Hogan et al v. Fidelity National Property & Casualty Insurance Company
Filing
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MEMORANDUM-DECISION and ORDER - That Fidelity's 23 Motion for Summary Judgment is GRANTED. That the complaint (Dkt. No. 1) is DISMISSED. That the Clerk close this case. Signed by Chief Judge Gary L. Sharpe on 5/6/2015. (jel, )
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF NEW YORK
________________________________
TIMOTHY HOGAN et al.,
Plaintiffs,
3:13-cv-9
(GLS/DEP)
v.
FIDELITY NATIONAL PROPERTY
& CASUALTY INSURANCE
COMPANY,
Defendant.
________________________________
APPEARANCES:
OF COUNSEL:
FOR THE PLAINTIFFS:
Timothy Hogan
Pro Se
14 Locust Street
Windsor, NY 13865
Stacy Hogan
Pro Se
623 Nelson Rd.
Johnson City, NY 13790
FOR THE DEFENDANT:
Stradley, Ronon Law Firm
2005 Market Street, Suite 2600
Philadelphia, PA 19103-7098
Nielsen, Carter Law Firm
3838 N. Causeway Boulevard
Suite 2850
Metairie, LA 70002
ELLEN R. ROGOFF, ESQ.
JOSEPH J. AGUDA, JR., ESQ.
Iseman, Cunningham Law Firm
9 Thurlow Terrace
Albany, NY 12203
JAMES P. LAGIOS, ESQ.
JOHN. F. QUEENAN, ESQ.
Gary L. Sharpe
Chief Judge
MEMORANDUM-DECISION AND ORDER
I. Introduction
Plaintiffs pro se Timothy Hogan and Stacy Hogan commenced this
action against defendant Fidelity National Property & Casualty Insurance
Company, the Write Your Own (WYO) insurance company that issued their
federal flood insurance policy pursuant to the National Flood Insurance Act
(NFIA) of 1968, as amended.1 (Compl., Dkt. No. 1.) Plaintiffs allege that
the denial of their claim for payment of flood-related damages was a
breach of contract, and “breach of the covenants of good faith and fair
dealing, and was tortious and in bad faith.” (Id.) Pending is Fidelity’s
motion for summary judgment. (Dkt. No. 23.) For the reasons that follow,
the motion is granted.
II. Background
1
See 42 U.S.C. §§ 4001-4131.
2
A.
Facts2
Fidelity, serving as a WYO insurance program carrier, issued a
Standard Flood Insurance Policy (SFIP) to plaintiffs for the period of
February 28, 2011 to February 28, 2012, pursuant to the NFIA.3 (Dkt. No.
23, Attach. 2 ¶ 5; Def.’s Statement of Material Facts (SMF) ¶ 1, Dkt. No.
23, Attach. 17.) The SFIP provided $38,500 of coverage for plaintiffs’
single family home. (Dkt. No. 23, Attach. 3; Def.’s SMF ¶ 1.) On
September 8, 2011, as a result of a flood caused by Tropical Storm Lee,
plaintiffs’ home was damaged.4 (Def.’s SMF ¶ 2; Dkt. No. 25 at 1.) The
following day, plaintiffs submitted a claim to Fidelity for the damages.
(Def.’s SMF ¶ 3.) Shortly thereafter, Colonial Claims Corporation, an
independent adjusting firm assigned by Fidelity, inspected the property and
recommended payment to plaintiffs in the amount of $1,107.58. (Id. ¶ 5;
Dkt. No. 23, Attach. 2 ¶¶ 8-9.) Accordingly, Colonial Claims prepared a
2
Unless otherwise noted, the facts are undisputed.
3
Defendant’s statement that the SFIP was issued for the period of February 28, 2011
to February 2, 2012 appears to be a typographical error. (Def. SMF ¶ 1; Dkt. No. 23, Attach.
3.)
4
Fidelity contends that plaintiffs’ home was damaged on August 28, 2011 by Hurricane
Irene and/or on September 8, 2011 by Tropical Storm Lee. (Def.’s SMF ¶ 2.) Plaintiffs’
complaint indicates that their home was damaged by Hurricane Irene. (Compl. ¶ 2.) However,
plaintiffs now state that their home was damaged by Tropical Storm Lee, on September 8,
2011. (Dkt. No. 25 at 1.)
