The Kodrins Take the 5th to the Supremes
I saw this breaking story on the case of Kodrin v State Farm show up in our Times Picayune RRS feed and immediately recognized the case since we covered it extensively. (here, here, here, and here) It was also the case where I exposed Rossie as a Katrina legal charlatan as his penchant for letting State Farm ghost write his blog finally caught up with him.
All that aside I wish I could get empart some hope that the Kodrin’s appeal to the Supremes will amount to anything other than a quixotic effort, after all we are a policyholder blog. Simply put, while we all know State Farm acted in bad faith in how they adjusted the Kodrin’s wind claim simply knowing that fact is not enough; the evidence must be introduced into the trial record and it is largely missing in Kodrin. The first “here” I linked above is what I think history will judge as the definitive post on the topic of Kodrin and getting bad faith cases past the 5th Circuit and our newer readers will also find out what was missing from the Kodrin equation. Without further commentary on my part following is today’s Times Picayune story on the Kodrin appeal to the US Supreme Court:
A Port Sulphur couple who lost their home in Hurricane Katrina has asked the U.S. Supreme Court to reverse a lower court ruling rejecting their assertion that State Farm Fire & Casualty Co. acted in bad faith when handling their claim.
Judy and Michael Kodrin originally sued in U.S. District Court and won a $356,318 award, which included the full value of their homeowners policy plus additional penalties and attorneys fees.
But a three-judge panel of the U.S. 5th Circuit Court of Appeals threw out the penalties and attorneys fees, reducing the overall award to $117,084, out of which the Kodrins would have to pay their own legal fees if they recover no additional damages.
The 2007 trial proceeding was one of the few State Farm cases in Louisiana to reach a jury.
State Farm said the house was destroyed by flooding and that payments should come from the National Flood Insurance Program. The Kodrins said the house was destroyed by wind, making State Farm liable under the homeowners policy it issued.
The 5th Circuit let stand the jury’s finding that State Farm owed under the homeowner’s policy. But it rejected the conclusion that the insurance giant acted in an “arbitrary and capricious” manner.
At the time, State Farm said it was pleased with the appellate court’s decision.
The Supreme Court receives thousands of appeals each year, but in recent years has accepted fewer than 100 for oral argument. The high court, now in recess, begins its next term in October.
I just read the Brief – it looks beautiful (from a Legal Secretary’s standpoint)! I see Dr. Hall was the Kodrins’ engineer – he’s such a nice man – and a great Engineer.
I’m sure I’m not in the minority when I say I hope the Kodrin Appeal is “picked.”
SHIRLEY
shirley heflin
July 31, 2009 at 10:52 pm
Unfortunately, there is next to zero chance the Writ will be granted. The Supremes rarely touch insurance issues since insurance issues are usually governed by state law and the Supremes don’t like wading into state law issues.
While I commend the kodrin team for framing the issue as an Eerie court gone awry, the fact is the 5ht basically said “you didnt provide evidence of bad faith” and thus, we are stripping your penalties awards. This is not the type of ruling that will get the Supreme’s attention.
I have a better suggestion for team Kodrin, lobby Congress to raise diversity jurisdiction to $250,000.00. That way, the 5th Circuit will have less of an opportunity to ignore the law and hand down unfounded legal rulings.
At the end of the day, the 5th Circuit is the worst, most active Circuit in the country and any plaintiff better heed their ineptness before treading into federal court.
NRB
July 31, 2009 at 11:10 pm
Not at all in the minority, Shirley. I haven’t had a chance to read it; but, as I recall, the case documents were well done but not well argued at the 5th.
nowdoucit
August 1, 2009 at 12:57 am
SOP I thought you might like this link. The comment is telling.
http://kevin.lexblog.com/2007/04/articles/blog-law-and-ethics/chubb-insurance-law-firm-blog-update-big-to-do-about-nothing/
steve
August 1, 2009 at 4:56 am
Spot on NRB. If you listen to the oral arguments the Kodrin’s attorney was asked point blank where is the bad faith in the trial record and his non answer rivaled Chris Landau’s nonsensical interpretation of ACC in Corban which was punctuated by the statement (and I’m paraphrasing and “at the home office who knows what happened there?”
Now of course this plays into why State Farm lawyers will take sanctions like in Frught than produce relevant documents.
