding areas of
disagreement, including any critiques of defendants’ expert’s or adjuster’s
conclusions, supported by all documentation. With limited exception to be left to the
mediators, documents not provided 30 days before the mediation may not be used
at mediation and may, after application to the Committee, be excluded from use
at trial.
7) Within two weeks thereafter, defendants are to notify
plaintiffs= counsel of any items or any perceived gaps in documentation, as
well as defendant’s statement as to areas of disagreement.
8) The mediators will hold a pre-mediation conference two weeks
in advance of the mediation and review with the parties the checklist of items
necessary to conduct a successful mediation, provided in the memorandum, dated
November 20, 2014, which was sent to the mediators. It will be left to the discretion of the
assigned mediator to adjourn the conference if necessary to obtain more
information. However, the parties are
warned that where parties indicate a readiness for mediation to the Court, and
then later contend that they could not settle because they were missing certain
items, sanctions will be imposed.
9) If the parties reach an impasse on a factual issue such as
the cause of foundation damage, that requires resolution of expert testimony in
a framed issue hearing, the parties should jointly notify the Committee member
handling the case, preferably prior to the scheduled mediation, so that the
hearing can be held expeditiously and hopefully allow the mediation to proceed
more smoothly.
The Court and the Committee expect the parties to proceed to
these mediations in good faith and having fully prepared to present their
arguments and evidence at the mediation.
It is the responsibility of both sides to fully prepare for
mediation before the scheduled mediation session. That includes notifying your adversary
counsel, the Committee member monitoring your case, or the mediator if you are
missing something.[5]
All counsel are admonished that further dilatory tactics or a
lack of good faith in the diligent prosecution and resolution of these cases
will be subject to sanctions. Counsel is
instructed that these matters should be treated with a sense of urgency. Members of the Committee will employ the full
panoply of available sanctions, including monetary sanctions, cost and fee
shifting, recommendations of dismissal and/or to strike answers and the
revocation of pro hac vice status should additional instances of bad
faith or dilatory tactics be discovered.
SO ORDERED.
Dated:
Brooklyn, New York
December 2,
2014
/S/
CHERYL L. POLLAK
Cheryl
L. Pollak
United
States Magistrate Judge
[1]
Alarmingly, one attorney prominently involved in coordinating the defense of
the WYO carriers has predicted that the defense of these cases could cost more
than $100 million, a figure that likely exceeds the cost of settling all of the
cases at full value.
[2]
Although Plaintiffs’ Liaison Counsel disputed the claim that the homeowners
were unavailable for consultation at the mediations, following the November
25th conference, the Committee received two notices of failed mediations in
which it was represented that plaintiffs were not present at the mediations.
See Balinsky v. Allstate Ins. Co, 13 CV 6996 (DE [96]); Salle v. Allstate Ins.
Co., 13 CV 6020 (DE [91]).
[3]
On November 21, 2014, Defendants’ Liaison Counsel submitted a letter to the
Committee attaching a memorandum issued by James A. Sadler, Director of Claims
at FEMA which discussed the settlement of WYO Flood Insurance claims. The memorandum explained that “If repairs have
been completed, it is the policyholder’s responsibility to prove that the amounts
paid on the claim plus the value of the deductible(s) and any applicable
physical depreciation were spent to repair or replace covered flood damage. This can only be done by presenting receipts,
paid bills, paid invoices, and cancelled checks. The amount of loss cannot be determined on an
estimate that is not fully supported by the proof discussed above.” At the
conference, however, counsel for FEMA explained that FEMA might be more
flexible in the proof that is required and that it is willing to work with the
parties to resolve these cases where such proof is lacking.
[4]
By letter dated November 29, 2014, plaintiffs’ counsel, Mr. Williams from the
firm of Gauthier, Houghtaling & Williams, argues that mediations should be
allowed to proceed in Louisiana, because the attorneys will lose valuable time
travelling to and from New York, and the added monetary expense incurred will
have an adverse impact on the plaintiffs who will be forced to bear these
litigation expenses. Given the lack of
overwhelming success in the Louisiana mediations to date, in part due to the
absence of the homeowners and lack of documentation, the Court denies
plaintiffs’ request. However, if
plaintiffs can demonstrate, through the mediations scheduled to proceed in
Louisiana in the next 30 days, that the procedure is successful, the parties
may seek reconsideration of this Order at that time.
[5]
The questions raised regarding the procedure to be followed in Raimey v. Wright
National Flood, 14-cv-461 will be addressed in a separate Order.
