Parker v. United States of America et al
Filing
89
ORDER granting 83 Motion for Summary Judgment Signed by Honorable David C. Bramlette, III on 1/30/2014 (ECW)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
NORTHERN DIVISION
LOU PARKER AS TRUSTEE
OF THE MELBA W. PARKER
REVOCABLE TRUST
VS.
PLAINTIFF
CIVIL ACTION NO. 3:13-cv-867(DCB)(MTP)
MISSISSIPPI FARM BUREAU
CASUALTY INSURANCE COMPANY
DEFENDANT
MEMORANDUM OPINION AND ORDER
This cause is before the Court on the defendant Mississippi
Farm Bureau Casualty Ins. Co. (“Farm Bureau”)’s motion for summary
judgment (docket entry 83). Having carefully considered the motion
and response, as well as the memoranda and applicable law, and
being fully advised in the premises, the Court finds as follows:
The plaintiff in this case, Lou Parker (“Parker”), is the
trustee of the Melba W. Parker Revocable Trust, created under the
laws of the State of Mississippi.
Melba W. Parker was an adult
resident citizen of Warren County, Mississippi, at the time of her
death in July of 2011.
She deeded her home located at 21533
Highway 465, Vicksburg, Mississippi, to the Trust on July 14, 2000.
The plaintiff’s Second Amended Complaint (“Complaint”) alleges
that on April 25, 2011, the plaintiff contacted an insurance agent
about the possibility of obtaining flood insurance on his home and
the Trust Property (located approximately 200 yards from his
home)(collectively, “the Parker property”), in connection with
obtaining a loan secured by the Parker property.
The plaintiff
advised his agent, Jackie Jenkins, that he needed immediate flood
insurance because he feared a flood could be imminent.
Complaint,
¶¶ 5, 7.
Jenkins made four phone calls to Farm Bureau managers, claims
personnel, and underwriting specialists to determine whether Farm
Bureau could issue a policy that would provide Parker coverage. In
response to each call, Farm Bureau advised Jenkins that he could
write the policy.
On April 27, 2011, Jenkins inspected and
photographed the property. Jenkins informed Parker that the policy
would be immediately effective upon the closing of the loan
transaction.
Complaint, ¶¶ 10-14.
The Parker loan closed on May 5, 2011, and Parker paid the
insurance premium as part of the closing, at which time the policy,
providing $250,000 in total coverage, became effective. Complaint,
¶¶ 16-17. Parker claims that his property suffered flood damage on
May 17, 2011, in an amount exceeding $250,000.
Complaint, ¶ 18.
Parker filed an insurance claim with Farm Bureau. On July 19,
2012, the claim was denied based on a policy exclusion for a “flood
in progress” when the policy was issued.
Complaint, ¶ 20.
Parker
appealed the denial to the Federal Emergency Management Agency
(“FEMA”), which also denied his claim based on the “flood in
progress” exclusion.
Complaint, ¶ 22.
Parker’s First Amended Complaint, brought against the United
States of America by and through FEMA, and Farm Bureau, for failure
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to provide coverage under a flood insurance policy, was dismissed
with prejudice against the United States by and through FEMA on
grounds of sovereign immunity.
The plaintiff filed a motion for
summary judgment, requesting that the Court find that Farm Bureau
had a contractual obligation to provide flood insurance coverage to
the plaintiff.
Farm Bureau filed a motion for summary judgment
seeking a ruling by the Court that Farm Bureau did not owe coverage
to the plaintiff, based on the plaintiff’s failure to comply with
the requirements of the policy.
On March 26, 2013, the Court
entered its Opinion and Order on the parties’ motions for summary
judgment,
denying
defendant’s motion.
the
plaintiff’s
motion
and
granting
the
However, the Court also found that the
plaintiff was attempting to bring state law claims related to the
procurement of the policy, and allowed the plaintiff to file the
present Second Amended Complaint (“Complaint”).
The
present
Complaint
asserts
claims
for
negligent
misrepresentation (Count I), fraudulent misrepresentation (Count
II), negligence (Count III), and punitive damages (Count IV).
After additional discovery, Farm Bureau filed the motion for
summary judgment presently before the Court.
In deciding the defendant’s motion for summary judgment, the
Court follows the standard set forth in Fed.R.Civ.P. 56(c), as
interpreted by the United States Supreme Court:
[A] party seeking summary judgment always bears the
initial responsibility of informing the district court of
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the basis of its motion, and identifying those portions
of
the
pleadings,
depositions,
answers
to
interrogatories, and admissions on file, together with
the affidavits, if any, which it believes demonstrate the
absence of a genuine issue of material fact.
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
After the
moving party has met this initial burden, “[t]he evidence of the
non-movant is to be believed, and all justifiable inferences are to
be drawn in his favor.”
