Leonard v. Nationwide Mut. Ins. Co., No. CIV.A. 1:05CV475 LTS-RHW.
| Decision Date | 15 August 2006 |
| Docket Number | No. CIV.A. 1:05CV475 LTS-RHW. |
| Citation | 438 F.Supp.2d 684 |
| Parties | Paul LEONARD and Julie Leonard, Plaintiffs, v. NATIONWIDE MUTUAL INSURANCE COMPANY, Defendant. |
| Court | U.S. District Court — Southern District of Mississippi |
David Zach Scruggs, David W. Shelton, The Scruggs Law Firm, PA, Oxford, MS, Derek A. Wyatt, Don John W. Barrett, Barrett Law Offices, Lexington, MS, James W. Backstrom, Denham, Backstrom & Hollingsworth, Ltd., Ocean Springs, MS, John G. Jones, Jones, Funderburg, Sessums, Peterson & Lee, Jackson, MS, Richard F. Scruggs, Sidney A. Backstrom, The Scruggs Law Firm, PA, for Oxford, MS, Steven H. Funderburg, Jones, Funderburg & Sessums, Jackson, MS, Dewitt M. Lovelace, Lovelace Law Firm, PA, Destin, FL, Marshall H. Smith, Jr., Barrett Law Offices, Lexington, MS, for Paul Leonard, Julie Leonard.
Christian D.H. Schultz—PHV, Daniel F. Attridge—PHV, Kirkland & Ellis—Washington, Washington, DC, H. Mitchell Cowan, Watkins Ludlam Winter & Stennis, PA, Jackson, MS, John C. O'Quinn—PHV, Thomas A. Clare—PHV, Kirkland & Ellis—Washington, Washington, DC, Laura Limerick Gibbes, Watkins Ludlam Winter & Stennis, PA, Jackson, MS, for Nationwide Mut. Ins. Co.
H. Mitchell Cowan, Watkins Ludlam Winter & Stennis, PA, Jackson, MS, John C. O'Quinn—PHV, Thomas A. Clare—PHV, Kirkland & Ellis—Washington, Washington, DC, Laura Limerick Gibbes, Watkins Ludlam Winter & Stennis, PA, Jackson, MS, for Jay Fletcher Ins.
This cause came on for trial by the court, sitting without a jury. Having heard the evidence presented by the parties and having considered the arguments of counsel, I make the following findings of fact and conclusions of law:
FINDINGS OF FACT
1. Plaintiffs Paul and Julie Leonard (the Leonards) reside at 1010 Washington Avenue, Pascagoula, Mississippi.
2. Defendant Nationwide Mutual Insurance Company (Nationwide) is a corporation organized under the laws of Ohio with its principal place of business there.
3. Jay Fletcher (Fletcher) is a local Nationwide representative who works in the Pascagoula, Mississippi, market. Fletcher was the Nationwide representative with whom the Leonards did business. Fletcher was a party defendant to this action when it was filed in the Chancery Court of Jackson County, Mississippi. After Nationwide removed the case from state court, all claims against Fletcher personally were dismissed.
4. It is undisputed that the Leonards' residence was extensively damaged during Hurricane Katrina, a powerful storm that made landfall on the Mississippi Gulf Coast on August 29, 2005. The primary disputes are the cause of the damage, the extent of the damage, and the question whether Nationwide is legally obligated to reimburse the Leonards for any or all of this damage.
5. At the time Hurricane Katrina damaged the Leonards' residence, their property was insured under a homeowners insurance policy issued by Nationwide. This policy has been identified in the record as policy number 63 23 MP 559938, form HO 23A. (the policy or the Nationwide policy)
6. The Leonards' residence was not covered by any policy of flood insurance at the time of the storm. Flood insurance was available prior to Hurricane Katrina under the National Flood Insurance Program. Under federal regulations that apply to this program, residential areas are classified according to the estimated risk of flooding. Areas most prone to flooding are designated Flood Zone A, those less susceptible to flooding are designated Flood Zone B, and those areas even less prone to flooding are designated Flood Zone C. Flood insurance is available to anyone, regardless of which flood zone their residence is situated in.
7. The Nationwide policy in force at the time of Hurricane Katrina contains the following relevant provisions:
Insuring Agreement
We will provide the insurance described in this policy, which includes the Declarations and attached endorsements or schedules, in return for the premium and fees, and compliance with all the policy provisions.
* * *
Property Coverages
Coverage Agreement
Coverage A—Dwelling
We cover:
1. The dwelling on the residence premises used mainly as your private residence, including attached structures ...
* * *
We cover other structures on the residence premises. They must be separated from the dwelling by clear space ...
