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Mississippi AG sues State Farm for breach impacting Katrina settlement

[JURIST] Mississippi Attorney General Jim Hood [official website] filed a lawsuit against State Farm [corporate website] Monday, alleging that the insurance company committed a bad faith breach of contract [press release, PDF] related to a settlement reached [JURIST report] on January 23 regarding Hurricane Katrina [JURIST news archive] policies. State Farm says that the move could disrupt the ongoing settlement process [press release] as it was being worked out with the Mississippi Insurance Department (MID) [official website]. A State Farm executive also questioned why Hood would disrupt a new settlement that was nearly identical to the January agreement, the only difference allegedly being a "set aside of millions of dollars in compensation for trial lawyers." On Friday, State Farm sent a letter to Assistant Attorney General Mary Jo Woods [PDF text] and a separate letter to Hood [PDF text], seeking to show that the "terms of the MID program mirror the reevaluation program" that they hoped to create with the January settlement.

The January settlement, which had been hailed by Hood, was later rejected [JURIST report] by US District Judge L.T. Senter on the grounds that the parties had not provided enough information to show that the proposed settlement created a procedure that was reasonable and fair. Senter also expressed concerns about how the settlement would affect homeowners who were not named in the class. MID Commissioner George Dale negotiated expedited settlement payouts [JURIST report] with State Farm in March under the new agreement. AP has more.

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