Reef Enterprises, Inc. v. Wright National Flood Insurance Company
MEMORANDUM PINION AND ORDER granting 15 Motion for Summary Judgment. Plaintiff, Reef Enterprises, Inc.'s claims are dismissed with prejudice. Signed by District Judge Halil S. Ozerden on 3/3/17. (RLW)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
a Mississippi Corporation doing
business as Jordan River Steamer
WRIGHT NATIONAL FLOOD
INSURANCE COMPANY, formerly
known as Fidelity National
Indemnity Insurance Company, a
Civil No. 1:16cv22-HSO-JCG
MEMORANDUM OPINION AND ORDER GRANTING DEFENDANT’S
 MOTION FOR SUMMARY JUDGMENT
BEFORE THE COURT is the Motion  for Summary Judgment filed by
Defendant Wright National Flood Insurance Company, formerly known as Fidelity
National Indemnity Insurance Company, a Texas Corporation. This Motion is fully
briefed. Having considered the Motion, related pleadings, the record, and relevant
legal authority, the Court is of the opinion that Defendant’s Motion  for
Summary Judgment should be granted, and that Plaintiff’s claims should be
dismissed with prejudice.
Plaintiff Reef Enterprises, Inc., a Mississippi corporation, doing business as
Jordan River Steamer1 (“Plaintiff” or “Reef”), held a Standard Flood Insurance
Policy (“SFIP”) from December 8, 2011, to December 8, 2012, issued by Defendant
Wright National Flood Insurance Company, formerly known as Fidelity National
Indemnity Insurance Company, a Texas Corporation (“Defendant” or “Wright”). See
SFIP [1-2] at 1-22. Wright operated as a Write-Your-Own (“WYO”) carrier
participating in the National Flood Insurance Program (“NFIP”). See Policy
Declarations [16-1] at 10; Aff. of Carolann Whitfield [16-1] at 2.
The SFIP issued to Plaintiff insured its non-residential property in Kiln,
Mississippi, and included coverage of $500,000.00 for the building and $210,000.00
for contents. Policy Declarations [13-1] at 1. Plaintiff operated a restaurant at this
location (the “Property”). Colonial’s Final Report [16-1] at 94.
On August 28, 2012, “heavy rains associated with Hurricane Isaac caused a
temporary and general condition of flooding” which damaged Plaintiff’s building.
Id. at 95. After receiving Plaintiff’s flood claim, Defendant assigned Colonial
Claims Corporation (“Colonial”) to inspect the Property, which in turn assigned
adjuster Ray Orlando (“Orlando”). Aff. of Carolann Whitfield [16-1] at 3. Orlando
contacted Plaintiff on August 30, 2012, and inspected the Property with Plaintiff on
The Complaint spells the same of the restaurant “Jordan River Steamer.” Compl.  at 1,
2, 6. Other places in the record refer to it as being spelled “Jourdan River Steamer.” See
Favre Letter [16-1] at 98. The Court will employ the spelling used in the Complaint.
September 1, 2012. Id.; Colonial’s Final Report [16-1] at 95. Plaintiff hired a public
adjuster, Scott Favre, to advocate on its behalf. See, e.g., Plauche Letter [16-1] at
100; Favre Letter [16-1] at 99; Colonial’s Final Report [16-1] at 97.
Orlando discovered that the Property had sustained two prior flood losses.
Aff. of Carolann Whitfield [16-1] at 3; Colonial’s Final Report [16-1] at 95. One
occurred during Hurricane Katrina in 2005, and the other on September 1, 2008.
Colonial’s Final Report [16-1] at 95. “The insured was paid a total of $348,687.35”
for these two prior losses. Id.
“Orlando asked the Plaintiff to produce receipts and/or other evidence that
the prior flood damages were repaired.” Aff. of Carolann Whitfield [16-1] at 3.
