Slater et al v. Hartford Insurance Company of the Midwest
Filing
41
ORDER granting, in part, and denying, in part, 36 Defendant Hartford Insurance Company of the Midwest's Motion for Summary Judgment; denying 28 Plaintiffs' Motion for Partial Summary Judgment. Signed by Judge Marcia Morales Howard on 6/13/2014. (JW)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
JACKSONVILLE DIVISION
TIMOTHY SLATER and
DEBORAH SLATER,
Plaintiffs,
vs.
Case No. 3:13-cv-345-J-34JBT
HARTFORD INSURANCE COMPANY
OF THE MIDWEST,
Defendant.
_____________________________
ORDER
This case is a breach of contract action brought by property owners Timothy and
Deborah Slater (“Slaters” or “Plaintiffs”) against insurer Hartford Insurance Company of the
Midwest (“Hartford”) for failure to pay under the terms of a flood insurance policy. The case
is before the Court on Plaintiffs’ Motion for Partial Summary Judgment and Memorandum of
Law (Doc. 28; Plaintiffs’ Motion), and Defendant, Hartford Insurance Company of the
Midwest’s Motion for Summary Judgment and Incorporated Memorandum.
(Doc. 36;
Defendant’s Motion)(collectively “Motions”). The parties have filed responses in opposition
to the respective motions, (Doc. 31; Defendant’s Response and Doc. 38; Plaintiffs’
Response), and, with leave of Court, Plaintiffs have filed a reply in support of their Motion.
(Doc. 35; Plaintiffs’ Reply). The Motions are ripe for consideration.
I.
Background
A.
The National Flood Insurance Program
This action arises out of a flood insurance policy issued pursuant to the National Flood
Insurance Program. (“NFIP”). See 42 U.S.C. § 4001 et seq. The NFIP is a federally
supervised and guaranteed insurance program administered by the Federal Emergency
Management Agency (“FEMA”), pursuant to the National Flood Insurance Act of 1968, as
amended, id. (“NFIA”), and corresponding regulations.1 See 44 C.F.R. §§ 59.1-77.2; see also
Flamingo S. Beach I Condo. Ass’n, Inc. v. Selective Ins. Co. of Southeast, 492 F. App’x 16,
17-18 (11th Cir. 2012); Carneiro Da Cunha v. Standard Fire Ins. Co. / Aetna Flood Ins.
Program, 129 F.3d 581, 583 (11th Cir. 1997). Pursuant to 42 U.S.C. § 4081(a) of the NFIA,
FEMA created the Write-Your-Own Program (“WYO Program”), which allows private insurers
to issue and administer flood insurance policies under the NFIP to assist FEMA in its
statutory duty to administer the NFIP. See Newton v. Capital Assurance Co., 245 F.3d 1306,
1308 (11th Cir. 2001)(citing 42 U.S.C. § 4081(a)). The WYO Program allows private
insurance companies (“WYO insurers”) to issue Standard Flood Insurance Policies (“SFIP”)
in their own names, while serving as fiscal agents of the United States. See 42 U.S.C. §
4071(a)(1); 44 C.F.R. § 62.23(f-g)(the “Arrangement”); see also Flamingo S. Beach, 492 F.
App’x at 18; Shuford v. Fid. Nat’l Prop. & Cas. Ins. Co., 508 F.3d 1337, 1339 (11th Cir.
1
The NFIA authorizes FEMA “to prescribe regulations establishing the general method or
methods by which proved and approved claims for losses may be adjusted and paid for any damage to
or loss of property which is covered by flood insurance made available under the provisions of this
chapter.” 42 U.S.C. § 4019(a).
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2007).2 Under the WYO Program, “the federal government underwrites the policies and
private WYO carriers perform significant administrative functions including ‘arrang[ing] for the
adjustment, settlement, payment and defense of all claims arising from the policies.’” Campo
v. Allstate Ins. Co., 562 F.3d 751, 754 (5th Cir. 2009)(citation omitted). However, while these
WYO policies “are written by private firms, the federal government acts as the guarantor and
reinsurer,” and SFIP claims are ultimately paid by the United States Treasurey. Flamingo S.
Beach, 492 F. App’x at 18; see also Shuford, 508 F.3d at 1342-33; Newton, 245 F.3d at
1311; 44 C.F.R. Pt. 62, App. A, art. III(D)(1).
Hartford is a WYO Program carrier participating in the NFIP. (Doc. 36-1; Holmes Aff.
¶¶ 4, 23). As such, the flood insurance policies issued by Hartford are SFIPs, issued
pursuant to the NFIA. Holmes Aff. ¶ 4. Thus, Hartford “appears in this action in a fiduciary
capacity as the fiscal agent of the United States.” Flamingo S. Beach, 492 F. App’x at 18
(citing 44 C.F.R. § 62.23(f-g)); see Shuford, 508 F.3d at 1339, 1343 (citing 42 U.S.C. §
4071(a)(1)).
B.
The Plaintiffs’ Flood Insurance Policy3
On September 30, 2011, the Plaintiffs purchased flood insurance in the form of a SFIP
from Hartford for their home in Neptune Beach, Florida. (Doc. 38-1); see also Holmes Aff.
¶ 3.4 The premium for the coverage was $365.00, and Plaintiffs purchased policy limits of
2
The WYO carriers are not, however, general agents of the federal government. See 44 C.F.R.
§ 62.23(g).
3
The following material facts are not in dispute.
4
The Affiant, Scott Holmes, is the Claims Technical Director for National Flood Services StoneRiver (“NFS”), “which is a third-party vendor servicing the flood insurance business for many
(continued...)
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$250,000 for the structure and $100,000 for the personal property, both subject to a $1,000
deductible. (Doc. 38-1); (Doc. 38-2; 08/27/12 First Proof of Loss); Holmes Aff. ¶ 3. The
Slaters’ SFIP is a Dwelling Form policy, which is published in the Code of Federal
Regulations at 44 C.F.R. Pt. 61, App. A(1); (see also Doc. 1-1; Policy).5 Under the Policy,
an insured must take certain steps in the case of a flood loss. 44 C.F.R. Pt. 61, App. (1),
art.VII.J. Of particular relevance here, the insured must file a Proof of Loss “[w]ithin 60 days
after the loss.” Id. art. VII.J.4. The claimant’s Proof of Loss “must be signed and sworn by
the insured and provide the insurer with nine specific pieces of information, including the
specifications of damaged buildings, detailed repair estimates, and a brief explanation of how
the loss happened.” Sutor v. FEMA, Nos. 06-1371, 07-2477, 2009 WL 4268457, at *4 (E.D.
Pa. Nov. 23, 2009)(citing 44 C.F.R. Pt. 61, App. A(1), art. VII.J.4.a.- i. The SFIP provides,
in part:
4.
Within 60 days after the loss, send us a proof of loss,
which is your statement of the amount you are claiming under the
policy signed and sworn to by you, and which furnishes us with
the following information:
a.
The date and time of loss;
b.
A brief explanation of how the loss happened;
...
4
(...continued)
insurance companies which participate as . . . [WYO] insurance carriers participating in the [NFIP].”
Holmes Aff. ¶ 1. Plaintiffs request that the Court disregard Holmes’ Affidavit because it “strays into expert
opinion,” and Defendant never disclosed Holmes as an expert. See Plaintiffs’ Response at 13-14.
Plaintiffs have not filed a motion to exclude the Holmes Affidavit from consideration. Nonetheless, in
considering the pending Motions, the Court only refers to the Holmes Affidavit with regard to facts within
the affiant’s personal knowledge, and does not rely on the affiant’s legal conclusions. See Ojeda v.
