Moffett et al v. Computer Sciences Corporation, et al

Filing 657

REPORT AND RECOMMENDATIONS of Special Master re 549 Supplemental MOTION for Summary Judgment for the claim of John and Lydia Helmer filed by FEMA Objections to R&R due by 6/20/2011 Responses due by 6/20/2011. Signed by Special Master Dennis M. Sweeney on June 2, 2011. (Sweeney, Special Master)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
Southern Division

THOMAS L. MOFFETT, II, ET AL.
Plaintiffs,
v.
COMPUTER SCIENCES CORPORATION,
ET AL.
Defendants.

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Civil Action No.
8:05-CV-01547

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REPORT AND RECOMMENDATION CONCERNING
WAIVER CLAIM OF JOHN AND LYDIA HELMER
This constitutes the Report and Recommendation to the Court concerning the
waiver claim of John and Lydia Helmer pursuant to Part 1.f of the Memorandum
Order of the Court (Document 467). In preparing this report, the Special Master
reviewed the motions, memoranda, affidavits and exhibits provided in connection
with the process specified in the Memorandum Order. As necessary, the Special
Master also reviewed other documents that are part of the Court filings in this
case.

The Special Master was also provided by the Federal Emergency

Management Agency (“FEMA”) the computer disc of the “appropriate documents
of record” for this claim, as specified in Part 1.a of the Memorandum Order. In
this case, the documents consist of 421 pages labeled FEMA-000001 to 000421.
I.

Background
Plaintiffs purchased a Standard Flood Insurance Policy (“SFIP” or

“Policy”), Policy Number 1005736424, directly from FEMA to insure their

residence located at 4025 Bay Drive, Baltimore, Maryland (“insured structure”)
from damage caused by flooding. See FEMA-000302. Plaintiffs' structure was
insured up to $220,200.00 subject to a $2,000.00 deductible and their contents
were covered up to $61,700.00 with a $1,000.00 deductible. See the Declaration
of Suzanne Woods (Document 183-13) and Supplemental Declaration of Karen
Christian (Document 549-3).
On September 18, 2003, Hurricane Isabel struck the Mid-Atlantic states,
including Maryland, causing severe damage along the coast, including the insured
structure owned by Plaintiffs. Id. Plaintiffs' policy was effective November 12,
2002 through November 12, 2003 and therefore, their residence was covered at
the time of the loss. Id.
On September 22, 2003, Plaintiffs contacted FEMA and notified it of an
alleged loss to their insured structure.

Id. at FEMA-000263.

On or about

September 25, 2003, Plaintiffs were contacted by an independent adjuster, Bob
Hughes of Bellmon Adjusting, who was assigned by FEMA to investigate
Plaintiffs' loss.

Id.

The independent adjuster inspected the exterior of the

structure, conducted a room-by-room inspection of the interior and adjusted the
loss.

See FEMA-000276 through FEMA-000293.

The adjuster identified

$93,996.24 in actual cash value covered flood damages to the structure after
applying the $2,000.00 deductible. See FEMA-000291.
The adjuster noted an additional $14,332.61 under the replacement cost
coverage provision if Plaintiffs were eligible. Id. Plaintiffs were not eligible for
replacement cost because a part of their home was a rental unit.
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See

FEMA-000187 and FEMA-000189 (See Response to Question 13).
On October 21, 2003, at the request of Plaintiffs (See FEMA-000166),
FEMA issued an advance of $5,000.00. See FEMA-000163.
On October 28, 2003, Plaintiffs submitted a signed and notarized Proof of
Loss for the $51,905.93 for their contents loss. See FEMA-000169. On October
30, 2003, FEMA rejected their Proof of Loss due to lack of documentation. See
FEMA-000167.
On December 12, 2003, Plaintiffs submitted a proposal from Dorsey
Builders to do "All work as per insurance agreement" for a total of $103,502.74
plus an additional $1,650.00 for replacement of a floor joist due to mold, which is
not covered by Plaintiffs' SFIP. See FEMA-000143.
On December 26, 2003, Plaintiffs submitted a Proof of Loss for
$182,931.47 for their structure and contents after application of the $3,000.00
deductible ($2,000 on building and $1,000 on contents). See FEMA-000015.
On February 3, 2004, Plaintiffs were notified that their Proof of Loss was
rejected, that they would be compensated in accordance with the adjustment
completed by Bellmon Adjusters, and that they had one year to file suit in US
District Court to challenge the denial. See FEMA-000179. FEMA issued a total
payment of $93,996.24