Orlando reported to Wright that Reef’s President, Hank Plauche, told him that
completed the work [for the prior losses,] and we said that was fine and
informed him we would need the invoices for the repairs. He told us he
didn’t have any receipts or they were destroyed in the flood. We told
him we might be able to use the photos from the prior to determine if
repairs were made and then we asked him if he could give us the name
of the contractor he used, to which he told us he couldn’t remember his
name. We pressed the name of the contractor then asked if he did the
work himself without a contractor and he told us yes. We asked if his
accountant might have some documentation from when he filed his
taxes and the insured told us he didn’t think so. We finished our
inspection and left. Some time went by and we got nothing from the
insured, then the prior came to us. We reviewed the prior and noticed
right away a lot of similarities in the contents and building items.
Colonial’s Action Request [16-1] at 35.
On November 6, 2012, Plaintiff’s public adjuster “compiled a packet of
information to turn over to [Orlando].” Favre Letter [16-1] at 98. This included:
Ten pictures post Hurricane Gustav (09/2008) showing the scope
of work that was completed by Jourdan [sic] River Steamer. Said
pictures show an extensive scope of work including, but not
limited to, flooring, electrical, sheetrock, plumbing, insulation,
painting and rebuilding of bar.
The business owner
subcontracted the rebuild himself and a lot of the expenses are
documented in the below printouts.
Receipts from Big Tray.
Breakdown of purchases from Associated Food & Equipment.
Breakdown of purchases from Cisco.
Breakdown of purchases from PayPal.
Breakdown of purchases from American Express.
Breakdown of purchases from QuickBooks from an array of
Building Supply distributors and Equipment distributors. As you
can see, Mr. Plauche has been replacing items from 2008 thru this
date in an effort to recover from Hurricane Gustav.
Plaintiff submitted a signed Proof of Loss dated November 29, 2012, which
sought $710,000.00 under the SFIP. Proof of Loss [16-1] at 103. On November 30,
2012, Orlando recommended that Wright reject the proof of loss. Orlando Report
[16-1] at 102.
On January 8, 2013, Plaintiff’s public adjuster forwarded a letter from
Plauche to Wright and Colonial asking for a new adjuster to be assigned to the flood
claim. Favre Letter [16-1] at 99; Plauche Letter [16-1] at 100. According to
Plauche, “[w]e were asked for all receipts for that period and I told him that our
files were flooded during the storm.” Plauche Letter [16-1] at 100. According to
Plauche, “[w]e have spent day after day compiling as much info as we could from
venders and quick books and are able to back them up with canceled checks form
[sic] the bank, but that just seems to fall and [sic] deaf ears.” Id.
On January 17, 2013, Wright rejected the Proof of Loss. Wright Letter [16-1]
at 104. Wright referred to items for which payment had been made for prior flood
claims and which had not been repaired or replaced, citing the SFIP at section VII,
General Conditions. Id. Wright informed Plaintiff
[p]lease have your public adjuster continue to work with the
independent adjuster to bring this claim to an amicable conclusion. Any
documentation that you can provide to verify that repairs were made
and/or replacements were purchased will be reviewed and judged on its
By stating the above, Fidelity National Indemnity Insurance Company
does not waive any of its rights, but specifically reserves any and all of
its rights under the policy of insurance and Federal Law.
In accordance with VII. GENERAL CONDITIONS, R. Suit Against
Us, should you wish to challenge Fidelity National Property and
Casualty Insurance Company’s position in this matter, you must file a
lawsuit within 12 months of the denial of claim letter, and your lawsuit
must be filed in federal court.
Id. at 105 (emphasis in original).
“Based on his observations and the documentation submitted by Plaintiff,
Orlando prepared a building damage estimate in the amount of $137,925.98 RCV
[Replacement Cost Value]; $111,560.41 ACV [Actual Cash Value] and a contents
estimate of $102,815.97 RCV; $75,158.71 ACV.” Aff. of Carolann Whitfield [16-1] at
4; see also Damage Estimate [16-1] at 43. On June 30, 2013, Orlando issued a Final
Report to Wright. Final Report [16-1] at 94. Orlando explained that “[t]here are a
few items we recommend for denial due to lack of documentation showing repaired
or replaced. These items are also included in our estimate but have a $0.00 dollar
amount.” Id. at 95.