Louisville Ladder, Inc., 410 F. App’x 213, 214-15 (11th Cir. 2010).
5
The full text of Plaintiffs’ SFIP is found at 44 C.F.R. Pt. 61, App. A(1). For ease of reference,
the Court will refer to the relevant regulation when discussing provisions in the Slaters’ SFIP.
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f.
Specifications of damaged buildings and detailed repair
estimates;
...
i.
The inventory of damaged personal property . . . .
44 C.F.R. Pt. 61, App.A(1), art. VII.J.4. The SFIP also provides that
7.
The insurance adjuster whom we hire to investigate your
claim may furnish you with a proof of loss form, and she or he
may help you complete it. However, this is a matter of courtesy
only, and you must still send us a proof of loss within 60 days
after the loss even if the adjuster does not furnish the form or
help you complete it.
Id. art. VII.J.7. Additionally, the SFIP provides that
This policy cannot be changed nor can any of its provisions be
waived without the express written consent of the Federal
Insurance Administrator. No action we take under the terms of
this policy constitutes a waiver of any of our rights.
Id. art.VII.D; see also Shuford, 508 F.3d at 1339; Ambassador Beach Condo. Ass’n, Inc. v.
Omaha Prop. & Cas. Ins. Co., 152 F. Supp.2d 1315, 1316 (N.D. Fla. 2001); 44 C.F.R. §
61.13(d)(“no provision of the said documents shall be altered, varied, or waived other than
by the express written consent of the Federal Insurance Administrator”).
C.
The Flood and its Aftermath
On June 26, 2012, while the policy was in effect, the Slaters’ home was damaged by
a flood caused by Tropical Storm Debby. (Doc. 1; Complaint ¶ 6; (Doc. 5; Answer ¶ 6);6
Holmes Aff. ¶ 13; see also 08/27/12 First Proof of Loss; (Doc. 38-8; 08/28/12 Second Proof
of Loss). The Slaters first discovered the flood water inside of their home at 1:00 a.m. on
6
“A fact admitted by answer is no longer a fact in issue.” Hill v. Federal Trade Comm’n, 124
F.2d 104, 106 (5th Cir. 1941).
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June 27, 2012. (Doc. 38-4; Deborah Slater Aff. ¶ 4). The water remained standing inside
the house for 24 hours. (Doc. 40-1; Timothy Slater Dep. at 39); (Doc. 36-3; Preliminary
Report). On June 28, 2012, in an effort to reduce the moisture, the Slaters placed large fans
and dehumidifiers throughout the house. (Doc. 28-5; ServPro Job Diary).
Hartford assigned the Slaters’ claim to an independent adjusting company on June 27,
2012. Holmes Aff. ¶ 14. The adjuster inspected the property on July 1, 2012, and prepared
a Preliminary Report, dated August 23, 2010. Holmes Aff. ¶¶ 15, 16; Preliminary Report.
The following information was recorded in the Preliminary Report:
Date Loss Assigned
06/27/2012
Date Insured Contacted
06/28/2012
Date Loss Inspected
07/01/2012
Date/time water entered building
06/26/2012 12:00 AM
Date/time water receded building
06/27/2012 12:00 AM
Time water remained In building
1 days 0 hours
Water Height or Wave Action
Main Building . . .
Exterior(Inches)
7
Interior (Inches)
1
Preliminary Report; see also Holmes Aff. ¶ 16. The adjustor prepared a Flood Damage
Closing Report, also dated August 23, 2012. (Doc. 36-4; Closing Report); Holmes Aff. ¶ 17.
In it, he “documented a 5-7" outside water line and a 1+” inside water line.” Closing Report.
The adjuster determined that
The exterior requires pressure washing to the water line. The
interior requires flood loss clean up and mildewcide of the floor
and walls to the water line. In addition the insulation, drywall,
and base molding requires [sic] removal and replacement in the
living room, kitchen, both bedrooms and bathrooms. . . . The
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cabinets in both bathrooms require removal and replacements,
and the counter tops and bathrooms sinks will need to be
removed and reinstalled. The wood floors are damaged and
need to be removed and replaced. . . .
Id. He also reported that the Slaters had not provided a list of damaged personal property,
so no losses were attributable to personal property, and further noted that other items in the
home did not appear to be damaged. Id. The adjuster recommended that Hartford “make
payment to the insured” for the dwelling damages, and wrote that “[w]e have provided the
insured with copies of our estimate. [sic] A Proof of Loss and NFIP Final Report and will
forward the forms upon receipt.” Id. at 2. Lastly, the adjustor stated that the company had
closed the file on the Slaters’ claim. While the Flood Damage Closing Report refers to an
adjuster’s estimate of damages, and to a long list of enclosures,7 the copy of the Closing
Report submitted by Hartford, and cited by the parties, does not include the enclosures or
estimate. (See Doc. 36-4).
On August 27, 2012, the Slaters submitted their first Proof of Loss to Hartford. The
08/27/12 First Proof of Loss has typewritten damages figures, along with handwritten
numbers. 08/27/12 First Proof of Loss. The typewritten damages figures conclude with “Net
Amount Claimed under the numbered policy is (Pending Your Flood Carrier’s Final Approval)
$13,992.72.”
Id.
The handwritten notations appear to say: “Microtech $20,164.31";
“[contractor] Shaycore $103,184.20;” and “Out of Pocket $2500.00.” Also handwritten is
“Policy limits $250,000/100,000.” Id. The handwritten numbers add up to $125,848.51. See
7
The enclosures referenced in the Flood Damage Closing Report are: Service Invoice, Proof
of Loss, NFIP RC Proof of Loss, NFIP Final Report, NFIP Preliminary Report, Overhead & Profit Affidavit,
NFIP Handbook Receipt, Narrative Closing Report, Valuation, Diagram, Building Estimate, Adjuster’s
Photographs, Flood Field Survey, and Activity Log.
-7-
Plaintiffs’ Response at 3. The 08/27/12 First Proof of Loss is on a form bearing the letterhead
of the United States Department of Homeland Security, FEMA, and the National Flood
Insurance Program, and is signed and sworn to by the Slaters as of August 27, 2012.
08/27/12 First Proof of Loss.
On August 28, 2012, the Slaters submitted a second Proof of Loss form. 08/28/12
Second Proof of Loss; Holmes Aff. ¶ 25.8 Handwritten on the top of the form preceding the
typewritten heading “Proof of Loss,” is the word “Supplemental.” Id. In response to the line
requesting the “Net Amount Claimed,” the 08/28/12 Second Proof of Loss bears the
typewritten entry “$125,293.38.” Id. Additionally, under “Time and Origin,” is the handwritten
entry: “Flood 26-28 of June 2012.” Id. The 08/28/12 Second Proof of Loss is signed and
sworn to by the Slaters, and dated August 28, 2012. Id.
Hartford issued a $15,567.63 payment for building damage to the Slaters pursuant to
the SFIP, on September 5, 2012. Holmes Aff. ¶ 18; (Doc. 36-5; 09/05/12 Check). On
September 12, 2012, Hartford sent a letter to the Slaters denying the Slaters’ request for
additional funds. (Doc. 36-11; 09/12/12 Hartford Letter); Holmes’ Aff. ¶ 29. Hartford wrote:
We have received your request to reopen the above referenced
flood claim in order to consider additional payment. The above
referenced claim was paid and closed based on the estimate
submitted by [the adjuster] and our review of the file. The
receipts submitted exceed the gross loss for the covered flood
damages in the amount of $16,567.63.
