NEW ORLEANS (AP) — A husband and wife who sued Allstate Indemnity Co. over Hurricane Katrina damages abruptly dropped their lawsuit that had claimed the insurance company underpaid them and acted in bad faith in handling their claims.It was the first federal lawsuit tried against an insurance company by a Louisiana homeowner since Hurricane Katrina. About 1,000 other lawsuits are pending against Allstate alone in US District Court.

The plaintiffs, Lawrence and Elizabeth Tomlinson, did not explain in court yesterday why they decided to drop their case, but Allstate, in court filings, had charged that they misrepresented their claim.

Allstate had rested its case on Wednesday night, and closing arguments were scheduled for yesterday when Judy Barrasso, Allstate’s lawyer, and Christy Howley, the couple’s lawyer, told Judge Martin Feldman that the case was dropped.

Feldman dismissed the seven-member jury and apologised to them for making them wait several hours yesterday morning. “The good news is that claims and defences have been mutually withdrawn,” Feldman told the jury. “This litigation no longer exists.”

The Tomlinsons accused Allstate of bad faith and said the company underpaid them for wind damage that tore holes in their roof and let rain pour into their home in the New Orleans suburb of Marrero.

Allstate, based in Northbrook, Illinois, disputed the extent of the wind damage to the Tomlinsons’ home and accused the couple of misrepresenting parts of their claim.

“At the conclusion of the evidence, the plaintiffs decided voluntarily to withdraw their claims and relinquish any right to refile them,” Barrasso said. “The plaintiffs have not received any compensation of any kind from Allstate for withdrawing their claim.”

Howley said her clients were ready to “go back to their lives and rebuild with the moneys they had already been paid” after more than a year out of their home and a long legal challenge.

“A jury verdict, until the jury returns with it, is always an unknown and due to some of the evidence and testimony, Mr. and Mrs. Tomlinson decided they would rather end the litigation than pursue their claims,” Howley said.

She declined to say what evidence and testimony led the couple to that conclusion.

Lawrence Tomlinson declined to discuss his reason for not pursuing the case, saying only that the trial “has been a long trip.” Elizabeth Tomlinson left the courtroom in tears.

Allstate said it paid the Tomlinsons more than $30,000 for living expenses after they moved to office property that they already owned. Barrasso declined to say whether Allstate has considered filing legal action against the couple.