PEPE v. FIDELITY NATIONAL PROPERTY AND CASUALTY INSURANCE CO. et al
Filing
26
OPINION. Signed by Judge Joseph E. Irenas on 10/17/2011. (dmr)
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
CATHERINE PEPE,
HONORABLE JOSEPH E. IRENAS
Plaintiff,
CIVIL ACTION NO. 11-3746 (JEI/JS)
v.
OPINION
FIDELITY NATIONAL PROPERTY AND
CASUALTY INSURANCE COMPANY, et
al.
Defendants.
APPEARANCES:
MARK J. HILL ASSOCIATES, P.C.
By: Mark J. Hill, Esq.
400 North Church Street, Suite 250
Moorestown, NJ 08057
Counsel for Plaintiff
PAUL J. FISHMAN, UNITED STATES ATTORNEY
By: Paul A. Blaine, Assistant United States Attorney
401 Market Street
P.O. Box 2098
Camden, NJ 08101
Counsel for Federal Emergency Management Agency
CARROLL, MCNULTY & KULL LLC
By: Gary Kull, Esq.
Shaun I. Blick, Esq.
120 Mountain View Blvd.
P.O. Box 650
Basking Ridge, NJ 07920
and
NIELSEN LAW FIRM, LLC
By: Kim Tran Britt, Esq.
3838 North Causeway Blvd., Suite 2850
Metairie, LA 70002
Counsel for Defendants Fidelity National Property and Casualty
Insurance Company and Fountain Group
1
IRENAS, Senior District Judge:
Plaintiff Catherine Pepe initiated this action against Fidelity
National Property and Casualty Insurance Company (“Fidelity”),
Fountain Group LLC (“Fountain”), and the Federal Emergency Management
Agency (“FEMA”) seeking damages in connection with the denial of a
claim for flood damage to her property.
Pending before the Court is
a Motion for Judgment on the Pleadings pursuant to Fed. R. Civ. P.
12(c) filed by Fidelity and Fountain, and a Motion to Dismiss
pursuant to Fed. R. Civ. P. 12(b)(1) filed by FEMA.
I.
Plaintiff maintained a Standard Flood Insurance Policy (“SFIP”)
for properties located at 226 E. Cresse Avenue, Wildwood Crest, New
Jersey.
(Compl. ¶¶ 1, 10.)
The Front Building and the Rear Building
were each covered by separate SFIPs issued by Fidelity pursuant to
the National Flood Insurance Program (“NFIP”).1
(Id. ¶¶ 11-12.)
Between November 11, 2009 through November 15, 2009, the Front and
Rear Buildings allegedly sustained severe flood damage due to
“Hurricane/Tropical Depression Ida and a related nor’easter.”
(Id.
¶¶ 16, 18.)
Following the storm, Plaintiff made a flood loss claim to
Fidelity for both Buildings.
(Id. ¶ 19.)
1
Fountain was assigned to
Fidelity is a Write-Your-Own (“WYO”) company
participating in the FEMA-administered NFIP. 42 U.S.C. § 4001 et
seq. Through the WYO program, FEMA has authorized private
insurance companies to issue SFIPs with claims and expenses paid
by the National Flood Insurance Fund. See 44 C.F.R. § 62.23.
2
adjust Plaintiff’s claim for the Rear Building while a different
adjuster was assigned Plaintiff’s claim for the Front Building.
¶ 20.)
(Id.
Tom Klein, an agent of Fountain, inspected the Rear Building
and allegedly concluded that no flood had occurred in the area and
that no clear evidence of a water line existed.
(Id. ¶¶ 24, 29-30.)
According to the Complaint, Fidelity never made a determination
regarding Plaintiff’s flood loss claim to the Rear Building and
therefore Plaintiff concludes that her claim was constructively
denied.
(Id. ¶¶ 34-35.)
On June 29, 2011, Plaintiff initiated the instant action by
filing a three Count Complaint, alleging claims for breach of
contract against Fidelity and FEMA, as well as a third party
beneficiary claim against Fountain.
On September 6, 2011, Fidelity
and Fountain filed their Motion for Judgment on the Pleadings.
Fidelity seeks to dismiss only Plaintiff’s claims for extracontractual damages, while Fountain seeks to dismiss the third-party
beneficiary claim asserted against it.
On September 23, 2011, FEMA
filed its Motion to Dismiss.
II.
A.
Federal Rule of Civil Procedure 12(b)(1) provides that a court
may dismiss a complaint for lack of subject matter jurisdiction.
The
party asserting that jurisdiction is proper bears the burden of
showing that jurisdiction exists.
Kokkonen v. Guardian Life Ins. Co.
