Attorneys carried files and exhibits into a federal courthouse Monday for what they expect to be a groundbreaking trial on whether insurance policyholders who lost homes inHurricane Katrina are entitled to recover losses that insurance companies claim were caused by flooding.

"A journey of a thousand miles begins with one step, and this is the first step," plaintiffs' attorney Richard "Dickie" Scruggs said as he arrived in court. "It's one case. If you win it, it's a huge win. If you lose it, you spin it the best way you can."

The lawsuit was filed on behalf of police Lt. Paul Leonard, who had taken out homeowner's insurance with Nationwide Mutual Insurance Co. long before Katrina pulverized his Pascagoula house on Aug. 29.

After the storm, Nationwide blamed the damage on water, not wind. The insurer said Leonard's policy didn't cover floods.

Joe Case, a spokesman for Nationwide, downplayed the impact one case could have on others pending against Nationwide and other insurance companies.

"Right now we are focused on what this trial is about," Case said Monday after entering the courthouse that's still surrounded by Katrina destruction. "We look at each claim on a case-by-case basis."

Leonard and his wife, Julie, say Nationwide denied their claim without thoroughly investigating the damage to their house, which is several hundred yards from the Mississippi Sound near the eastern end of the state's shoreline.

The Leonards, who purchased their policy more than a decade ago, also say their insurance agent had assured them they didn't need to buy flood insurance for their home because their policy would cover all hurricane damage.

"The goal here is to make my home whole again," said Leonard, whose house sustained an estimated $100,000 in damage. "If it helps someone else, that's great. But I'm fighting for my family's future."

Scruggs is no stranger to high-profile court fights. He helped secure the landmark, multibillion dollar settlement with tobacco companies in the late 1990s.

"Everyone is going to be watching the result of this," Scruggs said of the trial, which is expected to last a week or two. "It won't be binding for other cases, but the precedential effects of this will be enormous because it's the first one."

While Nationwide homeowners' policies cover wind damage, the Columbus, Ohio-based insurer argues that damage from flood water, including wind-driven storm surge, is excluded from coverage.

"Essentially, the Leonards are asking the court to change their contract after the fact," Case had said earlier. "They're asking for flood damage to be covered, and they didn't purchase flood insurance, regrettably."

Scruggs represents around 3,000 policyholders on Mississippi's Gulf Coast, including his brother-in-law, U.S. Sen. Trent Lott, R-Miss., whose Pascagoula home was demolished by Katrina on Aug. 29.

Scruggs also has filed against other insurers, including Allstate Insurance Co., Metropolitan Life Insurance Co., State Farm Insurance Cos. and United Services Automobile Association.

Mississippi Attorney General Jim Hood also is suing insurance companies, arguing they should pay for all of Katrina's property damage, whether it was caused by wind or wind-driven water.

Dr. Robert Hartwig, chief economist for the Insurance Information Institute in New York, warned that a victory by the Leonards would "create chaos in insurance markets all over the country" because it would send a message that contracts can be "retroactively rewritten" after a disaster.

"That creates an impossible business environment," he said.

Scruggs and other plaintiffs' hope that winning this and a handful of other cases would pressure insurers into settling thousands of other Katrina-related lawsuits. "The outcome will at least set the tone for future cases," Scruggs said.

Hartwig, however, downplayed that scenario. "Insurers will be looking at every single case on its merits," he said.