On July 10, 2013, Plaintiff executed another sworn Proof of Loss. Proof of
Loss [16-1] at 106. In the new Proof of Loss, Plaintiff claimed a net amount under
the policy of $186,719.12, id., which matched the actual cash value total calculated
by Wright’s adjuster Orlando, see Damage Estimate [16-1] at 43. On July 11, 2013,
Wright submitted a request to FEMA for a waiver for Plaintiff’s late-signed Proof of
Loss. E-Mail [22-1] at 1-2. Wright explained to FEMA that
[t]he Proof of Loss is late mainly due to the length of time it took the
insured to provide documentation that damages from a prior flood had
The adjuster wrote extremely detailed reports
delineating each building item and [sic] that had been damaged in the
prior flood. He then compared photographs from both floods in order to
determine what exactly had been repaired and/or replaced within the
time period between the two flood events. The same methodology was
utilized with the contents portion of the claim. In addition the insured
and his public adjuster took an inordinate amount of time to provide
documentation to verify repairs and replacements.
Id. at 2.
FEMA responded to Wright’s request on July 12, 2013, as follows:
[b]ased on the information you submitted, your request for a waiver of
the 60 day Proof of Loss policy provision is approved. This limited
waiver is for only the amount of the loss and scope of the damages
outlined in this request and otherwise does not waive the proof of loss or
any other requirement of the Standard Flood Insurance Policy and
makes no other comment because of a lack of information. If it is later
determined that an improper payment was made, the granting of this
waiver does not constitute a waiver of the right to see repayment of any
such improperly paid amounts.
Id. at 1 (emphasis added). On July 12, 2013, Wright tendered checks to Reef for
$111,560.41 and $75,158.71, for a total of $186,719.12. Checks [16-1] at 107-10.
One month later, on August 12, 2013, Plaintiff sent correspondence to Wright
purportedly invoking appraisal under the SFIP. Reef Letter [16-1] at 113-14. On
August 30, 2013, Wright responded to Plaintiff acknowledging the August 12, 2013,
letter, and advising that
[t]he outstanding issues with this claim cannot be resolved through the
appraisal process until a scope of damage has been agreed upon by all
parties. In the event we agree on the scope of covered items and at that
time if we cannot agree on the price of repair, you may exercise your
option under Section VII-General Conditions, P; Appraisal of the policy
for resolution of the claim.
Wright Letter [161-1] at 117.
On September 23, 2013, Plaintiff’s public adjuster again requested appraisal
under the SFIP “based on the scope provided by your independent adjuster.” Favre
Letter [16-1] at 119. According to the public adjuster, “there is no issue with scope.
That issue has been resolved in the adjustment process. The only issue is pricing.
The insured does not agree with your value on the value/cost as assigned by your
According to Wright, “Plaintiff’s public adjuster did not submit a repair
estimate based on the scope of loss prepared by Colonial Claims nor did he provide
any other documentation advising Wright of the price differences.” Aff. of Carolann
Whitfield [16-1] at 4. “Further, Plaintiff did not submit a supplemental Proof of
Loss for the additional claimed amount owed.” Id. at 5. “On this basis, Wright
maintained its rejection of Plaintiff’s appraisal request.” Id.; see also Claim Log  at 18 (stating on October 22, 2013, “our letter of appraisal rejection still stands”).
On January 31, 2014, Wright tendered payment to the Plaintiff in the
amount of $7,950.00 for increased cost of compliance (“ICC”) coverage under the
SFIP. Check [16-1] at 111-12. On April 10, 2014, Plaintiff’s attorney sent Wright
another letter requesting appraisal. Farmer Letter [16-1] at 122. Plaintiff’s
attorney asked Wright to “in good faith, engage in appraisal process pursuant to
VII(P) of the Policy.” Id. at 123.