//--------------------------------------------//
Superstorm Sandy Litigation –
VERY FEW POLICYHOLDERS UNDERSTAND OR KNOW WHAT THEIR INSURANCE POLICY COVERS
The insurers are going to courts and
file these declaratory actions asking the judge to narrowly construe the
insurance policy. If they are successful
in doing that, then the insurers ask the home or business owners to buy additional
coverage for the excluded perils.
If the insurers do not succeed to
convince the judge to narrowly construe the insurance policy, then they
re-write the insurance policy or add provisions within the insurance policy so
that the insured does not receive any recovery for his loss. One prime example of this strategy is the
addition of the ACC clause in insurance policies.
By now the homeowners living along
the coast of New Jersey, New York, Connecticut that were impacted by Hurricane
Sandy know that their damage claims have been denied for a number of reasons:
Denied because of the
anti-concurrent causation clause;
Denied because it was flood damage
and the homeowner did not have flood insurance;
Denied because the failed to file a
proof of loss
Denied because failed to promptly
notify the insurance company of the loss;
A
windstorm/hurricane such as Superstorm Sandy by its very nature results in a
wide range
of damage caused by
different covered and potentially excluded perils at different times during the
storm. These perils include wind, flood, storm surge, fire, power outage,
sewage back-up, etc. The difficulty for
the Court, as experienced by prior courts2
, is
deciding whether an insurance policy that
covers wind damage
but excludes flood damage, or vice versa, will provide insurance coverage
when the property
is damaged by a covered peril and damage also occurs from an excluded peril.
In the analysis of
the circumstance presented above, a clause that is now standard in many
insurance policies
known as the anti-concurrent causation (ACC) clause will emerge as one of the
most hotly debated
clauses between the insured and the insurance carrier in Superstorm Sandy
cases. It is
important to consider that the ACC clause is a fairly new provision that was
not tested in
the context of a
hurricane loss until Katrina, resulting in an Erie-guess by the Fifth Circuit
that was
later criticized by
the Mississippi Supreme Court. 3 The burden of proof required under a flood
policy versus a
wind policy will be equally important. A wind policy is often written as an
"all risk"
insurance
policy, and a flood policy is written as a named peril policy.
COMMONLY OCCURRING LEGAL ISSUES IN WIND CLAIMS
A. Fortuity
The burden of proving causation differs in first-party
property insurance cases depending on
whether the policy is a specified peril policy or an
"all risk" policy. Under a specified peril policy,
the insured has the burden of proving that the loss
was caused by a specifically enumerated peril. 4
Alternatively, under an "all risk" policy,
by contrast, "the insurer has the burden of proving that the cause of the
loss is an excepted cause."5
California Civil Jury Instructions (CACI)
2306. Covered and Excluded Risks—Predominant Cause of Loss
You have heard evidence that the claimed loss was caused by a combination of covered and excluded risks under the insurance policy. When a loss is caused by a combination of covered and excluded risks under the policy, the loss is covered only if the most important or predominant cause is a covered risk.[[Name of defendant] claims that [name of plaintiff]’s loss is not covered because the loss was caused by a risk excluded under the policy. To succeed, [name of defendant] must prove that the most important or predominant cause of the loss was [describe excluded peril or event], which is a risk excluded under the policy.]
[or]
[[Name of plaintiff] claims that the loss was caused by a risk covered under the policy. To succeed, [name of plaintiff] must prove that the most important or predominant cause of the loss was [describe covered peril or event], which is a risk covered under the policy.]
New September 2003
Directions for Use
The instructions in this series assume the plaintiff is the insured and the defendant is the insurer. The party designations may be changed if appropriate to the facts of the case.This instruction in intended for use in first party property insurance cases where there is evidence that a loss was caused by both covered and excluded perils. In most cases the court will determine as a question of law what perils are covered and excluded under the policy.
Depending on the type of insurance at issue, the court must select the bracketed paragraph that presents the correct burden of proof. For all-risk homeowner’s policies, for example, once the insured establishes basic coverage, the insurer bears the burden of proving the loss was caused by an excluded peril. In contrast, for “named perils” policies (for example, fire insurance) the insured bears the burden of proving the loss was caused by the specified peril. (See Strubble v. United Services Automobile Assn. (1973) 35 Cal.App.3d 498, 504 [110 Cal.Rptr. 828].)
