Federal Court Decides Hurricane Katrina Insurance Lawsuit Filed More Than Two Years After Hurricane Anniversary Prescribed

In Dixey, II v. Allstate Insurance Company, –F.Supp.2nd, 2010 WL 126628 (E.D.La.), plaintiff filed his Hurricane Katrina insurance lawsuit after the second anniversary of Hurricane Katrina and attempted to use the Louisiana class action statutes to demonstrate that his claim had not prescribed. The Court determined the claim had prescribed finding the “liberative prescription” set forth in LA-CCP art 596 is not applicable to the “contractual prescription” set forth in the policy. Allstate maintained that contractual limitation period set forth in its policy cannot be interrupted or suspended.

This decision is wrong. The Court failed to recognize that the twelve month provision in the contract is also a liberative prescriptive period. It is not in the language of the insurance company; rather, it is the language of the Legislature and expressed in words which the fire statute (LA-RS 22:691(F)) requires be inserted in the policy, word for word, line for line, number for number. See, Gremillion v. Travelers Indemnity Co., 240 So.2d 727, 256 La. 974 (1970). Further, the court must strictly construe the statute against prescription and in favor of the claim that is said to be extinguished and CC 3457 provides there is no prescription other than that established by legislation.

Additionally, in 2006 oral argument before the Louisiana Supreme Court, Allstate, State Farm and USAA, the three remaining defendants in a Hurricane Katrina lawsuit, even acknowledged the applicable limitation period is a liberative prescriptive period and capable of being suspended under the doctrine of contra non valentem. See, FN13 State v. All Property And Casualty Insurance Carriers Authorized And Licensed To Do Business In the State, 937 So.2d 313, 2006-2030 (La. 8/25/06) at 327. In footnote 13, that Court stated,

The defendants argue that the Acts at issue were unnecessary as Louisiana law already
contains the means for persons prevented from filing suit to avoid dismissal of their claims due to
prescription. Specifically, the defendants point out that the doctrine of contra non valentem applies
to prevent the running of liberative prescription where, in fact and for good cause, a plaintiff is
unable to exercise his cause of action when it accrues. As was discussed in oral argument,
determinations of whether contra non valentem applies generally proceeds on an individual, case-bycase
basis. In order to avoid mass confusion and an increase in filings in our courts, the Legislature
addressed this significant public concern in an appropriate manner.

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