Fisher v. Beers et al
Filing
22
ORDER AND REASONS the Court GRANTS FEMA's motion 12 and dismisses plaintiff's claim for declaratory relief.. Signed by Chief Judge Sarah S. Vance on 7/14/14.(jjs)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
CARLA FISHER
CIVIL ACTION
VERSUS
NO: 13-6632
RAND BEERS, ET AL.
SECTION: R
ORDER AND REASONS
Plaintiff Carla Fisher brought this breach of contract
action against Rand Beers in his capacity as Secretary of the
Department of Homeland Security ("DHS") and W. Craig Fugate in
his capacity as Administrator of the Federal Emergency Management
Agency ("FEMA"). The complaint alleges that FEMA failed to pay
the full amount of the flood-related losses owed to plaintiff
under a flood insurance policy issued through the National Flood
Insurance Program. Plaintiff also seeks a declaratory judgment
stating that FEMA is obligated to pay her claimed losses up to
the full extent of the submitted proofs of loss, less any
applicable deductible amount. FEMA has filed a motion to dismiss
plaintiff's claim for declaratory relief under Rule 12(b)(1). The
Court GRANTS FEMA's motion, not for lack of jurisdiction, but
because the declaratory judgment claim is essentially a
duplication of the breach of contract action.
I. BACKGROUND
Plaintiff alleges that she purchased a flood insurance
policy for her property at 3017 Yorktowne Drive in La Place,
Louisiana, through the Standard Flood Insurance Program ("SFIP").
She further states that the policy was in effect on August 28,
2012, when Hurricane Isaac made landfall and allegedly caused
damage to the property. Plaintiff alleges that she submitted a
timely proof of loss but that FEMA breached the terms of the
flood policy by failing to pay the full amount of her losses. Her
breach of contract claim asserts that FEMA "is obligated to pay
Plaintiff for her Hurricane Isaac loss up to the full extent of
the flood-related damage, minus any applicable deductible
amount." She seeks damages "including, but not limited to, the
amount of Plaintiff's loss and damages covered under the Flood
Policy above any applicable deductible."
Separately, plaintiff seeks a declaratory judgment stating
"that FEMA is obligated to pay her claims losses and damages up
to the full extent of the submitted Proofs of Loss, less any
applicable deductible amount."
FEMA moves to dismiss plaintiff's claim for declaratory
relief for lack of jurisdiction under Rule 12(b)(1). It argues
that jurisdiction does not exist because Congress has not waived
sovereign immunity for declaratory judgment actions under 42
U.S.C. § 4072. FEMA further argues that plaintiff's claim for
declaratory relief should be dismissed because it is essentially
a duplication of the breach of contract action, and plaintiff
does not seek any relief through the declaratory judgment action
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that she would not obtain by prevailing on her breach of contract
claim.
II.
LEGAL STANDARD
Under Rule 12(b)(1), “[a] case is properly dismissed for
lack of subject matter jurisdiction when the court lacks the
statutory or constitutional power to adjudicate the case.” Home
Builders Ass'n of Miss., Inc. v. City of Madison, 143 F.3d 1006,
1010 (5th Cir. 1998) (quoting Nowak v. Ironworkers Local 6
Pension Fund, 81 F.3d 1182, 1187 (2d Cir. 1996)). A district
court may dismiss a case for lack of subject matter jurisdiction
on any one of three bases: “(1) the complaint alone; (2) the
complaint supplemented by undisputed facts in the record; or (3)
the complaint supplemented by undisputed facts plus the court's
resolution of disputed facts.” Clark v. Tarrant County, 798 F.2d
736, 741 (5th Cir. 1986) (citing Williamson v. Tucker, 645 F.2d
404, 413 (5th Cir. 1981)). The plaintiff bears the burden of
demonstrating that subject matter jurisdiction exists. See
Paterson v. Weinberger, 644 F.2d 521, 523 (5th Cir. 1981).
When, as is the case here, grounds for dismissal may exist
under both Rule 12(b)(1) and Rule 12(b)(6), the Court should
address the jurisdictional question first. See Hitt v. Pasadena,
561 F.2d 606, 608 (5th Cir. 1977); see also Colonia Ins. Co. v.
Williams, 941 F. Supp. 606, 607-08 (N.D. Miss. 1996) ("[P]rior to
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deciding whether to exercise its discretion and allow a
declaratory judgment action to be brought, the court must first
examine jurisdiction.").
