Roden et al v. U.S. Department of Homeland Security's Federal Emergency Management Agency FEMA et al
Filing
73
MEMORANDUM OPINION re 72 Order on Motion for Summary Judgment. Signed by Senior Judge Neal B. Biggers on 09/30/2014. (jlh)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF MISSISSIPPI
DELTA DIVISION
______________________________________________________________________________
CHARLES RODEN AND LINDA RODEN
v.
PLAINTIFFS
CASE NO. 2:12cv120-B-V
NATIONWIDE MUTUAL FIRE
INSURANCE COMPANY
DEFENDANT
______________________________________________________________________________
MEMORANDUM OPINION
Presently before the court is the motion of Defendant Nationwide Mutual Fire Insurance
Company (“Nationwide”), for summary judgment. Upon due consideration of the parties’ filings
and supporting and opposing authority, the court is ready to rule.
Factual and Procedural Background
On May 11, 2009, Plaintiffs Charles and Linda Roden purchased a Standard Flood
Insurance Policy (“SFIP”) from Nationwide Mutual Fire Insurance Company to insure real
property from flood damage near the Mississippi River in Bolivar County, Mississippi.1 The
application was made in connection with obtaining a loan. Plaintiffs allowed the coverage to lapse.
Plaintiffs applied for a new policy on May 2, 2011, since flood insurance was required by their
lender. Plaintiffs’ agent indicated on the insurance application that the waiting period would not
apply since Plaintiffs’ lender required flood insurance.
After flood damage to the area, FEMA issued a bulletin to insurance carriers participating
in the “Write Your Own” (“WYO”) carrier program containing a start date of the flood relevant for
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The National Flood Insurance Act allows insurance companies to issue SFIPs as a
“Write Your Own” carrier through the National Flood Insurance Program (“NFIP”). The Federal
Emergency Management Agency (“FEMA”) regulates and pays on the policy. See National
Flood Insurance Act of 1968, 42 U.S.C. §§ 4013, 4019.
the community, and advised that the insurance companies would need to adjust the claims on an
individual basis because information might indicate that the flood in progress exclusion should not
apply to a claim. FEMA’s bulletin indicated that the flooding in Bolivar County, Mississippi
began on April 25, 2011 since someone in the community claimed damage on that date. Plaintiffs
sustained flood damage on May 10, 2011. Plaintiffs allege that on April 25, 2011, the nearest
gauge in Arkansas City recorded a depth of 33.19 feet, which is almost four feet below flood stage.
Nationwide denied Plaintiffs’ policy under the SFIP stating that the flood was deemed to be
in progress prior to Plaintiffs’ policies’ effective dates. Plaintiffs appealed the decision to James
Sadler, Director of Claims for the NFIP, who affirmed the companies’ disallowance of Plaintiffs’
claims.
Plaintiffs then filed the instant actions seeking a declaration from the court that FEMA’s
flood in progress date was selected in an arbitrary and capricious manner and is inaccurate.
Plaintiffs further allege a claim against the insurance companies who issued the policies for bad
faith in failing to pay the claim. Defendant Nationwide has moved for summary judgment.2
Standard of Review
Summary judgment is appropriate when the pleadings, depositions, answers to
interrogatories, and admissions on file, together with affidavits, if any, show that there is no
genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed.
R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). An issue of material fact is
genuine if a reasonable jury could return a verdict for the nonmovant. Anderson v. Liberty Lobby,
477 U.S. 242, 248 (1986). In reviewing the evidence, this court must draw all reasonable
2
The FEMA defendants named in this action were previously dismissed by this court on
the basis of sovereign immunity. See Order 25.
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inferences in favor of the nonmoving party, and avoid credibility determinations and weighing of
the evidence. Reeves v. Sanderson Plumbing Prods. Inc., 530 U.S. 133, 150 (2000). In so doing,
the court must disregard all evidence favorable to the moving party that the jury is not required to
believe. Reeves, 530 U.S. at 151. Plaintiff’s “burden is not satisfied with ‘some metaphysical
doubt as to the material facts,’ by ‘conclusory allegations,’ or by only a ‘scintilla’ of evidence.”
Little v. Liquid Air Corp., 37 F.3d 1069, 1975 (5th Cir. 1994) (citations omitted).
Discussion
Nationwide first argues that the Rodens’ insurance policy did not go into effect on May 2,
2011, as Plaintiffs allege, but rather the policy was subjected to a thirty-day waiting period.
