Scharr et al v. Selective Insurance Company of New York et al

Filing 22

DECISION AND ORDER granting 15 Selective Ins. Co. of N.Y.'s Motion for Summary Judgment in its entirety and dismissing 1 the Complaint. Signed by Hon. Michael A. Telesca on 10/23/17. (AFB)-CLERK TO FOLLOW UP-The Clerk of Court is directed to close this case.

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
JOHN SCHARR AND PATRICIA A. SCHARR,
Plaintiffs,

No. 1:16-cv-06821(MAT)
DECISION AND ORDER

-vsSELECTIVE INSURANCE COMPANY OF
NEW YORK, and THE HANOVER INSURANCE
GROUP, INC.,
Defendants.

I.

Introduction
John Scharr and Patricia A. Scharr (“Plaintiffs”) seek a

declaratory

judgment

requiring

defendant

Selective

Insurance

Company of New York (“Selective”) to reimburse them pursuant to the
terms of their insurance policy covering flood-related losses.
Currently pending before the Court is Selective’s Motion for
Summary Judgment (Docket (“Dkt”) #15).
II.

Factual Background and Procedural History
The following factual summary is drawn from the parties’

pleadings, affidavits, and exhibits submitted in connection with
Selective’s summary judgment motion (Dkt ##15–15-4, 17–17-3; &
18–18-1). Unless otherwise noted, the facts below are undisputed.
In December 2014, Plaintiffs purchased a house located at 2358
Lerch Road, in Penn Yan, New York (“the Property”).

Selective

issued a Standard Flood Insurance Policy (“SFIP”) to Plaintiffs
bearing policy number 0001739266 for the period of December 18,
-1-

2014, to December 18, 2015 (“the Policy”). The “Claim Guidelines In
Case Of A Flood” included at the beginning of the Policy direct
Plaintiffs to, inter alia, [n]otify your insurance representative,
in writing, as soon as possible after the flood[;]” “[d]etermine
the independent claims adjuster assigned to your claim and contact
him or her if you have not been contacted within 24 hours after you
reported the claim lo your insurance representative[;]” and “[m]ake
sure that the claims adjuster fully explains, and that you fully
understand, all allowances and procedures for processing claim
payments on the basis of your proof of loss. This policy requires
you to send us detailed proof of loss within 60 days after the
loss.”

(Dkt

#1-1,

p.

2

of

48).

The

Policy’s

proof

of

loss

requirement (“§ J. Requirements in Case of Loss”) provides that
“[i]n case of a flood loss to insured property, [the insured] must:
1. Give prompt written notice to us;
2. As soon as reasonably possible, separate the damaged
and undamaged property, putting it in the best possible
order so that we may examine it;
3. Prepare an inventory of damaged property showing the
quantity, description, actual cash value, and amount of
loss. Attach all bills, receipts, and related documents;
4. Within 60 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;
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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.
5. In completing the proof of loss, you must use your own
judgment concerning the amount of loss and justify that
amount.
6. You must cooperate with the adjuster or representative
in the investigation of the claim.
7. The insurance adjuster whom we hire to investigate
your claim may furnish you with a proof of loss form, and
she or he may help you complete it. However, 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.”
(Dkt #1-1, p 38 of 48) (emphases supplied).
Plaintiffs suffered a flood-related loss at the Property on
June 14, 2015. Plaintiffs notified Selective1 of the flood-related
loss and, on July 15, 2015, Selective assigned a company known as
All Seasons Adjusting to review the loss. Daniel K. Chasey of All
Seasons (“the Independent Adjuster”) inspected the Property on July

1

Plaintiffs also notified defendant The Hanover Insurance Group (“Hanover”),
with whom they had a homeowners insurance policy covering the Property. Hanover
denied coverage for the claimed loss on the basis that it was the result of a
flood-related event and not covered under the homeowners policy.

-3-

18,

2015.

About

the

same

time,

Selective

also

retained

GHD

Consulting Services (“GHD”), which inspected the Property on July
31, 2015.
Based upon the Independent Adjuster’s assessment, Selective
initially denied Plaintiffs’ claim in its entirety on August 14,
2015. The Independent Adjuster had concluded that although there
was a “general condition of flooding at [the] property,” the
covered damage was minimal and amounted to $403.65, much less than
the Policy’s $5,000 deductible. In the August 14, 2015 letter,
Selective informed Plaintiffs as follows:
If you do not agree with Selective’s decision to deny
your claim, federal law allows you to appeal it within 60
days of the date of this letter. Your appeal must be in
writing and include a copy of this letter, a copy of the
completed Proof of Loss you submitted to the insurer, a
written statement of the basis for the appeal in as much
detail as possible, including relevant policy and claim
information, along with all the documentation that
supports your written statement.
(Dkt #17, Ex. A) (bolded type in original).
Shortly thereafter, Selective changed its position and allowed
a portion of Plaintiffs’ claim, based on GHD’s August 17, 2015
report. GHD found that certain undermining, soil voids, and broken
concrete along the east foundation wall of the Property in the
walkout lower level had been damaged by velocity flow from the
flood. GHD recommended the replacement of the east foundation wall
on the walkout lower level and the removal of debris and earth soil
from the walkout lower level. (Dkt #15-4, ¶ 9). GHD, however,

-4-

disagreed with the balance of Plaintiffs’ claim, attributing the
remaining damage to an alleged failure to properly maintain the
Property. (Id.). Based on GHD’s report, the Independent Adjuster
then obtained an estimate from a local contractor, who indicated
that it would cost $12,854.40 to implement GHD’s recommendations.
On

September

Scharr”)

called

30,

Amy

2015,

L.

plaintiff

Englert

Patricia

(“Englert”)

at

Scharr

(“Mrs.