III. DISCUSSION
The National Flood Insurance Program ("NFIP"), which was
established by the National Flood Insurance Act ("NFIA"), is a
federally-subsidized program administered by FEMA that provides
flood insurance at or below actuarial rates. Marseilles
Homeowners Condominium Ass'n Inc. v. Fidelity Nat. Ins. Co., 542
F.3d 105, 1054 (5th Cir. 2008). The NFIA authorizes the
Administrator of FEMA to issue regulations establishing the
general terms and conditions of insurability and coverage,
including the types, classes, and locations of eligible
properties. 42 U.S.C. § 4103. These regulations make up the
Standard Flood Insurance Plan ("SFIP"), which is codified at 44
C.F.R. § 61, App. A.1 The SFIP "and all disputes arising from the
handling of any claim under the policy are governed exclusively
by the flood insurance regulations issued by FEMA, the National
Flood Insurance Act of 1968, . . . and Federal common law." 44
C.F.R. 61, App. A(1), Art. IX.
1
Relevant here is Appendix A(1) to § 61, which covers
dwellings.
4
Claims paid under the NFIP are paid from the National Flood
Insurance Fund, which is maintained by the U.S. Treasury. Eaker
v. State Farm Fire and Cas. Ins. Co., 216 F. Supp. 2d 606, 611-12
(S.D. Miss. 2001) (citing 42 U.S.C. § 4071(d)). Because claims
payments are "a direct charge on the public treasury," In re
Estate of Lee, 812 F.2d 253, 256 (5th Cir. 1987), the principles
of sovereign immunity require the federal government to consent
to being sued for such claims. F.D.I.C. v. Meyer, 510 U.S. 471,
475 (1994) ("Absent a waiver, sovereign immunity shields the
Federal Government and its agencies from suit."). "Sovereign
immunity is jurisdictional in nature," as the "terms of [the
United States'] consent to be sued in any court define that
court's jurisdiction to entertain the suit." Id. (quoting United
States v. Sherwood, 312 U.S. 584, 586 (1941)).
The NFIA permits policyholders to sue for amounts due under
the contract if they are dissatisfied with the claim payments.
Wright v. Allstate Ins. Co., 500 F.3d 390, 394 (5th Cir. 2007).
The SFIP further states that the policy and all disputes arising
out of it are governed in part by federal common law. Id. (citing
44 C.F.R. Pt. 61, App. A(1), article IX). In Wright, the Fifth
Circuit held that this reference to federal common law merely
"directs courts to employ standard insurance principles when
deciding coverage issues under the policy." Id. It "does not
stand for the proposition that a flood insurance policyholder may
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bring a federal common law extra-contractual cause of action"
based on the handling of his flood insurance claim. Id. at 39495. In addition to holding that the NFIA did not expressly
provide for an extra-contractual cause of action, the Wright
court declined to recognize an implied right of action, noting
that it did not "perceive any evidence that Congress implicitly
intended that policyholders be able to file claims against [the
insurer] other than those specifically provided for in the Act."
Id. at 395-98.
In Scritchfield v. Mutual of Omaha Insurance Company, 341 F.
Supp. 2d 675 (E.D. Tex. 2004), a judge in the Eastern District of
Texas applied Wright's reasoning to a plaintiff's request for
declaratory relief. Without specifically citing Wright, the
district judge reasoned that nothing in the Act or its
legislative history suggested that Congress intended to create a
statutory cause of action for a declaratory judgment. Id. at 679680. He further concluded that sovereign immunity barred
plaintiff's request for a declaratory judgment, because
"[n]either Plaintiffs nor the court are [sic] able to find a
statute authorizing claims for . . . declaratory relief under the
NFIA. Id. at 681.
FEMA now relies on Scritchfield to argue that this Court
lacks jurisdiction to grant plaintiff's request for declaratory
relief. The Court is not persuaded by Scritchfield's reasoning.
