Moffett et al v. Computer Sciences Corporation, et al

Filing 720

REPORT AND RECOMMENDATIONS of Special Master re 661 Supplemental MOTION for Summary Judgment for the claim of Lisa Ray filed by FEMA Objections to R&R due by 10/6/2011 Responses due by 10/6/2011. Signed by Special Master Dennis M. Sweeney on 9/18/11. (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 LISA RAY
This constitutes the Report and Recommendation to the Court concerning the
waiver claim of Lisa Ray 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 671 pages labeled FEMA-000001 to 000671.
I.

Background
Plaintiff’s property located at 7641 Bay Street, Pasadena, Maryland, was

insured by First Community Insurance Company (“First Community”)1 under
Policy Number 19000956392603 with a coverage limit of $151,000.00 for her
building and $100,000.00 for her contents, with each subject to a $500.00
deductible. See FEMA-000005.
On September 18, 2003, Hurricane Isabel struck the Middle Atlantic
States, including Maryland, which caused flooding resulting in damage to
Plaintiffs’ home. Id.
First Community paid Plaintiff $5,000.00 as advance payment on her
contents claim. See FEMA-000005. On November 10, 2003, First Community
issued Plaintiff two checks in the amounts of $41,251.25 and $5,569.24 as part of
her building claim.

See FEMA-000054.

On November 10, 2003, First

Community also paid Plaintiff $15,333.57 for the remainder of her contents claim.
See FEMA-000054. In addition, as a result of the Hurricane Isabel Task Force
review, Plaintiff was issued two more checks for $5,699.08 (See FEMA-00040)
and $841.88 (See FEMA-000052) for a total payment of $53,361.45.
First Community further issued Plaintiff two checks for the Increased Cost
of Compliance policy limit of $30,000.00 ($15,000.00 on February 9, 2004 and
$15,000.00 on July 23, 2004). Plaintiff acknowledges that she was compensated a
total of $53,361.45 for her building claim, $20,333.57 for her contents claim, and
$30,000.00 under the Increased Cost of Compliance (“ICC”) provision of her
policy. See FEMA-000005.

1

First Community Insurance was purchased by Fidelity Property Casualty Insurance Company
and is Plaintiff's current insurer, but for purposes of this declaration, Plaintiff's insurer will be
identified as First Community Insurance. See Doc. No. 320-1.

2

FEMA notes that on October 27, 2003, Plaintiff sent a fax to her adjuster in which
she praised his estimate after her review of it and found the only thing she believed
to be missing was acoustical ceiling tile and carpet/padding for the Utility Room.
See FEMA-000481. She then asserts the adjuster "did a very thorough job and it
looks good!" Id.

II.

Waiver Claim and Denial

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On December 3, 2007, this Court permitted Plaintiffs to submit

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

On February 25, 2008, Plaintiff submitted to FEMA a

document entitled “PLAINTIFF LISA RAY'S INDIVIDUAL APPLICATION
FOR WAIVER OF PROOF OF LOSS REQUIREMENTS.”

The waiver

application requested that FEMA compensate Plaintiff an additional $87,229.72
due to a shortfall for her building claim ($79,704.83) and contents claim
($7,524.89). See FEMA-000005.

FEMA denied the request for a waiver of the

proof of loss requirements in a letter dated July 31, 2008. See FEMA-0000260 to
0000261.
III.

Reasons for Waiver Denial
The reasons for the denial of the Waiver Claim are found at ¶¶9-19 of the