In order for us to consider additional payments on your claim,
please submit all itemized paid receipts and/or documentation for
8
The copy of the 08/28/12 Second Proof of Loss submitted by Plaintiffs includes 26 pages of
attachments setting forth the costs of work done to the house, including a 24 page evaluation report by
a company named MicroTech Water Damage Control, Inc, dated August 16, 2012, reporting estimated
repairs totaling $103,184.20. (See Doc. 38-8; Water Damage Report).
-8-
covered flood damages or a signed contractor’s room-by-room,
line-by-line unit cost estimate that exceeds the amount of
$16,567.63. Once we receive the information, we will review it
to determine if additional payment can be allowed under the
Standard Flood Insurance Policy.
If an item has been omitted from the initial claim payment, please
provide the information so that we can review. Until we receive
further information from you, the claim file will remain closed.
We have received a signed and sworn Proof of Loss. . . . We are
rejecting the signed Proof of Loss in the amount of $125,293.38,
pursuant to the Standard Flood Insurance Policy, VII, General
Conditions, M. Loss Payment as we have not received the
necessary documentation to substantiate the amount being
claimed.
09/12/12 Hartford Letter. The letter lists the Date of Loss as being June 26, 2012. Id.
Additionally, the letter advised the Slaters of their right to an administrative appeal of
Hartford’s decision to FEMA. Id.9
On February 19, 2013, FEMA responded to the Slaters’ administrative appeal, which
“questioned the damage assessment and final loss adjustment,” and sought “payment of the
supplemental claim for building components, mitigation/remediation services, and incidental
expenses totaling $126,293.38.” (Doc. 36-6; 02/19/13 FEMA Letter).10 FEMA noted that
“Hartford’s adjusted loss payment totaling $15,567.63 allowed for pressure washing of the
9
Where there is disagreement about the amount of flood damages or
coverage, the SFIP allows policyholders to appeal to FEMA from any
denial of their claims or to contest it in federal court. See 44 C.F.R. §
62.20; id. pt.61, app. A(1), art. VII(R). However, to invoke either
procedure for review of the denial of a flood insurance claim, a
policyholder must have first filed a timely and compliant proof of loss.
See 44 C.F.R. § 62.20; id. pt. 61, app. A(1), art. VII(R).
DeCosta v. Allstate Ins. Co., 730 F.3d 76, 82 (1st Cir. 2013).
10
The letter was sent by James Sadler, the Director of Claims for the NFIP, to Mark Goldwich,
the Slaters’ public adjuster. Holmes Aff. ¶ 19.
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exterior, flood loss clean-up of the affected areas, air movers, dehumidifiers, and mildewcide
treatments, as well as the replacement of covered building components of like kind and
quality, that were directly affected by flood.” Id. While stating that some of the expenses
sought by the Slaters were either not covered by the SFIP or “appeared broad and
excessive,” FEMA concluded that “the concerns conveyed in the appeal merit review and
further investigation,” and that “the claim is currently under re-evaluation for supplemental
payment of covered damages, as warranted.” Id. FEMA referred further adjustment of the
Slaters’ claim to Hartford. Id. FEMA also advised the Slaters of their right to file a lawsuit.
Id.
On March 15, 2013, an e-mail was sent from Kelly Bauer, identified as
“SHR.NFS.ALL.FEMAWAIVERS” to “fema-flaclaims@dhs.gov” regarding the Slaters’
“supplemental” claim. (Doc. 36-7; 03/15/13 Request for Waiver); Holmes Aff. ¶ 21.11 The
Request for Waiver lists the “Date of Loss” as June 26, 2012, and the “date loss assigned”
as June 27, 2012. 03/15/13 Request for Waiver. It notes that the “supplemental” “POL” was
signed and received on August 28, 2012. The Request for Waiver recounts the flooding as
“Exterior water depth at 7", interior at 1" for approximately 1 day.” Id.
Original damages included pressure wash, flood loss clean up,
mildewcide treatments, air movers, dehumidifiers, base moulding
[sic], wood plank flooring, paint, drywall, wood base cabinetry for
the bathroom, and insulation. Supplemental damages include
additional allowance for insulation & drywall, dumpster rental,
seal walls, texture for walls, high end ceramic floor tile, wood
base cabinetry for the kitchen, allowance to remove and re-install
appliances, and high end wood base cabinetry in the bedroom.
11
Hartford identifies Kelly Bauer as being with “NFS,” the third party vendor servicing Hartford’s
flood insurance business. See Holmes Aff. ¶¶ 1, 21. As such, the Plaintiffs contend that the 03/15/13
Request for Waiver was sent by Hartford to FEMA. Plaintiffs’ Response at 4.
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Id. As to the requested waiver, the Request states:
POL late signing: The supplemental POL is late due to the
insured needing additional time to gather supporting
documentation for their claim as well as time for an engineer to
inspect the property and make a determination if flood had
damaged the insured property. No consequential damages have
been included.
The flood damages to the insured property are covered under the
policy and the Insured is entitled to recover for the damage. We
do not believe the Program was jeopardized due to the delay in
receipt of documentation. The damages are documented by the
adjuster.
Id. The Request lists the “AVC Payable: $29,717.26/Current Amt Requested $16,567.63/
$15,567.63 Previous Claim Pmt(s)” for the building and “ACV Payable: $71.03/Current Amt
Requested $0/Previous Claim Pmt(s)” for the contents. Id.
That following Monday, March 18, 2013, FEMA responded that as long as the insured
has provided “the actual costs and not estimates,” the Request for Waiver was approved.
(Doc. 36-8; Waiver). Specifically, FEMA wrote:
Based on the information you submitted, your request for waiver
of the 60 day Proof of Loss policy provision is approved. This
limited waiver is for only the amount of the loss and scope of the
damages outlined in this request and otherwise does not waive
the proof of loss or any other requirement of the Standard Flood
Insurance Policy and makes no other comment because of lack
of information. If it is later determined that an improper payment
was made, the granting of this waiver does not constitute a
waiver of the right to seek repayment of any such improperly paid
amounts.
Waiver. On March 23, 2013, Hartford issued a second check to the Slaters in the amount
of $29,717.26 for building damage (for a total of $45,284.89 for building damage), and $71.03
for contents damage. Holmes Aff. ¶ 22; (Doc. 36-9; 03/23/13 Check).
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The Slaters filed this lawsuit on March 29, 2013. See Complaint. Plaintiffs allege in
Count I of their Complaint that the cost of repairing the damage to their house caused by the
flooding from Tropical Storm Debby exceeds $125,000.00, and that Hartford has breached
its obligations under the SFIP by failing to pay the amount properly owed to them under the
Policy. Id.12 The case is currently before the Court on cross motions for summary judgment
and partial summary judgment.
II.
Standard of Review
Under Rule 56, Federal Rules of Civil Procedure (Rule(s)), “[t]he court shall grant
summary judgment if the movant shows that there is no genuine dispute as to any material
fact and the movant is entitled to judgment as a matter of law.” Rule 56(a). The record to
be considered on a motion for summary judgment may include “depositions, documents,
electronically stored information, affidavits or declarations, stipulations (including those made
for purposes of the motion only), admissions, interrogatory answers, or other materials.” Rule
56(c)(1)(A).13 An issue is genuine when the evidence is such that a reasonable jury could
12
Plaintiffs also brought a second claim alleging professional negligence on the part of Hartford,
based on an alleged violation of the standard of care provided by the Florida Administrative Code. See
Complaint at 4-5. The Court granted Hartford’s motion to dismiss Count II because it raised claims under
state law which were preempted by the federal flood insurance regulatory scheme. (Doc. 26; 10/29/13
Order at 7). Count I alleging breach of contract is the only remaining claim.