($88,996.24 plus the October 21, 2003 $5,000.00

advance) for Plaintiffs' building loss and $34,760.92 for Plaintiffs' contents loss.
See FEMA-000018 and FEMA-000019. There is no dispute over these amounts.
See FEMA-000005. Further, Plaintiffs do not seek any additional compensation
under their contents coverage. Id.
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On May 13, 2004, Plaintiffs requested review of their claim by the
Hurricane Isabel Task Force ("Task Force").

See FEMA-000111.

Plaintiffs

requested compensation of the recoverable depreciation. Id.
On June 24, 2004, the Task Force concluded that Plaintiffs were not
entitled to the recoverable depreciation since the front portion of the house was
used as an apartment. See FEMA-000109. Of note, Plaintiffs did not make any
other request for supplemental payment to the Task Force.
On June 8, 2005, Plaintiffs filed their lawsuit. See Complaint, Doc. No. 1.
II.

Waiver Claim and Denial
On December 3, 2007, this Court permitted Plaintiffs to submit

applications for waivers to FEMA. See Doc. No. 196 and Doc. No. 197, Order of
December 4, 2007.

On or about February 25, 2008, Plaintiffs submitted to

FEMA a document entitled “PLAINTIFFS JOHN AND LYDIA HELMER'S
INDIVIDUAL APPLICATION FOR WAIVER OF PROOF OF LOSS
REQUIREMENTS.”

See FEMA-000001 through FEMA-000101.

FEMA

denied the request in an undated letter; see FEMA-000102 to 000103.
III.

Reasons for Waiver Denial
The reasons for the denial of the Waiver Claim are found at ¶¶18-28 in the

Supplemental Declaration of Karen Christian with Respect to the claim of John
and Lydia Helmer (Document 549-3). It states:
Plaintiffs claimed the "cost to restore original home" was
$188,754.70. See FEMA-000020 and FEMA-000021. They claim
the current cost to repair was $154,254.70 plus an additional
$34,500.00 to restore the kitchen to its pre-flood condition. See
FEMA-000005.
Plaintiffs deducted FEMA's payment of
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$93,996.24 plus their $2,000.00 deductible for a claimed shortfall
of $92,758.46. See FEMA-000020 and FEMA-000021.
Plaintiffs shortfall itemization includes the $105,152.74
estimate from Dorsey Builders to do "All work as per insurance
agreement" without a breakdown of that total, $9,656.00 from
BGE Home Products & Services, Inc., $4,000.00 from Phil
DeBello Roofing, Inc., $11,016.25 from Rolyn Construction
Corporation, $34,500.00 from Kenwood Kitchens, Inc., and many
additional items. Id.
Plaintiffs' "itemization" did not actually include any
itemization of physical loss caused by or from flood. Plaintiffs did
not provide any evidence to prove the damage caused by the flood
necessitated any of the repairs.
A review [of] the receipts, invoices and estimates submitted
with Plaintiffs' waiver application show Plaintiffs are seeking
compensation for such things as roofing, light fixtures, gutter
repair, general demolition, repair to dock and boat lift, electric
motors, and fuel oil.
See FEMA-000062, FEMA-000063,
FEMA-000070 and FEMA-000076. All items not covered by their
SFIP or did not suffer physical loss by or from flood.
When reviewing Plaintiffs' waiver application, the
Administrator evaluated the facts and circumstances relating to the
request. See FEMA-000102 and FEMA-000103. Specific to this
case, the Administrator considered the following whether:
1. Policy holder demonstrated additional damages
exist that are covered by the SFIP;
2. Policy holder submitted appropriate documenttation supporting the additional compensation being
requested; and
3. Policy holder provided a reasonable explanation
for the delay in submitting the POL.
Id.
The SFIP only covers direct physical loss caused by or
from flooding. Plaintiffs' copious invoices, receipts and estimates
do not identify how the damage relates to flooding or identify
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errors in the adjustment completed by Mr. Hughes. Further, the
SFIP excludes coverage for upgrades and requires the use of
material that is of like kind and quality. See Exhibit A at ¶ ¶ 16 and
17. Plaintiffs' documentation makes it impossible to complete a
comparison of the FEMA adjustment to the claim. For example,
the Dorsey Builders proposal and contract simply provides an
estimate of $103,502.74 to complete all work as per insurance
agreement without identifying the work. See FEMA-000143.
In addition, Plaintiffs claim for compensation to repair their
roof when the water only reached a height of 29 inches on the
exterior and a range of 14 inches to 28 inches in the interior is
clearly not compensable under their policy. See FEMA-000187.
Finally, Plaintiffs requested $34,500.00 to return their
kitchen to pre-flood condition. It is not clear why the Dorsey
Builders proposal did not cover their expense or why the amount
provided to repair both kitchens in Mr. Hughes' adjustment were
insufficient.
The estimate from Kenwood Kitchens included
upgrades and items well above the highest waterline of 28 inches.
In the letter providing FEMA's determination on Plaintiffs'
waiver application, the Administrator stated:
... you claim your actual damages exceeded the
amount allowed by the National Flood Insurance
Program Servicing Agent (NFIPSA). To support
the amount claimed, you provided a list of
expenditures for replacement of a roof that was not
damaged by the flood event, upgrades to the
structure which are not covered by the SFIP and
items paid for in the original claim adjustment.
Your claim was originally reviewed by an
independent adjuster and subsequently reviewed by
the Hurricane Isabel Task Force. The Task Force
denied the request for additional payment citing that
all covered flood damages had been paid for by
NFIPSA.
Further, your waiver resulted in a comprehensive
review of your claim by a FEMA Insurance
Examiner.
After further review, the Insurance
Examiner found no basis to set aside the original
findings.
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See FEMA-000102 and FEMA-000103.

