Paul Leonard had taken out homeowner's insurance long before Katrina pulverized his house, but it was of little consolation when his insurance company blamed the damage on water, not wind.
Leonard sued. His lawsuit, set to go to trial Monday, was expected to be the first legal test for insurers who claim their policies don't cover floods. They contend that Katrina's storm surge was water pushed by the force of the wind.
Leonard, a police lieutenant, and his wife, Julie, claim Nationwide Mutual Insurance Co. denied their claim without thoroughly investigating the damage to their house, which is several hundred yards from the Mississippi Sound.
The Leonards, who purchased their policy more than a decade ago, also claim that their insurance agent had assured them that they didn't need to buy flood insurance for their home because their policy would cover all hurricane damage.
"The goal here is to make my home whole again," said Leonard, whose house sustained an estimated $100,000 in damage. "If it helps someone else, that's great. But I'm fighting for my family's future."
The Leonards are represented by attorney Richard "Dickie" Scruggs, who helped secure a landmark, multibillion dollar settlement with tobacco companies in the late 1990s.
"Everyone is going to be watching the result of this," Scruggs said of the trial, which is expected to last a week or two. "It won't be binding for other cases, but the precedential effects of this will be enormous because it's the first one."
While Nationwide homeowners' policies cover wind damage, the Columbus, Ohio-based insurer argues that damage from flood waters, including wind-driven storm surge, is excluded from coverage.
"Essentially, the Leonards are asking the court to change their contract after the fact," said Nationwide spokesman Joe Case. "They're asking for flood damage to be covered, and they didn't purchase flood insurance, regrettably."
Scruggs represents around 3,000 policyholders on Mississippi's Gulf Coast, including his brother-in-law, U.S. Sen. Trent Lott, R-Miss., whose Pascagoula home was demolished by Katrina on Aug. 29.
Scruggs also has filed against other insurers, including Allstate Insurance Co., Metropolitan Life Insurance Co., State Farm Insurance Cos. and United Services Automobile Association.
Mississippi Attorney General Jim Hood also is suing insurance companies, arguing they should pay for all of Katrina's property damage, whether it was caused by wind or wind-driven water.
Dr. Robert Hartwig, chief economist for the Insurance Information Institute in New York, warned that a victory by the Leonards would "create chaos in insurance markets all over the country" because it would send a message that contracts can be "retroactively rewritten" after a disaster.
"That creates an impossible business environment," he said.
Scruggs and other plaintiffs' hope that winning this and a handful of other cases would pressure insurers into settling thousands of other Katrina-related lawsuits. "The outcome will at least set the tone for future cases," Scruggs said.
Hartwig, however, downplayed that scenario. "Insurers will be looking at every single case on its merits," he said.