In the magic jurisdiction for insurers that is Judge Walker’s court room the Farm is actually aided and abetted in such endeavors which means there will probably never be sustainable bad faith consequences in the form of punis as the plaintiffs have lost that battle before it ever had a chance to start..
sop
sop81_1
August 1, 2009 at 7:45 am
As the ATTORNEY FOR THE KODRINS, permit me to set the record straight. Slabbed exposes much of the “ugly truth” about what goes on in the insurance world (kudos for that!), including Hurricane Katrina litigation. Yet, still, much about the landmark Kodrin v. State Farm case remains misunderstood by many.
Considering the epic ramifications of the final outcome of this case, people should know better what happened; then they will care far more about this case. This decision could impact any Louisiana insured hoping for (1) a “fair shake” in the event of a serious catastrophe or injury his/her policy should cover, and, if coverage is wrongfully denied, (2) a federal court that will not (a) ignore (“nullify”) Louisiana’s laws on bad faith, and (b) nullify the insured’s right to a jury’s decision, untouchable on appeal, absent manifest error. Is this an exaggeration? If you do just a little “homework”/review, you won’t think so, I bet.
The Federal 5th Circuit’s domain also includes Texas and Mississippi, so they should worry, too.
Despite some cynics/critics’ comments (just a couple, really), I stand by the excellent work my team and I did, throughout. Look at what we proved; look at the documents – State Farm’s and ours, and it appears obvious why the jury didn’t deliberate long (just a couple of hours) in finding bad faith on State Farm under both categories offered on the jury interrogatories. Unanimously.
Beyond my comments below, for those of you who want more info/research, please visit: http://www.redmannlaw.com/press-and-news.html where you can find documents referenced, our recent press release, the U.S. Supreme Court writ (and all its attachments), both experts’ reports, Katrina “wind” map, a national law magazine article about this case & much more.
BASIC FACTS, TIME-LINE shown and undisputed at trial (with commentary):
• Before Katrina, the Kodrins had a Homeowner’s (“Wind”) policy w/ State Farm (“SF”) on their Port Sulphur, La. home worth about $216K; and a flood policy, purchased through SF, worth about 1/3 of that, i.e., about $76K;
• AUGUST 29, 2005 – Katrina made landfall just a short distance from the Kodrins’ Port Sulphur, La. home and then made a direct hit, leaving it rubble;
• Its strongest winds arrived hours before flood waters arrived;
• The area filled up like a bathtub, due to the terrain, when the levees overtopped (i.e., no massive wall of water hit; it took hours for waters to reach peak height, never up to the bottom of the roof);
• The Kodrin’s roof was found, nearly intact, about 1000 feet from the home’s location – in the direction of the storm’s top strongest winds which blew hours before any flood waters deep enough to float it in that direction came. When flood water deep enough had arrived, the winds were blowing, ninety or more degrees in another direction (Helloo?? Not even State Farm’s expert had a plausible flood explanation for this);
• It took days or weeks before the floods drained and the debris settled;
• AUGUST 31, 2005 – The Kodrins reported the loss to State Farm (“SF”);
• OCTOBER 20, 2005 (per SF) – 50 days later – SF Adj. Kaminski first inspects rubble site (I.e., not within the 30 days prescribed by law to initiate loss adjustment from notice; i.e., evid. of “bad faith”).
***NOTE: At no time did Kaminski, or anyone from SF, ever tell the Kodrins about critical CONFLICTS OF INTEREST that SF had directly adverse to the Kodrins when it came to adjusting the claim, “Good Faith,” “Fair Dealing,” and “Misrepresenting pertinent facts … relating to any coverage issue,” (La. R.S. 22: 1220), including:
▸ State Farm sent adjusters out to the Kodrins’ with, effectively, ‘two checkbooks’ – and the option of writing checks out of either or both checkbooks. This put the adjuster in the position to save State Farm well over $200,000 if he blamed the Kodrins’ damage on flood instead of wind and wrote instead a flood check on the US Treasury bank account. State Farm failed to ever mention this flagrant and outrageous conflict of interest (i.e., bad faith).