Wright responded on April 16, 2014, stating “[i]n response please find copies
of our letters dated 30 August 2013 and 17 January 2013.” Wright Letter [16-1] at
127. According to Wright, “[t]o date, Plaintiff has failed to submit a supplemental
Proof of Loss that complies with Article VII(J)(4) of the SFIP, for any additional
amounts claimed in this litigation.” Aff. of Carolann Whitfield [16-1] at 5.
Plaintiff filed a Complaint  in this Court on January 22, 2016, seeking to
have Defendant “fully comply with the appraisal provisions” of the SFIP. Compl. 
at 5. The Complaint asks the Court to compel Defendant “to fully cooperate with
the appraisal provisions contained in the [SFIP]” and “enter any other orders
required to allow the appraisal process to continue, including the Court’s
appointment of an independent umpire.” Id. at 6. The Complaint seeks “any such
other, specific and/or general relief to which they [sic] may be entitled to in law,
equity and good conscience.” Id.
Wright now moves for summary judgment on four grounds: (1) Plaintiff did
not timely file its lawsuit under the SFIP; (2) Plaintiff did not comply with all the
requirements of the SFIP; (3) Plaintiff did not timely submit a supplemental Proof
of Loss; and (4) appraisal is improper because coverage issues are or would have
been involved. Def.’s Mot. for Summ. J.  at 1-2.
Relevant legal standards
Summary judgment standard
Rule 56(a) provides that summary judgment is appropriate “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 movant
carries this burden, “the nonmovant must go beyond the pleadings and designate
specific facts showing that there is a genuine issue for trial.” Little v. Liquid Air
Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc). “A genuine dispute of material
fact exists if ‘the evidence is such that a reasonable jury could return a verdict for
the nonmoving party.’” Savant v. APM Terminals, 776 F.3d 285, 288 (5th Cir. 2014)
(quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). “In deciding
whether a fact issue exists, courts must view the facts and draw reasonable
inferences in the light most favorable to the nonmoving party.” Id.
The Standard Flood Insurance Policy
“The NFIP empowers the Federal Emergency Management Agency (FEMA)
to issue an [SFIP], either directly or, as here, through private issuers known as
[WYO] companies, which are statutorily authorized to act as fiscal agents of the
United States.” Miller v. Am. Strategic Ins. Corp., No. 16-30251, 2016 WL 7118473,
at *2 (5th Cir. Dec. 6, 2016) (citing 42 U.S.C. § 4071(a)(1); Gowland v. Aetna, 143
F.3d 951, 953 (5th Cir. 1998)). “FEMA, through regulation, creates the [SFIP],
which establishes ‘the conditions under which federal flood-insurance funds may be
disbursed to eligible policyholders’ and cannot ‘be altered, varied, or waived without
the express written consent of [FEMA’s] Federal Insurance Administrator.’” Id.
(quoting Marseilles Homeowners Condo. Ass’n v. Fidelity Nat’l Ins. Co., 542 F.3d
1053, 1054 (5th Cir. 2008) (per curiam); Gowland, 143 F.3d at 953; citing 42 U.S.C.
§ 4129; 44 C.F.R. pt. 61 app. A(1); 44 C.F.R. §§ 61.4(b) & 61.13(d)).
“An SFIP is a regulation of [FEMA], stating the conditions under which
federal flood-insurance funds may be disbursed to eligible policyholders.” Ferraro v.
Liberty Mut. Fire Ins. Co., 796 F.3d 529, 531 (5th Cir. 2015) (quotation omitted).
“Disputes arising out of NFIP policies are governed by federal common law.”
Constr. Funding, L.L.C. v. Fid. Nat. Indem. Ins. Co., 636 F. App’x 207, 209 (5th Cir.