Plaintiffs failed to demonstrate they met any of
the criteria used to determine whether to grant a
waiver. First, they failed to demonstrate any additional damages
they sought were actually covered by their SFIP. Second, they did
not submit detailed line-item documentation of uncompensated
damages caused directly by flooding to their original structure, but
instead provided proposals, estimates, receipts and invoices that
failed to identify their relationship to their actual losses by or from
flood. Third, they failed to establish that they proceeded in good
faith and with reasonable explanation for the delay.
Accordingly, after another comprehensive review of the
claim, FEMA determined no further compensation was warranted.
Id. Plaintiffs' waiver application was denied for a multitude of
reasons, but primarily because they failed to document any
physical loss by or from flood covered under their SFIP for which
they did not receive full compensation for.
IV.

Plaintiffs’ Assertions

Plaintiffs assert that there was interior water damage to their home with
varying levels of 28, 24 and 14 inches on the interior which stayed in the
house for approximately 15 hours. Plaintiffs’ Oppositions (Document 630)
at page 25.
Plaintiffs presented their proof of loss for both structure and contents
damage in the amount of $182,931.47 which was rejected and FEMA on a
revised POL paid $93,996.24 for structure damage and $34,760.92 for
contents. Id. at 25-26. Plaintiffs do not dispute the contents claim at this
point, but assert that additional damages are due for the structure. Id,

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Plaintiffs also note that they did not receive recoverable depreciation
because they rented out a portion of their home and thus in FEMA’s view
did not qualify for recovery of the type of damages. Id.
Plaintiffs believe that their home was in “very good condition and well
maintained” and feel that there was “no consistency or uniformity in the
way” property was adjusted and compensated. Id at 27. They particularly
note the custom kitchen they had and how that part of the claim was
adjusted which did not compensate for upper level cabinets that were
untouched by the water, but which Plaintiffs believe needed to be
replaced. Plaintiffs were also concerned about other issues such as the
way that the countertops were adjusted which they felt did not account for
“the probability of breakage because of the length of the counter top.”
Plaintiffs feel that the estimate provided by Kenwood Kitchens, Inc. was
not properly considered by FEMA although they do acknowledge that Ms.
Christian does mention it in her declaration. Id at 27-28. They contend that
the matter should be remanded back to FEMA for reconsideration of
whether more money should be provided for the damage to the kitchen.
Plaintiffs assert that they spent $154,000 in making repairs to the home.
They do acknowledge that they did include in the waiver request a request
for payment of roof repairs that they now agree is not compensable. They
thus back out $4,000 from their claim to leave a “revised shortfall” of
$88,758.46. Id at 28. This is the amount of judgment that they seek the
court to enter for them. Document 630 at page 36.
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V.