Selective

and

indicated she was “very concerned” about the Property as it was
“slowly collapsing and [was] unsafe.” (Dkt #17, Ex. B). Mrs. Scharr
also inquired about “the status of the engineering report review.”
(Id.). Englert contacted Tim Carroll at Selective via email on
September 3, 2015, to advise him about the dangerous structure and
mentioned that another individual “was having the adjuster reach
out to [Plaintiffs] today.” (Id.).
On

December

22,

2015,

Plaintiffs

were

contacted

by

the

Independent Adjuster who had prepared a proof of loss (“the Proof
of Loss”) on behalf of Plaintiffs requesting payment of $12,854.40
by Selective to cover the damages to the east foundation wall that
Selective had agreed to cover. Plaintiffs signed and executed the
Proof of Loss (Dkt #17, Ex. A) on December 22, 2015, and returned
it to Selective.
Because 60 days from the date of loss had expired before
Plaintiffs submitted their sworn Proof of Loss, Selective was
required by law to obtain a limited waiver from the Federal
Emergency

Management Agency

(“FEMA”).
-5-

Selective

submitted the

limited waiver

request

on

December

28,

2015, to

FEMA,

which

approved it on December 29, 2015. In granting the limited waiver,
FEMA noted that it was “for only the amount of the loss and scope
of the damages outlined in this request and otherwise does not
waive the proof of loss or any other requirement of the [SFIP].”
(Dkt #18, ¶ 9 & Ex. A). Selective subsequently released payment to
Plaintiffs in the amount of $12,854.40.
Plaintiffs continued to assert a claim against Selective for
the structural damages as to which it had denied coverage. On
February 22, 2016, Selective sent Plaintiffs a letter (Dkt #17, Ex.
D) denying any additional coverage for the damaged structural
elements based on their engineer’s report, which concluded that
such damages were not the result of the flood event. Selective
quoted pertinent excerpts from the engineer’s findings as follows:
•

•

The cracks and separations and missing cementitious
coating in the exterior concrete foundation were
typical for the age and type of construction and
were due to long-term differential foundation
movement and/or long-term differential movement of
the supporting soils and were not the result of the
flood event. This was concluded by the following:
•
The
cracks/separations
contained
rounded and worn edges, indicating
long-term existence (years).
•
Evidence
of
general
building
long-term
(years)
differential
settlement were observed throughout
the structure.
The out-of-level flooring and out-of-plumb walls
throughout the interior porch and first floor of
the referenced structure were attributed to
long-term settlement and/or long-term deflections
of the supporting framing and were not the result
of the flood event.

-6-

(Dkt #17, Ex. D). Selective explained that Plaintiffs’ SFIP did not
provide coverage for the above-quoted kind of damage, and referred
Plaintiff to Section V [Exclusions], (C) of the Policy which
provides, in relevant part, that Selective “do[es] not insure for
loss to property caused directly by earth movement even if the
earth movement is caused by flood.” (Id.) (bolded type in original;
emphasis supplied). Selective informed Plaintiffs that if they did
not agree with its decision,
federal law allows you to appeal it within 60 days of the
date of this letter [i.e., Friday, April 22, 2016]. Your
appeal must be in writing and include a copy of this
letter, a copy of the completed Proof of Loss you
submitted to the insurer; a written statement of the
basis for the appeal in as much detail as possible,
including relevant policy and claim information, along
with all the documentation that supports your written
statement.
(Dkt #17, Ex. D) (bolded type in original; italics supplied).
On April 11, 2016, Plaintiffs hired Greg Dende, PE (“Dende”),
of Dende Engineering Structural Consultants to inspect the Property
and review GHD’s findings. Dende stated in his report,
The engineering assessment prepared by GHD-Christian
Marcello
Amico,
PE
for
Selective
Insurance
Company-Branchville (the flood carrier) appears to me as
a thorough review made shortly after the flood occurrence
and I don’t take any exceptions to it. Its content has
been very useful for me in grasping the first hand
professional assessment of the conditions at that time.
(Dkt #17, Ex. E). Dende also observed that GHD had commented on the
foundation repair work to the rear (east) exterior wall and pointed
out that
“It should be noted the walkout lower level wall was more
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susceptible to flood damage due to the incomplete
foundation repairs and soil excavation under the
residence[.]” In my [Dende’s] opinion certainly a true
statement.
(Id.). Dende also noted “the possibility . . . that the conditions
are worse than the original GHD report [prepared eight months
previously], since . . . overstressed structures more often than
not ultimately fall over an extended period of time and not
necessarily at the point/time of impact. It should be considered in
motion as we speak.” (Id.). Dende determined that the Property was
in significant danger of complete collapse due to overstress on the
structure resulting from the collapsed foundation wall. (Id.). He
opined that the Property “should be considered a danger[,]” with no
hope of “salvaging/restoring it.” (Id.).
Plaintiffs then hired Van Scott Builders, Inc. (“Van Scott”)
to prepare an estimate of the cost of demolishing and rebuilding
the Property, as recommended by Dende. Van Scott estimated that the
project would cost $214,675.79.