242, 255 (1986).
Anderson v. Liberty Lobby, Inc., 477 U.S.
Fed.R.Civ.P. 56(e), however, does not permit the
nonmoving party to avoid summary judgment by resting on the
pleadings, but “requires the nonmoving party to go beyond the
pleadings and by [his] own affidavits, or by the depositions,
answers to interrogatories, and admissions on file, designate
specific facts showing that there is a genuine issue for trial.”
Celotex, 477 U.S. at 324.
Moreover, the mere existence of a
scintilla of evidence in support of the non-movant’s position is
insufficient; there must be evidence on which the jury could
reasonable find for the non-movant.
Anderson, 477 U.S. at 251-52.
The elements of a negligence claim are “duty, breach of duty,
proximate cause, and damages.” Mladineo v. Schmidt, 52 So.3d 1154,
1162 (Miss. 2010).
In
order
to
establish
negligent
misrepresentation,
the
plaintiff must prove: “(1) a misrepresentation or omission of a
fact; (2) that the representation or omission is material or
significant; (3) that the person/entity charged with the negligence
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failed to exercise that degree of diligence and expertise the
public is entitled to expect of such persons/entities; (4) that the
plaintiff reasonably relied upon the misrepresentation or omission;
and (5) that the plaintiff suffered damages as a direct and
proximate result of such reasonable reliance.”
Horace Mann Life
Ins. Co. v. Nunaley, 960 So.2d 455, 461 (Miss. 2007).
The elements of a fraudulent misrepresentation claim are: (1)
a representation; (2) its falsity; (3) its materiality; (4) the
speaker’s knowledge of its falsity or ignorance of the truth; (5)
his intent that it should be acted on by the hearer and in the
manner reasonably contemplated; (6) the hearer’s ignorance of its
falsity; (7) his reliance on its truth; (8) his right to rely
thereon; and (9) his consequent and proximate injury.
Spragins v.
Sunburst Bank, 605 So.2d 777, 780 (Miss. 1992).
“Punitive damages are appropriate only in cases where the
plaintiff shows by clear and convincing evidence that the defendant
acted with malice, gross negligence evidencing willful, wanton, or
reckless disregard for the safety of others, or the commission of
actual fraud.”
Estate of Gibson, 91 So.3d 616, 629 (Miss. 2012).
The National Flood Insurance Program (“NFIP”) was created in
1968 by the National Flood Insurance Act (“NFIA”) “in order to make
it more economic for the private insurance industry to make flood
insurance available to those who need it, ‘on reasonable terms and
conditions.’”
Azoulay v. Allstate Ins. Co., 2013 WL l5596017, at
5
*2 (D. Conn. Oct. 11, 2013)(quoting 42 U.S.C. § 4001(b)).
NFIP is
administered by FEMA and the Federal Insurance Administration
(“FIA”), and is “‘supported by the federal treasury, which pays for
claims that exceed revenues collected by private insurers from
flood insurance premiums.’” Id. (quoting Palmieri v. Allstate Ins.
Co., 445 F.3d 179, 183 (2d Cir. 2006)(further citation omitted)).
Therefore,
“‘an insured’s flood insurance claims are ultimately
paid by FEMA.’” Id. (quoting Gibson v. Am. Bankers Ins. Co., 289
F.3d 943, 947 (6th Cir. 2002)(further citation omitted)).
FEMA promulgated the Standard Flood Insurance Policy
(“SFIP”),
which
establishes
the
rights
and
responsibilities of the insurers and insureds under a
flood insurance policy. Consumers have the option of
purchasing a SFIP from the federal government directly or
from private insurance companies known as “Write-YourOwn” carriers (“WYO”). Muncy v. Selective Ins. Co. of
Am., 2007 WL 2229224, at *1 (E.D. Ky. July 31, 2007).
The WYOs merely act as fiscal agents of the United
States.
WYOs cannot alter the SFIP, and the U.S.
Treasury remains the underwriter for the SFIP. See 42
U.S.C. § 4017(d); 44 C.F.R. § 62.23(f). In this way,
WYOs are simply a conduit through which citizens may
purchase flood insurance, but premiums are still paid to
and claims paid from the United States government
coffers. See 42 U.S.C. § 4017(d).
Fadel v. Nationwide Mut. Fire Ins. Co. (“Fadel I”), 2012 WL
5878728, at *1 (W.D. Ky. Nov. 21, 2012)(footnote omitted).
In this case, Farm Bureau was a WYO that sold an SFIP to the
plaintiff on May 5, 2011.
On May 12, 2011, flood waters reached
the plaintiff’s property.
See Defendant’s Exhibit D.
