Duval allowed a lawsuit against The Allstate Corp., The St. Paul Travelers Companies Inc. and other insurers to proceed, but said the issue of "flood exclusion" could be appealed by the companies.

A hearing on the appeal was held Wednesday at the 5th U.S. Circuit Court of Appeals. A three-judge panel heard arguments from lawyers for policyholders and several insurance companies. Rulings from the appeals court often take months but Judge Carolyn King, one of the three judges, said a decision would come as quickly as possible.

"This case is not just going to take in the queue. It's going to the head of the list," she said.

Insurers say their homeowner policies do not cover damage from any type of flooding, including water from the levees that broke in the aftermath of the Aug. 29, 2005, storm.

"The generally prevailing meaning of the word flood includes what happened during and after Hurricane Katrina in this city," Richard Doren, lawyer for Lexington Insurance Co. argued Wednesday.

The insurance industry stands to lose an estimated $1 billion ($740 million) in Louisiana if policyholders successfully challenge companies' refusal to cover damage from levee breaches, said Robert Hartwig, chief economist at the industry-funded Insurance Information Institute in New York.

In court papers, a lawyer for policyholders with consolidated cases against insurers said Duval properly concluded that the definition of "flood" in policies is limited to "naturally occurring events."

But plaintiffs' attorney John Ellison accuses insurers of purposely not defining the term 'flood' and deliberately drafting vague policy language "to frustrate the reasonable expectations of Louisiana homeowner policyholders from whom they collected premiums for years."

"It's difficult to think of a more important or significant issue that needs to be resolved with respect to Louisiana law," Ellison said Wednesday.

Lexington Insurance Co. attorneys argue that punishing insurers for failing to define common words like "flood" could force them to engage in "defensive over-specification, which would inevitably lead to longer policies that are less comprehensible to most policyholders."

Duval agreed last year to dismiss State Farm Insurance Cos. from the litigation. He ruled that State Farm's policies included language that clearly excluded all flood damage, regardless of the cause.

Senior Circuit Judge Donald Walter presented the hypothetical situation about Hitler to American Civil Liberties Union attorney JoNel Newman, asking her if a school board would be allowed to remove that book from library shelves.

Newman answered by saying that the book about Cuba was a geography book about daily life on the island, not about Castro.

"The political reality in Cuba is not what the book is about, " Newman said. "The School Board can't remove it because it wishes to inject a political message into it."

Board members voted last year to remove the book after a parent who spent time as a political prisoner in Cuba complained. Cuban-Americans, most of them anti-Castro, have significant political sway as the largest ethnic group in Miami.

In seeking to remove the book, the board overruled the decision of two academic advisory committees, as well as the county school superintendent.

But another parent and the American Civil Liberties Union of Florida challenged the removal. A federal judge ruled last summer that the board's opposition to the book was political and that it should add books of different perspectives to its collections instead of removing the offending titles. The ACLU contends that diverse opinions should be represented in school libraries.

Circuit Judge Ed Carnes presented his own hypothetical, asking Newman if a book about North Korea could be pulled from shelves because it failed to mention problems in that Communist government.

Newman countered by saying such political discussions shouldn't be required for books for elementary students, arguing whether a book about the Great Wall of China must mention Chinese Communist leader Mao Tse-tung.

On another issue, the third member of the appeals panel, Circuit Judge Charles Wilson, asked if a book had to be part of the curriculum or required reading in order to be removed from school libraries, where it was available for checkout on a voluntary basis.

"If a book is educationally unsuitable, it can be removed, " said Richard Ovelmen, the School Board's attorney.

Also at issue is whether the ACLU has standing to file its legal challenge.

The court hasn't indicated when it would rule.

"Today's decision is an important victory not only for Atlantic Yards but for Brooklyn as well. This decision means we are one step closer to creating over 2,200 units of affordable housing, thousands of construction and office jobs and bringing the Nets to Brooklyn," said Bruce Ratner, president and CEO of Forest City Ratner Companies.

Their suit’s chances, say project opponents, are best if the case remains in federal court. That is why they say they will appeal the ruling issued today by Judge Nicholas Garaufis to the U.S. Court of Appeals for the 2nd Circuit.

“Part of the reason we have a better chance to win [there] is because the federal courts are much more familiar with constitutional issues and are less susceptible to political pressures,” said the plaintiffs’ attorney, Matthew Brinckerhoff days before the ruling.

A federal magistrate judge had recommended in February that the case belonged in state court. Judge Garaufis disagreed, but dismissed the case on its merits.

Another suit by opponents, challenging the process by which the state reviewed and approved the development, remains pending. But the eminent domain lawsuit was considered the greater threat to the project.

The crux of Mr. Brinckerhoff’s argument was that the condemnations do not have a primarily public purpose, as required by New York’s eminent domain law.

The panel created by Governor Tim Kaine to study the Virginia Tech shootings has hired an outside law firm for advice.

The international law firm Skadden, Arps, Slate, Meagher and Flom will work with the panel on a pro bono basis. The states' attorney general's office has been advising the panel, state police and Virginia Tech.

According to the panel's chairman Gerald Massengill, because of the independent nature of the panel, outside counsel was necessary to provide legal advice.

Governor Kaine created the panel in order to study the circumstances and responses surrounding the April 16 tragedy.

From the beginning, Scott, his family and attorneys have all insisted he is innocent. They say he had nothing to do with the murders. The court of appeals threw out his conviction, saying his right to a fair trial was violated.

In 2002, prosecutors used a videotaped statement from Scott's former friend, Robert Springsteen, to help convict him of murder. At the time Scott did not have an opportunity to challenge it in court.It was a decision the Court of Criminal Appeals now says violated Scott's constitutional rights to a fair trial.

"Because the statement was introduced without Springsteen being there, Scott never had a chance to cross examine the statement,” appellate defense attorney Ariel Payan said. “It was just introduced and there was nothing that could be done about it."

Scott's wife Jeannine has spent five years trying to set him free. "I'm thrilled that they really did look at this and decide there's something wrong with this case," Jeannine said. She says it's time police investigators focus their attention on someone else. "I would like them to find the actual perpetrators and stop wasting the county's and the city's money in this particular endeavor," she said.

State prosecutors admit this latest decision is a setback. They say they don't agree with the Appeals Court ruling.

"If in fact it stays as it is now, Michael Scott would be tried again, " assistant district attorney Bryan Case said.

But until the decision is declared final, Case says they will continue weighing all of their legal options. They could appeal the reversal to the U.S. Supreme Court, or take the case back to trial all over again.

Scott also insists his confession to police was coerced. He say he only agreed to it after several days of almost non-stop interrogation.