(Dkt #17, Ex. F.).

On April 28, 2016, the Town of Milo Department of Code
Enforcement and Administration (“the Town”) issued a Notice of
Determination – Substantial Damage letter stating that the Town’s
Code Enforcement Officer had determined that the Property “received
damages exceeding fifty percent (50%) of the pre-damaged structure
value as a result of the flooding that occurred on June 14, 2015,
and identified the damage amount as $214,675.79.” (Dkt #17, Ex. G).
The Town stated that pursuant to the attached engineering reports

-8-

from GHD and Dende, the Property was “classified as an unsafe
structure since it is significantly damaged, structurally unsafe,
supported on an unstable foundation and has experienced a partial
collapse . . . and
the

high

unsanitary

degree
and

to

a structure unfit for human occupancy due to
which

contains

the

structure

filth

and

is

in

disrepair,

contamination.”

is

(Id.).

Accordingly, the Town issued an order condemning the Property.
By letter dated April 19, 2016, and addressed to the Federal
Insurance

and

Mitigation

Administration,

Federal

Insurance

Administrator (“FIA”), Plaintiffs appealed Selective’s February 22,
2016 denial of coverage. Plaintiffs stated they were seeking
full recoverable damages in accordance to our insurance
policy because the damage to our property, 2358 Lerch
Road, Penn Yan, New York 14527-9424, occurred as a direct
result of a flood on June 14th, 2015. We must be paid in
accordance to our insurance policy because our property
meets the criteria of a substantially damaged structure
and the cause of the damage is a direct result of the
flood event.
(Dkt #17, Ex. H). Plaintiffs indicated that they had “[a]ttached .
. . documents and a timeline of the occurred events. In addition to
pictures and records.” (Id.). There is no indication when the
letter was postmarked or actually sent to FIA, or what documents
were included.
On June 30, 2016, FEMA sent a reply letter to Plaintiffs
indicating that in light of the new information submitted in their
appeal, Selective was “reviewing [their] flood claim, and possible
coverage for Increased Cost of Compliance (ICC).” (Dkt #17, Ex. I).

-9-

FEMA stated that “[a]side from the consideration of [Plaintiffs’]
claim for ICC, FEMA concurs with Selective’s final decision and
will provide no further administrative review through the appeals
process.” (Id.).
On December 16, 2016, Selective paid Plaintiffs an additional
sum of $15,000, for ICC expenses, pursuant to Coverage D under the
SFIP. (Dkt #15-4, Ex. D).
On December 15, 2016, Plaintiffs commenced the instant action
seeking a declaratory judgment that they are entitled to coverage
under the policies issued by Selective and Hanover, respectively,
for their flood-related losses sustained on June 14, 2005. The
parties participated in mediation, which was unsuccessful.
Pursuant to the scheduling order entered by Magistrate Judge
Marian W. Payson in March 2017, dispositive motions were to be
filed by October 13, 2017.

Selective filed its motion for summary

judgment on July 7, 2017. Plaintiffs filed opposition papers, and
Selective filed a reply. Hanover has not filed its own dispositive
motion or joined in Selective’s motion. Selective’s motion for
summary judgment was deemed submitted on the papers on August 25,
2017.
However, on October 18, 2017, Plaintiffs filed a Stipulation
of Discontinuance as to Hanover, which the Court signed and filed
on October 19, 2017. Hanover therefore is no longer a party to this
action.
III. General Legal Principles
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A.

Summary Judgment Standard of Review

Pursuant

to

Rule

56(a)

of

the

Federal

Rules

of

Civil

Procedure, the Court will grant summary judgment if the moving
party demonstrates that there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a matter of
law. “At the summary judgment stage, facts must be viewed in the
light most favorable to the nonmoving party only if there is a
‘genuine’ dispute as to those facts.” Scott v. Harris, 550 U.S.
372, 380 (2007). “When the moving party has carried its burden
under Rule 56(c), its opponent must do more than simply show that
there is some metaphysical doubt as to the material facts . . . .
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.’” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475
U.S. 574, 586–87 (footnote omitted).
B.

