![handle is hein.journals/tulr86 and id is 1357 raw text is: RECENT DEVELOPMENTS
In re Katrina Canal Breaches Litigation: The Louisiana
Supreme Court Defies the Majority in Upholding
Prohibitions on Postloss Assignments of Insurance Policies
I. OVERVIEW .....................................1345
II. BACKGROUND ..................................1346
III. THE COURT'S DECISION ...................... .....1350
IV ANALYSIS .................................... .....1353
I. OVERVIEW
Does public policy in Louisiana bar application of antiassignment
clauses in insurance policies to postloss assignments when an
assignment would entail not just the transfer of the right to money due,
but the transfer of contractual obligations as well?' The United States
Court of Appeals for the Fifth Circuit, unable to resolve pending
litigation without first answering this query, certified this question to
the Louisiana Supreme Court. The Fifth Circuit had been unable to
resolve issues in litigation stemming from a dispute over homeowners'
postloss assignments of insurance policies to the State of Louisiana
(State) as a requisite to receive Road Home awards following the
devastation of Hurricanes Katrina and Rita.2 The State, in response to
the growing number of requests for Road Home grants from uninsured
and underinsured homeowners and a consequent predicted one billion
dollar shortfall in funds, filed suit as assignee of the homeowners'
policies against over 200 insurers, seeking to make up some of this
predicted shortfall.' A problem arose when the insurers challenged the
homeowners' assignments to the State with a Federal Rule of Civil
Procedure 12(b)(6) motion to dismiss, alleging that application of the
1. Seeln re Katrina Canal Breaches Litig., 2010-1823, pp. 3-4 (La. 5/10/11); 63 So.
3d 955, 957-58.
2. Id. at pp. 2-3; 63 So. 3d at 957-58. As a requisite to receiving these funds, over
150,000 Louisiana homeowners executed a Limited Subrogation/Assignment Agreement.
Id. at p. 2; 63 So. 3d at 957. This agreement, among other things, purported to assign to the
State of Louisiana, all of [the homeowner's] claims and future rights to reimbursement and
all payments hereafter received or to be received by [the insured] under any policy of casualty
or property damage insurance or flood insurance on the residence. Id.
3. Id. at p. 3; 63 So. 3d at 958.
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