2011,
FEMA
issued
Bulletin
w-11030,
stating:
“FEMA
On May 17,
does
not
interpret the Section V (B) exclusion as being triggered only when
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floodwaters
Defendant’s
physically
Exhibit
touch
E.
the
Farm
insured
Bureau,
in
building.”
turn,
notified
See
the
plaintiff’s insurance agent of Bulletin w-11030, and the agent
directed
Farm
Bureau
Defendant’s Exhibit B.
to
issue
the
SFIP
as
requested.
See
On May 19, 2011, Farm Bureau issued the
Declarations Page (UW 13-14) with an effective date of May 5, 2011.
On June 20, 2011, FEMA issued Bulletin w-11039, setting forth the
flood-in-progress date for Warren County as April 25, 2011.
See
Defendant’s Exhibit C.
Following FEMA’s subsequent issuance of Bulletin w-11039,
stating that the community of Warren County was under a “flood in
progress” as of April 25, 2011, Farm Bureau denied the plaintiff’s
flood insurance claim based upon the “flood in progress” exclusion
in the policy, and in light of FEMA’s interpretation of its SFIP in
the context of FEMA’s Bulletins.
As a WYO carrier, Farm Bureau is
authorized to market, sell, issue, process claims and defend
litigation
under
the
SFIP,
but
all
activities
are
federally
regulated, and Farm Bureau must comply with FEMA’s agency standards
and guidelines:
1. The Company shall comply with written standards,
procedures, and guidance issued by FEMA or FIA relating
to the NFIP and applicable to the Company.
2. The Company shall market flood insurance policies in
a manner consistent with marketing guidelines established
by FIA.
44 C.F.R. Pt. 62, App. A, Art. II.
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Thus, Farm Bureau was required
to market and sell the SFIP in accordance with FEMA’s and FIA’s
guidelines and regulations.
As explained in Bulletin w-11045, the
WYO carrier was required to continue marketing and selling SFIPs
because there was always the possibility of an intervening covered
flooding event.
The Court notes that the NFIP was the plaintiff’s
only option for obtaining flood insurance, inasmuch as there are no
alternatives.
Griffith v. State Farm Fire & Cas. Co., 2010 WL
231743, at *2 (W.D. La. Jan. 14, 2010).
Furthermore, the United States Supreme Court has established
that “everyone is charged with knowledge of the United States
Statutes at Large,” and “the appearance of rules and regulations in
the Federal Register gives legal notice of their contents.”
Crop Ins. Corp. v. Merrill, 332 U.S. 380, 384-85 (1947).
Fed.
In
addition, all courts are under a duty “to observe the conditions
defined by Congress for charging the public treasury.” Id. at 385.
In Heckler v. Cmty. Health Servs. of Crawford Cnty., 467 U.S. 51
(1984), the Supreme Court held that
[p]rotection of the public fisc requires that those who
seek public funds act with scrupulous regard for the
requirements of law .... This is consistent with the
general rule that those who deal with the Government are
expected to know the law and may not rely on the conduct
of Government agents contrary to law.
Id. at 63.
The Fifth Circuit Court of Appeals has reasoned that because
those who deal with the government are required to know the law,
“the special nature of the insurance relationship ... charges the
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insured with the duty of understanding the SFIP so that he may deal
appropriately
with
the
government
and
its
appointed
agents.”
Richmond Printing LLC v. Dir. of Fed. Emergency Mgmt. Agency, 72
F.Appx. 92, 97-98 (5th Cir. 2003).
Thus, “individuals seeking to
utilize federal insurance programs are charged with the knowledge
of the contours of those programs.”
Fadel v. Nationwide Mut. Fire
Ins. Co. (“Fadel II”), 2013 WL 1337390, at *3 (W.D. Ky. March 29,
2013)(citing Richmond Printing, 72 F.Appx. at 98).
In Larmann v. State Farm Ins. Co., 2005 WL 357191 (E.D. La.
Feb. 11, 2005), the district court held that “all citizens are
charged with the knowledge of the law regarding federal insurance
programs” (id. at *4); and in Griffith, the court held that
insureds “are deemed to have constructive knowledge of the thirtyday waiting period and all other provisions under the NFIP.”
2010
WL 231743, at *3 (emphasis added).
The Mississippi Supreme Court has held that “insureds are
bound as a matter of law by the knowledge of the contents of a
contract
in
which
they
actually read the policy.
entered
notwithstanding
whether
they
Any alleged oral agreement ... does not
have any effect on the written insurance contract.”
Stephens v.
Equitable Life Assurance Soc’y of U.S., 850 So.2d 78, 83 (Miss.
2003). Further, a contracting party “will not as a general rule be
heard to complain of an oral misrepresentation the error of which
would have been disclosed by reading the contract.”