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“proof of loss” statement in that amount. (Def.’s SMF ¶ 5.)
On December 5, 2011, plaintiffs submitted the unexecuted proof-ofloss form to Fidelity, with the handwritten notation “decline” inscribed at the
bottom of the form. (Id. ¶ 6; Dkt. No. 23, Attach. 6 at 3.) In a letter to
Colonial Claims, plaintiffs asserted that “there is much more damage than
originally noted in the inspection that was done.” (Dkt. No. 23, Attach. 6 at
2.) Fidelity issued a letter to plaintiffs dated January 6, 2012 stating the
following:
The engineer reports no structural or foundation
repairs are necessary as a result of the flood loss
. . . . After reviewing the engineer’s report, we must
respectfully deny your claim for structural or
foundation damages. . . . You previously indicated
you are electing not to sign the [p]roof of [l]oss for the
undisputed damage in the amount of $1,107.58 after
application of your $2,000.00 policy deductible. We
are unable to issue payment without a properly
executed [p]roof of [l]oss.
(Dkt. No. 23, Attach 7 at 2.) Subsequently, in August 2012, plaintiffs
submitted the proof-of-loss form prepared by Colonial Claims, with
handwritten notes changing, among other things, the net amount claimed.
(Def.’s SMF ¶ 7.) Plaintiffs indicated that the net amount claimed was
“$88,307.26 or $38,500.00.” (Id.; Dkt. No. 23, Attach. 8.)
4
By way of letter on August 8, 2012, Fidelity rejected the signed proof
of loss because “the document ha[d] been altered.” (Dkt. No. 23, Attach.
9.) Fidelity enclosed another proof-of-loss form for the undisputed net
claimed amount of $1,107.58 and advised plaintiffs that
signing the [p]roof of [l]oss for the undisputed amount
does not prevent you from pursuing further covered
damages which can be handled through a
supplement. In the event we do not receive your
unaltered signed [p]roof of [l]oss within the next thirty
. . . days we will be forced to deny this claim.
(Id.) On September 11, 2012, Fidelity again wrote to plaintiffs, explaining
that, because it had “not received a valid properly executed [p]roof of [l]oss
representing the damages arising from the . . . flood event,” Fidelity was
forced to deny the claim. (Dkt. No. 23, Attach. 10 at 2; Def.’s SMF ¶ 9.)
Thereafter, on June 19, 2013, plaintiffs again submitted the proof-of-loss
form prepared by Colonial Claims, with the handwritten notation
“Supplemental” at the top of the page, and the net amount claimed
increased to “$88,307.26” or “$68,500” due to the addition of $30,000 for
Increased Cost of Compliance payments.5 (Dkt. No. 23, Attach. 11; Def.’s
5
The SFIP provides up to $30,000 under the “Increased Cost of Compliance” section,
which “pays [the insured] to comply with a State or local floodplain management law or
ordinance affecting repair or reconstruction of a structure suffering flood damage.” 44 C.F.R.
pt. 61, app. A(1), art. III(D)(1), (2).
5
SMF ¶ 11.)
B.
Procedural History
Plaintiffs commenced the instant action on January 4, 2013.
(Compl.) Following joinder of issue, (Dkt. No. 6), and the close of
discovery, (Dkt. No. 15), Fidelity filed the now-pending motion for summary
judgment, (Dkt. No. 23).
III. Standard of Review
The standard of review pursuant to Fed. R. Civ. P. 56 is well
established and will not be repeated here. For a full discussion of the
standard, the court refers the parties to its decision in Wagner v. Swarts,
827 F. Supp. 2d 85, 92 (N.D.N.Y. 2011), aff’d sub nom. Wagner v.
Sprague, 489 F. App’x 500 (2d Cir. 2012).
IV. Discussion
A.
Breach of Contract
Fidelity first argues that plaintiffs’ failure to timely submit a signed
and sworn proof of loss in support of their flood insurance claim, as
required by article VII(J)(4) of the SFIP, bars them from recovery for
breach of contract. (Dkt. No. 23, Attach. 18 at 12-13.) According to
Fidelity, a sworn proof of loss is also a condition precedent to filing suit
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under the SFIP. (Id. at 14-15.) Plaintiffs respond that they timely filed a
proof of loss on December 5, 2011, which was rejected by Fidelity. (Dkt.