Sources and Authority
- Insurance Code section 530 provides: “An insurer is liable for a loss of which a peril insured against was the proximate cause, although a peril not contemplated by the contract may have been a remote cause of the loss; but he is not liable for a loss of which the peril insured against was only a remote cause.”
- Insurance Code section 532 provides: “If a peril is specially excepted in a contract of insurance and there is a loss which would not have occurred but for such peril, such loss is thereby excepted even though the immediate cause of the loss was a peril which was not excepted.”
- “[In] determining whether a loss is within an exception in a policy, where there is a concurrence of different causes, the efficient cause—the one that sets others in motion—is the cause to which the loss is to be attributed, though the other causes may follow it, and operate more immediately in producing the disaster.” (Sabella v. Wisler (1963) 59 Cal.2d 21, 31—32 [27 Cal.Rptr. 689, 377 P.2d 889], internal quotation marks and citation omitted.)
- “Sabella defined ‘efficient proximate cause’ alternatively as the ‘one that sets others in motion,’ and as ‘the predominating or moving efficient cause.’ We use the term ‘efficient proximate cause’ (meaning predominating cause) when referring to the Sabella analysis because we believe the phrase ‘moving cause’ can be misconstrued to deny coverage erroneously, particularly when it is understood literally to mean the ‘triggering’ cause.” (Garvey v. State Farm Fire & Casualty Co. (1989) 48 Cal.3d 395, 403 [257 Cal.Rptr. 292, 770 P.2d 704], internal citations omitted.)
- “[T]he ‘cause’ of loss in the context of a property insurance contract is totally different from that in a liability policy. This distinction is critical to the resolution of losses involving multiple causes. Frequently property losses occur which involve more than one peril that might be considered legally significant… ‘The task becomes one of identifying the most important cause of the loss and attributing the loss to that cause.’ [¶] On the other hand, the right to coverage in the third party liability insurance context draws on traditional tort concepts of fault, proximate cause and duty.” (Garvey, supra, 48 Cal.3d at pp. 406—407, internal quotation marks, italics, and citations omitted.)
- “[I]n an action upon an all-risks policy such as the one before us (unlike a specific peril policy), the insured does not have to prove that the peril proximately causing his loss was covered by the policy. This is because the policy covers all risks save for those risks specifically excluded by the policy. The insurer, though, since it is denying liability upon the policy, must prove the policy’s noncoverage of the insured’s loss.” (Strubble, supra, 35 Cal.App.3d at p. 504.)
- “[T]he scope of coverage under an all-risk homeowner’s policy includes all risks except those specifically excluded by the policy. When a loss is caused by a combination of a covered and specifically excluded risks, the loss is covered if the covered risk was the efficient proximate cause of the loss… [T]he question of what caused the loss is generally a question of fact, and the loss is not covered if the covered risk was only a remote cause of the loss, or the excluded risk was the efficient proximate, or predominate, cause.” (State Farm Fire & Casualty Co. v. Von Der Lieth (1991) 54 Cal.3d 1123, 1131—1132 [2 Cal.Rptr.2d 183, 820 P.2d 285], internal citation omitted.)
- “[A]n insurer is not absolutely prohibited from drafting and enforcing policy provisions that provide or leave intact coverage for some, but not all, manifestations of a particular peril. This is, in fact, an everyday practice that normally raises no questions regarding section 530 or the efficient proximate cause doctrine.” (Julian v. Hartford Underwriters Ins. Co. (2005) 35 Cal.4th 747, 759 [27 Cal.Rptr.3d 648, 110 P.3d 903].)
Secondary Sources
Croskey et al., California Practice Guide: Insurance Litigation (The Rutter Group) ¶¶ 6:134—6:143, 6:2531 California Liability Insurance Practice: Claims & Litigation (Cont.Ed.Bar) Analyzing Coverage: Reading and Interpreting Insurance Policies, § 3.42
3 California Insurance Law & Practice, Ch. 9, Homeowners and Related Policies, § 36.42 (Matthew Bender)
26 California Forms of Pleading and Practice, Ch. 308, Insurance, § 308.113 (Matthew Bender)
12 California Points and Authorities, Ch. 120, Insurance, § 120.50 (Matthew Bender)
As we informed the public several
months ago, Federal
Emergency Management Agency (FEMA) granted another
six-month extension for National Flood Insurance Program (NFIP) policyholders
affected by Hurricane Sandy to file proof-of-loss claims. The new deadline is
Oct. 29, 2014. NFIP usually requires
policyholders to submit a fully documented, signed and sworn proof-of-loss
claim within 60 days from the date of their loss. The magnitude of the Sandy disaster is the
reason for this extension that will give policyholders additional time to file
claims. This is the third six-month extension.