2016) (citing Spence v. Omaha Indem. Ins. Co., 996 F.2d 793, 796 (5th Cir. 1993)).
“Although WYO insurers administer SFIP policies, payments made pursuant
to such policies are a direct charge on the public treasury.” Ferraro, 796 F.3d at
531-32 (quotation omitted). “Therefore, the provisions of an insurance policy issued
pursuant to a federal program must be strictly construed and enforced.” Id. at 532
(quotation omitted). “In order to recover under an SFIP, FEMA regulations require
strict compliance with the SFIP itself.” Constr. Funding, L.L.C., 636 F. App’x at
209 (citing Marseilles, 542 F.3d at 1057). This requirement is also incorporated into
the terms of the SFIP, and “in order to file suit under the SFIP, the claimant must
‘show prior compliance with all policy requirements.’” Id. (quoting Marseilles, 542
F.3d at 1055). Substantial compliance does not satisfy this requirement. Id. at 210
(citing Marseilles, 542 F.3d at 1056; Gowland, 143 F.3d at 953-54).
According to Section VII(D) of Plaintiff’s SFIP, it
cannot be changed nor can any of its provisions be waived without the
express written consent of the Federal Insurance Administrator. No
action that we take under the terms of this policy can constitute a waiver
of any of our rights.
Id. at 14.
Section VII(J)(4) of the SFIP requires, in relevant part, that the insured
“[w]ithin 60 days after the loss, send us a proof of loss, which is your statement of
the amount you are claiming under the policy signed and sworn to by you . . . .”
SFIP [1-2] at 16. According to Section VII(M)(2),
[i]f we reject your proof of loss in whole or in part you may:
Accept such denial of your claim;
Exercise your rights under this policy; or
File an amended proof of loss, as long as it is filed within 60 days
of the date of the loss.
Id. at 17.
In Section VII(K)(2), the SFIP provides that
[o]ptions we may, in our sole discretion, exercise after loss include the
* * *
We may request, in writing, that you furnish us with a complete
inventory of the lost, damaged, or destroyed property, including:
Quantities and costs;
Actual cash values;
Amounts of loss claimed;
Any written plans and specifications for repair of the
damaged property that you can reasonably make available
to us; and
Evidence that prior flood damage has been repaired.
Id. at 16.
Section VII(P) addresses appraisals as follows:
[i]f you and we fail to agree on the actual cash value of the damaged
property so as to determine the amount of loss, either may demand an
appraisal of the loss. In this event, you and we will each choose a
competent and impartial appraiser within 20 days after receiving a
written request from the other. The two appraisers will choose an
umpire. If they cannot agree upon an umpire within 15 days, you or we
may request that the choice be made by a judge of a court of record in
the State where the insured property is located. The appraisers will
separately state the actual cash value and the amount of loss to each
item. If the appraisers submit a written report of an agreement to us,
the amount agreed upon will be the amount of loss. If they fail to agree,
they will submit their differences to the umpire. A decision agreed to by
any two will set the amount of actual cash value and loss.
Id. at 17.
To file suit against an insurer, the SFIP provides in Section VII(R) that
[y]ou may not sue us to recover money under this policy unless you have
complied with all the requirements of the policy. If you do sue, you must
start the suit within one year of the date of the written denial of all or
part of the claim, and you must file the suit in the United States District
Court of the district in which the insured property was located at the
time of loss. This requirement applies to any claim that you may have
under this policy and to any dispute that you may have arising out of
the handling of any claim under the policy.
Wright is entitled to summary judgment on Plaintiff’s claims.
Plaintiff maintains that it is entitled to recover amounts under the SFIP
which Orlando did not include in his damage estimate. The Complaint  reflects
that Plaintiff’s request for appraisal relates to Wright’s January 17, 2013, letter “in
which [Wright] did not agree with the overall Proof of Loss submitted by [Plaintiff].”
