Louisiana doctors lost their bad-faith case against AIG after a $16.1 million hurricane damage appraisal; a court upheld the jury’s verdict over the insurer’s earlier $6.7 million repair dispute

A Louisiana couple’s $16.1 million hurricane damage appraisal did not help them overturn a jury verdict in an insurance dispute. Raja and Gayathri Talluri, doctors who own a 25,000-square-foot home in Thibodaux, Louisiana, sued AIG Property Casualty over its refusal to pay their full $6.7 million repair estimate after Hurricane Ida damaged their property in August 2021. Although an appraisal later set the loss at $16,126,268, AIG paid the award in full. The couple’s remaining claim concerned whether the insurer had acted in bad faith by refusing to pay the full estimate submitted by ATA Loss Consulting. On February 10, 2026, the US Court of Appeals for the Fifth Circuit upheld the jury’s verdict. The ruling highlights how insurance disputes can hinge on statutory deadlines and evidence of bad faith, even when later appraisals establish substantially higher damage estimates.Hurricane Ida damage sparks dispute over repair costs The Talluris’ home featured imported décor, including flooring from Nepal and roofing tiles from Colombia. Before AIG inspected the property, the couple hired Precision Construction & Roofing to tarp the roof for $86,404. AIG’s independent adjuster, White, inspected the home on September 24, 2021. His report two days later estimated restoration costs at more than $7 million but recommended that AIG withhold payment until an engineer and building consultant assisted with the claim. Three days after the inspection, the Talluris sent a demand letter seeking policy limits, roof-tarping costs and funds to replace the roof. On October 1, AIG denied the full claim but paid $106,404 for tarping and immediate needs.After further inspections, AIG’s building consultant, J.S. Held, initially estimated repairs at $359,479.21. AIG paid $309,479.21 after deducting the policy’s $50,000 deductible. The insurer later increased its estimate and made additional payments. On November 11, 2021, the Talluris submitted an ATA Loss Consulting estimate of $6,713,922.27, alongside an engineering report from Structural Alliance. AIG disputed parts of the estimate, particularly the proposed roof replacement. The roofing dispute involved replacing Santa Fe tiles with Ludowici tiles at an additional $8,000 per roofing square, equivalent to 100 square feet. At trial, AIG adjuster Eklund compared the proposal to “going from a Camry to a Rolls Royce.” AIG also disputed claimed water intrusion in the ballroom.Appraisal sets the loss at $16.1 million In February 2022, AIG invoked the policy’s appraisal process to resolve the remaining disputed damage. Each side appointed an appraiser, and the two selected an umpire after failing to agree on the loss amount. The Talluris’ appraiser, Irwin, inspected the property and prepared a valuation supported by 74 documents. On October 13, 2022, the umpire issued an award of $16,126,268.AIG paid approximately $10 million on November 9, excluding amounts already paid and additional living expenses and guaranteed rebuilding costs payable as incurred. It subsequently paid those expenses when the Talluris incurred them, satisfying the appraisal award in full. The couple sued in January 2023, alleging breach of contract and bad faith under Louisiana law. The district court granted partial summary judgment to AIG, finding that the insurer had paid all other amounts, including the appraisal award, within the required deadlines. The only issue left for trial was whether AIG acted in bad faith by refusing to pay the full ATA estimate.Why the Fifth Circuit upheld the jury’s verdict Before trial, the district court excluded the appraisal award and Irwin’s testimony about his valuation of the damage. The jury could still hear his observations of the property and his criticism of AIG’s estimates, as well as evidence about the appraisal process. The jury found that the Talluris had not proved AIG received satisfactory proof of loss and then failed to pay within Louisiana’s statutory 30-day period. Under the verdict form’s instructions, it did not need to decide whether AIG’s conduct was arbitrary or without probable cause.On appeal, the Talluris argued that excluding the appraisal amount and Irwin’s valuation testimony had prejudiced their case. AIG challenged whether the couple had preserved their objection to excluding the award amount. The Fifth Circuit rejected that argument, assumed without deciding that the exclusion was erroneous, and found any error harmless. The court reasoned that AIG did not know the final appraisal amount when it refused to pay the full ATA estimate months earlier. It also found Irwin’s excluded valuation cumulative of evidence the jury had already heard. Because the jury had found the first two elements of the bad-faith claim unproved, the appraisal award was unlikely to change the outcome. The three-judge panel of Circuit Judges Barksdale, Willett and Duncan affirmed the judgment in Talluri v. AIG Property Casualty, docket No. 24-30744, on appeal from the US District Court for the Eastern District of Louisiana, case No. 2:23-CV-377. The opinion was unpublished and is generally non-precedential under Fifth Circuit Rule 47.5.You use AI every day. Now get your AI Quotient. Take the AIQ test.