Standard Flood Insurance Policies and Proof of Loss

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 [National Flood
Insurance Program], created by the [NFIA], is administered by FEMA
and supported 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).
-11-

“Pursuant to 42 U.S.C. § 4081(a), FEMA created the Write–Your–Own
Program (‘WYOP’), which allows private insurers, sometimes called
‘WYO companies,’ to issue and administer flood-risk policies under
the Government Program.” 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
(brackets omitted; citation omitted)).
All SFIPs require an insured to submit an executed proof of
loss within 60 days from the date of loss. 44 C.F.R. Pt. 61, App.
A(I),

Art.

VII(J)(4));

(quotation omitted).

see

also

Jacobson,

672

F.3d

at

173

“In light of the compelling interest in

assuring uniformity of decision in cases involving the NFIP, the
Second Circuit has held that SFIP proof-of-loss requirements “must
be strictly construed and enforced.” Jacobson, 672 F.3d at 175
(collecting circuit authority).
IV.

Discussion
Selective has moved for summary judgment on the basis that

Plaintiffs failed to timely submit a signed and sworn proof of loss
for the additional damages they seek over and above the amount
Selective already paid to them. As noted above, Plaintiffs’ Policy
contains a standard proof of loss provision, stating in relevant
part, that “[i]n case of loss to insured property, you must: 4.
[w]ithin 60 days after the loss, send [Selective] a proof of loss,
which is your statement of the amount you are claiming under the
-12-

policy signed and sworn to by you. . . .” (Dkt #1, Ex. A); see also
44 C.F.R. Pt. 61, App. A(I), Art. VII(J)(4)). Here, the loss in
question occurred on June 14, 2015. Under the Policy, Plaintiffs
were required to send Selective their signed and sworn proof of
loss by August 13, 2015, 60 days from the date of loss. It is
undisputed that Plaintiffs did not submit, and Selective did not
receive, a signed, sworn proof of loss within 60 days. Mrs. Scharr
testified at her deposition that the only proof of loss she and her
husband signed was the one prepared by the Independent Adjuster in
the amount of $12,854.40, which they submitted on December 22,
2015, well over 60 days past the date of loss. (Dkt #15-3, Ex. D,
Excerpt from Deposition of Patricia Scharr (“Schaar Dep.”) at
14:10-21). When asked whether she or her husband ever submitted any
proof of loss form other than that one, she replied that she
“didn’t know that was an option.”

(Id., Scharr Dep. at 14:22-

15:7).
Thus, Plaintiffs cannot and do not dispute that they did not
submit a signed and sworn proof of loss for the entire amount
claimed under the SFIP within 60 days of the flood-related loss.
This alone is a basis for granting judgment as a matter of law to
Selective. See, e.g., Ravasio v. Fid. Nat. Prop., 81 F. Supp.3d
274, 278 (E.D.N.Y. 2015) (“[The] [insureds]’ 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
[insureds] had until January 25, 2012 to submit additional Proofs
-13-

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 [insureds] have failed to comply with the requirements of the
SFIP, the present action is barred as a matter of law and Fidelity
is entitled to summary judgment.”).
A.

Substantial Compliance

Plaintiffs contend that they provided Selective with all of
the information it needed to be adequately apprised of their claim,
essentially raising a “substantial compliance” argument. Plaintiffs
point out that Selective concedes receipt of a completed Proof of
Loss form in December 2015, relating to the undisputed damage
sustained to the east foundation wall. Plaintiffs contend that
their

communications

with

Selective,

together

with

the

Dende

report, are clear evidence that Plaintiffs were asserting a claim
for all of the alleged damage to the Property, not just the east
foundation wall. Plaintiffs also point to the Town’s letter that
condemned the Property and estimated damages at $214,675.79, and
the estimate from Van Scott indicating the same amount for the cost
of demolition and rebuilding. Based on the foregoing information,
Plaintiffs

argue

that

Selective

was

adequately

informed

by

Plaintiffs that the claimed loss was for the balance of the Policy
by virtue of the $202,400.00 policy limit. Since Selective was
afforded

“the

fullest

opportunity

to

investigate,

defend

and

intelligently estimate rights and responsibilities[,]” Christofely
-14-

v. Fed. Ins. Admin., 580 F. Supp. 467, 470 (E.D.N.Y. 1984),
Plaintiffs contend that a separate Proof of Loss form for the
additional claimed damages was unnecessary, as Plaintiffs had
substantially complied with the policy notice provisions.
Circuit

