A federal judge has ruled that a Gulf Coast couple can sue their insurance agent for negligence after he allegedly allowed their flood insurance policy to lapse only days before Hurricane Katrina wrecked their home.

Michael and Lucille Catchot sued Nationwide Mutual Insurance Co. and their agent, Michael Felsher, for refusing to cover more than $79,000 in damage to their Ocean Springs home, most of which the company blamed on Katrina’s storm surge.

The couple claims they paid the premium on their flood policy two or three days before it was set to lapse, on Aug. 14, 2005, by dropping off a check for $319 in the mail slot at Felsher’s office.

Nationwide, however, claims the Catchots missed the deadline for renewing their flood policy by one day. Felsher wrote the couple a new flood policy that didn’t take effect until Sept. 14.

In the interim, Katrina slammed into the Gulf Coast on Aug. 29 and severely damaged the Catchots’ home. The couple didn’t find out that their flood policy had lapsed until after the storm, when Nationwide rejected their claim.

In court papers, Nationwide attorney F. Hall Bailey argued that Felsher isn’t liable for the company’s “coverage determination” and shouldn’t be named as a defendant in the couple’s lawsuit.

“It was Nationwide, not Felsher, that determined plaintiffs’ flood policy had lapsed under federal law,” Bailey wrote.

On Monday, however, U.S. District Court Judge L.T. Senter Jr. ruled that the Catchots’ negligence claim against Felsher can proceed.

“Deciding the merits of a claim based on allegations of negligence requires a fact-intensive inquiry,” Senter wrote.

Also on Monday, Senter refused to transfer the case back to state court, where the Catchots originally filed it earlier this year. Interpreting the terms of a flood policy is the federal court’s responsibility, the judge ruled.

Dustin Thomas, a lawyer for the Catchots, said he wanted the case to be heard in state court because the federal court in Gulfport has a backlog of hundreds of Katrina insurance lawsuits challenging insurers for refusing to cover damage from Katrina’s rising water.

“This is a different kind of case. It’s basically a case against the insurance agent,” Thomas said. “I thought it might go a little quicker in state court.”