13
Rule 56 was revised in 2010 “to improve the procedures for presenting and deciding
summary-judgment motions.” Rule 56 advisory committee’s note 2010 Amendments.
The standard for granting summary judgment remains unchanged. The
language of subdivision (a) continues to require that there be no
genuine dispute as to any material fact and that the movant be entitled
to judgment as a matter of law. The amendments will not affect
continuing development of the decisional law construing and applying
these phrases.
Id. Thus, case law construing the former Rule 56 standard of review remains viable and is applicable
(continued...)
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return a verdict in favor of the nonmovant. See Mize v. Jefferson City Bd. of Educ., 93 F.3d
739, 742 (11th Cir. 1996) (quoting Hairston v. Gainesville Sun Publ’g Co., 9 F.3d 913, 919
(11th Cir. 1993)). “[A] mere scintilla of evidence in support of the non-moving party’s position
is insufficient to defeat a motion for summary judgment.” Kesinger ex rel. Estate of Kesinger
v. Herrington, 381 F.3d 1243, 1247 (11th Cir. 2004) (citing Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 252 (1986)).
The party seeking summary judgment bears the initial burden of demonstrating to the
court, by reference to the record, that there are no genuine issues of material fact to be
determined at trial. See Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir. 1991).
“When a moving party has discharged its burden, the non-moving party must then go beyond
the pleadings, and by its own affidavits, or by depositions, answers to interrogatories, and
admissions on file, designate specific facts showing that there is a genuine issue for trial.”
Jeffery v. Sarasota White Sox, Inc., 64 F.3d 590, 593-94 (11th Cir. 1995) (internal citations
and quotation marks omitted). Substantive law determines the materiality of facts, and “[o]nly
disputes over facts that might affect the outcome of the suit under the governing law will
properly preclude the entry of summary judgment.”
Anderson, 477 U.S. at 248.
In
determining whether summary judgment is appropriate, a court “must view all evidence and
make all reasonable inferences in favor of the party opposing summary judgment.” Haves
v. City of Miami, 52 F.3d 918, 921 (11th Cir. 1995) (citing Dibrell Bros. Int’l, S.A. v. Banca
Nazionale Del Lavoro, 38 F.3d 1571, 1578 (11th Cir. 1994)). At the summary judgment
13
(...continued)
here.
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stage, the Court’s function is not to “weigh the evidence and determine the truth of the matter
but to determine whether there is a genuine issue for trial.” Anderson, 477 U.S. at 249.
III.
Discussion
A.
Hartford’s Motion for Summary Judgment (Doc. 36)
Hartford contends that the Slaters are not entitled to any additional recovery under
their SFIP because they “failed to submit a timely sworn Proof of Loss to Hartford,” and thus,
Hartford is entitled to judgment as a matter of law on the Slaters’ breach of contract claim.
Defendant’s Motion at 2, 19, 20. Specifically, Hartford argues that the 08/28/12 Second Proof
of Loss is untimely under Article VII(J)(4) of the SFIP as it was submitted more than 60 days
after the date of loss, June 26, 2012. Id. at 11.14 Plaintiffs respond by arguing that summary
judgment is not appropriate because they complied with the terms of the SFIP by submitting
a timely Proof of Loss. Plaintiffs’ Response at 1. Specifically, Plaintiffs contend that the
08/27/12 First Proof of Loss adequately presented their claim and, alternatively, that FEMA
granted a written waiver of the deadline. Id. Additionally, Plaintiffs argue that Hartford’s
“repudiation of its own deadlines excused” them from strict deadline compliance, and that
they are relieved from the Proof of Loss deadline by the doctrine of equitable tolling. Id.
A Proof of Loss is a statement by the insured informing the insurer - either FEMA or
a WYO carrier - of the amount the insured is claiming under the policy. See 44 C.F.R. Pt. 61,
App. A(1), art. VII.J.4. The statement must be signed and sworn to by the insured, and
provide the insurer with nine specified pieces of information, including the specifications of
damaged buildings, detailed repair estimates, and a brief explanation of how the loss
14
Hartford neither acknowledges or makes reference to the 08/27/124 First Proof of Loss.
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happened. See id. at art. VII.J.4.a.-i. “[S]trict compliance with the provisions of federal flood
insurance policies is required because payments are drawn from the federal treasury.”
Shuford, 508 F.3d at 1343; see also Sanz v. U.S. Sec. Ins. Co., 328 F.3d 1314, 1318 (11th
Cir. 2003)(“the insured must adhere strictly” to the requirements of an SFIP “before any
monetary claim can be awarded against the government”); Richardson v. Am. Bankers Ins.
Co., 279 F. App’x 295, 298 (5th Cir. 2008)(insured must “show prior compliance with all of
the policy’s requirements, including the [proof of loss] requirement”). As such, failure to file
a timely Proof of Loss prohibits an insured from recovery. Sanz, 328 F.3d at 1317-18 (citing
Federal Crop Ins. Corp. v. Merrill, 332 U.S. 380, 384-85 (1947)). However, the Proof of Loss
requirement may be waived, but to be effective, the waiver must be made by the Federal
Insurance Administrator in writing. See Sanz, 328 F.3d at 1318-19; see also; 44 C.F.R. Pt.
61, App. A(1), art. VII.D; 44 C.F.R. § 61.13(d).
1.
Timeliness of Proof of Loss
a.
06/27/12 First Proof of Loss
Plaintiffs argue that their submission of the 08/27/12 First Proof of Loss, with the
handwritten entry reflecting “the same dollar amounts” as that presented in the 08/28/12
Second Proof of Loss, “adequately presents all of the Slaters’ losses,” and thus, creates “a
genuine issue of material fact regarding whether the second proof of loss was even
necessary, because a reasonable jury could find that the first document put Hartford on
notice about all of the Slaters’ damages.” Plaintiffs’ Response at 5-6. They note that the
“package of information sent the following day” in the 08/28/12 Second Proof of Loss,
included contractor estimates to support the numbers handwritten by Timothy Slater on the
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08/27/12 First Proof of Loss. Id. Hartford did not mention the 08/27/12 First Proof of Loss
in its papers, arguing only that the 08/28/12 Second Proof of Loss was untimely.
Preliminarily, Plaintiffs contend that Hartford incorrectly begins counting the 60-day
Proof of Loss deadline on June 26, 2012, arguing that “[t]his is not the proper date because
the policy states to start counting ‘after’ the flood; and Hartford states that the floodwaters did
not recede until June 27, 2012.” Plaintiffs’ Response at 12. As such, according to Plaintiffs,
“the earliest possible day to start counting would be June 28, 2012,” the day after the date
Hartford documents that the flooding ended. Id. Under this scenario, the 60-day time limit
would have expired on Sunday, August 26, 2012. Plaintiffs also argue that the record
evidence supports a conclusion that water was still standing in their house in the early
morning hours of June 28, 2012, which would mean that June 29, 2012 would be “the earliest
day to start counting.” Id. As support, the Slaters cite to Timothy Slater’s deposition
testimony in which he stated that “there was moisture in the home months after, but we
cleaned all the standing water as quickly as we could, so within 24 hours for standing water
sounds right.” (Doc. 40-1; T. Slater Dep. at 39). Under this scenario, the 60-day deadline
would fall on Monday, August 27, 2012, which was the date that the Slaters executed the
08/27/12 First Proof of Loss.