No. 25 at 4.) Further, plaintiffs argue that, while they “could not sign a
[p]roof of [l]oss with the wrong date and wrong amount for a home that
wasn’t properly inspected for damages,” Fidelity was “well aware of a loss”
at their property before the deadline for filing a proof of loss passed. (Id. at
4-5.) The court agrees with Fidelity.
The National Flood Insurance Program (NFIP) was created in 1968
by the 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.” 42 U.S.C. § 4001(b); see Palmieri v.
Allstate Ins. Co., 445 F.3d 179, 183 (2d Cir. 2006). The NFIP is
administered by the Federal Emergency Management Agency (FEMA),
and “supported by the federal treasury, which pays for claims that exceed
the revenues collected by private insurers from flood insurance premiums.”
Palmieri, 445 F.3d at 183 (citation omitted). 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
7
U.S.C. § 4019(a).
“Pursuant to its authority under 42 U.S.C. § 4081(a), FEMA created
the WYO Program, which allows private insurers, also known as ‘WYO
companies,’ to issue and administer flood-risk policies under the NFIP.”
Jacobson v. Metro. Prop. & Cas. Ins. Co., 672 F.3d 171, 174-75 (2d Cir.
2012); see 44 C.F.R. pt. 62, app. A. While the private insurance
companies administer the federal program, “[i]t is the Government, not the
companies, that pays the claims,” Palmieri, 445 F.3d at 184, and,
therefore, “a lawsuit against a WYO company[,]” like Fidelity in this case,
“is, in reality, a suit against FEMA,” Van Holt v. Liberty Mut. Fire Ins. Co.,
163 F.3d 161, 166-67 (3d Cir. 1998). WYO companies, thus, act as “fiscal
agents of the United States,” 42 U.S.C. § 4071(a)(1), “but they are not
general agents and therefore must strictly enforce the provisions set out in
the regulations, varying the terms of a policy only with FEMA’s express
written consent.” Jacobson, 672 F.3d at 175 (citing 44 C.F.R. §§ 61.4(b),
61.13(d)-(e), 62.23(c)-(d)). Notably, the standard terms and conditions of
the flood insurance policies issued by WYO companies, including the SFIP
here, are codified regulations. Compare 44 C.F.R. pt. 61., app. A(1), with
(Dkt. No. 23, Attach. 7 at 3-6; Dkt. No. 23, Attach. 10 at 2-4.)
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The SFIP requires an insured party to submit a “signed and sworn”
proof of loss to the insurer within sixty days of a flood loss. 44 C.F.R. pt.
61, app. A(1), art. VII(J)(4).6 FEMA extended the proof of loss filing
deadline for losses related to Hurricane Irene and Tropical Storm Lee,
giving plaintiffs 150 days from the date of loss to submit a signed proof of
loss for claims related to Hurricane Irene, and 165 days from the date of
loss to submit a signed proof of loss for claims related to Tropical Storm
Lee. (Dkt. No. 23, Attach. 12; Dkt. No. 23, Attach. 13.) Thus, plaintiffs
6
The full text of 44 C.F.R. pt. 61, app. A(1), art. VII(J)(4) is as follows:
Within [sixty] 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, and which furnishes us with the
following information:
a. The date and time of loss;
b. A brief explanation of how the loss happened;
c. Your interest (for example, “owner”) and the interest, if any, of
others in the damaged property;
d. Details of any other insurance that may cover the loss;
e. Changes in title or occupancy of the covered property during the
term of the policy;
f. Specifications of damaged buildings and detailed repair
estimates;
g. Names of mortgagees or anyone else having a lien, charge, or
claim against the insured property;
h. Details about who occupied any insured building at the time of
loss and for what purpose; and
i. The inventory of damaged personal property described in J.3.
above.
Further, the SFIP provides that “[i]n completing the proof of loss, [an insured] must use [his or
her] own judgment concerning the amount of loss and justify that amount,” and a timely proof
of loss must be submitted even if the adjuster does not furnish the form or help with its
completion. Id. pt. 61, app. A(1), art. VII(J)(5), (7).
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had, at the latest, until February 21, 2012 to submit a proof of loss with
respect to their claim. (Def.’s SMF ¶ 14.) Here, plaintiffs submitted three
proofs of loss: in December 2011, August 2012, and June 2013. (Id. ¶¶ 67, 11.) However, the December 2011 proof of loss—the only one
submitted within the allotted time frame—was unsigned and undated.7 (Id.
