In re Katrina Canal Breaches Litigation, 63 So. 3d 955

Louisiana accepted a certified question from the Fifth Circuit in In Re: Katrina Canal Breaches Litigation regarding whether an anti-assignment clause bars post-loss assignments of insured claims.
Road Home program provided grant aid to Katrina/Rita victims; recipients signed Limited Subrogation/Assignment Agreements assigning all insurance and related rights to the State to avoid duplication of benefits.
The State sued over broad insurance policy rights to recover Road Home funds, accusing insurers of duplicative payments or insufficient payments on claims.
Defendants removed to federal court; the district court denied dismissal, ruling anti-assignment provisions did not bar post-loss assignments under Louisiana law, and certified the ruling for interlocutory appeal.
Louisiana Supreme Court certified the question to address whether public policy precludes enforcement of post-loss assignments and whether anti-assignment clauses can apply to such assignments on a policy-by-policy basis.
The Court held there is no Louisiana public policy to preclude anti-assignment clauses from applying to post-loss assignments, but the clause must clearly express applicability to post-loss assignments and must be evaluated policy-by-policy.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether public policy bars post-loss assignments.	State argues no public policy bars post-loss assignments against anti-assignment clauses.	Insurers contend public policy favors free assignment of claims and that Article 2653 supports prohibition absent clear post-loss language.	No public policy bars post-loss assignments.
Whether post-loss assignments fall within anti-assignment clauses.	Post-loss rights to payments fall outside 'assignment of the policy' and thus fall within anti-assignment clauses.	Clauses are broad and prohibit any assignment of rights arising from the contract, including post-loss.	Language must clearly express post-loss applicability and be evaluated per policy.
What standard governs enforceability of anti-assignment clauses in this context.	Contracts may prohibit assignment without public policy concerns.	Legislative policy and public regulation should govern, and pre-loss vs post-loss distinction matters.	Enforceability depends on clear, unambiguous policy language specifying post-loss applicability.

Geddes & Moss Undertaking & Embalming Co. v. Metropolitan Life Ins. Co., 167 So. 209 (La. App. Orl. 1936) (post-loss assignability allowed; distinction pre- vs post-loss noted)
R.L. Lucien Tile Co. v. American Sec. Ins. Co., 8 So.3d 753 (La. App. 4th Cir. 2009) (post-loss assignment context; limited guidance; discusses anti-assignment clause phrasing)
Louisiana Smoked Prods., Inc. v. Savoie’s Sausage and Food Prods., Inc., 696 So.2d 1373 (La. 1997) (policy terms interpreted under freedom of contract; public policy considerations discussed)
Barrera v. Ciolino, 636 So.2d 218 (La. 1994) (freedom to contract; public policy limitations)
Marcus v. Hanover Ins. Co., Inc., 740 So.2d 603 (La. 1999) (public policy and legislative role in policy considerations)