Ravasio et al v. Fidelity National Property and Casualty Insurance Company

Filing 56

DECISION AND ORDER granting 43 Motion for Summary Judgment - For the foregoing reasons, Fidelitys motion for summary judgment pursuant to Fed. R. Civ. P. 56 dismissing the complaint is granted. The Clerk of the Court is respectfully directed to close this case. So Ordered by Judge Arthur D. Spatt on 1/29/2015. (Coleman, Laurie)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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EUGENE RAVASIO and MARY RAVASIO
REVOCABLE TRUST,
Plaintiffs,

DECISION AND ORDER
13-CV-1510 (ADS)(GRB)

-againstFIDELITY NATIONAL PROPERTY AND
CASUALTY INSURANCE COMPANY,
Defendant.
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APPEARANCES:
Kujawski & Dellicarpini
Attorneys for the Plaintiffs
1637 Deer Park Avenue
P.O. Box 661
Deer Park, NY 11729-0661
By: Mark C. Kujawski, Esq., Of Counsel
Conway Farrell Curtin and Kelly PC.
Attorneys for the Defendant
48 Wall Street 20th Floor
New York, NY 10005
By: Gail M. Kelly, Esq., Of Counsel
Nielsen, Carter & Treas, LLC
Attorneys for the Defendant
3838 N. Causeway Boulevard, Suite 2850
Metairie, LA 70002
By: Kim T. Britt, Esq., Of Counsel
SPATT, District Judge.
On February 7, 2013, the Plaintiffs Eugene Ravasio and Mary Ravasio Revocable Trust
commenced this action in the Supreme Court of the State of New York, County of Suffolk
against the Defendant Fidelity National Property and Casualty Insurance Company (“Fidelity”),
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a Write-Your-Own (“WYO”) Program Carrier participating in the United States Government’s
National Flood Insurance Program (“NFIP”), pursuant to the National Flood Insurance Act of
1968 (“NFIA”), 42 U.S.C. § 4001 et seq., as amended. Boiled to its essence, the Plaintiffs allege
that Fidelity breached a contract of flood insurance by failing to pay for damages caused by
flooding associated with Hurricane Irene that occurred on or about August 28, 2011.
On March 21, 2013, Fidelity removed this case to federal court pursuant to 42 U.S.C. §
4072, 44 C.F.R. Pt. 61, App. A(1), Article VII(R) and Article IX; 28 U.S.C. § 1331; 28 U.S.C. §
1337; 28 U.S.C. § 1367; and 28 U.S.C. § 1441(c).
On August 29, 2014, Fidelity moved pursuant to Federal Rule of Civil Procedure (“Fed.
R. Civ. P.”) 56 for summary judgment dismissing the complaint. Fidelity submits that the
Plaintiffs failed to comply with the conditions precedent under the subject Standard Flood
Insurance Policy (“SFIP”). In particular, Fidelity maintains that the Plaintiffs failed to submit, in
connection with their desired relief, a signed and sworn Proof of Loss and supporting
documentation, as required by SFIP Article VII(J)(4), prior to filing suit, as required by SFIP
Article VII(R).
For the reasons set forth, Fidelity’s motion for summary judgment is granted.
I.

