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Hurricanes, Tornadoes & Wind Storms

Zelle has helped numerous clients navigate, evaluate and sometimes eliminate their hurricane, tornado and wind storm exposures. Through consistent analysis across multiple claims, we have helped clients establish credible and consistent approaches to claim handling and resolution. 

While Zelle attorneys have been able to assist their clients in resolving many of these claims pre-suit, either through consultation in the adjustment phase, appraisal, or alternative dispute resolution, other claims have been litigated in numerous state and federal courts.

The issues addressed in these claims include:

Hurricane Ike

Hurricane Ike was by far the costliest hurricane in Texas history.  When it made landfall on the Texas coast, Zelle assisted its insurance clients with the onslaught of complex claims that followed, involving chemical, petrochemical, refining, retail, commercial housing, manufacturing, and other commercial properties.  The firm also developed particular expertise in insurance coverage disputes involving risk purchasing groups.

Three of the more notable Hurricane Ike cases handled by Zelle include:

Brelian Inc. v. Liberty Mutual Fire Ins. Co., (U.S. District Court for the Southern District of Texas). Zelle defended Liberty Mutual Insurance Company in this claim for property damage and alleged bad faith arising from Hurricane Ike.  The policyholder demanded Liberty Mutual pay additional insurance proceeds, attorneys’ fees and other penalties at the conclusion of an appraisal.  Finding that Liberty Mutual appropriately tendered amounts due under the commercial property policy pursuant to the appraisal award, a Texas federal judge granted summary judgment to Liberty Mutual on the policyholder's claims for breach of contract, bad faith, attorney’s fees and other alleged violations of the Texas Insurance Code.

In Re Continental Casualty Company (Texas Court of Appeals, 14th District). Continental Casualty Company insured multiple commercial buildings in and around the Houston metropolitan area, which were reportedly damaged during Hurricane Ike.  At the conclusion of the adjustment, a dispute arose regarding the amount of loss and Continental demanded appraisal pursuant to the policy.  The trial court denied Continental’s right to appraisal.  Zelle filed a Writ of Mandamus on behalf of Continental asking the Court of Appeals to enforce the appraisal clause in the policy.  The Court of Appeals conditionally granted the Writ requiring the policyholder to participate in appraisal as the policy required.

Hurricane Ike Suit In Federal Court In Galveston, Texas. A client's insured (a steel mill) filed a lawsuit in the fall of 2010 claiming it suffered approximately $116 million in business interruption losses as a result of property damage from Hurricane Ike  and seeking $150 million in extra-contractual damages for alleged bad faith conduct. The case settled in January 2012 after five days of trial.

Hurricane Katrina

When Hurricane Katrina hit the Gulf Coast, Zelle attorneys represented numerous clients in claims involving a variety of business sectors.

Some of the more notable Hurricane Katrina-related cases handled by Zelle attorneys include:

Allianz Global Risks US v. The Administrators of the Tulane Educational Fund (U.S. District Court for the Eastern District of Louisiana). Zelle defended Allianz against a claim by Tulane University, and filed a declaratory judgment action in Federal Court in Louisiana asking the court to interpret the flood exclusion in the policy. Tulane claimed in excess of $500 million for property damage and business interruption losses as a result of wind and flood damage caused by Hurricane Katrina, a claim Zelle assisted in resolving on favorable terms.

Board of Commissioners of the Port of New Orleans v. Factory Mutual Insurance Company (U.S. District Court for the Eastern District of Louisiana). Factory Mutual insured the Port of New Orleans’ 22-miles of river-front property in New Orleans, including the Port’s many warehouses and other buildings leased to commercial tenants. The Port sought damages in excess of $250 million related to property damaged by wind, flood, fire, and vandalism during and after Hurricane Katrina. The many issues in dispute included claims for pre-existing damage, code-upgrade demands, paint-matching, demands for full replacement of buildings and walls where there was only minor wind-damage, claims for business income losses where the policy only insured “debris-removal”, claims for lost rental-income when the lease required the tenant to continue to pay, despite property damage, and, most significantly, claims for a number of buildings that were pre-existing, but not scheduled insured property under the policy.

Northrop Grumman Corp. v. Factory Mutual Insurance Company (U.S. District Court for the Central District of California). Flood and wind from Hurricane Katrina damaged Northrop’s shipyards located in Pascagoula, Mississippi and Avalon, Louisiana. The majority of damage that Northrop sustained was storm surge flooding. Northrop filed suit against Factory Mutual in California just 60 days after the loss seeking damages in excess of $1.2 billion and contending, in part, that the flood exclusion in Factory Mutual’s excess policy was unenforceable. The Ninth Circuit found as a matter of law “that the Flood Exclusion unambiguously bars coverage for the water damage to Northrop’s shipyards under the excess policy.” 563 F.3d 777 (9th Cir. 2009). The District Court subsequently granted FM’s Motion for Summary Judgment declaring that the Flood Exclusion in FM’s excess policy is enforceable, notwithstanding California’s efficient proximate cause doctrine. In addition, the District Court granted FM’s Motion for Partial Summary Judgment dismissing all “bad faith” and extracontractual claims. The dispute was ultimately resolved prior to trial on the remaining claims.

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