courts

have

uniformly

rejected

“substantial

compliance” arguments in the context of SFIPs. See, e.g., Flick v.
Liberty Mut. Fire Ins. Co., 205 F.3d 386 (9th Cir. 2000). In Flick,
the plaintiff argued that despite her failure, by several months,
to submit a timely proof of loss, she was entitled to recover under
her SFIP because she had substantially complied with the policy.
The Ninth Circuit rejected the “substantial compliance” standard:
Because flood losses, whether insured by FEMA or by a
participating WYO insurer, are paid out of the National
Flood Insurance Fund, a claimant under a standard flood
insurance policy must comply strictly with the terms and
conditions that Congress has established for payment.
That is the simple, but powerful command of the
Appropriations Clause. Congress, through a valid act of
delegation to FEMA, has authorized payment of flood
insurance funds to only those claimants that submit a
timely sworn proof of loss. We therefore have no more
power to award a money remedy to a flood insurance
claimant who submits a sworn proof of loss after the 60
day time limit than we have to award a money remedy to a
disability benefits claimant whose income exceeds a
statutory earnings limit.
205 F.3d at 394–95 (citations and footnotes omitted); accord
Pecarovich v. Allstate Ins. Co., 309 F.3d 652, 657–58 (9th Cir.
2002), opinion amended on denial of reh’g, 317 F.3d 938 (9th Cir.
2003). The Second Circuit similarly has recognized that “[t]he
principles unique to governmental insurance policies that require

-15-

a strict construction of their terms and requirements can sometimes
create ostensibly inequitable results.” Jacobson, 672 F.3d at 176.
The fact that Plaintiffs signed and submitted a proof of loss
in the amount of $12,854.40 in order to receive the payment
recommended by the Independent Adjuster does not relieve them of
their responsibilities under the Policy to file a signed and sworn
proof of loss within 60 days of the loss, setting forth all damages
claimed under the Policy. See, e.g., DeCosta v. Allstate Ins. Co.,
730 F.3d 76, 84 (1st Cir. 2013) (“Strictly construing the SFIP’s
proof-of-loss provision, it is clear that DeCosta did not sign and
swear to claiming $212,071.32 on a proof of loss, as required.
Merely attaching his adjuster’s estimate of damages to two executed
proof-of-loss forms claiming a smaller amount does not comply. See
44 C.F.R. pt. 61, app. A(1), art. VII(J)(4). The law on this is
clear[.]”) (internal citation omitted); Gunter v. Farmers Ins. Co.,
736 F.3d 768, 773-74 (8th Cir. 2013) (insureds’ failure to submit
supplemental proof of loss of additional damage to their insurer
after submitting an initial claim under insured’s SFIP barred
recovery on a claim for the additional damages, despite contention
that insured signed the proof of loss under duress; insureds were
not required to accept adjuster’s damage estimate in submitting
their initial proof of loss).
The unreported Eastern District of Louisiana decision on which
Plaintiffs rely, Tuircuit v. Wright Nat. Flood Ins. Co., No. CIV.A.
13-6268, 2014 WL 4207639 (E.D. La. Aug. 25, 2014), is factually
-16-

distinguishable and in any event, not binding authority on this
Court. In Turcuit, the court relied on another unpublished case out
of that district for the proposition that “a proof of loss may be
considered even if it does not provide a ‘specific amount of
damages’ as long as it ‘provide[s] at least enough information for
FEMA to evaluate the merits of the claim.’” Id. at *3 (quoting
Copeland v. Fed. Emergency Mgmt. Agency, No. 03–2704, 2004 WL
325577, at *1, *3 (E.D. La. Feb. 18, 2004); brackets in original).
It was undisputed that the insured, Tuircuit, had submitted an
unsigned and unsworn proof of loss for his claim of $214,528.04;
Wright, the insurer argued Tuircuit never submitted the signed
proof of loss for $214,528.04 dated October 20, 2012. Tuircuit
alleged that a signed proof of loss was indeed submitted to Wright
and submitted (1) a copy of the disputed, signed October 20, 2012
proof of loss and (2) a sworn statement from the third-party
adjuster hired by Tuircuit stating that the adjuster helped submit
the signed October 20, 2012 proof of loss to Wright. Although
Wright contended that the evidence of the signed October 20, 2012
proof was not credible, the district court noted that it could not
resolve such credibility disputes on summary judgment. Based on the
record before it, the district court in Tuircuit was satisfied that
a genuine issue of material fact existed regarding whether a timely
signed proof of loss for $214,528.04 was submitted to Wright.
Because it appears that a proof of loss for the entire amount
claimed was submitted to the insurer in Tuircuit, the only question
-17-

remaining

was whether

it was

signed

and

timely.

Tuircuit

is

therefore on a slightly different factual footing than Plaintiffs’
case. Even if Tuircuit were directly on point, it cannot be
considered binding authority sufficient to cause this Court to
disregard the Second Circuit’s clear directive, based on Supreme
Court precedent, that “[i]n the context of federal insurance
policies, . . . an insured must comply strictly with the terms and
conditions of such policies.” Jacobson, 672 F.3d at 176 (citing
Fed. Crop Ins. Corp. v. Merrill, 332 U.S. 380, 384–85 (1947)).
Plaintiffs’ failure to timely submit a signed and sworn proof
of loss for all damages claimed under the Policy is a basis for
denying their claim against Selective as a matter of law.
B.

