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April 22, 2008 - Fraud Claim Rejected In Hurricane Katrina Lawsuit

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A federal judge on Monday dismissed a key Hurricane Katrina lawsuit alleging fraud against State Farm Fire & Casualty Co. The suit was filed by Biloxi, Mississippi couple Thomas and Pamela McIntosh, after State Farm blamed most of the damage to their home on Katrina's storm surge, and paid them only $36,228. Dozens of lawsuits were filed in the wake of Hurricane Katrina's devastation of the gulf coast on August 29, 2005. Many of them, the McIntosh's included, centered around allegations that State Farm routinely denied claims based on bad faith and fraud.

The McIntosh suit claimed that State Farm, through Alabama-based firm A.E. Renfroe & Company, who provided State Farm with damage assessment reports, produced two separate engineering reports in October 2005, shortly after the Katrina damage occurred. They alleged that State Farm used the two reports to minimize the value of the wind damage sustained by their home and to avoid liability for their claims against their homeowners' policy. The couples' policy did not include coverage for flood damage.

In his Partial Summary Judgment, U.S. District Court Judge L.T. Senter, Jr., says that while the McIntosh's contention that State Farm and A.E. Renfroe worked together to deliberately underestimate the damage to their home would support a finding of bad faith, it is not sufficient to warrant such a finding. A.E. Renfroe & Company, he further finds, cannot have aided and abetted a fraud that did not occur.