Westmoreland v. Fidelity National Indemnity Insurance Company et al
Filing
54
RULING AND ORDER granting in part and denying in part 36 Motion for Partial Summary Judgment. Under the terms of the SFIP, the ACV Loss Settlement Provision applies to Plaintiffs claim because the Property is not her principal residence. Therefor e, Defendants Partial Motion for Summary Judgment seeking to dismiss Plaintiff's claim for recoverable depreciation is GRANTED. Defendants Partial Motion for Summary Judgment is in all other respects DENIED. Signed by Judge John W. deGravelles on 5/29/2015. (LLH)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA
JOYCE WESTMORELAND
CIVIL ACTION
VERSUS
NO. 13-564-JWD-RLB
FIDELITY NATIONAL INDEMNITY
INSURANCE COMPANY and COLONIAL
CLAIMS CORPORATION
RULING & ORDER
Before the Court is the Partial Motion for Summary Judgment filed by Defendant, Wright
National Flood Insurance Company f/k/a Fidelity National Indemnity Insurance Company
(“Wright”). (Doc. 36). Plaintiff, Joyce Westmoreland (“Westmoreland”), opposes the motion
(Doc. 42), and Defendant has filed a Reply Memorandum. (Doc. 45). The Court has carefully
reviewed the submissions of the parties and the relevant law. For the reasons which follow, the
motion is GRANTED in part and DENIED in part.
I.
BACKGROUND FACTS
This action arises out of a flood insurance claim made by Plaintiff, Joyce Westmoreland,
for damage to her property located at 20406 Fairway Drive, Springfield, Louisiana (hereinafter
referred to as “the Property”), sustained during Hurricane Isaac on August 29, 2012. (Doc. 1).
Westmoreland was the holder of Standard Flood Insurance Policy (“SFIP”) No. 171150610986
which was issued by Wright,1 a Write-Your-Own (“WYO”) carrier participating in the National
Flood Insurance Program. (Doc. 36-1, pp. 1, 4). The SFIP was effective from December 4, 2011,
1
All references to transactions of Wright include both those transactions entered into by the insurer under its former
name, Fidelity National Indemnity Insurance Company, and those entered into under its current name, Wright
National Flood Insurance Company.
1
through December 4, 2012, and had a coverage limit for building structural damages in the
amount of $200,000, subject to a deductible of $1,000. (Id. at p. 4).
At the outset, the Court notes that the parties are in agreement as to the majority of the
material facts of the case. In September of 2008, the Property sustained flood damages when
Hurricane Ike made landfall. (Doc. 36-1, pp. 3-4). The storm caused the Property to receive three
inches of interior flood water and fifteen inches of exterior flood water. (Id. at p. 4). At the time
of this flood loss, Carl Lind was the principal owner of the Property. (Doc. 36-2, p. 6). Mr. Lind
was the named insured on SFIP No. 177700276306, which had been issued to him by Wright.
(Id.). Mr. Lind made a flood loss claim through Wright and received payment under his SFIP in
the amount of $21,151.81. (Id.).
In 2010, Westmoreland purchased the Property from the Linds. (Doc. 1, ¶ 10; see also
Doc. 42-6, p. 6). On August 29, 2012, Hurricane Isaac made landfall and flooded
Westmoreland’s property. (Doc. 42, p. 2). After the storm, Plaintiff notified Defendant of the
flood loss, and the claims adjustment process began. (Doc. 36-1, p. 4). Wright engaged
independent adjuster, Bruce Huffman (“Huffman”), through Colonial Claims Corporation,2 to
adjust Plaintiff’s claim. (Id.). Following an inspection of the Property, Huffman determined that
the Property had received approximately twenty-two inches of water on the interior and thirtytwo inches of water on the exterior of the building. (Id.). The interior flood waters remained
inside the building for approximately five days. (Doc. 42, p. 3).