Nationwide asserts that Plaintiffs fraudulently misrepresented that the insurance application
was obtained in connection with executing a loan on the property. The court disagrees. Unlike the
insurance application made when Plaintiffs received a loan that stated “Loan Transaction - No
Wait,” this application stated “Lender Required - No Wait (SFHA),” which indicates that
Plaintiffs’ lender requires flood insurance on the property- an accurate statement. The SFIP has the
following instruction regarding the policy’s effective date: “The 30-day waiting period does not
apply when flood insurance is required as a result of a lender determining that a loan on a building
in an SFHA that does not have flood insurance coverage should be protected by flood insurance.”
See Complaint, Exh. L. This is a separate exception to the waiting period than insurance obtained
in connection with making a loan. Defendant has presented no evidence why the exclusion of the
waiting period when flood insurance is lender required is not applicable in this case. At this
juncture, the court finds that the policy was in effect on May 2, 2011.
Nationwide asserts that even accepting Plaintiffs’ policy date as accurate, dismissal of the
case is still warranted due to Nationwide’s proper reliance on FEMA’s flood-in-progress date in
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denying the policy. Nationwide further contends that FEMA’s determination cannot be disturbed
by this court.
“When Congress has ‘explicitly left a gap for an agency to fill, there is an express
delegation of authority to the agency to elucidate a specific provision of the statute by regulation,’
Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 843–844 (1984),
and any ensuing regulation is binding in the courts unless procedurally defective, arbitrary or
capricious in substance, or manifestly contrary to the statute.” United States v. Mead Corp., 533
U.S. 218, 227 (2001) (citations omitted). The Fifth Circuit has stated the following regarding
federal insurance programs:
[A] policy of “insurance issued pursuant to a federal program must be strictly
construed and enforced . . . .” Gowland v. Aetna, 143 F.3d 951, 954 (5th Cir. 1998).
Because insurance companies act as “fiscal agents” of the government under the
National Flood Insurance Program, all policy awards deplete federally allocated funds.
In re Estate of Lee, 812 F.2d 253, 256 (5th Cir. 1987). Therefore, “ ‘not even the
temptations of a hard case’ will provide a basis for ordering recovery contrary to the
terms of a regulation, for to do so would disregard ‘the duty of all courts to observe the
conditions defined by Congress for charging the public treasury.’ ” Forman v. Fed.
Emergency Mgmt. Agency, 138 F.3d 543, 545 (quoting Office of Pers. Mgmt. v.
Richmond, 496 U.S. 414, 420 (1990)).
Monistere v. State Farm Fire & Cas. Co., 559 F.3d 390, 394 (5th Cir. 2009).
FEMA issues “bulletins” as guidance that Nationwide is required to follow pursuant to
federal regulation. “The Company [Nationwide] shall comply with written standards, procedures,
and guidance issued by FEMA or FIA relating to the NFIP and applicable to the Company.” See
44 C.F.R. § 62, app. A. Federal regulation further provides that a policy will not be paid if a flood
is in progress at the time the policy goes into effect. See 44 C.F.R. § 61, app. A(1), art. (V)(B).
FEMA sets forth guidelines as to how the flood-in-progress date is established. The court finds
that through these regulations, Congress has delegated authority to FEMA to issue guidance to
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WYO insurance companies and to determine that denial is proper if a flood is deemed to be in
progress at the policy’s effective date. The court, therefore, will defer to the agency’s
interpretation and not disturb the determination of the flood-in-progress date.
While Plaintiffs do not specifically plead a claim for misrepresentation of the insurance
agent, they allege in the complaint that the insurance agent falsely informed the couple that the
property would be covered under the policy at the time it was purchased. Plaintiffs cannot recover
for any misstatements made by the insurance company through its agent since the policy contained
provisions regarding the flood-in-progress provision. See Stephens v. Equitable Life Assurance
Soc’y of U.S., 850 So. 2d 78 (Miss. 2003). In Stephens, the Mississippi Supreme Court held that
“insureds are bound as a matter of law by the knowledge of the contents of a contract in which they
entered notwithstanding whether they actually read the policy. Any alleged oral agreement . . .
does not effect on the written insurance contract.” Id. at 83, ¶ 15 (citations omitted); see also
Parker v. Miss. Farm Bureau Casualty Ins. Co., 997 F.Supp.2d 481 (S.D. Miss. 2014).
Conclusion
For the foregoing reasons, the court finds that Defendant Nationwide’s motion for summary
judgment should be and the same is hereby GRANTED. A separate order in accord with this opinion
will issue this day.
This, the 30th day of September, 2014.
/s/ Neal Biggers
NEAL B. BIGGERS, JR.
UNITED STATES DISTRICT JUDGE
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