The SFIP requires that a claimant provide the insurer with a Proof of Loss “within 60
days after the loss.” 44 C.F.R. Pt. 61, App. A(1), art. VII.J.4 and 7. Neither party cited to any
legal authority providing guidance on the computation of the SFIP 60-day Proof of Loss
requirement, and the Court was unable to locate any. However, Plaintiffs cite to the decision
in Smith v. Nat’l Flood Ins. Program of FEMA, 156 F. Supp.2d 520 (E.D. Pa. 2001), in which
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the court applied the method of computation provided by Rule 6(a), Federal Rules of Civil
Procedure, for computing the NFIA deadline for a claimant to bring suit in federal court
(“‘within one year after the date of mailing of notice of disallowance or partial disallowance
by the Director’”). Smith, 156 F. Supp.2d at 522-23 (quoting 42 U.S.C. § 4072). In doing so,
the court observed that the Third Circuit Court of Appeals had applied the Rule 6(a) method
of computation to determine the end of the statutory limitations period applicable to the
Federal Tort Claims Act, which provides that an action must be brought “within two years
after such claim accrues,” 28 U.S.C. § 2401(b), and found that “the same reasons” apply to
the one-year statute of limitations computation in the NFIA. Id. at 523 (citing Frey v.
Woodard, 748 F.2d 173, 175 (3d Cir. 1984)). Thus, the Smith court adopted the Rule 6 time
computation methodology for ascertaining the end point of the NFIA one-year statute of
limitations that “exclude[s] the day of the event that triggers the period,” and includes the last
day of the period unless the last day is a Saturday, Sunday, or legal holiday, in which case
“the period continues to run until the end of the next day that is not a Saturday, Sunday, or
legal holiday.” Rule 6(a)(1).
The Eleventh Circuit has observed that it has “long recognized as a general policy a
legislative intent to apply Rule 6(a) to all federal statutes enacted or amended after the
adoption of Rule 6(a) . . . . [and that] [t]his policy generally prevails unless the statute in
question itself reflects a contrary intent.” Am. Canoe Ass’n, Inc. v. City of Attalla, 363 F.3d
1085,1086 (11th Cir. 2004)(citations omitted)(applying Rule 6 computational analysis to
Clean Water Act); see also Maahs v. United States, 840 F.2d 863, 865-66 (11th Cir.
1988)(Rule 6 computation of time applied to FTCA two-year requirement for claim to be
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brought such that the counting begins on the day after the cause of action arose and ends
on the next day that is not a Saturday, Sunday, or legal holiday). In light of this authority, the
Court determines that the Rule 6(a) computational analysis applies to the 60-day Proof of
Loss deadline set forth in the NFIA. If the date of the loss is set at June 26, 2012, then the
60-day time limit for the Slaters to submit a timely Proof of Loss would have fallen on
Saturday, August 25, 2012. If the date of the loss was June 27, 2012, when the Slaters
discovered the flooding in their house and the floodwaters receded, then the 60-day deadline
would have been Sunday, August 26, 2012, and if the date of the loss is June 28, then the
sixtieth day would have fallen on Monday, August 27, 2012. The 08/27/12 First Proof of Loss
was signed and verified on Monday, August 27, 2012. Thus, under each of the foregoing
scenarios, the 08/27/12 First Proof of Loss was timely.15 However, it appears that the
08/27/12 Second Proof of Loss, if considered alone, may be untimely.
b.
08/28/12 Second Proof of Loss as a Supplemental Proof of
Loss
The next issue might well be whether the 08/27/12 First Proof of Loss, standing alone,
constitutes an adequate Proof of Loss submitted in compliance with the requirements of the
15
The Court declines to accept Plaintiffs’ invitation to extend the date of their loss to June 30,
2012 based upon FEMA’s August 28, 2012 memoranda regarding the “adjusted date of loss” from
Tropical Storm Debby. See Plaintiffs’ Response at 9 (citing Doc. 38-3; 08/28/12 FEMA Memo re:
Tropical Storm Debby). In the memoranda, FEMA observed that “Tropical Storm Debby produced
torrential rain and widespread flood damage in the state of Florida,” and assigned the “dates of loss” as
being “June 23, 2012-June 30, 2012.” 08/28/12 FEMA Memo re: Tropical Storm Debby. Nothing about
the memoranda suggests that all claimants may assert a June 30, 2012, date of loss. Indeed, the
Slaters’ date of loss falls squarely within FEMA’s parameters for the storm in Florida.
Additionally, the Slaters may not be excused from the Proof of Loss requirement because their
08/28/12 Second Proof of Loss missed the 60-day deadline by one day, and thus constituted a de
minimis error. See Response at 11-15. Substantial compliance with the requirements of the SFIP is not
sufficient. Rather, the insured must completely satisfy the Proof of Loss requirement. See Sanz, 328
F.3d at 1317.
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SFIP. See 44 C.F.R. Pt. 61, App. A(1), art. VII.J.1-9. However, neither party has made this
assertion.
Instead, Plaintiffs contend that the 08/28/12 Second Proof of Loss, when
considered with the 08/27/12 First Proof of Loss, satisfy the Proof of Loss requirement.
Although the SFIP makes no reference to either permitting or prohibiting supplemental
claims, it does require that a Proof of Loss must be filed within 60 days. As such, some
courts have stated that a supplemental proof of loss must also be submitted within 60 days
of the loss. See Ambassador Beach Condo. Ass’n, 152 F. Supp.2d at 1316-17. Additionally,
courts have held that after the 60 day period expires, “the insured may not seek additional
damages not reflected in the Proof of Loss.” Oaks v. Allstate Ins. Co., No. 05-191-REW,
2006 WL 3328179, at *5 (E.D.Ky. Nov. 14, 2006)(“Plaintiff may not avoid enforcement of the
proof of loss requirement by ‘supplementing’ or ‘amending’ his original statement after the
60 day period expires”); Smith Pierre v. Fid. Nat’l Indem. Ins. Co., No. 11-60298-CIV, 2011
WL 3924178, at *3 (S.D. Fla. Sept. 7, 2011)(“Plaintiff’s original proof of loss cannot fulfill his
obligation to submit a proof of loss for amounts not covered by the original proof of loss”); see
also Howell v. State Farm Ins. Co., 540 F. Supp.2d 621, 627 (D.Md. 2008)(plaintiffs “are
limited to benefits they claimed in timely proofs of loss, even if they ‘consistently disputed the
amounts [that] the defendants should pay under the policy’” (citation omitted)). Notably, while
these cases appear to state a general rule that any supplemental proof of loss must be
submitted within the SFIP 60-day time period, the supplemental claims in the cases were
ultimately rejected for other reasons. For example, in Ambassador Beach and Howell, the
court rejected the supplemental claims because the plaintiff had accepted full payment for
the amount sought in the original proof of loss, but then sought additional payments not
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included in a timely proof of loss. See Ambassador Beach Condo. Ass’n, 152 F. Supp.2d at
1317; Howell, 540 F. Supp.2d at 627. In Smith-Pierre, 2011 WL 3924178, at *3; Oaks, 2006
WL 3328179, at *2, 5; and Sutor, 2009 WL 4268457, at *2, 4, the supplemental claims were
rejected because they sought amounts not included in the timely proof of loss, and for which
the claimants failed to submit a proof of loss, or failed to submit a signed and sworn proof of
loss.