▸ No one from State Farm ever mentioned the conflict of its getting a handsome commission from the U.S. Government on every flood policy payment it made in these situations. (Imagine the above “sweet deals” for insurers – being able to decide “Uncle Sam” will pay, instead of them, and getting a commission on each huge check they get to write – spread across the whole Katrina-ravaged gulf coast? Perhaps this helps explain why State Farm and other insurers, following the worst natural catastrophe ever to hit the U.S., posted their greatest profits ever in 2005 and 2006);
▸ Also very disturbing, this ‘Good Neighbor’ insurer never told the Kodrins that if they accepted the flood money – which State Farm was pushing from the beginning – it might jeopardize their homeowner claim, even though both policies together would not pay for all that was lost. And yes, SF did indeed later raise defenses relating to flood payments accepted, but to no avail;
• OCT. 20, 2005 – At that first inspection, Kaminski pointed out massive limbs twisted, shattered on trees adjacent to the Kodrin property and above flood height; in front of witnesses, stating it is obviously wind, if not tornado, damage (because twisted around); he saw further wind damage and said he was going to “write it up that way” and would “advocate the claim” as a “wind claim.” And said not a peep about “flood is to blame.” He admitted to ALL of this at trial (also in video depo way earlier, BTW);
• OCT. 20, 2005 – However, just a few hours after that inspection, Kaminski “discussed the loss with management” (i.e., his boss, quote taken from his report). Suddenly, after this meeting, this “advocate” of wind claims is like “Schultz” on the old “Hogan’s Hero’s” TV show – “I know Nuh-cink! [about any wind damage],” and his report typed up that same afternoon was not only devoid of wind-damage advocacy, it advocated flood damage. [Hence my comment at oral argument in the 5th Circuit citing this example of the adjuster’s “about face” - after his meeting with his boss - as what looked and smelled like blatant bad faith]. But, indeed, $216K of the company’s money was riding on his evaluation, so maybe management was only asking him to be “double sure” of what he remembered – “perhaps the opposite of what he told the insured a hour ago? – before he typed his report.” Yeah. … Just after they talked about unicorns and rainbows, no?;
Bad Faith discussion: Under La. law, Kaminski, as a representative of an insurer, “owe[d] to his insured a duty of good faith and fair dealing. … [and had] “an affirmative duty to adjust claims fairly…” (La.R.S.22:1220 A). So, what happened? Logic dictates that Kaminski was either (A) lying at the inspection (playing a sick game?), or (B) telling the truth at the inspection, and later that day lied in his report misrepresenting critical facts on behalf of SF to help SF avoid paying on the policy – most likely to save his company $200+K – part of pattern, I suggested, on this and many other properties. And SF knew or should have known about the lies, and/or participated in the ruse;
• And check this out – the “Smoking Gun” SF “Wind/Water Protocol” document, dated 09-21-05, which made its first public debut in this trial, over strenuous objections, wherein all SF told all its adjusters: “Where wind acts concurrently [i.e., per SF’s own definition: at same time or in sequence - first wind destruction, then flood pickling the debris, or vice versa], coverage for the loss exists only under flood coverage, if available. …”
• NOVEMBER 26, 2005 – More than 86 days since loss adjustment started – SF EXPERT JIM DANNER – inspects the Kodrin property. By now, the land is cleared. By law, the 60-day deadline to get this property adjusted and give a decision was another “bad faith” had been missed, by far, indisputably. The law presumes that, after a calamity such as this, insureds are not financially secure; quite the contrary. Hence these deadlines are mandates with repercussions (e.g., bad faith penalties) if missed. This violation of bad faith laws, was just one independent ground, among others, proven and upon which the jury could award penalties irrespective of the causation issue (that the 5th Circuit got “tunnel vision” on, we submit);
• DECEMBER 02, 2005 – DANNER’S EXPERT REPORT is prepared. He blames 100% of loss on flooding. While Danner had inspected other properties in the area that had not been cleared away, indeed finding significant wind damage to some of them (and admitted it was that sheared roofs off nearby homes in photos he was shown), he still concluded in his report that all of the Kodrin damage was due to flooding. And argued he did not think even one Kodrin shingle came loose before the flood did the damage. (Really). His report is about 252 or so words long, and had no supporting attachments. Under oath at trial he admitted that when he did his report, he couldn’t tell you when or how hard the winds blew, nor when the flood waters came. He didn’t know if – as the Kodrin expert could and did – the flood waters came from the north or south, how fast or slow they rose, how high they got. He did no research; no meteorological, hydrological, topographical; none (I’m not kidding!). But he “saw” no evidence of wind damage in photos he saw, and he relied on Kaminski’s report (really);
• JANUARY 03, 2006 – State Farm officially denies the claim (about 124 days after SF was notified of it – well beyond the 30-day and/or 60-day time limits allowed to adjust the claim by law or face bad faith penalties);
• In subsequent months, the Kodrins got so fed up they did hire counsel. Good faith efforts were made to resolve the matter without suit. But State Farm, we submit, very much liked its arrangement of blaming EVERYTHING on flood, writing those checks instead of its own, getting a nice commission on everything, plus costs, and posting huge profits instead;
• So, suit was filed (after amendment of 22:658, allowing for attorney fees, increased penalties), everything was done in order to properly move the case forward, and an inordinate amount of work went into the case.