BACKGROUND

Unless stated otherwise, the following facts are drawn from the parties’ Rule 56.1
Statements and the attached exhibits. Triable issues of fact are noted.
Of relevance here, in its capacity as a WYO Program carrier, Fidelity issued to the
Plaintiffs SFIP No. 31-25102556560-04, which provided coverage of $250,000, subject to a
$5,000 deductible, insuring the building located at 151 Wagstaff Lane in Islip, New York, with
an effective date of January 26, 2011 to January 26, 2012.
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Following the flooding of the premises that occurred on August 28, 2011 from Hurricane
Irene, the Plaintiffs submitted a claim for benefits to Fidelity.
On or about September 1, 2011, Gene Tackett and Clyde Wright, independent adjusters
assigned to assist the Plaintiffs in presenting their flood loss claim, inspected the property and
found that the floodwaters were limited to the crawlspace. Based on their inspections, Tackett
and Wright recommended payment to the Plaintiffs in the amount of $46,271.77.
On or about October 28, 2011, the Plaintiffs executed a Proof of Loss in the amount of
$35,960.46 and a Building Replacement Cost Proof of Loss in the amount of $10,311.31 for a
total amount of $46,271.77. The Proof of Loss specifically permitted supplemental claims.
Fidelity subsequently paid to the Plaintiffs the amount of $46,271.77.
On September 14, 2011, the Federal Emergency Management Agency (“FEMA”), upon
authority of 44 C.F.R. § 61.13(d), extended the 60-day deadline for submitting a Proof of Loss in
support of a flood claim for Hurricane Irene-related damages in the State of New York to a total
of 90 days from the date of loss.
On November 22, 2011, FEMA issued a second bulletin extending the Proof of Loss
deadline to a total of 150 days from the date of loss. As the Plaintiffs’ date of loss was August
28, 2011, they had until January 25, 2012 to submit Proofs of Loss for any further damages
claimed. The Plaintiffs concede that they have not obtained, nor did anyone acting on their
behalf, obtain from FEMA any waiver of any provision of the SFIP or any rule of the NFIP.
By form dated May 28, 2012, the Plaintiffs submitted a supplemental claim through their
public adjuster, John La Pata.
On August 12, 2012, Fidelity issued a partial denial of the Plaintiffs’ supplemental claim.
Although this partial denial did not mention the timeliness of the supplemental claim, the partial
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denial stated: “We do not waive any of our rights under this policy, but specifically reserve any
and all rights under this policy and governing Federal law.” (Pls’ Exh D.).
As noted above, on February 7, 2013, the Plaintiffs commenced this lawsuit.
On March 21, 2013, Fidelity removed this lawsuit to this Court.
On March 28, 2013, Fidelity interposed an answer. As one of its affirmative defenses,
Fidelity stated as follows:
The SFIP expressly conditions the right to sue for further benefits under the
policy upon the Insured’s prior compliance with “all the requirements of the
policy.” In order to obtain the federal benefits that the Insureds are seeking under
the policy, the Insureds must meet the burden of proof to establish the pre-suit
full, complete, truthful, and detailed compliance with “all” requirements of the
SFIP, including but not limited to the notice of loss, separation of property,
documentation, cooperation, proof of loss, and other requirements. See 44 C.F.R.
Pt. 61, App. A(1), Art. VII, each provision of which is expressly pleaded herein
by reference.
(Docket Entry No. 4, at 6.)
On June 5, 2014, the Plaintiffs filed suit in Supreme Court, Suffolk County against their
insurance agent and broker for allegedly failing to advise them of the 150-day extension of time
to file Proofs of Loss.
On August 29, 2014, Fidelity moved pursuant to Fed. R. Civ. P. 56 for summary
judgment dismissing the complaint.
II.