Huffman determined that all damages observed during his inspection were caused by
flood. (Doc. 36-6, p. 1). However, Huffman indicated that some of the damage appeared to have
been damage from a prior flood loss; therefore, evidence of the repair of the 2008 damages was
2
In her Complaint, Plaintiff named Colonial Claims as a defendant. (Doc. 1).The Court dismissed Colonial Claims
on April 3, 2014. (Doc. 26).
2
requested from Westmoreland. (Doc. 36-1, pp. 4-5). Because no evidence was provided to
Huffman, his estimate included only those “items that were not paid in [the] prior [claim] or
items I could tell by pictures and my inspection hat [sic] they had been repaired.” (Doc. 36-6, p.
2). Huffman’s estimate totaled $54,892.90 actual cash value. (Doc. 36-4, p. 18). Apparently
based on this estimate, Wright issued a payment for structural damages in the amount of
$54,892.90 to Westmoreland.3 (Doc. 45, p. 5).
On December 20, 2012, Wright issued a Partial Denial of Claim letter to Westmoreland
through her attorney. (Doc. 36-5, p. 3). Westmoreland appealed the denial to FEMA, but
Wright’s decision was upheld. (Doc. 36-7). Thus, on August 27, 2013, Westmoreland filed the
instant suit in this Court. (Doc. 1).
II.
THE PRESENT MOTION
Wright moves for summary judgment on two separate issues. First, Wright contends that
Westmoreland is not entitled to “recover for items of damage that were previously damaged by a
prior flood loss, however, not repaired/replaced after the prior loss.” (Doc. 36-1, p. 2).
Specifically, Wright argues that Article VII(K)(2)(e) of the SFIP requires Westmoreland to
produce evidence to show that any items damaged in a prior flood loss for which payment under
the SFIP was issued were actually repaired before the current flood loss occurred. (Id. at p. 5). In
opposition, Westmoreland argues that she is entitled to recover all damages from the 2012 flood
loss regardless of whether or not the prior damages were repaired. (Doc. 42, p. 8). Wright
responds that based on the SFIP and provisions of FEMA’s Adjuster Claims Manual, unrepaired
prior damages cannot be paid a second time. (Doc. 45, p. 4). Therefore, Wright argues, it is
entitled to summary judgment because Westmoreland cannot meet her burden of proving the
repairs were made. (Doc. 45).
3
It is unclear from the record when this payment was made.
3
Second, Wright asserts that because the Property was not Westmoreland’s principal
residence, any recovery allowed is subject to valuation by Actual Cash Value (“ACV”) under
Article VII(V) of the SFIP. (Doc. 36-1, p. 8). In her opposition, Westmoreland concedes that the
Property was not her principal residence, and, therefore, her recovery is limited to the ACV.
(Doc. 42, p. 10).
III.
LAW & ANALYSIS
A. Summary Judgment Standard
“The 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.”
Fed.R.Civ.P. 56(a). If the mover bears his burden of showing that there is no genuine issue of
fact, “its opponent must do more than simply show that there is some metaphysical doubt as to
the material facts. . . . [T]he nonmoving party must come forward with ‘specific facts showing
that there is a genuine issue for trial.’” See Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
475 U.S. 574, 586–587, 106 S.Ct. 1348 (1986) (internal citations omitted). The non-mover's
burden is not satisfied by “conclusory allegations, by unsubstantiated assertions, or by only a
‘scintilla’ of evidence.” Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.1994) (citations
and internal quotations omitted). “Where the record taken as a whole could not lead a rational
trier of fact to find for the non-moving party, there is no ‘genuine issue for trial.’” Matsushita
Elec. Indus. Co., 475 U.S. at 587. Further:
In resolving the motion, the court may not undertake to evaluate the credibility of
the witnesses, weigh the evidence, or resolve factual disputes; so long as the
evidence in the record is such that a reasonable [fact-finder] drawing all
inferences in favor of the nonmoving party could arrive at a verdict in that party's
favor, the court must deny the motion.
International Shortstop, Inc. v. Rally's, Inc., 939 F.2d 1257, 1263 (5th Cir.1991).
