The Fifth Circuit asked the Louisiana Supreme Court whether a policy's anti-assignment clause prohibited post-loss assignments of policy rights. See In Re: Katrina Canal Breaches Litigation, 2010 U.S. App. LEXIS 15603 (5th Cir. July 28, 2010).
After Hurricanes Katrina and Rita, Louisiana distributed federal funds to homeowners under its "Road Home" program for repair of uninsured or under-insured property damage. In return for such funds, recipients executed an assignment to the State all claims and future rights to reimbursement from any casualty, property or flood policy on their residence. The program was popular and eventually created a one billion dollar shortfall. To remedy the problem, the State sued various insurers, relying on the assignments to argue for recovery of funds expended under the Road Home program.
The district court denied the insurers' motion to dismiss, holding that the anti-assignment provisions did not bar post-loss assignments under Louisiana law. The Fifth Circuit noted there were conflicting decisions from Louisiana courts. An old case from 1936 invalidated an anti-assignment clause as applied to the post-loss assignment of rights to life insurance proceeds. On the other hand, a Katrina case enforced an anti-assignment clause to invalidate a post-loss assignment of all claims arising out of the ownership of the insured property. The Fifth Circuit noted that this more recent case was consistent with cases from several other jurisdiction and specifically cited the Hawaii Supreme Court's decision in Del Monte Fresh Produce (Haw.) Inc. v. Fireman's Fund Ins. Co., 183 P.3d 734, 747 (Haw. 2007).
Given this inconsistency, the Fifth Circuit asked the Louisiana Supreme Court whether an anti-assignment clause barred an insured's post-loss assignment of claims under the policy when the assignment transferred contractual obligations, not just the right to money due?