Compl.  at 4. Wright’s January 17, 2013, letter rejected Plaintiff’s original Proof
of Loss because “it may not accurately reflect the covered damages sustained to
covered property in this flood event.” Wright Letter [16-1] at 104. Wright referred
to Plaintiff’s prior flood claims and cited items which “were not repaired and/or
replaced prior to the current flood event.” Id.
In his Final Report, Orlando recommended that Wright deny coverage of
certain items “due to lack of documentation showing repaired or replaced” from the
prior flood losses. Final Report [16-1] at 95. Orlando included these items in his
damage estimate, but assigned them a $0.00 value. Id. Based in part upon
assigning these items a $0.00 value, Orlando’s building damage estimate was
$111,560.41 ACV and his contents estimate was $75,158.71 ACV, for a total of
$186,719.12. Damage Estimate [16-1] at 43. Plaintiff’s second Proof of Loss dated
July 10, 2013, claimed the same amount, $186,719.12. Proof of Loss [16-1] at 106.
Wright obtained a waiver from FEMA to accept the late Proof of Loss, and then
tendered checks to Plaintiff consistent with these estimates.
Plaintiff did not timely file its lawsuit.
Under Plaintiff’s SFIP, any suit against the insurer must be instituted
“within one year of the date of the written denial of all or part of the claim . . . .”
SFIP [1-2] at 17. The Court finds that Plaintiff did not timely file its lawsuit under
the SFIP, such that Wright is entitled to summary judgment.
Wright rejected Plaintiff’s original Proof of Loss on January 17, 2013. Wright
Letter [16-1] at 104. On June 30, 2013, Orlando issued a Final Report to Wright
which recommended denial of certain items due to lack of documentation showing
that those items had been repaired or replaced, and assigned those items a $0.00
dollar amount. Final Report [16-1] at 94-95. On July 10, 2013, Plaintiff executed
another sworn Proof of Loss consistent with Orlando’s damages estimate, see id.;
Proof of Loss [16-1] at 106, and after obtaining a waiver from FEMA, Wright
tendered checks to Reef on July 12, 2013, consistent with Orlando’s estimate and
Plaintiff’s new Proof of Loss, Checks [16-1] at 107-10.
Reef first sought to invoke appraisal one month later, on August 12, 2013,
Reef Letter [16-1] at 113-14, which Wright denied on August 30, 2013. Wright
Letter [161-1] at 117. On September 23, 2013, Plaintiff’s public adjuster sent
Wright correspondence requesting appraisal under the SFIP “based on the scope
provided by your independent adjuster,” Favre Letter [16-1] at 119, but Wright
stood by its rejection of the requested appraisal, Aff. of Carolann Whitfield [16-1] at
4; Claim Log [16-1] at 18 (stating on October 22, 2013, “our letter of appraisal
rejection still stands”).
On April 10, 2014, Plaintiff’s attorney sent a letter to Wright again
requesting appraisal under the SFIP. Farmer Letter [16-1] at 122. Wright
responded with a letter dated April 16, 2014, standing by its prior denial letters of
January 17, 2013, and August 30, 2013. Wright Letter [16-1] at 127.
The Complaint  was not filed in this Court until January 22, 2016. Even
considering the latest response by Wright on April 16, 2014, the present lawsuit
was instituted well after the one-year statute of limitations contained in the SFIP
had expired. See SFIP [1-2] at 16 (Section VII(R)). Wright is entitled to summary
judgment on this basis.
Plaintiff argues that the one-year statute of limitations does not apply to its
request for appraisal because a rejection of an invocation of appraisal does not
constitute a “claim.” Pl.’s Mem.  at 8-10. The Court recognizes that the United
States Court of Appeals for the Fifth Circuit has held that “[n]othing in the
[appraisal] clause or the contract as a whole establishes a time limit for invoking
the appraisal clause,” provided that the party’s actions have not amounted to
waiver. Dwyer v. Fid. Nat. Prop. & Cas. Ins. Co., 565 F.3d 284, 287-88 (5th Cir.