Waiver

Plaintiffs alternatively argue that Selective has waived the
proof of loss requirement because (1) Selective “continued to
process the claim well beyond the alleged sixty day deadline” and
made a payment to

Plaintiffs in December 2015, notwithstanding

Plaintiffs’ failure to submit a Proof of Loss within 60 days; and
(2) Selective issued a denial letter almost eight months after the
loss occurred without referencing Plaintiffs’ failure to file a
timely Proof of Loss.
Plaintiffs’ waiver argument is precluded by the express terms
of the Policy, which provides, in relevant part as follows:
D. Amendments, Waivers, Assignment

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This policy cannot be changed nor can any of its
provisions be waived without the express written consent
of the Federal Insurance Administrator. No action we take
under the terms of this policy constitutes a waiver of
any of our rights. . . .
(Dkt #1-1, p. 30 of 48). As Defendants argue, federal courts
consistently have rejected waiver arguments substantially the same
as the one urged by Plaintiffs here. For instance, in Sanz v.
United States Sec. Ins. Co., 328 F.3d 1314 (11th Cir. 2003) (per
curiam),

Hurricane

Irene

caused

canals

on

both

sides

of

the

plaintiff’s neighborhood to converge, causing water to flood the
area and enter his home. Although there were no immediate signs of
damage, Sanz began to notice cracks in the walls of his house after
approximately two months. On February 29, 2000, Sanz notified
Security, his insurance carrier, of the damage. In April of 2000,
adjusters and a structural engineer inspected the premises to
determine the cause and scope of the damage. According to Sanz, the
adjusters informed him that he needed to submit estimates of the
damage to Security, which he did in June 2000. Sanz contended that
Security continued to reassure him that all paperwork had been
filed and that Security would “take care of him.” However, Security
denied his claim. See id. at 1317. On appeal, Sanz argued that
“Security waived the 60-day proof of loss requirement because
Security continued to process his claim and repeatedly assured him
that all necessary forms had been filed.” Id. at 1318. The Eleventh
Circuit found it significant that Sanz admitted that (1) he did not
submit a proof of loss as required by his policy; and (2) he did
-19-

not receive written notice from the Federal Insurance Administrator
that the proof of loss requirement was waived. Id. at 1318-19. The
Eleventh Circuit agreed with its five sister circuits that “have
concluded that there must be strict compliance with the terms and
conditions of federal flood insurance policies and that the failure
to file a proof of loss prohibits a plaintiff from recovery.” Id.
at

1317-18

(collecting

circuit

authority).

Accordingly,

the

Eleventh Circuit held, “Sanz’ failure to file a proof of loss
within

60

days

without

obtaining

a

written

waiver

of

the

requirement eliminate[d] the possibility of recovery.” Id. at 1319.
Although the Court acknowledges that Sanz is not binding authority
upon this Court, it is factually very similar to Plaintiffs’ case.
The Second Circuit has not expressly decided whether equitable
defenses of waiver and estoppel are available in the NFIP context.
However, as

noted

above,

the

Second

Circuit

has

adopted

the

approach of its sister circuits that have “uniformly held that
[SFIP proof-of-loss] requirements must be strictly construed and
enforced.” Jacobson, 672 F.3d at 175 (citing Evanoff v. Standard
Fire Ins. Co., 534 F.3d 516 (6th Cir. 2008); Shuford v. Fid. Nat’l
Prop. & Cas. Ins. Co., 508 F.3d 1337 (11th Cir. 2007); Phelps v.
FEMA, 785 F.2d 13 (1st Cir. 1986); Suopys v. Omaha Prop. & Cas.,
404 F.3d 805 (3d Cir. 2005); Dawkins v. Witt, 318 F.3d 606 (4th
Cir. 2003); Mancini v. Redland Ins. Co., 248 F.3d 729 (8th Cir.
2001); Flick, 205 F.3d 386, supra; Gowland v. Aetna, 143 F.3d 951
(5th Cir. 1998)). The Second Circuit emphasized that it did so “in
-20-

part

because

uniformity

‘[t]here

of

decision

is

a

in

compelling

cases

interest

involving

the

in

assuring

NFIP[,]’”

id.

(quoting Flick, 205 F.3d at 390), and in part because “different
principles

are

at

stake

.

.

.

‘[w]here

federal

funds

are

implicated,’” id. (quoting Wright v. Allstate Ins. Co., 415 F.3d
384, 388 (5th Cir. 2005)). The Second Circuit observed that the
Supreme Court had long admonished “‘those who seek public funds
[to] act with scrupulous regard for the requirements of law. . .
[and] are expected to know the law and may not rely on the conduct
of Government agents contrary to law.’” Id. at 175-76 (quoting
Heckler v. Cmty. Health Servs. of Crawford Cnty., Inc., 467 U.S.
51, 63 (1984)).
Plaintiffs also argue that Selective waived any defense of
failure to file a proof of loss because at no time prior to the
commencement of this litigation did it “assert a defense based upon
a failure to timely submit a proof of loss.” (Dkt #17-1 at 8).
However, Selective could not waive any requirements under the NFIP.
See, e.g., Jacobson, 672 F.3d at 177 (“It is well established . .
. that the actions of an insurance company under the NFIP cannot
waive requirements set by the government, or operate as an estoppel
against the government.”) (citing Gowland, 143 F.3d at 955; other
citation omitted).