DISCUSSION

A. The Standard Governing a Motion for Summary Judgment
“Summary judgment must be granted where the pleadings, the discovery and disclosure
materials on file, and any affidavits show ‘that there is no genuine dispute as to any material fact
and that the movant is entitled to judgment as a matter of law.’” Brown v. Eli Lilly & Co., 654
F.3d 347, 358 (2d Cir. 2011)(quoting Fed. R. Civ. P. 56(a)). “In ruling on a summary judgment
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motion, the district court must resolve all ambiguities, and credit all factual inferences that could
rationally be drawn, in favor of the party opposing summary judgment and determine whether
there is a genuine dispute as to a material fact, raising an issue for trial.” McCarthy v. Dun &
Bradstreet Corp., 482 F.3d 184, 202 (2d Cir. 2007)(internal quotation marks omitted). “A fact is
material if it might affect the outcome of the suit under the governing law, and an issue of fact is
genuine if the evidence is such that a reasonable jury could return a verdict for the nonmoving
party.” Ramos v. Baldor Specialty Foods, Inc., 687 F.3d 554, 558 (2d Cir. 2012)(internal
quotation marks omitted). “Where the record taken as a whole could not lead a rational trier of
fact to find for the nonmoving party, there is no genuine issue for trial.” Ricci v. DeStefano, 557
U.S. 557, 586, 129 S. Ct. 2658, 174 L. Ed. 2d 490 (2009)(quotation marks and citation omitted);
see also Fabrikant v. French, 691 F.3d 193, 205 (2d Cir. 2012).
“The moving party bears the burden of establishing the absence of any genuine issue of
material fact.” Zalaski v. City of Bridgeport Police Dep’t, 613 F.3d 336, 340 (2d Cir. 2010). If
this burden is met, “the opposing party must come forward with specific evidence demonstrating
the existence of a genuine dispute of material fact.” Brown, 654 F.3d at 358. In order to defeat
summary judgment, the nonmoving party “must do more than simply show that there is some
metaphysical doubt as to the material facts and may not rely on conclusory allegations or
unsubstantiated speculation.” Id. (internal quotation marks and citations omitted).
B. The National Flood Insurance Program
Under the National Flood Insurance Act of 1968, 42 U.S.C. §§ 4001–4127 (“NFIA”),
“the federal government provides flood insurance subsidies and local officials are required to
adopt and enforce various enforcement measures.” Palmieri v. Allstate Ins. Co., 445 F.3d 179,
183 (2d Cir. 2006). “The NFIP, created by the [NFIA], is administered by FEMA and supported
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by taxpayer funds, which pays for claims that exceed the premiums collected from the insured
parties.” Jacobson v. Metro. Prop. & Cas. Ins. Co., 672 F.3d 171, 174 (2d Cir. 2012).
Under the NFIA, FEMA “is authorized to prescribe regulations establishing the general
method or methods by which proved and approved claims for losses may be adjusted and paid
for any damage to or loss of property which is covered by flood insurance.” 42 U.S.C. § 4019.
In 1983, FEMA created the Write Your Own program, which allows private insurance
companies to issue and administer SFIPs in their own names as “fiscal agent[s] of the Federal
Government.”42 U.S.C. § 4071(a)(1); see also Palmieri, 445 F.3d at 183. “Thus, while the
private insurance companies administer the federal program, ‘it is the Government, not the
companies, that pays the claims.’” Jacobson, 672 F.3d at 175 (quoting Palmieri, 445 F.3d at
184).
All SFIPs require an insured to submit an executed Proof of Loss within sixty (60) days
from the date of loss. See 44 C.F.R. Pt. 61, App. A(I), Art. VII(J)(4). In light of the “compelling
interest in assuring uniformity of decision in cases involving the NFIP,” Jacobson, 672 F.3d at
175 (quoting Flick v. Liberty Mut. Fire Ins. Co., 205 F.3d 386, 390 (9th Cir. 2000)), the Second
Circuit has applied the standard of other circuits and “held that [proof of loss] requirements must
be strictly construed and enforced.” Id.; Zuk v. Allstate Ins. Co., No. 12-CV-4186 (SJF)(AKT),
2014 WL 905552, at *3 (E.D.N.Y. Mar. 6, 2014)(citing Jacobson).
