Natural disasters, condemnations, and insurance coverage - sounds like my kinda case!
The Fifth Circuit just held that an insurance company had a duty to defend several lawsuits brought against St. Bernard parish for post-Katrina condemnation and demolition of over 5700 structures. The case is Lexington Insurance Co. v. St. Bernard Parish Gov't and the opinion can be found here.
This case involves health and safety condemnations and not the traditional compulsory acquisition of property we practice. After Katrina, St. Bernard parish condemned structures that were damages and had fallen into disrepair, then demolished many of them.
The owners, not surprisingly, brought suit for the property damage and demolition. The parish sought defense and indemnity under a liability policy. The carrier did not defend but brought a declaratory judgment action against the parish.
On appeal, the insurer challenged the lower court's holding of ambiguity relating to the the "personal and advertising injury" provision that defined such injury as arising out of "the wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling or premises that a person occupies by or on behalf of its owners, landlord or lessor." The insurer argued that the provision only applied when the invasion was on behalf of an owner, landlord and lessor. This would mean that unless the parish were so acting, no coverage would be available.
The Fifth Circuit rejected that construction. Next, the question of stacking the retained limit per plaintiff vs. per occurrence was addressed. The carrier sought to establish that a $250,000 retained limit (call it a deductible for discussion), applied to each and every alleged demolition and property damage, such that no defense would be owed because no property had a value over $250,000. The court found that all the demolition and property damage were "related" and arose from a single occurrence, therefore only one allocation of the retainer limit was proper.
Stay tuned. This case only dealt with the duty to defend and not the duty to indemnify which likely triggers different exclusions.