4
B. Interpretation of the SFIP
The flood insurance policy issued by Wright to Westmoreland was a SFIP administered
pursuant to the National Flood Insurance Program (“NFIP”). Congress created the NFIP “to
provide insurance coverage at or below actuarial rates.” Marseilles Homeowners Condo. Ass'n
Inc. v. Fid. Nat. Ins. Co., 542 F.3d 1053, 1054 (5th Cir. 2008). The Federal Emergency
Management Agency (“FEMA”) operates the NFIP with claims ultimately being paid from the
federal treasury. Gowland v. Aetna, 143 F.3d 951, 955 (5th Cir. 1998). FEMA regulations dictate
the terms and conditions of the SFIP. Wright v. Allstate Ins. Co., 415 F.3d 384, 386 (5th Cir.
2005). Appendix A(1) to Title 44, Part 61 of the Code of Federal Regulations contains the
language of the SFIP at issue here. 44 C.F.R. Pt. 61, App. A(1).
The SFIP and all disputes arising from claims under it are governed by FEMA flood
insurance regulations and federal common law. 44 C.F.R. Pt. 61, App. A(1), Art. IX.
Additionally, the scope of coverage under the SFIP is subject to interpretation by the Federal
Insurance Administrator. 44 C.F.R. 61.4. And “FEMA’s interpretation of its own regulations is
given ‘controlling weight unless it is plainly erroneous or inconsistent with the regulation.’ ”
Worthen v. Fid. Nat’l Prop. & Cas. Ins. Co., 463 Fed. Appx. 422, 426 (5th Cir. 2012) (quoting
Stinson v. United States, 508 U.S. 36, 45, 113 S. Ct. 1913 (1993) (internal citation and quotation
omitted)). Because claims are paid from the federal treasury, the terms and conditions of the
SFIP must be “strictly construed and enforced.” Gowland v. Aetna, 143 F.3d 951, 954 (5th Cir.
1998).
While federal common law governs, the Fifth Circuit has applied “general principles of
state insurance law” to aid in the interpretation of SFIPs. Worthen, 463 Fed. Appx. at 425. These
principles include:
5
(1) if the language of a policy is clear and unambiguous, it is accorded its natural
meaning; (2) if the meaning of a policy provision is susceptible to different
constructions, the one most favorable to the insured prevails; (3) insurance
contracts are to be reasonably construed in accordance with the objective and
intent of the parties; (4) in determining the most reasonable construction of
contested provisions, the court may draw from the provisions, the policy as a
whole, and the apparent objectives of the parties in entering the contract; and (5)
in the end, if the meaning of the policy terms remains unclear, the policy is
generally construed in the insured's favor to promote the policy's objective of
providing coverage.
Worthen, 463 Fed. Appx. at 425-26 (citing Hanover Bldg. Materials, Inc. v. Guiffrida, 748 F.2d
1011, 1013 (5th Cir. 1984)).
C. Summary Judgment on the Proof of Prior Flood Damage Repair Provision
Wright argues that Article VII(K)(2)(e) requires Westmoreland to show that the 2008
flood damages were repaired or replaced “before additional U.S. Treasury funds can again be
paid out for the exact same damage.” (Doc. 36-1, p. 5). In essence, Wright’s argument stands for
the proposition that the SFIP specifically excludes from coverage prior flood damages for which
payment was made but which were not repaired.
The Court disagrees. Article VII(K)(2)(e) gives the insurer the option to “request, in
writing, that [the insured] furnish [it] with a complete inventory of the lost, damaged or
destroyed property, including … [e]vidence that prior flood damage has been repaired.” 44
C.F.R. Pt. 61, App. (A)(1), art. VII(K)(2)(e). Even applying the required strict construction
standards, the language of this provision does not indicate a coverage exclusion for prior
unrepaired damages; it merely provides the insurer with the option to request evidence of repair.
Simply put, there is nothing in Article VII or the SFIP as a whole indicating that evidence of the
repair of prior damages is a predicate to recovery.
Wright also points to FEMA’s Adjuster Claims Manual for support of its claim that
unrepaired prior damages are excluded from coverage under the SFIP. Fed. Emergency Mgmt.
