State Farm Fire and Casualty Co. is asking a federal judge to dismiss Hurricane Katrina lawsuits by policyholders who received Small Business Administration disaster loans.
In Louisiana, Travelers Insurance Co. backed off its argument that policyholders with SBA loans should not be able to recover hurricane damages from the insurer and State Farm said it was reviewing its position, according to the Times-Picayune.
But State Farm is making the same argument in U.S. District Court in Gulfport in a dozen cases or more, two attorneys who represent policyholders told the Sun Herald.
"It's obvious that it's a corporate decision," said Bay St. Louis attorney Randy Santa Cruz of the Merlin Law Group. "It's not an attorney jumping out and making this filing. They've done it in Louisiana. And different firms in Mississippi have filed the same motion to dismiss" on State Farm's behalf, he said.
State Farm does not allow its attorneys in Mississippi to comment on cases. However, spokesman Fraser Engerman at the company's Bloomington, Ill., headquarters said, "We want to avoid any potential that would have us make payments twice.
"We intend to honor the contract. We're going to pay what we owe the policyholder, but again we need to determine who is the party of interest."
State Farm argues in court records that cases against the company should be dismissed where SBA loans apply because the policyholder has assigned his interest in the claim to the SBA.
"How can you say you've recovered when you get a loan?" said attorney Ben Galloway of Owen & Galloway in Gulfport. "You haven't recovered, you have to pay it back."
"It's just another mean-spirited approach by State Farm. It's not going to fly in Louisiana, so they're going to see if it will fly over here - and it's not."
The motions continue to be filed even though, in one case since settled, the SBA filed a notarized statement that says the assignment of insurance proceeds to the agency was not "an assignment of a claim, cause of action or the right to sue."
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