¶ 6.)
The Second Circuit requires strict construction and enforcement of
the SFIP proof-of-loss requirements, explaining that “[p]rotection of the
public fisc requires that those who seek public funds act with scrupulous
regard for the requirements of law.” Jacobson, 672 F.3d at 173, 175-76
(internal quotation marks and citation omitted) (ruling that, where a plaintiff
submitted a proof of loss, but failed to designate a specific amount of
damages, the district court properly granted summary judgment to the
insurer). To that end, courts in this Circuit have consistently held that the
failure to submit a complete, timely, signed and sworn proof of loss is an
absolute bar to a plaintiff’s claims. See Wing Bldg. Holding Co. LLC v.
Standard Fire Ins. Co., No. 1:13-CV-1007, 2015 WL 631956, at *3
7
Fidelity also notes that the proofs of loss submitted by plaintiffs did not satisfy the
SFIP requirement that insureds specify the amount claimed, as the December 2011 form
merely declined the amount offered by Fidelity, and the August 2012 and June 2013 forms
were equivocal. (Dkt. No. 23, Attach. 18 at 12; Dkt. No. 28 at 5.)
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(N.D.N.Y. Feb. 13, 2015) (determining that, where plaintiff suffered flood
loss related to Hurricane Irene in August 2011, failure to submit a proof of
loss until July 31, 2012 forfeited plaintiff’s right to any recovery under the
SFIP); Abend Family Ltd. P’ship v. NGM Ins. Co., No. 5:13-cv-8, 2014 WL
6085769, at *5-6 (D. Vt. Nov. 13, 2014) (holding that “[p]artial or even
substantial compliance with the proof-of-loss requirement is not sufficient,”
where a plaintiff submitted a proof of loss for an undisputed amount along
with “supplemental proofs of loss in the form of paid bills and the amount
and type of work involved[,] as the damage from the flood became
apparent”); Kehoe v. Travelers Ins. Co., No. 1:08-CV-566, 2009 WL 87589,
at *1, *3 (N.D.N.Y. Jan. 12, 2009) (finding that failure to submit a timely
proof of loss barred a suit, even though the plaintiff had been “in frequent
contact with [the insurer] regarding his claim, and provided the insurer with
an independent engineer’s report which opined the loss was due to erosion
caused by flood waters”); see also Mancini v. Redland Ins. Co., 248 F.3d
729, 734-35 (8th Cir. 2001) (concluding that a proof of loss was invalid
when accompanied by a transmittal letter only bearing the printed names of
the insured, for it had not been signed and sworn as required by the SFIP);
Gowland v. Aetna, 143 F.3d 951, 954 (5th Cir. 1998) (“[W]e hold that an
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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.”).
In addition, because the SFIP makes insureds responsible for
ensuring compliance with the proof of loss requirement, see 44 C.F.R. pt.
61, app. A(1), art. VII(J)(7), Fidelity’s “fail[ure] to provide a [p]roof of [l]oss
with the correct date and amount,” (Dkt. No. 25 at 2), is immaterial. See
Suopys v. Omaha Prop. & Cas., 404 F.3d 805, 810 (3d Cir. 2005) (“The
SFIP places the onus on the insured to file the proof of loss within [sixty]
days regardless of the representations and assistance, or lack thereof,
provided by the insurer or its adjuster.”).
Accordingly, although Fidelity was aware of a loss at plaintiffs’
property, because they failed to comply with the proof-of-loss policy
requirements, plaintiffs forfeited any right to demand recovery under the
SFIP for their Tropical Storm Lee claim, and Fidelity is entitled to summary
judgment on plaintiffs’ breach of contract claim.
B.
Plaintiffs’ Second Cause of Action
Next, Fidelity seeks summary judgment on plaintiffs’ second cause of
action, arguing that any extra-contractual claims are preempted by federal
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law. (Dkt. No. 23, Attach. 18 at 15-24.) Plaintiffs fail to respond to this
argument. The court agrees with Fidelity.