Submitting general information under oath or talking to
the insurer over the phone or sending letters, etc. is not a substitute for a
proof of loss under the NFIP. Since the overwhelming majority of case law suggests that
the courts will dismiss the damage claims unless proof of losses are submitted,
we
strongly urge New Jersey, New York, Connecticut and other insureds to submit
their proofs of loss timely and not risk jeopardizing claim recovery rights.
What is the
“proof of loss” and why is it important?
A proof of
loss is the formal written claim you use to support the amount of money you are
claiming under your policy. Your proof of loss forms must be signed, sworn, and
submitted with supporting documentation.
Submission of
your proof of loss is required by federal regulations under the National Flood
Insurance Program. You will not be able to recover all of your claim or sue
your insurer if you do not submit your proof of loss on time!
Depending on
the coverage you are claiming, you might need to submit more than one proof of
loss form before the deadline. We advise Sandy survivors to (1) submit each of
the three forms listed below that applies to your case on time, (2) complete
them fully and sign them, (3) state specific dollar amounts, (4) state what you
believe to be the full value of your claim, (5) attach all supporting
documentation, and (6) meet all requirements in Section VII (J) of the flood
policy. A copy of each of the three forms is attached, and they are also
available at the FEMA website
.
·
The standard “Proof of Loss”
details the full value of your claim. Even if your insurance adjuster already
had you sign and submit a proof of loss, that proof of loss may be considered
“courtesy only” and it probably undervalued your loss (especially if you
submitted it early in the claim process before you knew how much money you
needed for repairs). You need to submit another proof of loss which details
what you believe is the full value of losses for your claim. See FEMA Form #86-0-9
·
The “Increased Cost of Compliance
Proof of Loss” supports your claim to recover up to $30,000 for eligible
“elevation, flood-proofing, relocation, or demolition” See FEMA Form #86-0-10
·
The “Statement as to Full Cost of
Repair or Replacement” states your full actual or estimated costs to
rebuild, repair, or replace the property. Generally you can recover the full
repair or replacement cost for damages to the building itself if the building
was a single-family home, it was your principal residence, and it was either
insured for 80% or more of its full replacement value, or you purchased the
maximum amount of insurance. See FEMA Form #86-0-12
SS Sandy Placeholder Row
The above cautionary note brings us to the
latest Superstorm
Sandy row regarding the so-called placeholder claims.
On 12 August 2014 a New York federal
court in the Eastern District of New York managing the consolidated Superstorm
Sandy insurance litigation deferred ruling on a crucial insurance issue on the validity of so-called placeholder proofs of loss
provided by policyholders who couldn't meet deadlines pending the
outcome of mediation by FEMA.
The issue arose
after policyholder law firm Gauthier Houghtaling & Williams LLP and claims
administrator Canopy Claims developed a formula that allowed policyholders to
provide proofs of loss from SS Sandy to FEMA for the time being while later
submitting supplemental proofs of loss with more specific information. FEMA took issue with the placeholders, saying
that it had not waived the requirement that plaintiffs provide information
about their actual losses from SS Sandy.
Our opinion is that these placeholders will lose their claims unless
they submit these proofs of losses. The
case law is pretty adamant about it.
There have been several 6-month extensions and there is no excuse in
failing to follow the procedures. What
are these law and claim management firms think?
They could be sued for damages if the placeholder claims are dismissed
by the court. Will shall see.
The Eastern
District of New York decided not to take a side on the placeholder proofs of
loss dispute following FEMA's decision to allow private insurers that administer
flood policies to participate in mediation on these cases and to ask for
permission from the Federal Insurance and Mitigation Administration to waive
provisions of the standard flood insurance policy, on a case-by-case basis.
FEMA’s position is that insureds must strictly adhere to the
SFIP's proof of loss requirements before bringing suit against FEMA
However, FEMA
has made its position very clear for the last fifty years of the NFIP and
re-iterated this position to the judges in New York as follows:
FEMA's commitment to support mediation and efficient
resolution of claims does not conflict with its position that insureds must
strictly adhere to the SFIP's proof of loss requirements before bringing suit
against FEMA in United States district court
If a case is dismissed,
FEMA said it would encourage insurers to continue discussions out of court and
allow policyholders to demonstrate covered damage. Good luck with that. When comes to money, unless you follow all
procedures to the so-called “substantial compliance” standard”, then you will
recover zero dollars for your loss.