• Causation expert Neil Hall was hired some time after that. His report was indeed scientific, including many attachments, and was 42 pages. SF got and ignored it.
• SF and the Kodrins prepared their case, did abundant discovery, well before trial;
• SF never wavered and never made any “unconditional” tenders to the Kodrins – not a penny, which we alleged – proved – was in bad faith;
• The case was worked up for trial, and trial went well. The jury spoke loud and clear;
• The federal appellate court, in vacating the jury’s penalties award, attempted to make the entire bad faith discussion only about whether SF acted reasonably in ultimately denying the claim. That court apparently ignored many decades of state laws on bad faith, which allow for penalties, if proven, for bad faith beyond just ultimately denying a claim wrongly.
• And on the question of unreasonably denying the claim, the appellate court also ignored state law, and created a dangerous, insurer-friendly “Hired Gun Immunity” law of its own, nullifying a jury’s role in deciding bad faith along the way, we submit. I.e., that court made a rule that said that if an insurer gets an expert (any expert, judging by SF’s Danner) who gives then any excuse not to pay, then they may be immune from state laws and jury verdicts on bad faith.
• That court also attempted to explain how SF’s causation analysis, and reliance on Danner was reasonable. In arguing that the Kodrins did not put on much evidence of wind damage, they opined something like “everybody else in the area” was flood ravaged, but the Kodrins were the one “wind” exception. !. Indeed, not even SF’s own expert, Danner, and other witnesses, tried to make that wrong assertion (they admitted quite the contrary, as outlined above).
• Anyway, the Motion for Reconsideration respectfully pointed out all of this to the court, but to no avail. Hence our writ to the highest court in the land.
TO SUM UP to the foregoing: Just as with the jury, anyone with moderate intelligence could see there was abundant evidence of multiple instances of bad faith proven at trial, including:
• Undue delays in starting to adjust the homeowner’s/wind claim after notice given;
• Undue delays in adjusting the claim once started (to “starve” insureds into submission);
• State Farm’s outrageous conflicts of interest and their not mentioning any of same to their insureds when the law, and fundamental fairness and fair play required it; and
• Denying the Homeowner/wind claim despite overwhelming evidence in its own possession, and as supplemented by the Kodrins, that SF wind was the vastly more likely cause of the loss.
CONCLUSION
Throughout, SF went to great lengths in bad faith to avoid responsibility and “put the tab on ‘Uncle Sam’” saving ungodly amounts of claims money in their coffers.
Toward that end, SF “threw everything they had” at Kodrin counsel. At times two and three law-firms were enrolled at the same time, seemingly trying to “paper us to death,” and coming at us hard on this (and other) State Farm Katrina cases. On appeal, SF brought in two “ringer” bigshot firms from Manhattan AND Los Angeles to fight my small local firm. And all of those attorneys did a very good job, I agree. But we did a pretty good job, too. We presented strong facts, expert testimony and compelling argument to the jury, and briefed and argued the law at every stage in a way in which I am quite proud. The trial judge, the Hon. Carl Barbier, was tough equally on both sides, and did his job quite well.
After two full days of testimony, on the third day, the jury took just a couple of hours to come to their conclusions, unanimously finding 100% owed on the policy, bad faith proven on both 22:658 and 22:1220, and awarding penalties. Not an “emotional, runaway jury” verdict, just a sensible, “Petitioners proved the case and their damages” verdict, I believe.
Rare to see, but one juror actually gave a blogger her interview just after the award, and it wasn’t pretty for State Farm. Slabbed addressed it, and those comments are available via my firm’s site, too.
