In re Katrina Canal Breaches Litigation
United States Court of Appeals, Fifth Circuit
495 F.3d 191 (2007)
After Hurricane Katrina caused levees around New Orleans to break, flooding the city, over forty consolidated suits were brought by policyholders against insurers (defendants) whose policies excluded coverage for "Water Damage, meaning: …Flood, surface water, waves, tidal water, over-flow of a body of water…"; plaintiffs argued the term "flood" was ambiguous and shouldn't cover water damage caused by a negligently designed or maintained levee failing, as opposed to a purely natural flood. The district court found the term ambiguous for most defendants (allowing the case to proceed) but not for State Farm, whose exclusion specifically referenced "natural or external forces," and dismissed as to State Farm; all parties appealed.
Whether the term "flood" in a homeowners' insurance policy's exclusion clause unambiguously covers water damage caused by an inundation from a broken, man-made levee, or whether the term is ambiguous as applied to man-made rather than purely natural flooding.