Special Master’s Analysis 1

FEMA in their Reply (Document 633) contend that the Kenwood Kitchens
proposal does not control how the SFIP should be applied. Id at10.
FEMA asserted that the Dorsey Builders proposal purported to cover
Plaintiffs’ repair expenses and FEMA felt that the amount of money
provided did cover the repair expenses for both kitchens. It was within
FEMA discretion to rely on the Dorsey Builders proposal rather than the
proposal from Kenwood Kitchens. This is the type of choice that FEMA
is entitled to make and it is not for courts to substitute its judgment for the
discretion exercised by FEMA absent some showing of how the
determination did not meet the requirements of the SFIP.
As noted above in the Supplemental Declaration of Karen Christian both
the Dorsey Builders’ and the Kenwood Kitchens proposals were not
detailed enough to show that FEMA had an obligation to pay under the
SFIP. FEMA found more persuasive the analysis of the independent
adjuster, Bob Hughes of Bellmon Adjusting. FEMA did not find that the
documentation submitted by the Plaintiffs was more convincing for the
reasons stated by FEMA in its Memorandum for Summary Judgment

1.Group Three Plaintiffs in their Oppositions (Document No. 630) at pages 3 to 9 have raised what
they term to be twenty four “common issues” that the Court has previously considered or resolved
in consideration of prior groups. To the extent that these issues are not further cited in the
individual Plaintiffs’ discussion of their particular cases, the Special Master will not specifically
address in this report and recommendation these issues but will incorporate and rely on the court’s
prior rulings on these issues (see Documents 594,596 and 597) and the previously filed
Memorandum on Role of the Special Master and Report and Recommendation of the Special
Master on General Issues Raised by Plaintiffs and Defendants (Document 563).

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(Document 549-2 ). This determination was a decision that FEMA was
entitled to make in its analysis of the claim. It does not appear that the
documentation submitted by the Plaintiffs from Dorsey or Kenwood
Kitchens shows that the Hughes’ estimates were in clear error.
FEMA also notes that items beyond the roof damage were included in the
claim that are not compensable under the SFIP including light fixtures,
gutter repair, general demolition, repair to dock and boat lift, electric
motors and fuel oil. Id at 11. The Special Master agrees with FEMA that
Plaintiffs’ claim included items that were simply not compensable under
the SFIP based on the evidence Plaintiffs submitted to support their waiver
request.
FEMA asserts that Plaintiffs were not entitled to recoverable depreciation
compensation and assert that it is unclear whether Plaintiffs are still
contending otherwise. The Special Master agrees with FEMA that such
depreciation is not recoverable in this case even if this claim is being
made.
FEMA’s adjudication of the waiver claim of the Plaintiffs appears to be
consistent with the way other claims were handled. Plaintiffs’ revised
claim for an additional $88,000 is simply not supported by the record in
this case.
The Special Master does not believe as suggested by the Plaintiffs that a
remand is appropriate in this case. FEMA considered the arguments made
in the waiver claim and they rejected them. FEMA’s rejection of
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Plaintiffs’ arguments is neither arbitrary or capricious nor an abuse of
discretion.

VI.

Recommendation of the Special Master
After a review and a consideration of the matter and the arguments

presented by the parties, it is the recommendation of the Special Master that the
Defendants’ Motion for Partial Summary Judgment affirming FEMA’s
determination of Plaintiff’s waiver application be granted; and it is further
recommended that Plaintiff’s Motion for Summary Judgment be denied.

June 2 , 2011
Date

/S/
Dennis M. Sweeney
Special Master

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