Unfortunately, most insureds have no idea what substantial compliance
means. If an insurer denies their
property damage claim, they will start huffing and puffing and filing
complaining letters, blaming everything and everybody for their loss and their
failure to follow the required procedures.
As investigating engineers we take quite a bit of this “abuse” because
the insurers use our professional investigations (and other factors of course)
to deny or accept a claim. There have
been quite a few “bad faith” claims filed already against insurers. However, in June, the three federal judges in
the Eastern District of New York directed courts to dismiss bad faith claims
against insurers, as well as requests for punitive damages and attorneys' fees,
after plaintiffs in more than 150 cases didn't file necessary paperwork.
Please do not
blame the forensic engineer or the insurer.
Just find a knowledgeable claim management and law firm and hire a
competent professional engineer to collect the evidence and prepare an unbiased
report FOR YOU. Please remember that the
insurer’s engineers’ report represents the results of their investigation. YOU HAVE THE RIGHT TO HIRE YOUR OWN ENGINEER
AND PERFORM YOUR OWN INVESTIGATION. YOU
DO NOT HAVE TO RELY ON THE INSURER’S REPORT.
This is the way to do it and not to file lawsuits against people for
your failure to read the insurance policy or follow the prescribed procedures. The of proof in on the insured and not the
other way around.
Metropolitan Engineering,
Consulting & Forensics (MECF)
Providing Competent, Expert and Objective
Investigative Engineering and Consulting Services
P.O. Box 520
Tenafly, NJ 07670-0520
Tel.: (973) 897-8162
Fax: (973) 810-0440
E-mail: metroforensics@gmail.com
Web pages: https://sites.google.com/site/metropolitanforensics/
https://sites.google.com/site/metropolitanenvironmental/
https://sites.google.com/site/metroforensics3/
We are happy to
announce the launch of our twitter account. Please make sure to follow us at
@MetropForensics or @metroforensics
To unsubscribe
from future technical blogs and announcements, please reply to this email with
the word “unsubscribe” in the subject line.
Metropolitan appreciates your business.
Feel free to recommend our services to your friends
and colleagues.
More than a year after Hurricane
Sandy's waters receded, an "onslaught" of litigation is now slamming
into the federal court with jurisdiction over the storm's most heavily affected
areas.
As of early February, more than 800 Sandy-related cases—most disputing insurance claim denials or alleged underpayments—have been filed in the Eastern District, which includes the outer boroughs of New York City and Long Island, areas that endured the brunt of the nation's second-costliest weather disaster after Hurricane Katrina.
Policyholders and insurers have tried to resolve claims one-on-one. But the influx of cases shows that a large number of those negotiations have proven fruitless.
The cases started pouring in around October and November. Rather than let what Eastern District Chief Judge Carol Bagley Amon described as an "onslaught" overwhelm the court, she tapped three magistrate judges to examine whether the cases could be grouped or organized for more efficient resolution.
The trio—Magistrate Judges Cheryl Pollak, Gary Brown and Ramon Reyes Jr. —has submitted a case management plan to address matters such as discovery schedules and settlement discussions. The Eastern District's Board of Judges, comprised of all the jurisdiction's judges, is now reviewing the proposal and will approve the final order.
In preparation, Amon opened a case last month called In re Hurricane Sandy Cases "for the purposes of Pretrial Case Administration in all actions seeking insurance coverage for damage caused by Hurricane Sandy."
"There are a lot of cases, but we're being sensible about it," she said in an interview about the court's approach. "We couldn't let this just happen to us. We had to take charge. As judges, that's what we're required to do."
She added that individual judges could opt out of the case management plan.
Some attorneys have said the cases are too fact-specific for a uniform judicial approach, but Amon said there could be a meaningful method of grouping cases, even in a limited way.
Benjamin Rajotte, director of the disaster relief clinic at Touro College Jacob D. Fuchsberg Law Center, said most of the Sandy litigation will go to federal court because the National Flood Insurance Act dictates that suits challenging flood coverage trigger federal jurisdiction.
Other disputes are being resolved through the New York State Department of Financial Services' Storm Sandy Mediation Program, an arrangement where the insurer picks up the $400 tab for a mediator. As of Feb. 10, the state program had received 2,708 requests for mediation. Of that figure, 1,460 have been settled, said a Department of Financial Services spokesperson.
