action Suit heats Up
After Its Request For Stay Is Denied, Citizens’
Board Offers $103M Settlement
The U.S. Supreme Court opt- ed not to delay the execu- tion of a judgment against Louisiana Citizens Property Insurance Corp. while the last-resort
insurer prepares an application for the
high court to hear the case.
In a brief answer, the Supreme Court
stated, “The application for a stay pend-
ing the filing and disposition of a petition
for a writ of certiorari in the above-en-
titled case has been presented to Justice
Scalia, who on January 31, 2012, denied
This denial prompted the board over-
seeing Citizens to offer $92.8 million to
the individuals who are members of the
class action lawsuit Geraldine Oubre
et al. v. Louisiana Citizens Fair Plan.
They offered an additional $10 million
to other claimants who are not part of
the lawsuit, but could be incorporated
that accuses the state-run insurer of failing to start the claims-adjusting process
within the time frame established by law
following Hurricanes Katrina and Rita
Donelon, however, has voiced skepticism that the offer will be accepted.
“I don’t think [the plaintiffs’ lawyers]
will accept a $25 million cap on the attorney’s fees,” he says.
In early February, Citizens offered
an $80 million settlement, with a $25
million cap on attoneys’ fees. The
plaintiffs’ lawyers countered with a
$105 million settlement, which still
equated to about $38 million less than
Citizens’ total exposure.
In December 2011, the Louisiana Supreme Court reinstated the $93 million
judgment against Citizens, paving the
way for about 18,575 Citizens policyholders to collect $5,000 each. Donelon
and Citizens have appealed the ruling.
Interest has incurred at $10,200 a day; the
judgement now stands at close to $104
In late February, Citizens asked the
state Supreme Court to reconsider its decision, but the court declined, prompting
the last-resort insurer to take the matter
up with the U.S. Supreme Court.
Citizens has raised constitutional issues with the decision, including questions as to the ability to impose a penalty
without any showing of bad faith or conduct on the part of the insurer.
Donelon plans to ask the legislature to
approve a bill that would declare Citizens
a state agency, insulating it from having
assets seized in future court cases.—By
Phil Gusman, PropertyCasualty360.com