Supplemental Declaration of Karen Christian for the Claim of Lisa Ray. It states:
Plaintiff based her shortfall amount on her assertion that it
cost her $163,566.28 to repair and elevate her home. Id. Plaintiff
subtracted the amounts her insurer paid under her building
coverage ($79,704.83), Increased Cost of Compliance coverage
($30,000.00) plus her $500.00 deductible from her claimed cost to
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repair her home ($163,566.28) to arrive at her claimed shortfall of
$79,704.83. See FEMA-000005 and FEMA-000078. In addition,
Plaintiff asserts a shortfall of $7,524.89 under the contents portion
of her claim, which brings her total claimed shortfall to
$87,229.72. Id.
Plaintiff’s method of calculating her building damages by
simply taking her claimed cost of repairs and subtracting First
Community's total building payments does not take into account
any of the SFIP's coverage limits or exclusions. Plaintiff provided
copious receipts with her claim and waiver application, but fails to
address how the claimed loses were caused by or from the flood.
Plaintiff made substantial upgrades to her home. As noted
by Plaintiff, she added an additional floor to comply with flood
plain requirements. See FEMA-000020. She was also moved all
of the home systems up. Id. Plaintiff's shortfall calculation simply
subtracts $30,000.00 from her total repair costs, but fails to
sufficiently itemize her claim to actually account for expenses
related to elevation and upgrade costs.
In addition, Plaintiff's repair estimate includes items not
damaged by the flood. These items include roof replacement and
skylights, gutters and downspouts, the extension of the chimney, a
new entrance and stairs to the third floor, new flooring associated
with the relocation of appliances, restoration of her lawn, walks
and parking. See FEMA-000031 and FEMA-0000032.
Plaintiff presented no new evidence challenging the repair
estimates provided by First Community. Plaintiff’s sole focus was
on receiving compensation based on the cost of building a
substantially improved structure.
In regards to Plaintiff's claimed shortfall for the damage to
her contents, her application falls woefully short. Again, Plaintiff
did not provide any new documentation, but relies on the same
contents list she provided to the adjuster during the initial claim
adjustment. The adjuster prepared his estimate using Plaintiff's
contents list. See FEMA-000653 through FEMA-000664. The
adjuster allowed for all covered contents items at the costs listed
by the insured. Id. The adjuster did not allow for non-covered
items, nor did he allow for the building items Plaintiff included on
her list. Plaintiff provided no evidence to support her claimed
contents shortfall of $7,524.89.
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When reviewing Plaintiff’s waiver application, the
Administrator evaluated the facts and circumstances relating to the
request. See FEMA-000260 and FEMA-000261. 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.
Plaintiff’s claimed building shortfall fails to
explain how her claimed uncompensated damages relate to the
actual physical loss caused by or from the flooding. In addition to
only insuring against physical loss by or from flooding, the SFIP
excludes coverage for upgrades and requires the use of material
that is of like kind and quality, which Plaintiff’s shortfall
calculation disregards. Finally, the SFIP has a policy limit of
$30,000.00 for Increased Cost of Compliance expenses and
Plaintiff’s shortfall calculation makes it impossible to separate out
these expenses. See FEMA-000078.
In the letter providing FEMA's determination on Plaintiffs’
waiver application, the Administrator stated:
... you claim your actual flood damages exceed the
amount paid by your Write Your Own Company,
Fidelity National Property and Casualty. You also
received payment for the maximum amount of
coverage for the Increased Cost of Compliance
claim filed for the demolition of the insured
structure. To support the supplemental amount
claimed, you provided estimates for repair. Your
claim was originally reviewed by an independent
adjuster and subsequently reviewed by the
Hurricane Isabel Task Force. All reviews of your
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claim conclude your estimates do not warrant
additional payment.
They include many noncovered items, modifications to the residence not
associated with flood damages, and improvements
to the structure, which are not covered by the SFIP.
Id.

Plaintiff failed to demonstrate she met any of the
criteria used to determine whether to grant a waiver.
First, she failed to demonstrate any additional building damages were
direct physical losses caused by or from flooding. Second, her
building shortfall calculation did not take into account the coverages
and exclusions found within her SFIP, which does not provide
compensation for upgrades. With respect to Plaintiff’s contents
shortfall calculation, she failed to submit any new documentation to
explain why the adjuster's estimate was insufficient for covered items
or what items the adjuster failed to consider in his estimate that
Plaintiff believes should have been compensated.
Accordingly, after another comprehensive review of the claim,
FEMA determined no further compensation was warranted. Id.
Plaintiff’s waiver application was denied for a multitude of
reasons, but primarily because she failed to document any physical
loss by or from flood covered under her SFIP for which she did not
receive full compensation.
IV.

