Katrina Canal Breaches Litigation, In re

United States Court of Appeals for the Fifth Circuit · 2011 · Contracts

645 F.3d 703 (2011)

Updated July 26, 2026

ContractsAssignmentInsurance contractsAnti-assignment clausesanti-assignment clausepost-loss assignmentinsurance policypolicy rights

Facts

The dispute involved approximately 151,000 homeowners' insurance claims based on policyholders' purported assignments of policy rights to the State. The insurers relied on anti-assignment clauses in homeowners' policies that purported to bar assignment of the policy or an interest in it without insurer consent. The Fifth Circuit had earlier concluded that no controlling Louisiana Supreme Court precedent resolved whether such clauses barred post-loss assignments of policy rights when the assignment transferred contractual obligations and not merely a right to payment. The court therefore certified that question to the Louisiana Supreme Court.

Issue

Under Louisiana law, does a homeowner's insurance policy anti-assignment clause that purports to bar assignment of the policy or an interest in it without the insurer's consent bar an insured's post-loss assignment of claims under the policy when the assignment transfers contractual obligations, not just the right to money due? After the Louisiana Supreme Court's answer, could the Fifth Circuit resolve the parties' dispute on the existing record?

Rule

There is no Louisiana public policy that prevents an anti-assignment clause from applying to post-loss assignments. But such a clause bars a post-loss assignment only if its language clearly and unambiguously states that it applies to post-loss assignments; therefore, enforceability must be determined on a policy-by-policy basis, and any contradiction or ambiguity in the contract is strictly construed against the insurer.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In Baton Rouge, Nina Porter held a homeowner's policy from Bayou Crest Insurance. After a kitchen fire, she signed an agreement assigning to Pelican Recovery Fund all of her rights and duties relating to the fire claim. The policy stated: "Assignment of this policy or any interest in this policy requires our written consent."

If Bayou Crest argues the assignment is invalid solely because it occurred without consent, which is the best analysis?

Explanation. The governing rule is that an anti-assignment clause may apply to a post-loss assignment, but only if the policy language clearly and unambiguously says so. A clause barring assignment of the policy or an interest in it, without more, does not automatically invalidate a post-loss assignment. The majority also rejected any blanket public-policy bar or blanket enforcement rule. (Derived from Katrina Canal Breaches Litigation, In re (2011).)