There is authority, however, for the proposition that a supplemental proof of loss that
is submitted out of time, may be considered along with a timely proof of loss, if the
supplemental submission makes a claim that is identical to that submitted in the timely proof
of loss. For example, in Stogner v. Allstate Ins. Co., No. 09-3037, 2010 WL 148291, at *1
(E.D. La. Jan. 11, 2010), the plaintiff suffered flood losses in 2005 and 2008. 2010 WL
148291, at *1. When the plaintiff submitted a proof of loss for the 2008 incident, the insurer
disputed the documentation regarding whether the 2005 damage had been repaired and paid
only $6,171. The Plaintiff filed suit. The court recognized that while “it is clear that
supplementary proofs of loss are required when a claimant requests more in the
supplementary claim than in the original claim . . . if the same amount is claimed, and only
the decision is disputed, additional proofs of loss may not be necessary.” Id. at *4 (emphasis
added). The Stogner court denied the insurer’s motion for summary judgment based upon
the proof of loss because it was not apparent from the record whether the lawsuit was for “the
same amount” claimed in the 2008 proof of loss (but not paid in full), or if it was for more,
which would require another proof of loss. Id.
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Similarly, in Young v. Imperial Fire & Cas. Ins. Co., No. 13-5246, 2014 WL 1456408
(E.D. La. April 15, 2014), the insured submitted three signed and sworn Proof of Loss
statements for building damages, plus a detailed estimate of damages from a public adjuster
to a WYO insurer. 2014 WL 1456408, at * 1, 3. In the initial timely Proof of Loss, plaintiffs
made a claim for $175,000, which was the policy limit of building coverage minus the
deductible. Plaintiffs also stated in the initial Proof of Loss that the “actual cash value, full
cost of replacement or repair and applicable depreciation” was “‘undetermined.’” Id. at *1.
The damages report, which estimated the total amount of damages to be $260,635.83, was
submitted after the 60-day Proof of Loss period had expired. Id. The accompanying cover
letter stated that the report “was an estimate of damages to supplement” the insured’s claim.
Id. When the SFIP insurer declined to pay the policy limits for building losses, the insureds
filed suit against the insurer. The insurer argued that it was entitled to summary judgment
because the plaintiff insureds did not submit a timely Proof of Loss for building damages that
complies with the requirements of the SFIP. Id. The insurer argued that the insured’s
submissions were inadequate because the detailed estimate was not submitted with a signed
Proof of Loss form, and the estimate was not separately signed and sworn by the insureds.
Additionally, the WYO insurer argued that the claimed amount of $175,000 and the estimated
damages amount of $260,235.83 made it “impossible to know the actual amount of plaintiffs’
claim.” Id. at 3. The court denied the insurer’s motion for summary judgment, determining
that all of the insured’s Proof of Loss forms, “taken together with [the adjuster’s] estimate that
was sent [after the 60-day deadline], constitute a complete Proof of Loss that complies with
the SFIP.” Id. The court further determined the Proof of Loss forms “taken together” with the
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adjuster’s report “clearly state that plaintiffs’ cost of repair is the amount estimated by [the
adjuster’s] detailed report, $260,235.83, and that plaintiffs claim their policy limit on building
coverage, minus the deductible, which is $175,000,” permitting the SFIP insurer to evaluate
the insureds’ claim for their policy limits based upon the damages and costs presented in the
detailed report. Id. at *4; but see Sun Ray Village Owners Ass’n v. Old Dominion Ins. Co.,
546 F. Supp.2d 1283, 1292 (N.D. Fla. 2008)(summary judgment for WYO insurer where
insured failed to provide any support for its claimed loss and insurer had no basis by which
to evaluate the merits of insured’s asserted losses).
Here, the 08/27/12 First Proof of Loss and the 08/28/12 Second Proof of Loss, when
construed in favor of the Slaters, both refer to more than $125,000.00 in property damages.
Hartford does not argue that the 08/27/12 First Proof of Loss Form was either untimely or
deficient. Indeed, Hartford does not even discuss the 08/27/12 First Proof of Loss Form.
Unlike the claimant in Sun Ray Village, who failed to submit any support for or documentation
to support its claimed loss under the SFIP, 546 F. Supp.2d at 1286-87, 1289, 1292, the
Slaters submitted a detailed Water Damage Report with their 08/28/12 Second Proof of Loss.
Accordingly, summary judgment is due to be denied. See Young, 2014 WL 1456408,at *1,
3.
2.
The Administrator’s Waiver
“[F]ailure to file a proof of loss bars recovery absent an express written waiver of the
proof-of-loss requirement by the Administrator.” Shuford, 508 F.3d at 1343. The SFIP does
not allow for constructive waiver. See Suopys v. Omaha Prop. & Cas., 404 F.3d 805, 811
(3d Cir. 2005). Rather, a waiver argument is viable only where there is an actual written
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waiver from the Federal Insurance Administrator. Sanz, 328 F.3d at 1318-19; see also 44
C.F.R. Pt. 61, App. A(1), art. VII.D.
In order for a communication from the FEMA
Administrator to waive the proof-of-loss requirement, “the waiver must be apparent from the
face of the document itself.” Howell, 540 F. Supp.2d at 628. (FEMA’s written notice of its
willingness to reconsider insureds’ claims did not expressly waive the proof of loss
requirement). Thus, payment, and an insurer’s processing of a claim or payment of a portion
of a claim does not constitute a waiver of the proof of loss requirement, see Greer v. Owners
Ins. Co., 434 F. Supp.2d 1267, 1277-78 (N.D. Fla. 2006), and an insurer does not
“constructively waive” the proof-of-loss requirement by processing a claim, or denying a claim
for a reason other than failure to file a timely proof of loss. See Shuford, 508 F.3d at 1343
(citing Sanz, 328 F.3d at 1318-19).
Plaintiffs argue that the FEMA administrator waived the 60-day Proof of Loss
requirement in the March 18, 2013 communication issued in response to Hartford’s March
15 Request for Waiver. Plaintiffs’ Response at 8. Plaintiffs contend that Hartford’s 03/15/13
Request for Waiver mentions Plaintiffs’ supplemental proof of loss (which listed $125,293.38
in claims) four times, and includes a list of specified damages that were all presented in the
08/28/12 Second Proof of Loss. Id. Plaintiffs argue that
In light of the fact that (i) the FEMA waiver applies to “the amount
of the loss and scope of damages outlined in the request”, and
(ii) the list of damages outlined in the request is simply a
restatement of the damages outlined in page 2 of the
supplemental proof of loss’ supporting documents . . . , and (iii)
the request references the supplemental proof of loss 4 times,
there is, at minimum, a material question of fact regarding the
scope of the waiver.
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Id. at 8-9. Plaintiffs further contend that the reference to $29,717.26 in the 03/15/13 Request
for Waiver is “ambiguous.” Id.
Hartford cites to the language of the Waiver which it argues is self-limiting to “‘only the
amount of the loss [$29,717.26] and scope of the damages outlined in the request and
otherwise does not waive the proof of loss or any other requirement of the Standard Flood
Insurance Policy,’” and does not provide a general waiver of the SFIP Proof of Loss
requirement. Defendant’s Motion at 10, 12, 19. According to Hartford’s flood insurance
claims servicer Scott Holmes, Claims Technical Director with NFS, Hartford, through NFS
“had requested a waiver from FEMA to pay the Plaintiffs’ supplemental flood claim of
$29,717.26 on March 15, 2013.” Holmes Aff. ¶ 21.
To be sure, FEMA and Hartford’s agreement to reopen the Slaters’ file to further
consider the Slaters’ claim is not, in and of itself, an express waiver of the SFIP Proof-of Loss
requirement. See Sanz, 328 F.3d at 1318-19. However, the Administrator here did issue an
express waiver in writing. See Waiver. The issue is whether that March 18, 2013 Waiver
may be construed as a matter of law as waiving the Proof of Loss requirement only in the
amount of $29,717.26, or as to the full scope of damages described in the 08/28/12 Second
Proof of Loss.
