Allstate might have struggled in the New Orleans public court ofopinion, but a lawsuit that was dropped this week by the plaintiffsshows that policyholders aren't always the victims in a claimdispute.

Allstate began facing the first of about 1,000 cases against itin New Orleans earlier this week. The first federal trial it facedinvolved plaintiffs Lawrence and Elizabeth Tomlinson. As in theTomlinson case, a majority of the other pending cases involvedisputes about claim payments, determinations, and charges of badfaith made after Hurricane Katrina struck in Aug. 2005.

According to reports, Allstate paid the Tomlinsons $150,000 fordamage to their home, contents, and additional living expensesprior to litigation. The main dispute came when the company beganquestioning some of the claim costs that were being reported.

"Based on reviewing the pre-trial motion practice, it looks likeAllstate shifted the focus to alleged material misrepresentationsmade by Ms. Tomlinson (an attorney) as to the submission of claimsfor living expenses," said Steven Kluz, an attorney with Mohrman& Kaardal in Minneapolis, Minn. "Allstate struck gold withadmissions plaintiffs made that a residence Ms. Tomlinson claimedto have rented was actually owned by the other plaintiff, Mr.Tomlinson, and no lease was ever executed."

The case, however, is not expected to materially impact theother remaining cases still to be heard, but it could cast a wideshadow of skepticism.

"My guess is that the purported fraud in this case is ananomaly," said Kluz. "Unfortunately for plaintiffs, this was thefirst case partially tried, and it could create doubt about otherplaintiffs' claims."

Based on Allstate's response, there is no doubt that the resultis being viewed by the company as a great start on what looks likea long journey.

"At the conclusion of the evidence, the plaintiffs have decidedvoluntarily to withdraw their claims and relinquish any right tore-file them," said Mike Siemienas, spokesperson for Allstate."They have not received compensation of any kind from Allstate forwithdrawing their claim. We believe that result speaks foritself."

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