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Id. (quoting
Godfrey, Bassett & Kuykendall Architects, Ltd. v. Huntington Lumber
& Supply Co., 584 So.2d 1254, 1257 (Miss. 1991)).
In
Taylor
v.
S.
Farm
Bureau
Cas.
Co.,
954
So.2d
1045
(Miss.Ct.App. 2007), the Mississippi Court of Appeals held that
“‘[u]nder Mississippi law, there is no fiduciary relationship or
duty between an insurance company and its insured in a first party
insurance contract.’”
Id. at 1049 (quoting Langston v. Bigelow,
820 So.2d 752, 756 (Miss.Ct.App. 2002)).
With regard to SFIPs, the federal regulations provide:
The standard flood insurance policy is authorized only
under terms and conditions established by Federal
statute, the program’s regulations, the Administrator’s
interpretations and the express terms of the policy
itself.
Accordingly, representations regarding the
extent and scope of coverage which are not consistent
with the National Flood Insurance Act of 1968, as
amended, or the Program’s regulations, are void, and the
duly licensed property or casualty agent acts for the
insured and does not act as agent for the Federal
Government, the Federal Emergency Management Agency, or
the [WYO carrier].
44 C.F.R. § 61.5(e)(emphasis added).
The Tenth Circuit Court of
Appeals has interpreted the regulation as follows:
By creating the legal fiction that an insurance agent
“acts for the insured,” instead of for her employer (the
private insurance company), § 61.5(e) shields the private
insurance company from liability for certain of the
agent’s tortious acts.
Whether this is good public
policy because it makes participation in the NFIP more
attractive to private insurance companies, or bad public
policy because it may result in injustice for some
insureds, is not for us to decide.
The objective of
federal law, as evinced by 44 C.F.R. § 61.5(e) is clear,
and we cannot ignore it.
Remund v. State Farm Fire and Cas. Co., 483 Fed.Appx. 403, 408 (10th
10
Cir. 2012)(footnotes omitted). The appellate court also noted that
because the agent acted for the insured, the insured and the agent
“were, together, one party to the insurance contract while State
Farm, as fiscal agent of the United States, was the other party.”
Id. at 410.
To the extent that the plaintiff attempts to impute Jenkins’
allegedly tortious acts to Farm Bureau, such an attempt fails
because the “structure of the NFIP precludes the imputation of any
claims against [the insurance agent] to [the insurance company].”
Bull v. Allstate Ins. Co., 649 F.Supp.2d 529, 541 (W.D. La. 2009).
The plaintiff would still be allowed to sue his own agent in a
state law tort action (see WYO Program Bull. No. W-09038), but
Parker did not name Jenkins as a defendant in this case.
In any event, the plaintiff cannot recover from Farm Bureau
because he has failed to show that he reasonably relied on any
representations by Farm Bureau with respect to the scope of
coverage afforded under the SFIP contract issued to him.
The
plaintiff “had constructive notice of the policy terms ... [and is
charged] with the duty of understanding the terms of the SFIP so
that
he
may
deal
appropriately
with
the
government
and
its
appointed agents.” Richmond Printing, 72 Fed.Appx. at 98. It does
not matter if the plaintiff never received a copy of the policy,
because “the SFIP is published in its entirety in the CFR.”
Id.;
see also Griffith, 2010 WL 231743, at *4 (the CFR is “an additional
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outlet ... to turn to obtain information about the terms of the
policy”).
“[T]he
insured
is
charged
with
the
constructive
knowledge of the provisions of the SFIP ‘regardless of actual
knowledge
of
what
is
in
the
regulations
resulting from ignorant innocence.’”
or
of
the
hardship
Larmann, 2005 WL 357191, at
*5 (quoting Fed. Crop Ins., 332 U.S. at 385).
“[T]hose who deal
with the Government are expected to know the law and may not rely
on the conduct of Government agents contrary to law.” Heckler, 467
U.S. at 63.
Therefore,
the
plaintiff’s
claims
for
negligent
misrepresentation and fraudulent misrepresentation fail because he
cannot establish reasonable reliance.
Likewise, his claim for
negligence fails because the defendant did not owe the plaintiff
the duty he asserts. Finally, in the absence of any liability, the
plaintiff cannot assert a claim against the defendant for punitive
damages. The Court therefore finds that the defendant’s motion for
summary judgment is well-taken.
Accordingly,
IT IS HEREBY ORDERED that defendant Mississippi Farm Bureau
Casualty Insurance Company’s motion for summary judgment (docket
entry 83) is GRANTED. A final judgment dismissing this action with
prejudice shall follow.
SO ORDERED, this the 30th day of January, 2014.
/s/ David Bramlette
UNITED STATES DISTRICT JUDGE
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