Sharpe v. American National Property and Casualty Company

Filing 29

ORDER AND REASONS denying 27 Motion to Compel. Signed by Chief Judge Sarah S. Vance on 6/3/14. (jjs)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
MICHAEL VERNON SHARPE

CIVIL ACTION

VERSUS

NO: 13-161

AMERICAN NATIONAL PROPERTY
AND CASUALTY COMPANY

SECTION: R(5)

ORDER AND REASONS
Plaintiff Michael Sharpe moves the Court to compel appraisal.1
Because the parties do not agree on the scope of coverage under
plaintiff's
appraisal

insurance

clause

is

policy,

plaintiff's

improper.

Accordingly,

invocation
the

of

Court

the

DENIES

plaintiff's motion.

I.

BACKGROUND
Plaintiff Michael Sharpe is a LaPlace, Louisiana homeowner. He

purchased a Standard Flood Insurance Policy (SFIP) from defendant
ANPAC.2 The insurance under a SFIP is provided through the National
Flood Insurance Program (NFIP), which is administered by the
Federal

Emergency

Management

Agency

under

the

National

Flood

Insurance Act (NFIA). Wright v. Allstate Ins. Co., 415 F.3d 384,
385-86 (5th Cir. 2005). "The terms of SFIP policies are dictated by
FEMA," id. at 386, and are currently found in the Code of Federal

1

R. Doc. 27.

2

R. Doc. 1 at 1.

Regulations at 44 C.F.R. pt. 61, app. (A)(1). Although ANPAC is
nominally

plaintiff's

insurer,

"[p]ayments

on

SFIP

claims

ultimately come from the federal treasury." Wright, 415 F.3d at
386. In administering the policy, ANPAC acts as a "fiscal agent of
the United States," and is known as a Write Your Own insurer. Id.
In August 2012, plaintiff's property sustained flood and wind
damages as a result of Hurricane Isaac.3 Plaintiff thereafter filed
a flood claim with ANPAC for flood damages to his property.4 In the
current lawsuit, plaintiff alleges that the amount he has received
thus far from ANPAC has not fully compensated him for his covered
losses.5 Specifically, plaintiff contends that ANPAC has paid only
$118,845.05 for building damages, when actual damages totaled over
$250,000, and that ANPAC did not pay for the replacement of several
covered items.6
In April 2014, plaintiff's counsel contacted counsel for ANPAC
and indicated his wish to invoke the appraisal clause of the SFIP.7
But ANPAC contends that plaintiff is not entitled to an appraisal
because "there is a sharp disagreement between the parties as to

3

Id. at 2. Plaintiff's complaint states that the damage
was sustained in August 2011, but the Court assumes that this was
a typographical error, as Hurricane Isaac occurred in 2012.
4

Id.

5

Id. at 2-3.

6

R. Doc. 27-1 at 2.

7

R. Doc. 27-3.
2

the scope of what was damaged by flood."8 ANPAC also argues that
plaintiff's proposed appraiser is not impartial, as is required by
the terms of the SFIP.

II.

DISCUSSION
The appraisal clause in the SFIP provides as follows:
If [the insured] and [the insurer] fail to agree on the
actual cash value or, if applicable, replacement cost of
the damaged property to settle upon the amount of loss,
then either may demand an appraisal of the loss. In this
event, [the insured] and [the insurer] will each choose
a competent and impartial appraiser within twenty days
after receiving a written request from the other. The two
appraisers will choose an umpire. If they cannot agree
upon an umpire within 15 days, [the insured] or [the
insurer] may request that the choice be made by a judge
of a court of record in the state where the covered
property is located. The appraisers will separately state
the actual cash value, the replacement cost, and the
amount of loss as to each item. If the appraisers submit
a written report of an agreement to [the insurer], the
amount agreed upon will be the amount of loss. If they
fail to agree, they will submit their differences to the
umpire. A decision agreed to by any two will set the
amount of actual cash value and loss, or if it applies,
the replacement cost and loss.
Each party will:
1.
Pay its own appraiser; and
2.
Bear the other expenses of the appraisal and
umpire equally.

44 C.F.R. pt. 61, app. A(1), art. VII(P).
FEMA has issued guidelines concerning the "Proper Invocation
and Usage of the Appraisal Clause Provisions in the Standard Flood
Insurance Policy."9 These guidelines are "given 'controlling weight

8

R. Doc. 28 at 1.

9

R. Doc. 27-4.
3

unless [they are] plainly erroneous or inconsistent with the
regulation.'" Worthen v. Fid. Nat'l Prop. & Cas. Ins. Co., 463 F.
App'x 422, 426 (5th Cir. 2012) (internal quotation marks omitted)
(quoting

Stinson v. United States, 508 U.S. 36, 45 (1993)).

According to those guidelines,
[t]he SFIP Appraisal process is a mechanism for resolving
only disputes regarding the dollar amounts to be paid for
flood damages covered by the SFIP. The Appraisal process
cannot be used as a method to determine scope of damages,
coverage under the SFIP, or causation of damages.
. . . .
For the appraisal clause to be properly invoked, . . .
[t]he named insured and the issuer of the SFIP must agree
to the scope of loss and damages. . . . This means that
a claim cannot be partially resolved by the Appraisal
process and partially resolved by other means (such as .
. . through litigation). Appraisal can only be used when
it will result in complete resolution of the entire
claim.10
Here, the appraisal clause has not been properly invoked
because the parties do not agree to the scope of the damages. In
its brief, ANPAC points out that the parties dispute whether the
SFIP covers several items of damage -- for example, the cost of
inspecting and possibly replacing the "builder board" between the
studs and the brick exterior of plaintiffs' home and the cost of
removing and replacing plaintiff's ceramic tile flooring.11 Such
disputes over coverage cannot be resolved by the appraisal process.
See De La Cruz v. Bankers Ins. Co., 237 F. Supp. 2d 1370, 1374

10

Id. at 2 (emphasis in original).

11

See R. Doc. 28 at 2; R. Doc. 28-1 at 14-16, 19, 24.
4

(S.D. Fla. 2002); Stevens v. Allstate Ins. Co., No. 13-5102, R.
Doc. 39 at 4-5 (E.D. La. May 5, 2014) (Fallon, J.).
Plaintiff apparently concedes that the coverage vel non of
certain items is disputed, because he proposes that ANPAC "be
directed to pay the appraisal value of non-disputed portions of the
claim" and that the parties then "litigate the pricing of disputed
items."12 But this is not permissible. Under the terms of the SFIP,
"Appraisal cannot be used as a means to resolve some issues and not
others because of the necessity of having an agreed-to scope of
loss before invoking the clause."13 "This means that Appraisal would
only be available after a lawsuit is filed if it would result in a
resolution of all claims of the insured and a dismissal of the
lawsuit."14 Here, appraisal would not resolve the entire suit
because, again, the parties do not agree to the scope of loss.
Thus, the appraisal clause may not be invoked. See Stevens, No. 135102, R. Doc. 39 at 5.15

12

R. Doc. 27-1 at 3.

13

R. Doc. 27-4 at 3.

14

Id.; see also id. at 2 ("[A] claim cannot be partially
resolved by the Appraisal process and partially resolved by other
means (such as . . . through litigation).").
15

In view of this disposition of defendant's motion, the
Court need not address ANPAC's argument that plaintiff has not
selected an impartial Appraiser.
5

III. CONCLUSION
For the foregoing reasons, the Court DENIES plaintiff's motion
to compel appraisal.

3rd
New Orleans, Louisiana, this _____ day of June, 2014.

SARAH S. VANCE
UNITED STATES DISTRICT JUDGE

6