University says it's not been fully paid

Thursday, August 03, 2006
By John Pope

Loyola University sued its insurer in federal court Wednesday, saying Continental Casualty Co. has paid the Uptown university less than one-seventh of the $28.5 million it suffered in Hurricane Katrina-related losses.

In a class-action lawsuit assigned to U.S. District Judge Kurt Engelhardt, Loyola says the storm inflicted about $6 million in property damage and $22.5 million in business-interruption losses, the latter because Loyola was forced to close for the fall semester.

Despite paying $200,000 so the Ernst & Young accounting firm could document claims it filed in May, Loyola has received only $4 million, said Michael St. Martin, Loyola's attorney.

"Some insurance companies . . . are in the business of receiving premiums, but they're not in the business of paying claims," he said.

A spokeswoman for Continental Casualty's parent company, CNA, declined to comment on the case.

The policy's limits are about $4 million for property losses and about $15 million for business interruption, St. Martin said.

Contributing to its losses was a drop in spring-semester enrollment, Loyola said. According to university statistics, 4,436 students registered for that term, a drop of about 19 percent from the pre-Katrina fall-semester figure of 5,500.

The lawsuit was filed as a class action because there are "thousands" of local businesses that had policies like Loyola's with the same company and have run into similar problems, St. Martin said.

Engelhardt will have to decide whether these businesses represent a class. If he does, they have the option of joining Loyola.

If not, they will have to file their own litigation before the Aug. 29 deadline, which is the first anniversary of Katrina's landfall.

Loyola's litigation is the second Katrina-related lawsuit that a local university has recently filed against its insurer.

Last month Tulane University, Loyola's neighbor on upper St. Charles Avenue, sued Allianz Global Risks U.S. Insurance Company in federal court for $250 million in storm damage.

Allianz, Europe's largest insurer, had said it didn't have to pay because its policy did not include flood-related losses.

That case also has been assigned to Engelhardt.