PRASTOS v. TRAVELERS INSURANCE COMPANIES

Filing 32

OPINION/ORDER denying 28 Motion to Compel. Signed by Magistrate Judge Cathy L. Waldor on 3/10/15. (DD, )

NOT FOR PUBLICATION

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

NICK PRASTOS,
Plaintiff,

Civil Action No. 2:13cv2546 (SRC)(CLW)

v.
TRAVELERS INSURANCE COMPANIES
(d/b/a Standard Fire Insurance Company),

OPINION & ORDER

Defendant.

THIS MATTER comes before the Court upon motion by Plaintiff Nick Prastos
(“Plaintiff”) seeking an order to compel an appraisal as well as a stay of proceedings pending the
appraisal. The Court declined to hear oral argument pursuant to Rule 78 of the Federal Rules of
Civil Procedure.
On April 22, 2013, Plaintiff filed suit against Defendant “asserting a [breach of contract]
claim arising out of the 2012 storm known as ‘Hurricane Sandy.’” (Complaint, ECF No. 1.)
Plaintiff claims that Defendant failed to cover Plaintiff’s property damage pursuant to the Standard
Flood Insurance Policy (“SFIP” or “Policy”) that Defendant issued to Plaintiff. Id. Plaintiff
accordingly seeks “compensatory damages, prejudgment interest, and such further relief as the
Court may deem just and proper.” Id.
The instant dispute concerns whether and when a party may demand an appraisal in light
of the Policy terms and Federal Emergency Management Agency (“FEMA”) directives. On
October 30, 2014, Plaintiff demanded an appraisal under the Policy and, on November 7, 2014,
Defendant objected. (ECF No. 28, Exhibits A-B.) On November 12, 2014, Plaintiff filed his
motion, in which he asks this Court “to compel [Defendant] to participate in an appraisal of the
disputed loss, and for a stay of the action pending such appraisal.” (ECF No. 28.) On November

26, 2014, Defendant filed its opposition to Plaintiff’s motion. (ECF No. 31.) The parties agree that
disputes exist as to both the scope and value of the loss. Plaintiff, however, maintains that the
Court need not resolve all outstanding issues “when there are disputes over both scope and value”
of a claim, that an appraisal may move forward as to value, and that the Court thereafter may
dispose of “whatever discrete legal issues” remain. Defendant counters that “the use of the
appraisal process in th[e] fashion [proposed by Plaintiff] is expressly prohibited as a matter of
law.” Defendant argues that the terms of the Policy confine appraisal to disputes regarding “actual
cash value” and thus prohibit appraisal where, as here, disputes remain as to both the scope and
value of the loss. Defendant further cites FEMA Bulletin W-13029 (“FEMA Bulletin”) for this
proposition.
The FEMA Bulletin, issued on May 15, 2013, concerns “Proper Invocation and Usage of
the Appraisal Clause Provisions in the Standard Flood Insurance Policy” and provides, in pertinent
part:
If the insured and insurer cannot agree on the scope of loss, then the Appraisal
provision cannot be invoked. This means that a claim cannot be partially resolved
by the Appraisal process and partially resolved by other means (such as an appeal
to FEMA or through litigation). Appraisal can only be used when it will result in a
complete resolution of the entire claim.
[. . .]
Appraisal cannot be used as a means to resolve some issues and not others because
of the necessity of having an agreed-to scope of loss before invoking the clause.
This means that Appraisal would only be available after a lawsuit is filed if it would
result in a resolution of all claims of the insured and a dismissal of the lawsuit.
The FEMA Bulletin plainly applies to the instant dispute, as the parties acknowledge that
disputes exist as to both the scope and value of the loss and, if ordered, an appraisal would not
result in a complete resolution of the entire claim. Importantly, FEMA’s guidelines are “given
controlling weight unless [they are] plainly erroneous or inconsistent with the regulation.”
Worthen v. Fid. Nat’l Prop. & Cas. Ins. Co., 463 F. App’x 422, 426 (5th Cir. 2012) (internal

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quotations omitted) (quoting Stinson v. United States, 508 U.S. 36, 45 (1993)); see also Hower v.
Fed. Emergency Mgmt. Agency, 2004 WL 2577503, at *2 (E.D. Pa. Oct. 20, 2004) (finding FEMA
regulations not to be arbitrary, capricious, or manifestly contrary to the statute and therefore
affording the regulations controlling weight).
The Court finds no infirmity with the pertinent portions of the FEMA bulletin, nor does
Plaintiff offer authority to support such a finding. The FEMA Bulletin, therefore, forecloses
appraisal under the circumstances presented, i.e., where disputes remain as to both the scope and
value of the loss. The Court is mindful of Plaintiff’s desire to resolve some issues in this case. The
terms of the Policy and the FEMA Bulletin, however, counsel against such a route and the Court
finds that it would be impractical to address the issues in piecemeal fashion and in direct
contravention of the FEMA Bulletin. Plaintiff’s motion to compel appraisal accordingly is denied
and his request for a stay is denied as moot since the request was contingent upon an appraisal.

ACCORDINGLY, IT IS on this 10th day of March, 2015,
ORDERED that Plaintiff’s motion to compel appraisal and for a stay is DENIED; and
FURTHER ORDERED that the Clerk shall terminate ECF No. 28.

s/Cathy L. Waldor
CATHY L. WALDOR
United States Magistrate Judge

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