3
of Am., 511 U.S. 375, 377 (1994).
When considering a motion to
dismiss for lack of subject matter jurisdiction, a court may not
presume the truthfulness of plaintiff’s allegations, but must
“evaluate for itself the merits of jurisdictional claims.”
Hedges v.
United States, 404 F.3d 744, 750 (3d Cir. 2005)(quoting Mortensen v.
First Federal Sav. & Loan Ass’n, 549 F.2d 884, 891 (3d Cir. 1977)).
The court may consider exhibits outside the pleadings and is “free to
weigh the evidence and satisfy itself as to the existence of its
power to hear the case.”
Mortensen, 549 F.2d at 891.
B.
Pursuant to Fed. R. Civ. P. 12(c), “[a]fter the pleadings are
closed--but early enough not to delay trial--a party may move for
judgment on the pleadings.”
Fed. R. Civ. P. 12(c).
A Rule 12(c)
Motion for Judgment on the Pleadings is subject to the same standard
of review as a Rule 12(b)(6) Motion to Dismiss.
Turbe v. Gov’t of
V.I., 938 F.2d 427, 428 (3d Cir. 1991); see also Spruill v. Gillis,
372 F.3d 218, 223 n.2 (3d Cir. 2004); Collins v. F.B.I., 2011 WL
1624025, at *4 (D.N.J. April 28, 2011).
Federal Rule of Civil Procedure 12(b)(6) provides that a court
may dismiss a complaint “for failure to state a claim upon which
relief can be granted.”
In order to survive a motion to dismiss, a
complaint must allege facts that raise a right to relief above the
speculative level.
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555
(2007); see also Fed. R. Civ. P. 8(a)(2).
4
While a court must accept as true all allegations in the
plaintiff’s complaint, and view them in the light most favorable to
the plaintiff, Phillips v. County of Allegheny, 515 F.3d 224, 231 (3d
Cir. 2008), a court is not required to accept sweeping legal
conclusions cast in the form of factual allegations, unwarranted
inferences, or unsupported conclusions.
Morse v. Lower Merion Sch.
Dist., 132 F.3d 902, 906 (3d Cir. 1997).
The complaint must state
sufficient facts to show that the legal allegations are not simply
possible, but plausible.
Phillips, 515 F.3d at 234.
“A claim has
facial plausibility when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the defendant
is liable for the misconduct alleged.”
Ashcroft v. Iqbal, 129 S.Ct.
1937, 1949 (2009).
III.
A.
FEMA moves to dismiss the claims against it arguing that
“Congress has not waived sovereign immunity to permit this lawsuit to
be brought directly against FEMA under 42 U.S.C. § 4072.”
(FEMA Br.
in Support at 1.)
It is well established that the United States and its agencies
are immune from suit unless Congress explicitly waives sovereign
immunity.
U.S. Dept. of Energy v. Ohio, 503 U.S. 607, 615 (1992).
The National Flood Insurance Act (“NFIA”) contains a limited waiver
of sovereign immunity where a claim was directly submitted to,
5
evaluated, and denied by the FEMA Director, as opposed to a WYO
company.2
See 42 U.S.C. § 4072; see also Van Holt v. Liberty Mut.
Fire Ins. Co., 163 F.3d 161, 166 (3d Cir. 1998)(noting that “the
plain text appears to restrict the reach of § 4072 to suits against
FEMA.”).
In this case, Plaintiff purchased the SFIPs from Fidelity, filed
a claim with Fidelity, and Fidelity assigned Fountain to adjust
Plaintiff’s claim.
The SFIP at issue was not directly issued from
FEMA and FEMA did not participate in the evaluation of Plaintiff’s
claim.3
(Christian Dec. ¶¶ 5-6, 9).
2
In pertinent part, 42 U.S.C. § 4072 provides:
In the event the program is carried out as
provided in section 4071 of this title, the
Director [of FEMA] shall be authorized to
adjust and make payment of any claims for
proved and approved losses covered by flood
insurance, and upon the disallowance by the
Director of any such claim, or upon the
refusal of the claimant to accept the amount
allowed upon any such claim, the claimant,
within one year after the date of mailing of
notice of disallowance or partial disallowance
by the Director, may institute an action
against the Director on such claim in the
United States district court for the district
in which the insured property of the major
part thereof shall have been situated, and
original exclusive jurisdiction is hereby
conferred upon such court to hear and
determine such action without regard to the
amount in controversy.
42 U.S.C. § 4072.
3
In her Opposition Brief, Plaintiff argues that “it is not
clear that FEMA was not a participant in the denial of [her]
claim.” (Opp. Br. at 2.) However, this argument is wholly
6
Other federal courts to have considered this issue under
circumstances similar to those presented here--where an insured
obtained an SFIP from a private WYO company, which evaluated and
denied the insured’s claim--have dismissed claims against FEMA,
reasoning that the NFIA’s limited waiver of sovereign immunity is not
satisfied.