Rajotte said "the main problems are, the insurers are undervaluing what everyone—the homeowner, the public adjuster—has agreed has been damaged. And number two, they're not considering the proper scope of repairs—what it would take to fix it."
The Touro clinic has already filed four Eastern District lawsuits and intends to file another 15 in the coming weeks. In all of them, homeowners got 50 percent less from their insurers than they needed to repair storm damage.
For example, the clinic represents Joe and Marilyn McDonald, a retired couple whose Amityville home was flooded by five feet of water inside. In the McDonalds' Jan. 23 suit, they allege Allstate Insurance Company breached its obligations to pay the full amount they are due under their policy.
So far, Allstate has offered them $38,400. But the McDonalds said the damages to their home totaled $234,000, and they have been unable to make all their repairs.
The couple's repeated calls to Allstate have been unsuccessful.
"They just totally dismissed me," said Marilyn McDonald, who is 65. "I felt like I was being scammed."
Rajotte said FEMA, which manages the National Flood Insurance Program, extended the deadline to file proof of loss to 18 months after the October 2012 storm, to April 29, 2014. But it did not extend the deadline for policyholders to submit a federal lawsuit against their insurers: that's still one year from the insurer's first written denial of a claim.
Each Sandy victim has his or her own, individual deadline to file a lawsuit, Rajotte explained, which in many cases could come well before April 29.
Javier Delgado of the Merlin Law Group said there could be more suits to come. With main offices in Tampa but also locations including New York and New Jersey, the firm is representing commercial and residential plaintiffs in "several hundred" Sandy cases that are mostly in federal court.
Though some insurance policies on wind storm damage have a one-year window on when its determination can be challenged, Delgado said the "norm" is a two-year statute of limitations.
Despite the possibility of more lawsuits, Delgado, a former adjuster and insurance defense attorney, said there is a "huge percentage of attrition" between policyholders who are denied and those who press on in court.
That drop-off, he said, was attributable to a possible plaintiff's flagging will and also the fact that "some people don't even have the time."
One of Delgado's client's, Dr. Harold Parnes, a certified diagnostic radiologist and neuroradiologist in Brooklyn, had three policies on his business through CNA and put in a claim after getting 40 inches of sewage in the office building's basement.
Parnes said he put in a claim for "millions of dollars" but has only received a "small percentage." He said Delgado is now preparing a lawsuit.
Noting he built the practice himself, Parnes, 53, said he got insurance for "peace of mind in case something happens, then something happens" and he has not been fully covered.
"That's really not appropriate," he said.
As of early February, more than 800 Sandy-related cases—most disputing insurance claim denials or alleged underpayments—have been filed in the Eastern District, which includes the outer boroughs of New York City and Long Island, areas that endured the brunt of the nation's second-costliest weather disaster after Hurricane Katrina.
Policyholders and insurers have tried to resolve claims one-on-one. But the influx of cases shows that a large number of those negotiations have proven fruitless.
The cases started pouring in around October and November. Rather than let what Eastern District Chief Judge Carol Bagley Amon described as an "onslaught" overwhelm the court, she tapped three magistrate judges to examine whether the cases could be grouped or organized for more efficient resolution.
The trio—Magistrate Judges Cheryl Pollak, Gary Brown and Ramon Reyes Jr. —has submitted a case management plan to address matters such as discovery schedules and settlement discussions. The Eastern District's Board of Judges, comprised of all the jurisdiction's judges, is now reviewing the proposal and will approve the final order.
In preparation, Amon opened a case last month called In re Hurricane Sandy Cases "for the purposes of Pretrial Case Administration in all actions seeking insurance coverage for damage caused by Hurricane Sandy."
"There are a lot of cases, but we're being sensible about it," she said in an interview about the court's approach. "We couldn't let this just happen to us. We had to take charge. As judges, that's what we're required to do."
She added that individual judges could opt out of the case management plan.
Some attorneys have said the cases are too fact-specific for a uniform judicial approach, but Amon said there could be a meaningful method of grouping cases, even in a limited way.
Benjamin Rajotte, director of the disaster relief clinic at Touro College Jacob D. Fuchsberg Law Center, said most of the Sandy litigation will go to federal court because the National Flood Insurance Act dictates that suits challenging flood coverage trigger federal jurisdiction.