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Wright addressed a plaintiff's attempt to bring private, federal
common law causes of action for fraud and negligent
misrepresentation. Unlike those claims, a declaratory judgment is
not a "cause of action." Rather, it "is merely a vehicle that
allows a party to obtain early adjudication of an actual
controversy arising under other substantive law." Dallas Cnty.,
Tex. v. MERSCORP, Inc., 3:11-CV-02733-O, --- F. Supp. 2d ---,
2014 WL 840016, at *7 (N.D. Tex. Mar. 4, 2014) (emphasis added)
(quoting MetroPCS Wireless, Inc. v. Virgin Mobile USA, L.P.,
3:08-CV-1658-D, 2009 WL 3075205, at *19 (N.D. Tex. Sept. 25,
2009) (citing Collin County, Tex. v. Homeowners Ass'n for Values
Essential to Neighborhoods, (HAVEN), 915 F.2d 167, 170 (5th Cir.
1990)).
Moreover, the Court need not look to federal common law to
expressly or impliedly provide for declaratory relief, because
the Declaratory Judgment Act ("DJA") does just that. The DJA
states, in relevant part:
In a case of actual controversy within its jurisdiction, ...
any court of the United States, upon the filing of an
appropriate pleading, may declare the rights and other legal
relations of any interested party seeking such declaration,
whether or not further relief is or could be sought. Any
such declaration shall have the force and effect of a final
judgment or decree and shall be reviewable as such.
28 U.S.C. § 2201(a). Again, the DJA is "a procedural device
designed to provide a new remedy," as opposed to a substantive
cause of action, "to the federal court arsenal." Mission Ins. Co.
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v. Puritan Fashions Corp., 706 F.2d 599, 601 (5th Cir. 1983). See
also MERSCORP, Inc., 2014 WL 840016, at *7 (noting that the DJA
is "procedural only" and that "the availability of such relief
presupposes the existence of a judicially remediable right”)
(quoting Schilling v. Rogers, 363 U.S. 666, 677 (1960), and Lowe
v. Ingalls Shipbuilding, A Div. of Litton Sys., Inc., 723 F.2d
1173, 1179 (5th Cir. 1984)). Thus, it is irrelevant whether the
NFIA and the federal common law provide for extra-contractual,
substantive causes of action. Because the NFIA allows
policyholders to sue for breach of contract, it has created a
judicially remediable right, and the DJA merely serves as the
procedural vehicle by which a plaintiff may seek a declaration
clarifying those rights.
Likewise, the Court is aware of no authority suggesting that
Congress must expressly waive sovereign immunity with respect to
declaratory judgment actions. Again, a declaratory judgment is
not a substantive cause of action; it is a remedy available to a
litigant who can point to an existing right that the Court has
jurisdiction to enforce. Congress created a limited waiver of
FEMA's sovereign immunity when it permitted policyholders to sue
for breach of their flood insurance contracts. A judgment
declaring the policyholder's rights under the SFIP is precisely
the type of relief Congress authorized when it permitted actions
for breach of contract. A policyholder would receive no relief
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through a declaratory judgment that would not also be available
by pursuing an action for breach of contract. Cf. Garcia v.
United States, 538 F. Supp. 814, 816-17 (S.D. Tex. 1982) (holding
that sovereign immunity did not preclude declaratory relief
because the DJA, while not independently conferring subject
matter jurisdiction on the courts, "create[s] a remedy available
in actions where, as here, the federal district court already has
jurisdiction to entertain suit."). Accordingly, the Court
concludes that it has jurisdiction to hear plaintiff's claim for
declaratory relief.
Citing Scritchfield, FEMA also argues that the Court lacks
jurisdiction over the declaratory judgment action because it is
redundant. It urges that the declaratory judgment action is
"simply a duplication of [plaintiff's] breach of contract claim
because both actions require this Court to: (1) interpret the
terms and conditions of the SFIP and (2) determine the rights and
obligations of the parties on the basis thereunder." Dismissal on
this basis would not, however, be for want of jurisdiction. As
the Court explained in Landscape Design & Construction, Inc. v.