See Bruno v. Paulison, 2009 WL 377300, *5-6 (D.Md Feb.
12, 2009); Tucard v. Fidelity Nat’l Prop. & Cas. Ins. Co., 567
F.Supp. 2d 215, 218-19 (D.Mass. 2008); Sutor v. FEMA, 2008 WL
1959693, *3-4 (E.D.Pa. May 5, 2008); Hower v. FEMA, 2004 WL 2577503,
*2-3 (E.D.Pa. Oct. 21, 2004).
Since FEMA neither issued the SFIP to Plaintiff nor participated
in the denial of her claim, the conditions for the limited waiver of
sovereign immunity in 42 U.S.C. § 4072 are not met.
Accordingly,
this Court lacks subject matter jurisdiction over Plaintiff’s claim
against FEMA and FEMA’s Motion to Dismiss will be granted.
B.
In Count Three of the Complaint, Plaintiff asserts a third-party
beneficiary claim against Fountain arising out of its investigation
and adjustment of Plaintiff’s flood loss claim. (See Compl. Count
Three.)
Plaintiff also seeks interest and attorney’s fees and costs
against both Fountain and Fidelity.
(See Compl. Counts One and
Three.)
unsupported and even contradicted by the allegations in the
Complaint that she purchased the SFIPs from Fidelity, that her
claim was adjusted by Fountain and that it was ultimately denied
by Fidelity. (See Compl. ¶¶ 10-11, 20, 32.)
7
Fidelity argues for dismissal of Plaintiff’s claims for extracontractual damages,4 while Fountain argues for dismissal of the
third-party beneficiary claim asserted against it.
In their Motion
for Judgment on the Pleadings, Fidelity and Fountain argue that these
claims are preempted by federal law.
The Court agrees.
First, extra-contractual and negligence
claims are barred against all persons involved in the claims
adjustment process, including the WYO company.
See C.E.R. 1988, Inc.
v. Aetna Cas. & Surety Co., 386 F.3d 263, 272 n.12 (3d Cir. 2004);
Sutor v. FEMA, 2009 WL 2004375, at *5-6 (E.D.Pa. July 9, 2009); Messa
v. Omaha Prop. & Cas. Ins. Co., 122 F.Supp. 2d 513, 523 (D.N.J.
2000).
Second, Fidelity, as the WYO company, is the only proper
defendant in this action.
The NFIA expressly permits suits only
against the director of FEMA, see supra note 2, and FEMA regulations
extend liability to WYO companies.
44 C.F.R. § 62.23(d); C.E.R., 386
F.3d at 267 n.4 (3d Cir. 2004)(noting that “42 U.S.C. § 4072
authorizes suit against the FEMA Director upon disallowance of a
claim” and that “[b]y regulation, the WYO company is sued in place of
the FEMA Director”).
There is no provision in the NFIA or in the
regulations authorizing suit against independent adjusters such as
Fountain for claims arising from the adjustment of claims under
4
Plaintiff does not oppose the dismissal of her claims
against Fidelity for extra-contractual damages. (Pl’s Opp. at
2.)
8
SFIPs.
See Sutor v. FEMA, 2008 WL 1959693, *6 (E.D.Pa. May 5, 2008).
Because Plaintiff’s claims plainly arise out of allegedly improper
investigation and adjustment of a claim pursuant to a SFIP, and the
only proper defendant in such an action is the WYO company, Plaintiff
cannot maintain claims against Fountain.
Accordingly, Fidelity’s Motion with respect to Plaintiff’s
claims for extra-contractual damages and Fountain’s Motion with
respect to the third-party beneficiary claim will be granted.5
IV.
For the foregoing reasons, FEMA’s Motion to Dismiss will be
granted.
Fidelity’s Motion for Judgment on the Pleadings with
respect to Plaintiff’s claims for extra-contractual damages and
Fountain’s Motion with respect to the third-party beneficiary claim
will be granted.
An appropriate order will be issued.
Dated: October 17, 2011
s/Joseph E.Irenas
JOSEPH E. IRENAS, S.U.S.D.J.
5
While there is some procedural irregularity in that
Fidelity and Fountain have prematurely moved for Judgment on the
Pleadings, the only Defendant to not have filed an answer is
FEMA, which is no longer a party to the action. See supra
section III, A. Therefore, any procedural issue concerning the
timing of Fidelity and Fountain’s Motion for Judgment on the
Pleadings is now moot.
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