Homeowners Recover Full Amount of Wood Floor Damages and Home Insurance Company is Sanctioned for Delay

When a natural disaster strikes the issue of insurance comes to the forefront. What can a homeowner do when their home is damaged but the insurance company delays and fails to pay? That was the case when a Kenner, Louisiana, couple had their wood floors ruined by Hurricane Isaac. After taking the company to court, the family was finally able to recover claims for the damages as well as sanction the insurance company for the delay.

japanese-porch-tsumago-1228438-1024x768Russell and Tracy Varmall owned a home in Kenner, Louisiana. Their home sustained damages during Hurricane Isaac in 2012. The home was insured by Bankers Specialty Insurance Company (“Bankers”) for wind damage and New Hampshire Insurance Company for flood damage.

The Varmalls initially made claims to Bankers after the hurricane, which included damages to their roof and attic, water damage to their living room ceiling, damages to their fence, and a claim for spoiled food. These claims were adjusted in a timely fashion and were not an issue in the case.

A few days after an independent insurance adjuster hired by Bankers, Lenette Conn, visited the Varmalls home, Mr. Varmall noticed that his wood floors were cupping and buckling. Mr. Varmall contacted Ms. Conn to report the flooring problem. Ms. Conn told Mr. Varmall to report it to Bankers so they could reschedule her to reinspect the property. When she did, Ms. Conn concluded that the floor damages were caused by flooding and denied the claim. The Bankers policy contained a coverage exclusion to water damage caused specifically by flooding. Bankers instructed Mr. Varmall to make a claim to his flood insurance, which he did. This claim was denied because there was no general condition of flooding in the area or particular risk of flooding during Hurricane Isaac. The Varmalls appealed the flood insurance decision and filed a claim with FEMA. Both were denied.

The Varmalls then brought a lawsuit against Bankers, seeking damages for Bankers’ failure to pay for the damages to their wood floors. The District Court for the Parish of Jefferson ruled that the Varmalls proved their losses were covered under the Bankers policy, that the Varmalls had damages in excess of $50,000, and that Bankers had been arbitrary and capricious in failing to timely adjust the Varmalls’ loss. The Varmalls were awarded damages of $50,000, plus interest and costs. Bankers then appealed, arguing that the wood floor damage was not covered by the policy, the $50,000 damage award was too high, and that the Trial Court erred in finding it was arbitrary and capricious in failing to timely adjust the Varmalls’ claim. At the heart of the coverage issue on appeal was whether Mr. Varmall’s testimony regarding the source of the water was credible or not.  

On review before an appellate court, reasonable evaluations of witness credibility and reasonable inferences of fact by a lower court should not be disturbed on appeal.   See  Waguespack v. Sentry Select Ins. Co., 105 So.3d 880 (La. Ct. App. 2012). Additionally, the weight given to the testimony of an expert witness is within the broad discretion of the trial judge and will not be disturbed unless the appellate court finds an abuse of discretion.  

In this case, Bankers attempted to attack the credibility of Mr. Varmall as a witness by using his statements, the loss statement made to his flood insurance company, and the testimony of Bankers expert engineer who inspected the property. The Louisiana Fifth Circuit Court of Appeal found Mr. Varmall’s testimony that significant amounts of leaking water came through the roof of his home to be credible. The Fifth Circuit also found that Mr. Varmall only filed a claim with his flood insurance after Bankers instructed him to do so. Finally, the Fifth Circuit found that Bankers engineering expert testimony did not carry much weight because the expert only examined the property two years after the hurricane and his theory that the drainage system malfunctioned was without any merit. The expert had performed no tests of the Varmalls’ drainage system and acknowledged that he had no evidence that the drainage system actually failed. Instead, the Fifth Circuit gave more weight to the testimony of the Varmalls’ expert who concluded that the wood floor buckling was consistent with increased moisture levels caused by the roof leak.  The Fifth Circuit affirmed the Trial Court’s ruling that the damage to the wood floors was covered under the Bankers policy.

Next, the Fifth Circuit determined that the Varmalls’ damages were properly calculated and exceeded the $50,000 threshold required by the insurance policy. The Varmalls’ presented evidence of well over $50,000 worth of charges to replace the wood floors. On the other hand, Bankers presented no evidence that could reasonably refute any of the damage calculations that the Varmalls presented. The cost to replace the floors and move the Varmalls household items so the floor could be fixed was approximately $49,500 and that was before calculating an extra 20% for taxes and profit.

Finally, the Fifth Circuit found Bankers was arbitrary and capricious by failing to adjust the claim in a timely manner in violation of La. R.S. 22:1892. Under Louisiana law, all insurers shall pay the amount of any claim due within thirty days after receipt of satisfactory proof of loss from the insured party.  See La. R.S. 22:1892(A)(1). The statute makes the failure to provide payment within thirty days after receipt of satisfactory written proof of damages is found to be arbitrary and capricious and subjects the insurer to a penalty of fifty percent of the difference between the amount paid and the amount found to be due as well as reasonable attorney fees and costs under La. R.S. 22:1892(B)(1).

The Fifth Circuit found it very important that Bankers’ adjuster, Ms. Conn, had no training in engineering, construction, or determining the cause of damage at properties. It was also important that Ms. Conn admitted she could not determine the difference between wind-driven rain and flood. Ms. Conn never entered the attic and never took any steps to determine where the water entered from. Because of Ms. Conn’s actions, it was unreasonable for Bankers to deny the claim by relying on Ms. Conn’s recommendations. The violation of La. R.S. 22:1892 entitled the Varmalls to an award of 50 percent of their damages.

When insurance companies deny damage claims, it is very important to have an excellent attorney represent your interests. Not only can a good lawyer make your insurance company pay the claims you are entitled to, but they can also invoke the proper laws to sanction the insurance company for their delay.


Written by Berniard Law Firm Blog Writer: John Trepel

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