In Shuford, 508 F.3d at 1342, the Eleventh Circuit construed the plain language of a
waiver by the FEMA administrator which extended the post-Hurricane Katrina Proof of Loss
deadline requirement from 60 days to one year. The court rejected the claimant’s argument
that the Administrator’s use of the word “may” in the phrase “‘a policyholder may submit to
the insurer a proof of loss,’” meant that the claimant had a choice of whether to challenge the
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WYO denial decision, and that the filing of the proof of loss was optional, because the
claimant’s proposed construction would render other parts of the limited waiver superfluous.
508 F.3d at 1342; see also e.g. Howell, 540 F. Supp.2d at 628 (court concludes after
reviewing the language of FEMA bulletin implementing a claim review process, that the
“document is insufficient as a matter of law to constitute an express waiver under the terms
of the SFIP;” “in order for us to conclude that FEMA bulletin waived the proof of loss
requirement, the waiver must be apparent from the face of the document itself”); Goodman
v. Fid. Nat’l Prop. & Cas. Ins. Co., No. 3:06cv93/MCR/EMT, 2007 WL 1521479, at *3 (N.D.
Fla. May 23, 2007)(concluding what a “reasonable interpretation” of the use of the word
“may” in administrator’s post-Hurricane Katrina waiver by “reading the memorandum in its
entirety.”). However, in Provenza v. State Farm & Cas. Ins. Co., No. 06-7319, 2007 WL
1655567 (E.D. La. June 6, 2007), the court determined that a post-Hurricane Katrina FEMA
waiver reference to “may” “could be ambiguous to a claimant such that summary judgment
against a claimant who relied on the waiver is inappropriate,” and that a waiver may be “too
ambiguous to support summary judgment against a claimant who may have been confused
by it.” Id. Ultimately, the Fifth Circuit Court of Appeals resolved the issue, determining as a
matter of law that FEMA’s use of the word “may” in its post-Hurricane Katrina waiver did not
generally waive the proof of loss requirement. See Marseilles Homeowners Condo. Ass’n,
Inc. v. Fid. Nat’l Ins. Co., 542 F.3d 1053, 1056-57 (5th Cir. 2008)(citing Shuford, 508 F.3d at
1342); see also Provenza v. State Farm Fire and Cas. Co., No. 06-7319, 2008 WL 4938451,
at *1-2 (E.D. La. Nov. 17, 2008)(noting that the court had granted subsequent motion for
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summary judgment in favor of WYO insurer after Fifth Circuit concluded that there is no
ambiguity regarding the post-Katrina waiver of the proof of loss requirement).
By approving the Request for Waiver and stating that “[t]his limited waiver is only for
the amount of the loss and the scope of the damages outlined in this request,” the
Administrator’s Waiver is ambiguous. On the one hand, The Request for Waiver refers to
“Building R/C: $29,717.26/Current Amt Requested” and “ACV Payable: $29,717.26/Current
Amt Requested $16,567.63/ $15,567.63 Previous Claim Pmt(s)”. On the other hand, the
Request for Waiver does specifically refer to the “08/28/2012 - supplemental” Proof of Loss
three times, and to “Supplemental damages” which “include additional allowance for
insulation & drywall, dumpster rental, seal walls, texture for walls, high end ceramic floor tile,
wood base cabinetry for the kitchen, allowance to remove and re-install appliances, and high
end wood base cabinetry.” Request for Waiver. The Request for Waiver justified the delay
in submitting the “supplemental POL,” which appears to be the 08/28/12 Second Proof of
Loss, as being late “due to the insured needing additional time to gather supporting
documentation for their claim as well as time for an engineer to inspect the property and
make a determination if flood had damaged the insured property.” Id. Even if the “amount
of the loss” is construed to be the $29,717.26 referenced in the Request for Waiver, the
Administrator’s Waiver states that it applies to “the amount of the loss and the scope of the
damages” in the Request for Waiver. The “scope of the damages” appears to be those
enumerated in the Request for Waiver, and set forth in the 08/28/12 Second Proof of Loss
which is mentioned multiple times in the Request for Waiver. As such, the scope of the
Administrator’s express written waiver is ambiguous on its face. Construing the facts in favor
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of the Slaters, as the nonmoving party as well as the insured, summary judgment in favor of
Hartford with regard to the Administrator’s Waiver of the 60-day Proof of Loss requirement,
is due to be denied.
3.
Repudiation
The Slaters argue that Hartford repudiated the SFIP by failing to send an adjuster to
inspect the property by June 29, 2012, within 48 hours of the Slaters giving notice to Hartford
of the flood, as required by the FEMA claims manual. Plaintiffs’ Response at 10-11 (citing
(Doc. 38-6; NFIP Adjuster Claims Manual ¶ 2.i).16
Plaintiffs’ contend that “Hartford’s
repudiation of its own deadlines excuses any alleged supplemental proof of loss deadline
error.” Id. at 11.
The doctrine of repudiation is a “legal” as opposed to an equitable doctrine. Studio
Frames Ltd. v. Standard Fire Ins. Co, 369 F.3d 376, 381 (4th Cir. 2004). Repudiation,
“sometimes called ‘anticipatory breach’” occurs
when one party repudiates its obligations under a contract, the
unperformed contractual rights and duties of the contract cease
to be binding on the non-repudiating party altogether.
Restatement (Second) of Contracts § 253(2) & cmt. b (explaining
that “one party’s repudiation discharges any remaining duties of
performance of the other party with respect to the expected
exchange”)(emphasis added). . . . [A]fter one party to a contract
repudiates its contractual rights and obligations, the right of the
non-repudiating party to recover on the contract without first
performing conditions precedent “is given to the non-repudiating
party by the law, irrespective of the repudiating party’s wishes.
Williston on Contracts § 39:38 (Richard A. Lord, ed., 4th
ed.2000)(emphasis added).
16
The NFIP Claims Manual is incorporated by reference into the FEMA regulations. Suopys,
404 F.3d at 811 (citing 44 C.F.R. § 62.23).
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Studio Frames, 369 F.3d at 381. “Repudiation” is “a ‘“statement by the obligor to the obligee
indicating that the obligor will commit a breach that would of itself give the obligee a claim for
damage for total breach.”’” Evanoff v. Standard Fire Ins. Co., 534 F.3d 516 (6th Cir.
2008)(quoting Mobile Oil Exploration & Producing Southeast v. United States, 530 U.S. 604,
608 (2000)(quoting Restatement (Second) of Contracts § 250 (1979))).
The Eleventh Circuit has not specifically addressed the question of whether the
doctrine of repudiation can apply to an SFIP. However, the Fourth Circuit has held that it
might apply. Studio Frames, 369 F.3d at 381 (“Here we must consider . . . whether the
otherwise binding requirement that [the insured] file a proof of loss could be legally excused
by the repudiation of the SFIP by [the insured]” and applying federal common law). In Studio
Frames, the WYO insurer informed a lessee attempting to make a flood insurance claim, that
a tenant cannot purchase SFIP building coverage for a building he does not own. The
insurer attempted to return the premiums paid by the lessee. On these facts, the court held
that “the policy at issue here may be repudiated,” and remanded the case to the district court
to determine whether the insurer’s conduct and statements actually did amount to a
repudiation. Id. at 383 (emphasis added). The Second Circuit Court of Appeals has declined
to adopt the Fourth Circuit’s Studio Frames reasoning, and concluded that it is “at best
questionable whether the doctrine of repudiation has any application in the context of policies
issued under the NFIP.” Jacobson v. Metro. Prop. & Cas. Ins. Co., 672 F.3d 171, 177 (2d
Cir. 2012); see also Gunter v. Farmers Ins. Co., 736 F.3d 768, 775 (8th Cir.
