Jury Picked to Hear Katrina Insurance Lawsuit

GULFPORT, Miss. (AP) -- An eight-person jury was picked Monday for the trial of one of hundreds of insurance lawsuits filed by policyholders after Hurricane Katrina, and a judge refused to move the proceedings hundreds of miles from Mississippi's Gulf Coast.

Opening statements in the lawsuit brought against State Farm Fire & Casualty Co. by Norman and Genevieve Broussard of Biloxi are scheduled to begin at 10 a.m. Tuesday.

By seating the jury of four women and four men, U.S. District Judge L. T. Senter Jr., rejected State Farm's bid to move the trial more than 300 miles north to Oxford. State Farm had argued it could not receive a fair trial in south Mississippi.

Before the jury was seated, Senter had sent home more than a quarter of the initial 80-member jury pool.

"We're going to go ahead with the case (here)," State Farm spokesman Fraser Engerman said late Monday.

A second eight-person panel also was selected Monday for a second Katrina-related lawsuit involving State Farm that is scheduled for trial here later this month.

The Broussards, whose Biloxi home was reduced to a slab by Katrina, sued State Farm after the insurer denied their entire claim. State Farm says all the damage was caused by flood waters, while the Broussards claim a tornado destroyed their home before any flooding.

Hundreds of Mississippi homeowners have sued their insurance companies for refusing to cover billions of dollars in damage from Katrina's storm surge. This is only the second case to be tried since the Aug. 29, 2005, storm destroyed or severely damaged tens of thousands of homes.

By noon, more than a quarter of the 80-member jury panel had been sent home. Early on, Senter had dismissed six potential jurors who said they could not be impartial in the case.

"The object is to find eight fair and impartial jurors who will listen attentively to the evidence as it comes in," Senter told the jury pool.

In court papers filed earlier, State Farm claimed the jury pool has been tainted by "media propaganda" about the insurance industry's handling of claims after Katrina.

The Bloomington, Ill.-based insurer commissioned a survey of 3,600 registered voters in Mississippi that found a "substantial amount of bias against insurance companies" among Gulf Coast residents after the hurricane.

Lawyers for the Broussards have argued that State Farm hasn't met the legal burden for showing that the case must be moved.

On Monday, all but seven of the remaining 74 jury pool members acknowledged during questioning by State Farm attorneys that their homes had received at least some damage during Katrina.

None said they had a claim denied by their insurer but several acknowledged that they had complaints about the process used to adjust their claims.

State Farm attorney John Banahan of Pascagoula told the potential jurors that it was a daunting task to remain objective "because we're all gone through something collectively here on the coast."

Last year, Senter presided over the first trial of a Katrina insurance lawsuit, which Paul and Julie Leonard of Pascagoula filed against Nationwide Mutual Insurance Co. Senter's decision in that case, which was heard without a jury, was seen as a victory for the insurance industry.

Senter ruled in August that Nationwide's policies cover damage from a hurricane's wind but not from its rising water, including storm surge. The judge also rejected the Leonards' argument that Nationwide's policies are ambiguous and therefore cannot be enforced because storm surge isn't specifically excluded from coverage.

Although Senter will preside over the Broussard trial, this time the case will be decided by a jury. The second trial also could be a stronger test of the insurance industry's refusal to cover billions of dollars in damage from Katrina.

State Farm and other major insurers maintain that their policies don't cover damage that could have been caused by a combination of wind and flood waters, even if hurricane-force winds preceded a storm's rising water. Many other people whose homes were reduced to slabs are challenging the validity of this "concurrent cause" language in their insurance policies.

This clause didn't figure as prominently in the Leonards' case, however, because they had limited wind damage and their home was still standing after Katrina.

The Broussards, who didn't have flood insurance, had a homeowner's policy with limits of $223,292 for the home, dwelling extension and contents. The couple wants State Farm to pay their claim in full, and they're seeking $5 million in punitive damages and $50,000 in emotional damages.

The trial is expected to last several days.

AP-ES-01-08-07 1859EST