Muse, et al v. National Flood Insurance Program et al
Filing
58
ORDER AND REASONS denying 36 MOTION for APPEAL OF MAGISTRATE JUDGE DECISION to District Court. The Magistrate Judge's order denying plaintiffs leave to amend the complaint is AFFIRMED. Signed by Judge Sarah S. Vance on 2/28/2019. (Reference: All cases)(cg)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
KAREN PORTER MUSE, ET AL.
VERSUS
CIVIL ACTION
NO. 17-10586
NATIONAL FLOOD INSURANCE
PROGRAM, ET AL.
SECTION “R” (3)
ORDER AND REASONS
Before the Court is a motion by plaintiffs, Karen and Matthew Muse,
to review and reverse the ruling by Magistrate Judge Daniel E. Knowles, III
denying their motion for leave to file an amended complaint. 1 Because
plaintiffs’ proposed amendments are futile, the Court denies the motion and
affirms the Magistrate Judge’s decision.
I.
BACKGROUND
This action arises out of a dispute regarding a flood insurance policy
issued by the Federal Emergency Management Agency (FEMA) under the
National Flood Insurance Program (NFIP). 2 In August 2016, plaintiffs’
property in Tickfaw, Louisiana was allegedly damaged in a flood.3 At the
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2
3
R. Doc. 36.
R. Doc. 1 at 2 ¶ 2.
Id. at 4 ¶ 11.
time of the flood, plaintiffs held a standard flood insurance policy (SFIP),
provided through the NFIP and administered by FEMA. 4 Plaintiffs timely
reported their losses to FEMA, seeking to recover under the policy.5 FEMA
sent an adjuster to plaintiffs’ property to assess the loss amount. 6 The
adjuster prepared a damage estimate and proof of loss, which plaintiffs
signed, although they allege that FEMA did not comply with the provisions
of the policy. 7 Plaintiffs allege that, several months later, they became
dissatisfied with the adjuster’s proof of loss and FEMA’s payments. Plaintiffs
then retained an independent adjuster to evaluate their losses. 8
The
independent adjuster prepared a second proof of loss, which plaintiffs
submitted to FEMA on October 6, 2017. 9
On October 12, 2017, before FEMA had responded to plaintiffs’ second
proof of loss, plaintiffs initiated this action against (1) FEMA, (2) the
National Flood Insurance Program (NFIP), (3) W. Brock Long, in his official
capacity as administrator of the Federal Emergency Management Agency
(FEMA), and (4) Elaine Duke, in her official capacity as secretary of the
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5
6
7
8
9
Id. ¶ 14.
Id. at 5 ¶ 17.
Id. ¶ 18.
Id. ¶¶ 18-19.
Id. at ¶ 21.
Id. at 6 ¶ 23; R. Doc. 35 at 1.
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Department of Homeland Security, claiming breach of contract. 10 On June
4, 2018, plaintiffs voluntarily dismissed defendants NFIP and Elaine Duke.11
On July 20, 2018, plaintiffs filed a motion for leave to file an amended
complaint. 12
Plaintiffs sought to add claims under the Administrative
Procedure Act (APA) and the Mandamus and Venue Act. 13
On August 30, 2018, Magistrate Judge Daniel E. Knowles, III denied
plaintiffs’ motion for leave to amend.14 He held that plaintiffs’ amendments
were futile because plaintiffs could not pursue claims against FEMA under
the APA or in a mandamus action.15 Plaintiffs have filed a motion for review
of the Magistrate Judge’s order. 16 FEMA opposes the motion. 17
II.
LEGAL STANDARD
A magistrate judge’s ruling on a non-dispositive civil motion may be
appealed to the district court. Fed. R. Civ. P. 72(a). When a timely objection
is raised, the district judge must review the magistrate judge’s ruling and
10
11
12
13
14
15
16
17
See R. Doc. 1.
R. Doc. 21.
R. Doc. 25.
See R. Doc 25-3.
R. Doc. 35.
Id. at 7-12.