2013)(recognizing split among United States Circuit Court of Appeals as to whether the
doctrine of repudiation applies to the SFIP).
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Assuming for discussion purposes that the doctrine of repudiation might be applicable
to an SFIP, in order to repudiate an insurance policy, “the insurer must renounce the policy
rather than simply deny[ ] the claim under the policy.” Jacobson v. Metro. Prop. & Cas. Ins.
Co., No. 1:09-CV-0158 (LEK/DRH), 2010 WL 5391530, at *5 (N.D.N.Y. Dec. 21, 2010), aff’d,
672 F.3d 171 (2d Cir. 2012); see also Gunter, 736 F.3d at 775 (insurer did not repudiate SFIP
where it “did not disavow the policy, contend that it was not bound by the policy’s terms, or
attempt to return . . . the premiums paid under the policy”). Indeed, a denial of a claim for
benefits under an insurance policy does not constitute repudiation.” Richardson, 279 F.
App’x at 299. Additionally, where the dispute between the insurer and the insured revolves
around the amount of loss and not the coverage itself, the insurer has not repudiated the
contract. See Norman v. Fid. Nat’l Ins. Co., 354 F. App’x 934, 937 (5th Cir. 2009). Here,
even if Hartford “materially breached” the SFIP by failing to promptly send an adjustor,
Hartford continued to act on the contract, and the Slaters elected to continue the contract by
claiming and receiving additional benefits. Thus, Hartford’s allegedly late inspection and
report does not excuse the Slaters from complying with the SFIP Proof of Loss 60-day
requirement. See Howell, 540 F. Supp.2d at 629-30. Indeed, although Hartford missed
deadlines, the parties continued with the contract and the dispute is over the amount of
benefits awarded, not over whether any benefits are due. As such, even if repudiation can
be raised in the context of an SFIP, Plaintiffs have failed to establish the applicability of the
doctrine of repudiation to the facts of this case.
-29-
4.
Equitable Estoppel Not Available
Moreover, Hartford is not estopped from denying coverage based upon its own delays,
the Administrator’s acceptance of a Supplemental Proof of Loss, or its denial of benefits for
reasons unrelated to the timeliness of the Supplemental Proof of Loss. The Eleventh Circuit
has observed that “equitable estoppel is unavailable in a claim against the government for
funds from the public treasury.” Shuford, 508 F.3d at 1342-43 (citing Office of Pers. Mgmt v.
Richmond, 496 U.S. 414, 424-34 (1990)(holding that the Appropriations Clause of the United
States Constitution prohibited monetary payments from the federal treasury that have not
been authorized by Congress)). Because a WYO insurer is “acting as a fiscal agent of the
United States, . . . [a] suit for benefits under the National Flood Insurance Program raises the
same concerns, under the Appropriations Clause, as a suit against a governmental entity
because benefits under the National Flood Insurance Program are paid from the federal
treasury.” Id. at 1343 (citing 42 U.S.C. § 4071(a)(1)); see also Sanz, 328 F.3d at 1319-20.
For example, in Dawkins v. Witt, 318 F.3d 606 (4th Cir. 2003), the court declined to
estop the insurer from first asserting the 60-day proof of loss deadline requirement as a
defense to an insured’s breach of contract claim regarding unpaid flood insurance claims,
even where it was undisputed that “FEMA accepted the plaintiffs’ first proof of loss after the
60 day period expired, that [the insurer’s adjuster] stated that the 60 day requirement would
not be enforced, that FEMA continued to address the claim well after the 60 day period
expired, and the Federal Insurance Administrator did not provide an express written waiver
of the 60 day requirement.” Dawkins, 318 F.3d at 610; see also e.g. Gunter, 736 F.3d at 774.
Moreover, the Eleventh Circuit has observed that even if estoppel is available, “it is warranted
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only if affirmative and egregious misconduct by government agents exists.” Sanz, 328 F.3d
at 1319-20; see also Dawkins, 318 F.3d at 611-12. Thus, even assuming that equitable
estoppel is available in the SFIP context, the Slaters have not adduced any evidence of
“‘affirmative and egregious misconduct’” on the part of Hartford, such that a claim of equitable
estoppel might be available. See Shuford, 508 F.3d at 1343 (quoting Sanz, 328 F.3d at
1319-20).
B.
Plaintiffs’ Motion for Partial Summary Judgment (Doc. 28)
In their Motion for Partial Summary Judgment, the Slaters seek a determination, as
a matter of law, that Hartford’s SFIP “provides coverage for mold damage in Plaintiffs’ home.”
Plaintiffs’ Motion at 1. The Slaters argue that “[a]s a result of the storm, portions of the home
were damaged by mold and mildew, although the extent of the damage is disputed.” Id. at
1-2. The Slaters contend that the SFIP’s mold exclusion, which does not insure for loss
caused by mold or mildew that results from any condition “[s]ubstantially confined to the
dwelling” or within the insureds’ control, including “[f]ailure to inspect and maintain the
property after the flood recedes,” does not apply. Id. at 2 (citing 44 C.F.R. Pt. 61, App. A(1)
art. V.D.4). Because they properly mitigated their mold and mildew loss by running large fans
and dehumidifiers less than 48 hours after the flood occurred, the Slaters argue that the mold
and mildew exclusion does not apply. Id. at 5. Hartford responds asserting that although the
Slaters “attempted to mitigate their loss following the flooding, as they were required to do,”
the company they hired to perform the mitigation “did a less than adequate job in its
remediation.” Defendant’s Response at 2. Additionally, Hartford notes that it paid the Slaters
$45,284.89 on their claim for property damage. Id. at 2. Hartford contends that “[i]t is up to
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the finder of fact to determine” if the mold in the Slaters’ home meets the conditions of the
SFIP exclusion. Id. at 4.
On this record, the Court concludes that there are genuine and disputed issues of
material fact that preclude entry of partial summary judgment in Plaintiffs’ favor regarding the
applicability of the SFIP mold and mildew exclusion exception in this case. First, the
evidence is disputed and inconclusive as to whether the extent of the alleged mold and
mildew damage was within the Plaintiffs’ control, and whether Plaintiffs adequately
“maintain[ed] the property after the flood recede[d].” See 44 C.F.R. Pt. 61, App. A(1), art.
V.D.4.b.(3). Additionally, factual issues exist as to the amount of the Slaters’ $125,293.38
claim that they attribute to mold and mildew damage,17 and whether any of the $45,284.89
payment made by Hartford was for mold and mildew loss. Accordingly, Plaintiffs’ Motion for
Partial Summary Judgment is due to be denied.
Upon due consideration, it is hereby
ORDERED:
1.
Defendant Hartford Insurance Company of the Midwest’s Motion for Summary
Judgment and Incorporated Memorandum (Doc. 36) is GRANTED IN PART and DENIED
IN PART, as follows:
A.
Hartford’s Motion is GRANTED only to the extent that Plaintiffs assert
1) that Hartford repudiated the Standard Flood Insurance Policy that it issued to the
Slaters, and 2) that Hartford is estopped from denying the Plaintiffs’ claim.
17
While the record includes the Slaters’ 08/28/12 Second Proof of Loss and attached 24 page
Water Damage Report, the Slaters do not cite to, and the Court is unable to ascertain, which of the
estimated repairs are affected by the SFIP mold and mildew exclusion.
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B.
2.
Hartford’s Motion is DENIED in all other respects.
Plaintiffs’ Motion for Partial Summary Judgment and Memorandum of Law (Doc.
28) is DENIED.
DONE AND ORDERED in Jacksonville, Florida, this 13th day of June 2014.
lc12
Copies to:
Counsel of Record
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