Vidos v. American Strategic Insurance Corporation

Filing 12

ORDER AND REASONS granting 10 Motion to Dismiss all of plaintiff's extra-contractual claims. Signed by Chief Judge Sarah S. Vance on 3/17/14. (jjs)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
CATHERINE VIDOS

CIVIL ACTION

VERSUS

NO: 13-5510

AMERICAN STRATEGIC INSURANCE
COMPANY

SECTION: R(5)

ORDER AND REASONS
Defendant American Strategic Insurance Company

moves the

Court to dismiss all of plaintiff's extra-contractual claims.1
For the following reasons, the Court GRANTS defendant’s motion.

I.

BACKGROUND
Plaintiff Catherine Vidos is a Mandeville, Louisiana

homeowner.2 She purchased a Standard Flood Insurance Policy
(SFIP) from defendant ASI.3 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) ["Wright I"]. "The
terms of SFIP policies are dictated by FEMA." Id. at 386.
Although ASI is nominally plaintiff's insurer, "[p]ayments on
SFIP claims ultimately come from the federal treasury." Id. In

1

R. Doc. 10.

2

R. Doc. 1 at 1.

3

Id.

administering the policy, ASI 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 damage
as a result of Hurricane Isaac.4 Plaintiff thereafter filed a
flood claim with ASI for flood damages to her property.5
In August 2013, plaintiff sued ASI, asserting that the
amount she has received thus far from ASI has not fully
compensated her for her covered losses.6 Plaintiff seeks damages;
"interest from the date of judicial demand"; penalties pursuant
to La. Rev. Stat. §§ 22:658 and 22:1220; "general, special and
equitable relief"; costs; and attorneys' fees.7
ASI now moves to dismiss plaintiff’s extra-contractual
claims.8 Plaintiff has not filed a response.

II.

LEGAL STANDARD
To survive a Rule 12(b)(6) motion to dismiss, the plaintiff

must plead enough facts to "state a claim to relief that is
plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570

4

Id. at 3.

5

Id.

6

Id.

7

Id. at 4-5.

8

R. Doc. 10.
2

(2007)). A claim is facially plausible "when the plaintiff pleads
factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged." Id. A court must accept all well-pleaded facts as true
and must draw all reasonable inferences in favor of the
plaintiff. Lormand v. U.S. Unwired, Inc., 565 F.3d 228, 239 (5th
Cir. 2009).
A legally sufficient complaint need not contain detailed
factual allegations, but it must go beyond labels, legal
conclusions, or formulaic recitations of the elements of a cause
of action. Iqbal, 556 U.S. at 678. In other words, the face of
the complaint must contain enough factual matter to raise a
reasonable expectation that discovery will reveal evidence of
each element of the plaintiff's claim. Lormand, 565 F.3d at 257.
If there are insufficient factual allegations to raise a right to
relief above the speculative level, or if it is apparent from the
face of the complaint that there is an insuperable bar to relief,
the claim must be dismissed. Twombly, 550 U.S. at 555.

III. DISCUSSION
ASI is correct that, to the extent that plaintiff alleges
extra-contractual claims, these claims must be dismissed.
The regulations promulgated by FEMA under the National Flood
Insurance Act of 1968 provide that "all disputes arising from the
handling of any claim under [a SFIP] are governed exclusively by
3

the flood insurance regulations issued by FEMA, the National
Flood Insurance Act of 1968 . . . and Federal common law." 44
C.F.R. pt. 61, App. A(1), Art. IX. These regulations expressly
preempt state law tort claims arising from claims handling by a
WYO. C.W. Gallup v. Omaha Prop. & Cas. Ins. Co., 434 F.3d 341,
344-45 (5th Cir. 2005); see also Wright I, 415 F.3d at 390. This
includes claims for statutory penalties under Louisiana law. See
West v. Harris, 573 F.2d 873, 881 (5th Cir. 1978); Bryars v.
Imperial Fire & Cas. Ins. Co., Civil Action No. 11-72, 2011 WL
54029320, at *5 n.9 (E.D. La. Nov. 8, 2011). Furthermore, the
Fifth Circuit has held that the NFIA does not explicitly or
implicitly authorize extra-contractual claims against WYO
insurers based on federal common law. See Wright v. Allstate Ins.
Co., 500 F.3d 390, 398 (5th Cir. 2007) ["Wright II"]. In other
words, insureds under SFIP policies have one remedy, and only one
remedy for nonpayment of claims: a suit for breach of contract.
See 42 U.S.C. § 4072 (authorizing such suits); Wright II, 500
F.3d at 398 (holding that policyholders cannot file extracontractual claims against WYO insurers because such claims were
not explicitly or implicitly authorized by Congress). Here,
plaintiff’s lawsuit is based solely on her claim under the
standard policy issued by ASI, which is a WYO insurer under the
NFIP. Gallup, Wright I, and Wright II thus expressly prohibit any
state law or extra-contractual claims in this context.

4

Plaintiff is also precluded from recovering attorneys fees
under state law. See West, 573 F.2d at 881 ("[A] prevailing
plaintiff in a suit on a flood insurance policy issued pursuant
to the N[FIA] is not entitled to recover . . . attorneys' fees
allowed by state insurance law for arbitrary denial of
coverage."); Midland Mortg. Co. v. State Farm Fire & Cas. Co.,
No. 07-4910, 2009 WL 1789419, at *4 (E.D. La. June 23, 2009)
(following West); Miller v. Omaha Prop. & Cas. Ins. Co., No.
Civ.A. H-95-4942, 1997 WL 33833419, at *3 (S.D. Tex. Sep. 4,
1997) (same).
Neither can plaintiff recover "interest from the date of
judicial demand," as she seeks in her complaint.9 In Newton v.
Capital Assurance Co., 245 F.3d 1306 (11th Cir. 2001), the
Eleventh Circuit held that interest awards against WYO companies
constitute direct charges on the public treasury and thus are
precluded by the "no-interest rule," which provides immunity to
the United States from interest awards. Id. at 1312; cf. Sandia
Oil Co. v. Beckton, 889 F.2d 258, 263 (10th Cir. 1989) (award of
postjudgment interest in suit against FEMA precluded by sovereign
immunity); In re Estate of Lee, 812 F.2d 253, 256 (5th Cir. 1987)
(award of prejudgment interest in suit against FEMA precluded by
sovereign immunity). The Fifth Circuit has cited Newton with
approval for this proposition. See Monistere v. State Farm Fire &
9

R. Doc. 1 at 4.
5

Cas. Co., 559 F.3d 390, 398 (5th Cir. 2009) (noting the parties'
agreement that the NFIP does not authorize pre- or postjudgment
interest). Moreover, other courts in this district have followed
Newton. See Miceli v. Hartford Fire Ins. Co., No. Civ.A. 03-2724,
2004 WL 253457, at *2-4 (E.D. La. Feb. 10, 2004) (finding
plaintiff's claim against WYO insurer for interest from the date
of judicial demand "precluded by the 'no-interest' rule because
it constitute[d] a direct charge on the public treasury.").
Accordingly, the Court holds that plaintiff's request for
interest is prohibited by the no-interest rule.
IV. CONCLUSION
For the foregoing reasons, ASI’s motion to dismiss plaintiff’s
extra-contractual claims is GRANTED.

17th
New Orleans, Louisiana, this _____ day of March, 2014.

SARAH S. VANCE
UNITED STATES DISTRICT JUDGE

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