Other disputes are being resolved through the New York State Department of Financial Services' Storm Sandy Mediation Program, an arrangement where the insurer picks up the $400 tab for a mediator. As of Feb. 10, the state program had received 2,708 requests for mediation. Of that figure, 1,460 have been settled, said a Department of Financial Services spokesperson.
Rajotte said "the main problems are, the insurers are undervaluing what everyone—the homeowner, the public adjuster—has agreed has been damaged. And number two, they're not considering the proper scope of repairs—what it would take to fix it."
The Touro clinic has already filed four Eastern District lawsuits and intends to file another 15 in the coming weeks. In all of them, homeowners got 50 percent less from their insurers than they needed to repair storm damage.
For example, the clinic represents Joe and Marilyn McDonald, a retired couple whose Amityville home was flooded by five feet of water inside. In the McDonalds' Jan. 23 suit, they allege Allstate Insurance Company breached its obligations to pay the full amount they are due under their policy.
So far, Allstate has offered them $38,400. But the McDonalds said the damages to their home totaled $234,000, and they have been unable to make all their repairs.
The couple's repeated calls to Allstate have been unsuccessful.
"They just totally dismissed me," said Marilyn McDonald, who is 65. "I felt like I was being scammed."
Rajotte said FEMA, which manages the National Flood Insurance Program, extended the deadline to file proof of loss to 18 months after the October 2012 storm, to April 29, 2014. But it did not extend the deadline for policyholders to submit a federal lawsuit against their insurers: that's still one year from the insurer's first written denial of a claim.
Each Sandy victim has his or her own, individual deadline to file a lawsuit, Rajotte explained, which in many cases could come well before April 29.
Javier Delgado of the Merlin Law Group said there could be more suits to come. With main offices in Tampa but also locations including New York and New Jersey, the firm is representing commercial and residential plaintiffs in "several hundred" Sandy cases that are mostly in federal court.
Though some insurance policies on wind storm damage have a one-year window on when its determination can be challenged, Delgado said the "norm" is a two-year statute of limitations.
Despite the possibility of more lawsuits, Delgado, a former adjuster and insurance defense attorney, said there is a "huge percentage of attrition" between policyholders who are denied and those who press on in court.
That drop-off, he said, was attributable to a possible plaintiff's flagging will and also the fact that "some people don't even have the time."
One of Delgado's client's, Dr. Harold Parnes, a certified diagnostic radiologist and neuroradiologist in Brooklyn, had three policies on his business through CNA and put in a claim after getting 40 inches of sewage in the office building's basement.
Parnes said he put in a claim for "millions of dollars" but has only received a "small percentage." He said Delgado is now preparing a lawsuit.
Noting he built the practice himself, Parnes, 53, said he got insurance for "peace of mind in case something happens, then something happens" and he has not been fully covered.
"That's really not appropriate," he said.
Uneven Effects
As the Eastern District
grapples with the case spike, other courts are not as affected.
Southern District Executive Edward Friedland said there were four pending Sandy-related suits over disputed flood insurance claims and another one that closed in December.
Though there could have been other Sandy-related suits that concluded even earlier, Friedland said any previously-uncounted cases would not make for a case load "anywhere near the numbers" in the Eastern District.
The Southern District covers Manhattan, the Bronx and the Hudson Valley; though Lower Manhattan was slammed during Sandy, the storm's full wrath was due east.
In the state courts of New York City and Long Island, there has not been "a significant number of Sandy-related cases," said First Deputy Chief Administrative Judge Lawrence Marks.
"The storm and its aftermath has undoubtedly been a contributing factor in some of the cases routinely brought in the courts such as foreclosure, landlord-tenant, consumer debt and child support cases, but we have not yet seen a large number of Sandy cases," he said.
In the months after the storm, the state court system set up dedicated Sandy parts in hard-hit counties including Richmond, Brooklyn and Queens. But the parts have gotten just a handful of cases each, if any, and administrative judges aren't sure why.
"We really have been underwhelmed," said Lawrence Knipel, administrative judge for Kings County Supreme Court, Civil Term. "We have one case for all of Brooklyn and it involves property damage to a private home in Bergen Beach."
In Richmond County, Administrative Judge Judith McMahon has seen just three Sandy-related cases. In all three, plaintiffs are suing their home or flood insurers over underpayments. One has since been removed to federal court.
McMahon said she hopes the lack of cases means people are getting their issues resolved outside of court. "People have called and asked, 'Do you really have a Sandy part?' And the answer is yes, we are open, and we're willing to have as much business as possible," she said.