Transport Leasing/Contract,
Federal courts have broad discretion to grant or refuse
declaratory judgment. Torch, Inc. v. LeBlanc, 947 F.2d 193,
194 (5th Cir. 1991). "Since its inception, the Declaratory
Judgment Act has been understood to confer on federal courts
unique and substantial discretion in deciding whether to
declare the rights of litigants." Wilton v. Seven Falls Co.,
515 U.S. 277, 286 (1995). This section is "an authorization,
not a command." Public Affairs Assocs., Inc. v. Rickover,
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369 U.S. 111, 112 (1962). It gives federal courts the
competence to declare rights, but does not impose a duty to
do so. Id.
CIV.A.3:00-CV-0906-D, 2002 WL 257573, at *10 (N.D. Tex. Feb. 19,
2002). Numerous courts, including the Court in Scritchfield, have
declined to entertain claims for declaratory relief when
"[p]laintiffs would get nothing from a declaratory judgment that
they would not get from prevailing on their breach of contract
claims." Scritchfield, 341 F. Supp. 2d at 682. Accord Gloston v.
Dep't of Homeland Sec., CIV.A. 13-6471, 2014 WL 1660630, at *1
(E.D. La. Apr. 25, 2014) (Feldman, J.); Phillips v. State Farm
Fire & Cas. Co., CIV.A. 13-5225, 2014 WL 295140, at *2 (E.D. La.
Jan. 27, 2014) (Barbier, J.); Stoner v. S. Farm Bureau Cas. Ins.
Co., 2:12-CV-00073-BRW, 2013 WL 593459, at *2-3 (E.D. Ark. Feb.
15, 2013); Kougl v. Xspedius Mgmt. Co. of Dallas/Fort Worth,
L.L.C., CIV.A.3:04CV2518-D, 2005 WL 1421446, at *3-4 (N.D. Tex.
June 1, 2005); Jakubowski v. Fed. Emergency Mgmt. Agency,
2:12-CV-02202 CCC, 2013 WL 1284389, at *6 (D.N.J. Mar. 27, 2013);
Fleisher v. Phoenix Life Ins. Co., 858 F. Supp. 2d 290, 300-04
(S.D.N.Y. 2012).2
2
In Scritchfield, the Court concluded that because the
declaratory judgment action was redundant, there was no ripe case
or controversy under the DJA. 341 F. Supp. 2d at 682. This Court
disagrees. The parties' dispute regarding the amount due under
the policy creates an actual controversy. Rather than concluding
that no case or controversy exists, other courts dealing with the
same issue have dismissed the declaratory judgment action as
superfluous under Rule 12(b)(6), see Fleisher, 858 F. Supp. 2d at
300-04; Kougl, 2005 WL 1421446, at *3-4, or they have stricken
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Plaintiff argues that a declaratory judgment would provide
her with additional relief, because a declaration that FEMA is
obligated to pay her flood losses up to the full extent of damage
would "protect against possible future events of denied
coverage." She now claims to seek a declaration that FEMA "is
under a continuing duty to perform under the contract." This
argument fails for two reasons. First, plaintiff's complaint does
not request a declaration regarding FEMA's potential future
obligations under the policy. Rather, it states that "Plaintiff
seeks a declaration that FEMA is obligated to pay her claims
losses and damages up to the full extent of the submitted Proofs
of Loss, less any applicable deductible amount."3 Thus, plaintiff
seeks a declaration as to FEMA's obligations only as to the
previously submitted proofs of loss.
Second, the only dispute in this action is whether FEMA
improperly adjusted plaintiff's past claim by understating the
damage to the insured property and the cost of repairs. Thus, a
declaration stating generally that FEMA would be obligated to
honor the terms of the SFIP in the future would serve no purpose.
And the Court quite obviously cannot issue a declaratory judgment
stating that FEMA is obligated to pay in full the amounts listed
the claim as redundant under Rule 12(f). See Gloston, 2014 WL
1660630, at *1; Stoner, 2013 WL 593459, at *2-3.
3
Emphasis added.
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in any potential future proofs of loss, as coverage must be
determined on a claim-by-claim basis.
Accordingly, the Court dismisses plaintiff's claim for
declaratory relief, not for lack of jurisdiction, but because it
is redundant.
IV.
CONCLUSION
For the foregoing reasons, the Court GRANTS FEMA's motion
and dismisses plaintiff's claim for declaratory relief.
New Orleans, Louisiana, this 14th day of July, 2014.
___
_________________________________
SARAH S. VANCE
UNITED STATES DISTRICT JUDGE
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