Here, the Plaintiffs’ date of loss was August 28, 2011. Considering the two Proof of Loss
extensions issued by FEMA allowing up to 150 days from the date of loss, the Plaintiffs had until
January 25, 2012 to submit additional Proofs of Loss for any additional damages claimed.
However, prior to and including that date, they failed to do so for any damages above and
beyond those previously paid for by Fidelity. Accordingly, because the Plaintiffs have failed to
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comply with the requirements of the SFIP, the present action is barred as a matter of law and
Fidelity is entitled to summary judgment.
The Plaintiffs contend that Fidelity cannot invoke the timeliness requirements of the
SFIP because it did not raise the issue until the filing of the instant motion. However, this
argument is belied by the pleadings, particularly the answer which included an affirmative
defense that the Plaintiffs were required to comply with “all” requirements of the SFIP, including
those pertaining to Proof of Loss. While the Plaintiffs contend that, for purposes of Fed. R. Civ.
P. 8, the generally-worded language of this affirmative defense failed to put them on adequate
notice of any such defense, the Courts notes that in Zuk, United States District Judge Sandra J.
Feuerstein deemed a similarly-worded affirmative defense to be sufficient.
Relatedly, the Plaintiffs contend that had Fidelity raised the issue of timeliness of the
Proof of Loss sooner or spelled out this affirmative defense in greater detail, they could have
sought a waiver or extension from FEMA. Even if this is true, the Plaintiffs fail to cite any
authority for the proposition that the onus is on the insurance carrier to keep a claimant abreast of
the various Proof of Loss requirements.
In this regard, contrary to the Plaintiff’s contention, the Court finds that, on these facts,
Fidelity is not “estopped” from asserting a Proof of Loss defense. In Sfoglia v. Hartford Fire Ins.
Co., Case No. 2:07-cv-00800 (JS)(MLO), Rec. Doc. 65 (E.D.N.Y. June 17, 2009), United States
District Judge Joanna Seybert addressed this precise issue:
As an initial matter, it is unclear whether WYO insurers,
who act as the United States’ “fiscal agents,” Palmieri, 445 F.3d
at 183, may ever be estopped. Four Circuits have effectively
barred estoppel claims against WYO insurers or FEMA, because the
funds used to pay claims come directly from the public treasury.
And another four have speculated that estoppel may be available,
but only upon a showing of “affirmative misconduct,” while noting
that the Supreme Court has consistently rejected estoppel arguments
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against the Government or its agents. Although the Second Circuit
has not yet addressed this issue, district courts within the Second
Circuit have generally adopted the “affirmative misconduct”
standard. Exim. Mortg. Banking Corp., 16 F. Supp. 2d at 178 n. 10;
Diamond, 689 F. Supp. at 169 (requiring “affirmative, serious
misconduct”).
This Court sees no reason to reach the issue of whether
WYO insurers may ever be estopped. But, even assuming arguendo
that Hartford could be estopped upon a showing of “affirmative
misconduct,” Mr. Sfoglia has failed to meet this standard. Mr.
Sfoglia contends that Hartford never “request[ed] any additional
proofs of loss,” and “acted as if the proof of loss documents
previously submitted were satisfactory.” Sfoglia Opp. Br. at 14.
Thus, Mr. Sfoglia argues that “[i]n reliance on Hartford’s denial
of coverage, the insured proceeded to file a lawsuit rather than
submit more claim forms.” Id. But Hartford did not deny coverage
because Mr. Sfoglia failed to file a Proof of Loss. Rather,
Hartford denied coverage because the appointed independent
adjuster, Mr. Irwin, determined that Mr. Sfoglia had no claim.
Hartford Stmt. ¶ 10. Had Mr. Irwin determined that Mr. Sfoglia was
entitled to benefits under his policy, the FEMA waiver required
Hartford to pay those benefits regardless of whether Mr. Sfoglia
filed a Proof of Loss. Mallin Aff. Ex. M. Accordingly, in the
strictest sense, Mr. Sfoglia did not “need” to file a Proof of