The Second Circuit has noted that the FEMA regulations explicitly
state that “‘[a]ll disputes arising from the handling of any claim under [a
NFIP] policy are governed exclusively by the flood insurance regulations
issued by FEMA, the National Flood Insurance Act of 1968, as amended,
and Federal common law.’” Jacobson, 672 F.3d at 174 (quoting 44 C.F.R.
pt. 61, app. A(1), art. IX). Accordingly, absent authorization by the NFIA
and/or the SFIP, an insured may not assert extra-contractual claims
against a WYO company. Concurring with the reasoning of other circuit
courts that have spoken on this issue, this court has held that the NFIA
does not expressly authorize insureds to bring extra-contractual state law
claims related to the handling of a flood insurance claim. See Southbridge
21 LLC v. Standard Fire Ins. Co., No. 3:14-cv-374, 2014 WL 4637083, at
*3-4 (N.D.N.Y. Sept. 16, 2014)8; see also Gunter v. Farmers Ins. Co., 736
F.3d 768, 772-73 (8th Cir. 2013) (“We conclude that [plaintiffs’] claims for
8
Plaintiffs’ second cause of action is ambiguous. While plaintiffs allege breach of the
covenant of good faith and fair dealing, they also claim Fidelity’s behavior was tortious.
(Compl. at 3.) Nonetheless, as in Southbridge, whether plaintiffs’ second cause of action
“sounds in contract or tort . . . is of no moment[ because] state-law claims are preempted by
the NFIA” when they are “intimately related to the disallowance of [an] insurance claim.” 2014
WL 4637083, at *3 n.5 (internal quotation marks and citations omitted).
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specific performance, unjust enrichment, and bad faith are expressly
preempted by federal law.”); C.E.R. 1988, Inc. v. The Aetna Cas. & Sur.
Co., 386 F.3d 263, 270-72 (3d Cir. 2004) (holding that the NFIA preempts
state law and “conclud[ing] that the application of state tort law would
impede Congress’s objectives . . . to reduce fiscal pressure on federal
flood relief efforts”); Ravasio v. Fidelity Nat. Property, No. 13-CV-1510;
2015 WL 390334, at *5 (E.D.N.Y. Jan. 29, 2015) (“[E]ven if the [p]laintiffs’
could recover their claimed amounts, the [c]ourt would deny their
extra-contractual requests for interest, costs, and attorneys’ fees. The
[NFIA] preempts state law claims for penalties and attorneys’ fees brought
against WYO insurance carriers participating in the FEMA’s NFIP.”
(internal quotation marks and citation omitted)).9 Further, “courts have
recognized that actions arising out of the handling of claims under the
[NFIA] do not give rise to federal common law claims.” Kehoe, 2009 WL
87589, at *3 n.2; see Gunter, 736 F.3d at 773 (“[Plaintiffs] seek to bring tort
and extra[-]contractual claims under federal common law to obtain state
9
Notably, plaintiffs do not allege any wrong-doing on the part of Fidelity with respect to
the procurement of the SFIP, but only complain of its conduct as it relates to the handling of
their claim. (See generally Compl; Dkt. No. 25 at 1-10); see, e.g., C.E.R. 1998, 386 F.3d at
271 n.12 (noting that whether the NFIA preempts state law claims arising out of the
procurement of a policy is less well-settled). Thus, the court need not discuss this distinction.
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law remedies otherwise preempted. It would frustrate the intent of
Congress to allow preempted state law claims to proceed under the guise
of federal common law.”); Wright v. Allstate Ins. Co., 500 F.3d 390, 394-95
(5th Cir. 2007) (ruling that the reference to federal common law in the SFIP
“directs courts to employ standard insurance principles when deciding
coverage issues under the policy,” but does not provide for any federal
common law extra-contractual relief against a WYO insurer); Howell v.
State Farm Ins. Cos., 448 F. Supp. 2d 676, 678-79 (D. Md. 2006) (noting
that the court was unable to find any case law creating a cause of action
for breach of the implied covenant of good faith and fair dealing, or breach
of fiduciary duty under federal common law).
Accordingly, as it is preempted by federal law, summary judgment is
granted as to plaintiffs’ second cause of action.
V. Conclusion
WHEREFORE, for the foregoing reasons, it is hereby
ORDERED that Fidelity’s motion for summary judgment (Dkt. No. 23)
is GRANTED; and it is further
ORDERED that the complaint (Dkt. No. 1) is DISMISSED; and it is
further;
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ORDERED that the Clerk close this case; and it is further
ORDERED that the Clerk provide a copy of this MemorandumDecision and Order to the parties.
IT IS SO ORDERED.
May 6, 2015
Albany, New York
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