Invoking Alternatives to Litigation in Disputes Over Property Catastrophe Losses
Litigating catastrophe claims can be costly. Recently, the Committee of Magistrate Judges appointed in the ln Re Hurricane Sandy litigation in the Eastern District of New York commented that they were alarmed by one defense attorney's prediction that the defense of roughly 1,200 flood cases could cost more than $100 million - a figure that likely exceeds the cost of settling all of the cases at full value. In the same order, the committee criticized some of the attorneys for acting in a manner that it described as objectively unreasonable or seemingly calculated to delay efficient resolution of the cases.
One example given by the committee to support this assertion was a defense attorney's representation to the court, after mediation had failed to resolve a case, that the depositions of the plaintiffs, engineer, contractor, and public adjuster would be necessary to complete discovery. The committee found it highly unlikely that such discovery would be warranted given what it characterized as modest dollar amounts at stake, and commented that it was left to conclude that the defense attorney was seeking to unreasonably delay resolution of the cases in refusing to settle absent what it described as "extensive discovery:' Unsurprisingly, policyholder attorneys seized upon the opportunity to publicly criticize insurance carriers for defending the Superstorm Sandy lawsuits rather than simply paying the demands of the policyholders' attorneys.