R. Doc. 36.
R. Doc. 42.
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“modify or set aside any part of the order that is clearly erroneous or contrary
to law.” Id. The court reviews the magistrate judge’s “‘factual findings under
a clearly erroneous standard,’ while ‘legal conclusions are reviewed de
novo.’” Moore v. Ford Motor Co., 755 F.3d 802, 806 (5th Cir. 2014) (quoting
Alldread v. City of Grenada, 988 F.2d 1425, 1434 (5th Cir. 1993)). A factual
finding is clearly erroneous when “although there is evidence to support it,
the reviewing court on the entire evidence is left with the definite and firm
conviction that a mistake has been committed.”
United States v. U.S.
Gypsum Co., 333 U.S. 364, 395 (1948). A legal conclusion is contrary to law
“when the magistrate fails to apply or misapplies relevant statutes, case law,
or rules of procedure.” Ambrose-Frazier v. Herzing Inc., No. 15-1324, 2016
WL 890406, at *2 (E.D. La. Mar. 9, 2016); Bruce v. Hartford, 21 F. Supp. 3d
590, 594 (E.D. Va. 2014) (“For questions of law there is no practical
difference between review under Rule 72(a)’s contrary to law standard and a
de novo standard.” (internal quotations and modifications omitted)).
III. DISCUSSION
Because plaintiffs moved to amend the complaint before the Court’s
deadline for submitting amended pleadings in its scheduling order, their
motion to amend is governed by Federal Rule of Civil Procedure 15(a). See
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S&W Enter., LLC. v. SouthTrust Bank of Ala., NA, 315 F.3d 533, 536 (5th
Cir. 2003). Under Rule 15(a), the Court will “freely give leave [to amend]
when justice so requires.” Fed. R. Civ. P. 15(a)(2). The Supreme Court has
held that “[i]f the underlying facts or circumstances relied upon by a plaintiff
may be a proper subject of relief, he ought to be afforded an opportunity to
test his claim on the merits.” Foman v. Davis, 371 U.S. 178, 182 (1962).
Leave to amend, however, “is by no means automatic.” Halbert v. City of
Sherman, 33 F.3d 526, 529 (5th Cir. 1994). A party requesting amendment
must “set forth with particularity the grounds for the amendment and the
relief sought.” United States, ex rel. Doe v. Dow Chem. Co., 343 F.3d 325,
331 (5th Cir. 2003) (quoting United States, ex rel Willard v. Humana Health
Plan of Tex., Inc., 335 F.3d 375, 386-87 (5th Cir. 2003)).
The Court
considers multiple factors before granting leave to amend, including “undue
delay, bad faith or dilatory motive on the part of the movant, repeated failure
to cure deficiencies by amendments previously allowed, undue prejudice to
the opposing party by virtue of allowance of the amendment, [and] futility of
amendment.” Foman, 371 U.S. at 182.
The Court finds no error of law or fact in the Magistrate Judge’s denial
of leave to amend under Rule 15(a), because plaintiffs’ proposed
amendments would be futile. The APA and mandamus claims that plaintiffs
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seek to add have no merit, because plaintiffs did not exhaust their claim
against FEMA before filing this lawsuit. The only avenue for plaintiffs to
pursue a flood insurance claim against FEMA is via the National Flood
Insurance Act (NFIA). The NFIA allows plaintiffs to file an action only “upon
the disallowance by the Administrator . . . or upon the refusal of the claimant
to accept the amount allowed.” 42 U.S.C. § 4072. Plaintiffs do not dispute
that they (1) did not refuse FEMA’s payments under the first proof of loss, or
(2) that they did not receive a denial of their second proof of loss. 18 They
therefore have no right to bring a claim under the NFIA. See Wiedemann v.
Harleysville Mut. Ins., No. 06-4723, 2006 WL 3462926, at *1 (E.D. La. Nov.
28, 2006); Carmouche v. Nat’l Flood Ins. Program, No. 17-11479, 2018 WL
5279121, at *3 (E.D. La. Oct. 24, 2018).