Moreover, Plaintiffs have not offered, and the

Court has not found, any legal authority for the proposition that
Selective was required to keep them apprised of their proof-of-loss
obligations under the terms of their insurance policy. To the
-21-

contrary, federal courts have expressly held that “‘[w]here federal
funds are implicated, the person seeking those funds is obligated
to familiarize himself with the legal requirements for receipt of
such funds.’” Jacobson, 672 F.3d at 175 (quoting Wright, 415 F.3d
at 388); see also, e.g., Ravasio, 81 F. Supp.3d at 278 (“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.”). Indeed, as quoted at length above in this Decision
and Order, the Policy carefully and repeatedly advised Plaintiffs
of their obligations and the conditions precedent to obtaining
reimbursement for flood-related losses. In addition, the Court
notes that in each letter sent by Selective, the 60-day proof of
loss requirement was included and highlighted in bold-faced type.
C.

Estoppel

Plaintiffs also assert that “estoppel against the United
States may be appropriate” (1) “where the conduct of the government
is relied upon to the[ir] detriment,” (2) “where the government’s
conduct threatens to work a serious injustice,” and (3) where the
public’s interest would not be unduly damaged by the imposition of
estoppel. (See Dkt #17-1 at 5).

-22-

The Supreme Court has yet to hold that equitable estoppel is,
per se, unavailable against the federal government, but it has
“never upheld an assertion of estoppel against the [g]overnment by
a

claimant

seeking

public

funds.”

Office

of

Pers.

Mgmt.

v.

Richmond, 496 U.S. 414, 434 (1990) (“Richmond”). In Richmond, the
respondent
relations

sought

benefits-related

personnel

and

received

advice

from

erroneous

Navy

oral

employee

and

written

information regarding how to stay below a statutory limit on
earnings, since if his earnings exceeded the limit, he would be
disqualified from continuing to receive a disability annuity based
on

his

years

of

civilian

service

with

the

Navy.

When

the

respondent’s reliance on the erroneous information caused him to
earn more than permitted by the relevant statute, the Office of
Personnel

Management

denied

him

six

months

of

benefits.

The

respondent appealed, and was unsuccessful. However, the lower
circuit court of appeals reversed the final administrative decision
denying

benefits

on

the

basis

that

the

government

provided

misinformation to the respondent which estopped it from denying
payment

of

benefits,

despite

the

statutory

provision

to

the

contrary.
The Supreme Court granted certiorari to address the question
whether “erroneous oral and written advice given by a Government
employee to a benefits claimant may give rise to estoppel against
the Government and so entitle the claimant to a monetary payment
not otherwise permitted by law.” Id. at 415-16. The Supreme Court
-23-

began by noting that from its “earliest cases,” it has “recognized
that equitable estoppel will not lie against the Government as it
lies against private litigants.” Id. at 419. The Supreme Court
emphasized

that

straightforward

its
and

precedents
explicit

have

command

“underscore[d]”
of

the

“the

Appropriations

Clause[,]” which
means simply that no money can be paid out of the
Treasury unless it has been appropriated by an act of
Congress. . . . Just as the pardon power cannot override
the command of the Appropriations Clause, so too judicial
use of the equitable doctrine of estoppel cannot grant
respondent a money remedy that Congress has not
authorized.
Richmond, 496 U.S. at 424 (some internal quotations omitted).
Although cognizant of “the individual hardship,” id. at 434,
created by its rejection of estoppel in that case, the Supreme
Court

could

not

undermine

the

fundamental

purpose

of

the

Appropriations Clause, which was “to assure that public funds will
be spent according to the letter of the difficult judgments reached
by Congress as to the common good and not according to the
individual favor of Government agents or the individual pleas of
litigants[.]” Id. at 427-28. Accordingly, the Supreme Court held,
“payments of money from the Federal Treasury are limited to those
authorized by statute[,]” id. at 416, and it reversed the contrary
holding of the circuit court below.
The case chiefly relied upon by Plaintiffs in support of their
estoppel theory, Meister Bros., Inc. v. Macy, 674 F.2d 1174 (7th
Cir. 1982), predates Richmond. Even prior to Richmond, Meister
-24-

apparently

was

an

outlier,

which

the

Seventh

Circuit

itself

recognized. See Meister, 674 F.2d at 1177 (“emphasiz[ing] that
[its] holding is of necessity limited to the unique circumstances
of [the] case” and was “not intend[ed] to intimate in any way an
appropriate standard for resolution of future cases”). In a 2003
case involving the National Flood Insurance Program, the Eleventh
Circuit declined to follow Meister in light of Richmond and the
fact that “every circuit court to address the issue since Meister”
had reached a “contrary conclusion[.]” Sanz, 328 F.3d at 1318 n. 6
& id. at 1318-19 (collecting cases). As the Eleventh Circuit noted
in Sanz, Richmond abrogated the reasoning underpinning Meister. The
Court need not determine whether or not it should follow Meister
because that case is factually inapposite. In particular, unlike
Meister, there
provided

is

erroneous

no
or

indication

here

misleading

that

Selective

information

to

or

FEMA

Plaintiffs.