Apologies this post is so lengthy, but there was much ground to cover on this important case. If readers (if you got this far!) have follow-up questions or comments, I will do my best to respond here, or you are invited to contact me directly. Via website or by phone.
Many Thanks, Slabbed, for my opportunity to speak (and at such length).
John W. Redmann
New Orleans 800-240-1995
http://www.redmannlaw.com
johnredmann
August 4, 2009 at 11:21 am
Thank you, John, for putting the very impressive record on the table in such detail.
I’m going to print and read again, visit your site and then come back here with questions/comment.
nowdoucit
August 4, 2009 at 12:20 pm
Our pleasure John and we hope you stay in touch with us. We write about many cases including those that haven’t worked out and sometimes we have to sort through (in our non lawyer brains) the why behind some of the judicial decisions.
Sometimes our analysis leads us to be a bit critical as this post illustrates. In case of the Kodrins they have the misfortune of residing in the 5th Circuit which is without doubt not only the most conservative appelate circuit in the country it is also the least consumer friendly IMHO. That said they have sustained bad faith penalties in several cases so to me the key was trying to find the differences in the cases to see what will fly past Edith and her big business loving compadres there and it was from that perspective that drove the subsequent our blogging on the case.
Like Broussard before you the bad faith is in really manifest in the trial record and as such the Kodrin’s jruy verdict would fly past many other judges that don’t share the same level of affection for corporate defendants as the jurists on the 5th. Unfortunately like Broussard the trial record does not have it laid out the the Nth degree which is the commonality we’ve found in the cases that the 5th has upheld.
Our hope is to the extent we look closely at these cases we will enable your brothers on the policyholder lawyer bar to have the benefit of the experience.
Nothing would make us happier than to see the Supremes pick up the case and set the 5th circuit straight on the level of minutia required to prove insurer bad faith. But reality tells me they passed on the opprtunity to correct Edith Jones’ abomination and slaughter of the concept of anti concurrent causation in Leonard thus I hold little hope for the Kodrins.
We all wish the Kodrins the best of luck and God speed in their recovery.
sop
sop81_1
August 4, 2009 at 12:45 pm
Dear Mr. Redmann: Again, I assert that you (and your Firm) did (and continue to do) a great job on behalf of Mr. & Mrs. Kodrin. Sure, maybe statistically it is a “long shot” that the Supreme Court will “pick” the Kodrin case for consideration, but this is where we must rely upon the “…..AND LIBERTY AND JUSTICE FOR ALL…” doctine which has made us the great country that we are today.
Further, if State Farm had acted in “good faith” from the BEGINNING of this case, the Kodrins (obviously) would never have had to seek legal counsel. State Farm, after buying their “expert” and subsequently denying the Homeowner’s Claim and solely blaming flood, then turning this case into the “Samson v. Goliath” fight you desribed above (i.e., them having 2-3 law firms vs. your small, local Firm), being a sore loser and not paying the jury verdict (hence, the appeal to the 5th Circuit which has now lead to the Writ before the Supreme Court of the United States of America).
One can only imagine how much State Farm has spent on attorney’s fees to date in the Kodrin case – probably more than their policy limits. No doubt they have a “Reserves Account” established for attorney’s fees – that money’s got to be factored in somewhere in every premium dollar a State Farm insured nationwide pays every day so it’s a mere pittance (and expectation) for them; but IT’S A ONCE IN A LIFETIME EVENT (NIGHTMARE) FOR MR. & MRS. KODRIN. I hope one day they can take comfort and reflect that even though their own insurance company wasn’t there for them when they needed them most, you and your law firm were. are and will be again if they need you. That’s the best compliment a lawyer can get – that and getting paid.
Best wishes,
SHIRLEY HEFLIN
shirley heflin
August 4, 2009 at 12:56 pm
Slabbed folks, and Ms. Heflin,
I am grateful for the opportunity to address these matters with you.
Thank you all for your kind (and prompt!) comments. You (and other readers) are encouraged to do as much homework on this case as you wish, and then ask me anything you’d like about it and/or my handling of it.
Truth is sunshine and an antiseptic; let only the bad guys fear it!
Respectfully,
John W. Redmann
Counsel for the Kodrins
http://www.redmannlaw.com
johnredmann
August 4, 2009 at 2:07 pm