2009). However, the Court is not persuaded that Dwyer means that, once an
insured attempts to invoke appraisal and such invocation is rejected by the insurer,
the insured has an unlimited amount of time after that to file suit seeking to compel
appraisal, as Plaintiff suggests. See Pl.’s Mem.  at 8-10.
While the parties have not cited any controlling authority on this point, the
Court is persuaded that the SFIP’s one-year statute of limitations bars Plaintiff’s
lawsuit under the particular facts of this case. The SFIP’s one-year statute of
limitations to file suit “applies to any claim that [the insured] may have under this
policy and to any dispute that [the insured] may have arising out of the handling of
any claim under the policy.” Policy [1-2] at 17-18. This clause is broad enough to
encompass Plaintiff’s Complaint here, such that it is subject to the SFIP’s one-year
limitation period. See id. On the record before the Court, Plaintiff’s theory is not
consistent with a strict construction and enforcement of the SFIP, which is required
because such claims are a direct charge on the public treasury. See Ferraro, 796
F.3d at 532.
Plaintiff argues that FEMA has “waived any time bar defense associated with
Wright’s January 13, 2013, rejection of Reef’s November 29, 2012, Proof of Loss
pursuant to 44 C.F.R. § 61.13(d).” Pl.’s Mem.  at 7-8. The Court is not of the
view that FEMA’s limited waiver in this case somehow excuses Plaintiff’s late-filed
lawsuit. FEMA’s limited waiver provided that it was “for only the amount of the
loss and scope of the damages outlined in this [the July 10, 2013, Proof of Loss]
request and otherwise does not waive the proof of loss or any other requirement of
the Standard Flood Insurance Policy . . . .” E-Mail [22-1] at 1. Plaintiff’s argument
on this point is unavailing.
Plaintiff has no right to appraisal on the facts of this case.
Even if Plaintiff’s lawsuit were deemed timely, Wright has shown that the
appraisal provision of the SFIP is inapplicable here. The Fifth Circuit has
explained that the appraisal provided for under the SFIP “is not an arbitration . . .
.” Dwyer, 565 F.3d at 286-87. “Appraisal is only appropriate when the sole dispute
involves the value of the agreed damages.” Jones v. Fid. Nat. Prop. & Cas. Ins. Co.,
No. Civ. A. G-10-289, 2013 WL 1572064, at *1 (S.D. Tex. Apr. 12, 2013) (citing
Dwyer, 565 F.3d at 286-88).
The substance of the disagreement between Plaintiff and Wright is whether a
dispute as to lack of payment under the SFIP for certain items, which had suffered
prior flood losses but were not repaired, constitutes a question as to scope of
coverage or as to the actual cash value of covered items. See, e.g., Wright Letter
[16-1] at 117 (“The outstanding issues with this claim cannot be resolved through
the appraisal process until a scope of damage has been agreed upon by all parties.”);
Farmer Letter [16-1] at 123 (“the disagreement in this particular case between the
Insurer and Insured as to ‘value’ of the damaged property appears to be
synonymous with the ‘scope’ of the items covered because I do see where the Insurer
is denying coverage under the terms of the Policy”).
Plaintiff’s position in opposition to summary judgment is that all coverage
issues were resolved before it invoked appraisal, Pl.’s Mem.  at 11, and that “the
only disagreement between Reef and Wright was with regards to the actual cash
value and/or replacement costs of those identified in the Adjustment Report dated
July 10, 2013, prepared by Mr. Orlando,” id. at 12. Plaintiff’s characterization of
this dispute as one over simply the value of the claim or the amount of the loss is in
effect an attempt to circumvent the one-year statute of limitations by recasting a
coverage question into one of loss amount for a covered claim. Here, Plaintiff’s
claims are in substance a dispute regarding the denial of coverage under the SFIP.
