Court to Sandy plaintiffs: Get moving or get lost

Silence is not an option for superstorm Sandy victims who are suing their flood insurance providers for underpayment.

The U.S. District Court of New Jersey has filed an order warning plaintiffs in 500 Sandy-related cases that if they don’t inform the court of their settlement progress or ask for a trial, their cases would be dismissed.

In the July 31 order, the court says it has identified 350 cases where an attorney for the homeowner has not submitted paperwork required to start brokering a settlement.

But a prominent attorney for Sandy clients says the real problem isn’t slow-moving plaintiffs, it is the Federal Emergency Management Agency and its inability to process the line of policyholders already waiting to begin resolution talks. FEMA denies this charge.

Flood policyholders in New Jersey were, on average, paid less than $50,000 on Sandy claims, a figure well below what New Yorkers received after the same storm and even less than what Gulf Coast residents got after Hurricane Katrina in 2005, according to FEMA data. This sparked a rush of lawsuits in federal court by homeowners who believed they had been cheated out of the coverage they paid for.

But Sandy cases in New Jersey were put on pause in March by a court-ordered stay, which was extended in May and then again last month. The original stay was in response to a public pledge by the Federal Emergency Management Agency, which backs nearly all flood insurance in the U.S., to work more enthusiastically toward settling with Sandy plaintiffs.

‘Silent’ claims

“The court is concerned that plaintiffs ... of ‘silent’ cases are neither litigating their claims nor pursuing the settlement of their claims despite the passage of more than 120 days since the stay was entered,” the new order reads.

More than 350 other Sandy cases have been resolved since activity was first stopped in March, according to the court. Another 150 have submitted all their settlement materials, but no tentative agreement has been reached.

Attorney Chip Merlin, whose firm represents some 400 Sandy cases in the region, says clients of his have turned in their paperwork but have been waiting months for feedback from FEMA.

The court’s order might do just what the judges are aiming for — prompt attorneys to get their clients in the settlement line — but it does not address their underlying concern: resolving these cases in a timely manner, he said.

“I disagree with the order and felt the onus should have been on FEMA rather than threatening policyholders with dismissal,” Merlin said in an email.

Glut of cases

In a statement to the Asbury Park Press, FEMA says that it has “stayed on top of the cases in the queue” and only very recently — perhaps because the New Jersey order was already having the intended effect — has there been a glut of cases, which are being worked through.

For some, negotiations aren’t a panacea. They haven’t yet borne fruit for Belmar resident Krista Sperber.

Sperber sued her flood insurer, Selective Insurance, after the company paid her family $600 to buy stucco and paint to cover the cracks in their home, which was uninhabitable after flooding by Sandy. The figure was so low because an engineering firm, which was at the center of the FEMA-shaking scandal, hired by Selective had determined that the fatal damage to the foundation existed before Sandy.

Sperber told the Press that she received an offer last week — for about $220,000 — and she intends to turn it down. Why? Because it does not cover her attorney fees and it contains language that she believes protects individuals involved in her situation from being prosecuted criminally.

“So no dice,” she said.

Russ Zimmer: 732-557-5748, razimmer@app.com