Insurance Law

McIntosh case: fraud claim dismissed

By David Rossmiller

The McIntosh v. State Farm, easily the most contentious of the State Farm Katrina cases, has long been dark and bloody ground where lawyers clashed by night.  This is the case where Kerri Rigsby herself approved the flood payment, then turned around and accused State Farm of overpaying flood damage with government money to minimize the company's liability for wind.

It is also the case where those dumb engineer e-mails were so incessantly touted, it's one of the cases with two engineer reports, it's the case with the note in the file that said "put in wind file, do not pay bill, do not discuss." That last part deserves some comment: it was often erroneously rendered as "do not pay claim," which the note did not say. Instead, it seems obvious that it is a reference to the bill of the engineering company for engineer Brian Ford's first report, which strangely (considering Kerri Rigsby approved the flood payment) found no evidence of flood damage, and attributed all the damage to wind. But this schtick worked for quite a while -- just look at this story from CBS from the salad days of the Ride of the Rigsbys --  August 26, 2006: "Sisters Blew Whistle on Katrina Claims."  What a load of Scruggsism! But the media and a lot of other people just ate it up.  Looks pretty silly now, doesn't it? Maybe some editor should go back and revise the headline on the story to: "Sisters Met With Trailer Lawyers, Blew Up Careers."  

You may remember Dickie Scruggs had to withdraw from McIntosh and all Katrina cases after he was indicted (following a big dust-up with the other members of the then Scruggs Katrina Group over whether he was actually going to do so).  Then you may remember the relabeled Katrina Litigation Group being disqualified when Judge Senter ruled they were implicated in unethical conflict involving the Rigsbys' taking of the State Farm documents and the hiring of the Rigsbys, material witnesses in McIntosh and many other Katrina cases, as "litigation consultants."  You might also remember the Katrina Litigation Group had kind of a weird thing going with Brian Ford, where he was in discussions to make some $10,000 a month as a "consultant."  I'm leaving out a lot of weirdness that is an integral part of this case, I know, but honestly, trying to tell the story so it makes any sense in less than 8,000 words is really hard to do. And you wonder why I'm naming my musical The Katrina Follies?

OK, that brings us up to the new news -- Judge Senter dismissed the fraud claim in McIntosh against State Farm and also against the Rigsbys' former employer, Renfroe, an independent contractor claims adjusting service. He said even if the McIntoshes proved their allegations, it wouldn't amount to fraud because they failed to meet the element of reliance.  They didn't rely on State Farm's alleged underpayment of wind damage, instead they rejected State Farm's claims adjusting and sued.  Renfroe, which allegedly aided and abetted fraud, couldn't be liable if there was no fraud as a matter of law in the first place, the judge said.

This ruling is not the same thing as saying there is nothing wrong. Senter said if the allegations were proven, it would constitute bad faith and would justify punitive damages. So he made no factual finding, for example, that the amount of wind payment was correct, or that amounts owed for wind damage were not wrongfully pushed off on the federal flood payment.  Still, this is a  significant development in this case, and in Katrina litigation.  Part of the continuing deScruggsification of remaining Katrina cases.  

Oh, by the way -- here's a copy of the judge's decision.

Full post as published by Insurance Coverage Law Blog on April 22, 2008 (boomark / email).