As Wright notes in its Memorandum , “Plaintiff demands ‘appraisal’ without
providing any information or evidence regarding the valuation of the disputed
damages (i.e., the disputed price differences for a particular board, or paint, etc.).”
Def.’s Mem.  at 8-9. The Court concludes that the crux of the parties’ dispute is
a coverage issue, namely “whether Plaintiff repaired all prior flood damages before
the August 28, 2012 flood loss.” Id. at 9.
Having reviewed the record as a whole, the Court is not persuaded that this
is a situation contemplated by the appraisal clause of the SFIP, that is where the
insured and insurer “fail to agree on the actual cash value of the damaged property
so as to determine the amount of loss . . . .” Policy [1-2] at 17. Under the SFIP, once
appraisal is invoked, the appraisers determine “the actual cash value and the
amount of loss to each item.” Id. The “actual cash value” is defined by the SFIP as
“[t]he cost to replace an insured item of property at the time of loss, less the value of
its physical depreciation.” Id. at 4.
The issue in this case is not the cost to replace certain insured items of
property, but whether Plaintiff can recover for those items in the first instance
under the terms of the SFIP because the items had suffered a prior flood loss and
Plaintiff did not provide sufficient documentation showing that the items had been
repaired or replaced. The Court finds that Wright’s determination that Plaintiff
could not recover for those particular items essentially amounts to a denial of
coverage. Based upon a plain reading of the Policy and the facts of this particular
case, Plaintiff cannot invoke the appraisal clause of the SFIP under these
circumstances. See id. at 17.
Plaintiff has not submitted a timely Proof of Loss as to the items for
which it seeks appraisal.
Even if this dispute were somehow covered by the SFIP’s appraisal clause,
Plaintiff has not submitted a timely supplemental Proof of Loss for any additional
amount it claims it is still owed under the Policy. Aff. of Carolann Whitfield [16-1]
at 5. “The regulations make strict compliance with the proof-of-loss requirement a
condition precedent to suit.” Ferraro, 796 F.3d at 532 (citing 44 C.F.R. pt. 61, app.
A(1) art. VII(R)). “[A]n insured’s failure to provide a complete, sworn proof of loss
statement, as required by the flood insurance policy, relieves the federal insurer’s
obligation to pay what otherwise might be a valid claim.” Id.
“In cases construing the terms of the SFIP, [the Fifth Circuit has] held that
an insured must file a sworn proof of loss before seeking damages in excess of the
amount paid by the insurer.” Kidd v. State Farm Fire & Cas. Co., 392 F. App’x 241,
244 (5th Cir. 2010) (citing Marseilles, 542 F.3d at 1055-56). Plaintiff failed to do so
in this case after it filed its narrowed, more limited July 10, 2013, Proof of Loss,
pursuant to which the insurer tendered funds under the Policy, and which Plaintiff
accepted. No timely Proof of Loss was submitted for the additional damages. This
precludes any right of Plaintiff to recover additional funds under the SFIP. See
Ferraro, 796 F.3d at 532; Marseilles, 542 F.3d at 1055-56; Kidd, 392 F. App’x at 244.
Wright’s Motion for Summary Judgment should be granted.
To the extent the Court has not addressed any of the parties’ arguments, it
has considered them and determined that they would not alter the result. The
Court concludes that Wright’s Motion  for Summary Judgment should be
granted, and that Plaintiff’s claims should be dismissed.
IT IS, THEREFORE, ORDERED AND ADJUDGED that the Motion 
for Summary Judgment filed by Defendant Wright National Flood Insurance
Company, formerly known as Fidelity National Indemnity Insurance Company, a
Texas Corporation, is GRANTED, and Plaintiff Reef Enterprises, Inc.’s claims are
DISMISSED WITH PREJUDICE.
SO ORDERED AND ADJUDGED, this the 3rd day of March, 2017.
s/ Halil Suleyman Ozerden
HALIL SULEYMAN OZERDEN
UNITED STATES DISTRICT JUDGE
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