6
Agency, National Flood Insurance Program: Adjuster Claims Manual (2013).4 Specifically,
Wright notes that the Adjuster Claims Manual requires the adjuster to “exclude from adjustment
any unrepaired prior damages” and to “[d]ocument that prior flood damage has been repaired in
the event that the building sustained previous flood damage.” Id. at II-5, VII-3. Wright argues
that these requirements and the SFIP show that unrepaired prior damages are excluded from
coverage. (Doc. 45, p. 4).
Again, the Court must disagree. The language of these provisions is clear and
unambiguous – the adjuster must exclude unrepaired prior damages from the adjustment. The
Adjuster Claims Manual provisions cited by Wright speak only to the standards which the
adjuster must follow, not the scope of coverage under the SFIP.
Moreover, reading the provisions from the Adjuster Claims Manual in pari materia with
Article VII(K)(2)(e) does not resolve the issue of whether or not the SFIP allows for coverage of
prior unrepaired damages. As discussed above, Article VII(K)(2)(e) merely provides the insurer
with the option to request evidence of repairs. If that evidence is available and provided, the
adjuster can use it to fulfill his or her obligation to document the repairs.
The Court is further persuaded by the structure of the SFIP itself. Coverage exclusions
are found in Articles IV and V of the SFIP. Under Article IV of the SFIP, certain types of
property are specifically excluded from coverage including land, currency, and fences. See 44
C.F.R. Pt. 61, App. (A)(1), art. IV(6), (7), and (12). Article V sets forth specific coverage
exclusions such as lost revenue and profits. 44 C.F.R. Pt 61, App. (A)(1), art. V(A)(1). Notably,
neither Article IV nor Article V excludes from coverage unrepaired prior flood damages.
At bottom, Wright has not pointed to any cases, statutes, regulations, or FEMA
interpretations which clarify whether or not the SFIP covers prior unrepaired damages. Thus, the
4
Available at https://www.fema.gov/media-library/assets/documents/2675.
7
Court concludes that the SFIP is ambiguous as to its coverage of prior unrepaired damages; and,
applying the standard principles of insurance policy interpretation, this ambiguity will be
resolved in favor of the insured, Westmoreland. Accordingly, the Court finds that this issue is
inappropriate for summary judgment; therefore, Wright’s motion is denied.
D. Summary Judgment on the Actual Cash Value Provision
Pursuant to Article VII(V)(4)(i), the actual cash value loss settlement applies to property
that is “[a] dwelling that is not your principal residence.” 44 C.F.R. Pt. 61, art. VII(V)(4)(i). As
noted above, Westmoreland has conceded that the Property was not her principal residence, and
her recovery is, therefore, limited to the actual cash value loss settlement provision. Article
II(B)(2) defines actual cash value as “[t]he cost to replace an insured item of property at the time
of the loss, less the value of its physical depreciation.” 44 C.F.R. Pt. 61, art. II(B)(2) (emphasis
added). Under the ACV provision, any recovery Westmoreland receives cannot include recovery
for depreciation. Consequently, Wright’s Partial Motion for Summary Judgment as to the ACV
provision is granted, and Westmoreland’s claim for recovery of depreciation is dismissed with
prejudice.
IV.
CONCLUSION
Accordingly,
IT IS ORDERED that the Partial Motion for Summary Judgment filed by Defendant,
Wright National Flood Insurance Company f/k/a Fidelity National Indemnity Insurance
Company, is GRANTED IN PART. Under the terms of the SFIP, the ACV Loss Settlement
Provision applies to Plaintiff’s claim because the Property is not her principal residence.
Therefore, Defendant’s Partial Motion for Summary Judgment seeking to dismiss Plaintiff’s
8
claim for recoverable depreciation is GRANTED. Defendant’s Partial Motion for Summary
Judgment is in all other respects DENIED.
Signed in Baton Rouge, Louisiana, on May 29, 2015.
S
JUDGE JOHN W. deGRAVELLES
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA
9
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?