Contrast with Meister, 674 F.2d at 1176-77.
Although the Second Circuit has not expressly ruled on the
issue, some circuit courts specifically have “held that FEMA and
its agents may not be estopped from asserting proof of loss
requirements.”

Bagley v.

New

York

Cent.

Mut.

Fire

Ins.

Co.,

3:13-CV-00241(BKS/DEP), 2015 WL 12556146, at *6 n. 5 (N.D.N.Y. June
17, 2015) (citing Shuford v. Fid. Nat. Prop. & Cas. Ins. Co., 508
F.3d 1337, 1342-43 (11th Cir. 2007); Marseilles Homeowners Condo.
Ass’n Inc. v. Fid. Nat. Ins. Co., 542 F.3d 1053, 1056 (5th Cir.

-25-

2008)). Shufurd was a claim for benefits under the National Flood
Insurance Program where the claims administrator had dispensed with
the 60-day proof of loss deadline and extended it to one year.
However, Fidelity erroneously sent a notice to the insured stating
that the 60-day deadline still applied. The insured did not file a
proof of loss within the new, one-year deadline, and Fidelity
denied the claim. The insured argued that Fidelity should have been
equitably estopped from raising its failure to submit a proof of
loss as a defense because it sent a letter erroneously stating that
the 60–day proof-of-loss requirement applied. The Eleventh Circuit
disagreed. Finding that Fidelity “was acting as a fiscal agent of
the United States, see 42 U.S.C. § 4071(a)(1),” the Eleventh
Circuit held that “Richmond applie[d].” Shuford, 508 F.3d at 1343.
The plaintiff’s suit in Shuford “raise[d] the same concerns, under
the Appropriations Clause, as a suit against a governmental entity
because benefits under the National Flood Insurance Program are
paid

from

the

federal

treasury.”

Id.

Therefore,

“[e]quitably

estopping Fidelity from raising the failure to file a proof of loss
as a defense would allow the erroneous letter from Fidelity to
alter the requirements for the disbursal of federal funds[,]” and
pursuant to “Richmond, equitable estoppel [was] unavailable to
Shuford.” Id.
Some district courts within the Second Circuit have considered
an estoppel argument against an insurer acting as an agent of the
federal government,

but

have

held
-26-

that

such defense

is

only

available

if

the

insured

can

prove

“affirmative

misconduct.”

Ravasio, 81 F. Supp.3d at 278 (quoting Sfoglia v. Hartford Fire
Ins. Co., Case No. 2:07–cv–00800(JS)(MLO), Rec. Doc. 65 (E.D.N.Y.
June 17, 2009) (unpublished opn.) (citing Exim Mortg. Banking Corp.
v. Witt, 16 F. Supp.2d 174, at 178 n. 10 (D. Conn. 1998) (“FEMA did
not make any misrepresentation to plaintiff. In fact, FEMA candidly
and repeatedly advised Exim of the importance of the proof of loss,
and ultimately denied the claim for failure to file the proof of
loss. Further, plaintiff does not claim any misrepresentation or
affirmative misconduct on the part of FEMA on which it reasonably
could have relied in failing to file the completed proof of
loss.”); Diamond v. Fed. Emergency Mgmt. Agency, 689 F. Supp. 163,
169

(E.D.N.Y.

1988)

(estoppel

against

the

federal

government

requires detrimental reliance on “affirmative, serious misconduct,”
not present in that case)). The Court need not weigh in on this
unsettled question, for even assuming arguendo that Selective could
be estopped upon a showing of “affirmative misconduct,” Plaintiffs
have failed

to

meet

this

high

standard.

Plaintiffs

have not

asserted any misrepresentation, much less affirmative misconduct,
by Selective or FEMA, and none is evident on the record before the
Court.
While
hardship,

the
the

Court
Supreme

is

sympathetic

Court

has

to

warned

Plaintiffs’
that

“not

financial
even

the

‘temptations of a hard case’ should cause courts to read the
requirements of a federal insurance contract with ‘charitable
-27-

laxity.’” Sanz, 328 F.3d at 1318 (quoting Merrill, 332 U.S. at
386). Accordingly, the Court is compelled to reject Plaintiffs’
equitable defenses.
V. Conclusion
For the reasons set forth above, the Court grants Selective’s
Motion for Summary Judgment (Dkt #15) in its entirety. Also, as
noted above, Plaintiffs submitted a Stipulation of Discontinuance
as to Hanover which the Court signed and filed on October 19, 2017,
thereby terminating Hanover as a party to this action. Accordingly,
Plaintiffs’ Complaint (Dkt #1) is dismissed in its entirety. The
Clerk of Court is directed to close this case.
SO ORDERED.

S/Michael A. Telesca
_____________________________________
HON. MICHAEL A. TELESCA
United States District Judge
Dated:

October 23, 2017
Rochester, New York

-28-