* * *
We cover personal property owned or used by an insured at the residence premises.
* * *
(Section I) Covered Causes of Loss Coverage A—Dwelling and Coverage B—Other Structures
We cover accidental direct physical loss to property described in Coverages A and B except for losses excluded under Section I — Property Exclusions. Coverage C — Personal Property
We cover accidental direct physical loss to property described in Coverage C caused by the following perils except for losses excluded under Section I—Property Exclusions:
* * *
2. Windstorm or hail.
Direct loss caused by rain, snow, sleet, sand or dust driven through roof or wall openings made by direct action of wind, hail, or other insured peril is covered.
* * *
Property Exclusions (Section I)
1. We do not cover loss to any property resulting directly or indirectly from any of the following. Such a loss is excluded even if another peril or event
contributed concurrently or in any sequence to cause the loss.
* * *
b) Water or damage caused by waterborne material. Loss resulting from water or water-borne material damage described below is not covered even if other perils contributed, directly or indirectly to cause the loss. Water and water-borne material damage means:
(1) flood, surface water, waves, tidal waves, overflow of a body of water, spray from these, whether or not driven by wind.
* * *
n) Windstorm or hail to any:
(1) structure, other than a building, including the supports and screens, with a roof-like covering of cloth, metal, plastic or fiberglass, whether or not the structure is attached to a building.
(2) screens, including their supports, around a pool, patio or other areas.
(3) property lines and similar walls, including seawalls, greenhouses, hothouses, slathouses, trellis, pergolas, cabanas and outdoor equipment used to service the residence premises.
(4) structure, including property in or on the structure, which is in whole or part, in or over water.
2. We do not cover loss to any property resulting directly or indirectly from the following if another excluded peril contributes to the loss:
* * *
c) Weather conditions, if contributing in any way with an exclusion listed in paragraph 1. of this Section.
8. The evidence presented at trial conclusively established that on August 29, 2005, the entire area surrounding Pascagoula, Mississippi, including the Leonard residence and its surrounding neighborhood, was subjected to violent winds in excess of 100 miles per hour. These winds increased gradually in the early morning hours and reached a peak of intensity between 9:00 a.m. and noon. Water from the Mississippi Sound was driven ashore by the storm, and the water level in the Leonard neighborhood rose to a peak level between 11:00 a.m. and noon. At its highest point, this water inundated the Leonard residence to a depth of approximately five feet.
9. The Leonard residence is approximately 12 feet above sea level. This property is 515 feet from the beachfront to the south.
10. The inundation of the ground floor of the Leonards' residence caused extensive damage to the floors, carpets, walls, and personal property situated therein. The second floor of the Leonards' property was not damaged. The physical damage to the roof of the Leonards' property consisted of a small number of broken shingles, and the water-tight integrity of the roof was not breached during the storm. The attached garage on the Leonards' property was also extensively damaged during the storm.
11. The only wind damage on the ground floor of the Leonards' residence was a hole in one window that witnesses described as "golf-ball sized." The exterior of the Leonards' home and the attached garage were soiled by a combination of wind-driven materials and water-borne materials.
12. The doors of the garage were damaged by both wind and water. These doors face west.
13. Following an inspection of the Leonards' property, Nationwide made an estimate of the wind damage sustained during the storm. The Nationwide adjustor found that the wind had caused damage to the shingles of the roof and that a tree was blown down across a fence. The adjustor authorized payment for these items of damage.
14. After applying the $500 deductible, Nationwide tendered a check to the Leonards in the amount of $1,661.17.
15. The Leonards estimated the total damages from the storm to be $130,253.49. This figure included all of the damages to the Leonard residence, regardless of whether the cause of the damage was wind or water. `The Leonards' experts identified $47,365.41 in damages that they attribute to wind. This estimate includes the cost of replacing the roof and extensive structural repairs to the garage.
16. During 1989, when the Leonards' property was covered by a homeowners policy issued by Allstate Insurance Company (Allstate), Allstate decided to stop issuing homeowners policies for properties located south of United States Highway 90. The Leonards' policy was, therefore, not renewed by Allstate.
17. In seeking replacement coverage, the Leonards decided to do business with Nationwide through Fletcher. The Leonards purchased their first Nationwide homeowners policy from Fletcher in 1989. This policy was entitled a Deluxe Homeowners Policy, and it was written on a Nationwide Form entitled "Elite II." In 2003, the form of the Nationwide homeowners policy changed. The replacement policy form was designated Form No. HO-23. In 2004,...
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