When one thinks of hurricane related property damage, the most obvious cause of damage seems to be wind and water. A recent appellate decision from Louisiana dealt with a different kind of hurricane related damage: looting.

In Ullah, Inc. v. Lafayette Ins. Co., No. 2009-CA-1566, 2010 WL 5143621 (La. App. 4 Cir. Dec. 17, 2010), the plaintiff was operating a retail store by the name of “A.K. Food Store” at the time Hurricane Katrina struck in 2005. At that time, the store had an inventory of approximately $1.2M in food, jewelry, and various sundries. The store suffered flood damage to about the four-foot level, and the remaining inventory above four feet was looted in the aftermath of Katrina. The plaintiff was insured for flood and looting by separate insurers, and the flood insurer paid the flood policy limit of $500,000 for the store’s flood related losses. The insurer that covered the looting losses, Lafayette Insurance Company, paid an unconditional $40,000 for those losses, but the insured disagreed with that amount. The insured filed suit for breach of contract, and at trial, the jury awarded the plaintiff $450,000 for its losses caused by looting.

The insurer appealed, not on legal grounds, but rather on a factual basis arguing why the $450,000 award was unreasonable. The insured responded to the appeal seeking statutory penalties and attorney’s fees that the trial court did not award. The appellate court upheld the award, reasoning that a full trial had been conducted on the merits, and a jury had found that based on the evidence presented to it, $450,000 was a reasonable amount to compensate the insured for looting losses. The court cited the Louisiana Supreme Court decision of Rosell v. ESCO, 549 So. 2d 840, 844-845 (La. 1989), which set the standard that a court could not set aside the jury’s finding in the absence of manifest error:

Where documents or objective evidence so contradict the witness’s story, or the story itself is so internally inconsistent or implausible on its face, that a reasonable fact finder would not credit the witness’s story, the court of appeal may well find manifest error or clear wrongness even in a finding purportedly based upon a credibility determination. But where such factors are not present, and a factfinder’s finding is based on its decision to credit the testimony of one of two or more witnesses, that finding can virtually never be manifestly erroneous or clearly wrong.

The insurer also argued that the store was seeking double recovery under the flood and looting coverages, but the court declined the insurer’s reasoning. With an inventory of $1.2M, and a recovery of $500,000 for flooding losses and $450,000 for looting losses, the court held that the insurer’s allegation of double-dipping was unfounded and unsupported by the facts in the case.

The court went on to apply the Louisiana standards for statutory penalties and attorney’s fees, but declined to award either after a thorough review of the case. In the end, this case serves as an important reminder to insureds that hurricane losses can include much more than just losses from wind and water.

Still to come in an upcoming hurricane post, will be an analysis of Judge Van Nortwick’s dissent in the case of Citizens Property Ins. Corp. v. Ashe, No. 1D09-1546, 2010 WL 4628915 (Fla. 1st DCA Nov. 17, 2010).