Plaintiff’s Assertions

Plaintiff’s contentions are found at pages 9 to 12 of the Plaintiffs’
Oppositions (Document 713).

Plaintiff notes that she made the decision

to “sacrifice the first floor of her dwelling and use that level as the
elevation and then replace that living space by adding a story above what
had been the second story....” Id at 11. She spent $163,566.28 to restore
her home to its pre-flood square footage by adding the extra floor and
using the first floor as the necessary elevation. Plaintiff contends that
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FEMA even by its own calculations should recognize the actual cash value
of the damages of at least $100,939.70.
Plaintiff points to internal comments by two FEMA representatives which
she feels amounts to acknowledgements that she had been underpaid. Id at
12.
Plaintiff seeks $87,229.72 to be awarded by summary judgment. Id at 46.

V.

Special Master’s Analysis 2

As FEMA notes in its Reply (Document 715), the supplemental payment
of $87,229.72 sought by Plaintiff is composed of two elements:
$79,704.83 for the structure and $7, 524.89 for the contents. As to the
contents claim, Plaintiff does not present any argument in her Opposition
as to why the contents claim determination is erroneous. There is no basis
for determining that FEMA’s rejection of the additional contents claim is
either arbitrary or capricious. Its earlier determination on this aspect of
the claim does not appear to be in error.
As to the structure claim, the detailed and comprehensive explanation
given by FEMA and set out in Part III above explaining the rationale for

2

In their Oppositions at Document No.713 at Pages 3 to 9, Group Six Plaintiffs 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 these issues in this Report and Recommendation, but will incorporate and rely on the
Court’s prior rulings on these issues (see Documents 594, 596, 597 and 679) and the previouslyfiled 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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its waiver decision is convincing and not refuted by Plaintiff’s Opposition.
The case does present an unusual situation since Plaintiff decided to gut
her first floor to comply with the flood plain requirements and utilize that
floor as her elevation and then add a third floor to account for the lost
square footage of habitable space.
FEMA notes that there was no damage to the second floor and argues that
it did in fact compensate Plaintiff for the direct physical losses caused by
or from the flooding subject to the coverages and exclusions provided by
the SFIP. FEMA argues that the remodeling of her home to comply with
local floodplain ordinances falls under the Increased Cost of Compliance
provision of her SFIP and is limited to $30,000 which she was paid.
FEMA’s position concerning how the ICC claim and Plaintiff’s eligibility
for compensation under Coverage A are stated on page 8 of FEMA’s Reply
(Document 715). As FEMA notes, “the constructive total loss doctrine”
does not apply to FEMA’s claims.

This equitable argument would

certainly aid the Plaintiff here were it available, but it has been established
in this litigation that the doctrine does not pertain to FEMA’s claim which
compensate only for direct physical loss or for the limited amount
provided under the ICC coverage. FEMA’s position may seem harsh and
as noted by FEMA state courts have developed doctrines to recognize the
overall picture of loss incurred by the insured. This however is not the
case with the FEMA policy which is strictly limited by its express terms
and limitations. There is no indication that given these limits that FEMA
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has acted in an arbitrary or capricious manner to deny additional money
for the Coverage A claim.3

FEMA’s determinations on the waiver as

explained in Part III above and in the Reply filed by FEMA are sufficient
to sustain the denial of the waiver in the view of the Special Master.

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.

September 18, 2011
Date

/S/
Dennis M. Sweeney
Special Master

3

Plaintiff does argue that there may have been some internal disagreements among
those reviewing the claim and point to certain communications in the record. This may
have been the case, but the Special Master task is to review the ultimate decision made
by FEMA on the waiver claim and determine whether that final decision is within the
discretion of FEMA to render.

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