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Paul v. Landsafe Flood Determination, Inc.

ELR Citation: 38 ELR 20293
Nos. No. 07-60652, (5th Cir., 12/05/2008)

The Fifth Circuit reversed a lower court decision dismissing homeowners' negligence suit against a company for erroneously determining that their home was not located in a flood zone. Based on that determination, the homeowners were not required to obtain flood insurance under the National Flood Insurance Program. Unfortunately, Hurricane Katrina caused substantial damage to their residence for which no flood insurance coverage existed. They then learned that the home was located in a flood-hazard area. The lower court ruled that Mississippi law imposed no duty on the company to provide the homeowners with a correct determination. But the proper inquiry is whether it was reasonably foreseeable that the homeowners would rely on the company's report. Under Mississippi law, the erroneous flood zone determination was the kind of professional opinion on which justifiable and detrimental reliance by a reasonably foreseeable person might be shown to have occurred. Accordingly, the court reversed and remanded the case for further proceedings.