In re Katrina Canal Breaches Litigation

What This Case Is About

After Hurricane Katrina devastated New Orleans in 2005, homeowners filed massive insurance claims. Insurers argued the damage was caused by flooding (excluded from most policies) rather than wind (covered). This Fifth Circuit case, while primarily about insurance coverage, became one of the earliest and most-cited applications of the Supreme Court’s Twombly plausibility pleading standard in the Fifth Circuit, making it a key procedural citation in § 1983 litigation.

The Facts

Thousands of property owners in the New Orleans area whose homes were damaged or destroyed by Hurricane Katrina sued their insurance companies. The central dispute was whether the destruction was caused by wind — which was generally covered — or by flooding from the breach of levees and canal walls — which was generally excluded under the policies’ water-damage exclusions. The cases were consolidated in a multi-district litigation proceeding before the Eastern District of Louisiana.

The insurers moved to dismiss, arguing that the flood exclusion clauses in their policies barred coverage. The homeowners countered that the “efficient proximate cause” doctrine should apply, meaning that if wind (a covered peril) set in motion the chain of events leading to the flooding, coverage should exist. They also argued the flood exclusions were ambiguous.

What the Court Decided

The Fifth Circuit addressed the motion to dismiss standard, articulating the test that would become standard in the circuit: “The ultimate question in a Rule 12(b)(6) motion is whether the complaint states a valid claim when all well-pleaded facts are assumed true and are viewed in the light most favorable to the plaintiff.” The court applied the then-new plausibility standard from Bell Atlantic Corp. v. Twombly — decided just two months earlier — holding that a complaint must state enough facts to “raise a right to relief above the speculative level.”

On the merits, the court analyzed the insurance policies’ anti-concurrent-cause clauses and flood exclusions, ultimately ruling that the exclusions applied to bar coverage for flood damage regardless of whether wind was a concurrent cause. The court held that the policies’ plain language excluded damage from flooding, even when it occurred alongside wind damage.

Why This Case Matters for Your § 1983 Case

Although In re Katrina is an insurance case, it matters for § 1983 practitioners because it is one of the most frequently cited Fifth Circuit cases for the motion to dismiss standard. When courts in the Fifth Circuit evaluate a motion to dismiss your civil rights complaint, they routinely cite this case for the proposition that:

• All well-pleaded facts are assumed true
• Facts are viewed in the light most favorable to the plaintiff
• The complaint must state a claim that is “plausible on its face”
• The court’s review is limited to the complaint, documents attached to it, and documents central to the claim referenced by the complaint

This formulation appears in hundreds of Fifth Circuit opinions addressing § 1983 claims, including cases involving qualified immunity, Monell liability, and failure to train.

Key Takeaway

In re Katrina Canal Breaches Litigation is the Fifth Circuit’s foundational articulation of the post-Twombly motion to dismiss standard — requiring that a complaint’s well-pleaded facts, taken as true, state a plausible claim for relief — and it is routinely cited in § 1983 cases across the circuit.