Plaintiffs’ failure to exhaust their claim prohibits them from bringing
an action against FEMA under the APA. The APA gives federal courts the
power to review final agency action and to compel agency action that is
unreasonably delayed. See 5 U.S.C. §§ 704, 706. But the APA explicitly states
that it does not “affect[] other limitations on judicial review” or “confer[]
authority to grant relief if any other statute that grants consent to suit
expressly or impliedly forbids the relief which is sought.” Id. § 702; see also
18
R. Doc. 35 at 1; R. Doc. 36-1 at 2-3.
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Bowen v. Massachusetts, 487 U.S. 879, 903 (1988) (noting that Congress did
not intend the APA to “duplicate the . . . established special statutory
procedures relating to” review of agency action). Plaintiffs cannot bring their
claim under the APA, because the NFIA explicitly provides a process by
which an insured may dispute a determination made by FEMA, and plaintiffs
have failed to adhere to this process. The APA does authorize plaintiffs to
pursue a claim that the NFIA disallows. Carmouche, 2018 WL 5279121, at
*5 (denying leave to amend a complaint to add a claim under the APA when
plaintiff had not exhausted her claim under the NFIA).
Plaintiffs cannot pursue their claim under the Mandamus and Venue
act either. Federal district courts “have original jurisdiction of any action in
the nature of mandamus to compel an officer or employee of the United
States or any agency thereof to perform a duty owed to the plaintiff.” 28
U.S.C. § 1361. But mandamus is an “extraordinary remedy which should be
utilized only in the clearest and most compelling of cases.” Winningham v.
U.S. Dep’t of Hous. & Urban Dev., 512 F.2d 617, 620 (5th Cir. 1975) (quoting
Carter v. Seamans, 411 F.2d 767, 773 (5th Cir. 1969)). It is intended to
provide relief to a plaintiff “only if he has exhausted all other avenues of relief
and only if the defendant owes him a clear nondiscretionary duty.” Heckler
v. Ringer, 466 U.S. 602, 616 (1984). A plaintiff is entitled to mandamus
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relief only when the plaintiff can show (1) a clear right to relief; (2) that the
defendant has a clear duty to act; and (3) that no other remedy is available.
Newsome, 301 F.3d at 231.
The Magistrate Judge correctly determined that plaintiffs have not
shown a clear right to relief under the first prong, because they failed to
exhaust their claim. 19 Plaintiffs only have a right to relief under the NFIA
once they have received a denial of their proof of loss. The Magistrate Judge
also correctly determined another adequate remedy is available to
plaintiffs.20 Plaintiffs failure to pursue their remedies properly under the
NFIA does not mean that these potential remedies do not exist. Plaintiffs
have therefore shown no justifiable basis to grant mandamus relief.
Carmouche, No. 17-11479, 2018 WL 5279121, at *5 (denying leave to amend
a complaint to add a mandamus claim when plaintiff had not exhausted her
claim under the NFIA).
None of plaintiffs’ arguments challenge the
Magistrate Judge’s determinations that they have no right to relief without
exhausting their claims, or that the NFIA provides an adequate remedy for
their claim. Given that plaintiffs have failed to make these showings, their
mandamus claim must fail.
19
20
See R. Doc. 35 at 11-12.
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Plaintiffs argue that the Magistrate Judge incorrectly determined that
their claim cannot be adjusted while plaintiffs’ case is pending. 21 This
argument is similarly unavailing. The NFIA allows plaintiffs to file an action
only after they have received a disallowance of their claim. See 42 U.S.C. §
4072. Even if FEMA had issued a denial of plaintiffs’ second proof of loss
after they filed this action, the denial would not remedy plaintiffs’ failure to
exhaust, because the statute requires that plaintiffs file their claim after
receiving a disallowance. Id. The Court therefore sees no error in the
Magistrate Judge’s determination.
Because plaintiffs’ claims under the APA and Mandamus Act have no
merit, the Magistrate Judge correctly determined that their proposed
amendments to their complaint are futile.
21
R. Doc. 36-1 at 2.
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IV.
CONCLUSION
For the foregoing reasons, plaintiffs’ motion for reconsideration is
DENIED. The Magistrate Judge’s order denying plaintiffs leave to amend
the complaint is AFFIRMED.
28th
New Orleans, Louisiana, this _____ day of February, 2019.
_____________________
SARAH S. VANCE
UNITED STATES DISTRICT JUDGE
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