Loss, and Hartford was not derelict in failing to inform him that
he failed to. Rather, Mr. Sfoglia had a choice: accept Mr. Irwin’s
findings (which resulted in no claim), or challenge those findings
by filing a Proof of Loss. Shuford, 508 F.3d at 1342 (“‘may’”
means only “that the policyholder ha[s] a choice whether to
challenge the insurer's decision”). At most then, Hartford failed
to instruct Mr. Sfoglia regarding the specific procedural hoops he
must jump through in order to file an SFIP challenge in federal
court. But Hartford’s failure to provide Mr. Sfoglia with
assistance on the steps he needs to take to file suit against it
does not constitute “affirmative misconduct.” And this is
especially true because, as a customer of a federal insurance
program, Mr. Sfoglia is “expected to know the law and may not rely
on the conduct of Government agents contrary to law.” Heckler, 467
U.S. at 63.
Mr. Sfoglia also seeks to establish estoppel by noting that Hartford
did not “send him a particular proof of loss form to
be completed.” Sfoglia Opp. Br. at 14. But the SFIP itself states
that, although the “insurance adjuster whom we hire to investigate
your claim may furnish you with a proof of loss form, and she or he
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may help you complete it . . . . this is a matter of courtesy only,
and you must still send us a proof of loss within 60 days after the
loss even if the adjuster does not furnish the form or help you
complete it.” 44 C.F.R. Pt. 61 App. A(1) at § VII(J)(7). Thus,
Hartford’s alleged failure to send him a Proof of Loss form does
not create estoppel.
Id. at 13-16 (footnotes omitted).
For the reasons articulated by Judge Seybert in Sfoglia, the Court finds that Fidelity is not
estopped, nor could it be estopped, from asserting a Proof of Loss defense based on timeliness.
The fact that the Plaintiffs did previously file a Proof of Loss claim did not relieve them
of their statutory and contractual obligation to file a Supplemental Proof of Loss for the amounts
they now seek to recover. “[A] signed and sworn proof of loss ‘claims only the amounts listed in
those forms, and the insured must timely file an additional proof of loss to claim any additional
amount of money.’” Dickson v. Am. Bankers Ins. Co. of Florida, 739 F.3d 397, 399 (8th Cir.
2014)(citation omitted). Although the Plaintiffs filed a Proof of Loss for their undisputed claims,
they never filed a Proof of Loss related to the amounts they now seek to recover here.
It is legally irrelevant that the Plaintiffs argue that a genuine issue of material fact exists
as to whether the amount of damage was caused by the flood as opposed to the wind. This is
because Fidelity’s motion for summary judgment is directed at the Plaintiffs’ failure to submit a
Proof of Loss for the additional amounts claimed, not at the substance of any such claim.
As a final matter, even if the Plaintiffs’ could recover their claimed amounts, the Court
would deny their extra-contractual requests for interest, costs, and attorneys’ fees. “The
National Flood Insurance Act preempts state law claims for penalties and attorneys’ fees brought
against WYO insurance carriers participating in the FEMA’s NFIP.” Bowie v. Am. Sec. Ins. Co.,
No. CIV.A. 13-5698 (MAVL), 2014 WL 2979759, at *2 (E.D. La. July 1, 2014)(citing Wright v.
Allstate Ins. Co., 415 F.3d 384, 390 (5th Cir. 2005). Further, a plaintiff cannot recover pre9

judgment or post-judgment interest against a WYO. Newton v. Capital Assur. Co., Inc., 245 F.3d
1306, 1312 (11th Cir. 2001); Sandia Oil Co., Inc. v. Beckton, 889 F.2d 258, 264 (10th Cir.
1989).
Accordingly, Fidelity’s motion for summary judgment dismissing the Plaintiffs’ prayer
for extra-contractual relief is granted.
III.

CONCLUSION

For the foregoing reasons, Fidelity’s motion for summary judgment pursuant to Fed. R.
Civ. P. 56 dismissing the complaint is granted. The Clerk of the Court is respectfully directed to
close this case.
SO ORDERED.
Dated: Central Islip, New York
January 29, 2015

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Arthur D. Spatt
ARTHUR D. SPATT
United States District Judge

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