'One Way or Another'
Southern District Executive Edward Friedland said there were four pending Sandy-related suits over disputed flood insurance claims and another one that closed in December.
Though there could have been other Sandy-related suits that concluded even earlier, Friedland said any previously-uncounted cases would not make for a case load "anywhere near the numbers" in the Eastern District.
The Southern District covers Manhattan, the Bronx and the Hudson Valley; though Lower Manhattan was slammed during Sandy, the storm's full wrath was due east.
In the state courts of New York City and Long Island, there has not been "a significant number of Sandy-related cases," said First Deputy Chief Administrative Judge Lawrence Marks.
"The storm and its aftermath has undoubtedly been a contributing factor in some of the cases routinely brought in the courts such as foreclosure, landlord-tenant, consumer debt and child support cases, but we have not yet seen a large number of Sandy cases," he said.
In the months after the storm, the state court system set up dedicated Sandy parts in hard-hit counties including Richmond, Brooklyn and Queens. But the parts have gotten just a handful of cases each, if any, and administrative judges aren't sure why.
"We really have been underwhelmed," said Lawrence Knipel, administrative judge for Kings County Supreme Court, Civil Term. "We have one case for all of Brooklyn and it involves property damage to a private home in Bergen Beach."
In Richmond County, Administrative Judge Judith McMahon has seen just three Sandy-related cases. In all three, plaintiffs are suing their home or flood insurers over underpayments. One has since been removed to federal court.
McMahon said she hopes the lack of cases means people are getting their issues resolved outside of court. "People have called and asked, 'Do you really have a Sandy part?' And the answer is yes, we are open, and we're willing to have as much business as possible," she said.
'One Way or Another'
Back in Brooklyn, about 250
attorneys trekked and trudged through cold, snowy weather on Feb. 5 to the
Eastern District's ceremonial courtroom from as far away as Louisiana to
discuss how to handle the cases.
Prior to the proceedings, the magistrate judges sought input from the attorneys on potential grouping or streamlining. Yet by and large, attorneys for both the plaintiffs and defense urged against grouping, saying the cases were too individual.
Jerry Nielsen of Nielsen Carter & Treas in Metairie, La., a defense side firm representing carriers issuing flood insurance through the National Flood Insurance Program, said after Hurricane Katrina, some possible groupings of cases were attempted without success.
The ensuing case-by-case approach was a "massive amount of work, but it got done."
Tracey Rannals Bryan of Gauthier Houghtaling & Williams, a Metairie La., firm representing about 2,000 plaintiffs in state and federal actions in New York and New Jersey, also said cases were too specific to be handled together.
Still, she said attorneys would settle 95 percent of the disputes without the need for judicial resolution.
As the proceedings went on, attorneys aired other thoughts like urging "a meaningful, expedient mediation process" and sparring over whether plaintiffs should be expected to itemize losses.
During the proceedings, Judge Jack Weinstein—who has dealt with a number of mass litigation cases during his time on the bench—listened in.
As the proceedings concluded, he said the jurisdiction's board of judges "decided at least tentatively not to go with one judge" taking on all the cases.
He urged speedy resolution of the cases, saying "we owe it to the community to get the cases disposed of, one way or another."
Prior to the proceedings, the magistrate judges sought input from the attorneys on potential grouping or streamlining. Yet by and large, attorneys for both the plaintiffs and defense urged against grouping, saying the cases were too individual.
Jerry Nielsen of Nielsen Carter & Treas in Metairie, La., a defense side firm representing carriers issuing flood insurance through the National Flood Insurance Program, said after Hurricane Katrina, some possible groupings of cases were attempted without success.
The ensuing case-by-case approach was a "massive amount of work, but it got done."
Tracey Rannals Bryan of Gauthier Houghtaling & Williams, a Metairie La., firm representing about 2,000 plaintiffs in state and federal actions in New York and New Jersey, also said cases were too specific to be handled together.
Still, she said attorneys would settle 95 percent of the disputes without the need for judicial resolution.
As the proceedings went on, attorneys aired other thoughts like urging "a meaningful, expedient mediation process" and sparring over whether plaintiffs should be expected to itemize losses.
During the proceedings, Judge Jack Weinstein—who has dealt with a number of mass litigation cases during his time on the bench—listened in.
As the proceedings concluded, he said the jurisdiction's board of judges "decided at least tentatively not to go with one judge" taking on all the cases.
He urged speedy resolution of the cases, saying "we owe it to the community to get the cases disposed of, one way or another."