OLIVER et al v. U.S. DEPARTMENT OF HOMELAND SECURITY

Filing 43

MEMORANDUM AND/OR OPINION. SIGNED BY HONORABLE MITCHELL S. GOLDBERG ON 8/25/2014. 8/26/2014 ENTERED AND COPIES E-MAILED.(kp, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
TIMOTHY OLIVER, and
RENA SINAKIN OLIVER, h/w,
Plaintiffs,
v.
U.S. DEPARTMENT OF HOMELAND
SECURITY,
Defendant.

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CIVIL ACTION

No. 12-4613

Goldberg, J.

August 25, 2014
MEMORANDUM OPINION

I.

INTRODUCTION
Plaintiffs, Rena and Timothy Oliver, have brought suit against Defendant, the United

States Department of Homeland Security, seeking payments pursuant to a flood insurance policy
purchased through the Federal Emergency Management Agency’s National Flood Insurance
Program. Presently before the Court are four motions filed by Defendant: a motion for summary
judgment, two motions in limine, and a second motion to compel. For the reasons discussed
below, the motion for summary judgment will be granted and the remaining motions denied as
moot.
II.

FACTUAL AND PROCEDURAL BACKGROUND
The following facts are undisputed unless otherwise indicated:
Plaintiffs own a house at 500 South Warminster Road in Hatboro, Pennsylvania. (Def.’s

Stat. of Facts ¶ 1.) Hatboro participates in the Federal Emergency Management Agency’s
(“FEMA”) National Flood Insurance Program (“NFIP”), which is administered pursuant to the
National Flood Insurance Act of 1968, 42 U.S.C. § 4001, et seq. (Def.’s Stat. of Facts ¶ 3.)
1

FEMA is an agency of Defendant Department of Homeland Security. The NFIP was established
to allow homeowners to purchase flood insurance on reasonable terms and conditions, either
directly from FEMA in the form of a Standard Flood Insurance Policy (“SFIP”) or from a private
insurer as part of the NFIP’s Write Your Own (“WYO”) program. 42 U.S.C. § 4001(a); 44
C.F.R. § 59, et seq.; 44 C.F.R. § 61, App. A(1).
Communities wishing to participate in the NFIP must adopt local flood regulations that
comport with federal regulations. 44 C.F.R. § 59.22; 44 C.F.R. § 60.3. To that end, FEMA issues
a Flood Insurance Rate Map (“FIRM”) for each participating community identifying local flood
hazards. 44 C.F.R. § 59.1. Once a FIRM is issued for a particular area, new construction in
hazardous flood zones must meet minimum flood plain construction standards requiring, among
other things, that the living area of a home be elevated above base flood level.1 44 C.F.R.
§ 60.3(c)(2). Any part of the home below that elevation must be non-living space, used for
storage, parking, or building access. 44 C.F.R. § 60.3(c)(5).
For elevated buildings in flood zones built after a FIRM is issued, coverage for damage to
the first floor is strictly limited to the items listed in in SFIP Section III A(8) and B(3), which
include fixtures such as electrical outlets, fuel tanks, water cisterns and similarly essential
equipment. 44 C.F.R § 61, App. A(1). These coverage limits do not apply to non-elevated
buildings built before a FIRM is issued. However, if a non-elevated building constructed preFIRM is substantially damaged by flood or substantially improved after a FIRM is in place, the
building must be repaired or improved consistent with the FIRM’s flood plain construction
standards, such that the living area is elevated above base flood level. 44 C.F.R. § 60.3(c)(2).

1

A base flood is a flood that has a one percent chance of being equaled or exceeded in any given
year. 44 C.F.R. § 59.1.
2

Following the repairs or improvements, the post-FIRM elevated coverage limits apply. 44 C.F.R.
§ 61, App. A(1)(II)(B)(23).
Plaintiffs applied for an SFIP in June 2011 through FEMA. Their application describes
their house as pre-FIRM, non-elevated and located in a special flood hazard zone designated
“Zone AE.” (Def.’s Stat. of Facts ¶ 2; Def.’s Mot., Ex. 6, p. 6-7.) The application was approved
and Plaintiffs purchased coverage in the amount of $95,800 for the house, and $47,900 for its
contents. (Def.’s Mot., Ex. 7)
In late August and again in early September of 2011, Plaintiffs’ house flooded due to
heavy rains and sustained substantial damage. (Def.’s Br. 3; Pls.’ Resp. 1.) Plaintiffs submitted a
claim to FEMA, which sent an independent adjuster to assess the property. Upon inspecting the
property, the adjuster was unsure whether the building was pre-FIRM and non-elevated as
described in Plaintiffs’ SFIP, or whether it was in fact post-FIRM and elevated. (Def.’s Mot., Ex.
11, bates no. 103.) Because of this uncertainty, the adjuster provided FEMA with two
estimates—one for the policy limits of $143,700 in the event that the house was non-elevated,
and one for $44,132.69, accounting for the SFIP’s post-FIRM elevated coverage limits. (Def.’s
Mot., Ex. 11, bates nos. 106-07.) FEMA advanced Plaintiffs $35,000 and Plaintiffs signed a
“non-waiver agreement” acknowledging that FEMA would continue to investigate Plaintiffs’
claim. (Id. at bates no. 116.)
FEMA’s investigation ultimately determined that the house was post-FIRM elevated and
thus subject to the SFIP coverage limitations. (Def.’s Mot., Ex. 24.) According to FEMA, the
house was originally non-elevated and insured as such through the NFIP by its previous owners,
the Munns. Following a flood in 2001, Hatboro declared the property damaged and in need of
substantial repairs. Because a FIRM had been issued for Hatboro by that time, the repairs were

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required to meet local flood plain construction standards, which meant that the living area had to
be elevated above base flood level. Using their SFIP benefits and an additional FEMA grant, the
Munns elevated the house on a concrete-block wall foundation, such that the entire house was
above base flood level. Thus, the new lowest level—enclosed by the concrete-block wall—was
only permitted to be used as storage, parking, or building access. As required by the SFIP, the
concrete walls were equipped with flood vents, which are openings in the wall that serve to
equalize water pressure in the event of a flood. (Def.’s Mot., Exs. 12-23.) The construction
changed the status of the house from pre-FIRM non-elevated to post-FIRM elevated. The lowest
level, however, was finished and turned into a living area at a later, unknown date. Plaintiffs
deny having known at the time they purchased the house or when they sought an SFIP that the
house had been elevated by the Munns.
Based on the above information, FEMA partially denied Plaintiffs’ claim, applying the
coverage limits pertaining to post-FIRM elevated buildings. (Def.’s Mot., Ex. 24.) FEMA
ultimately paid Plaintiffs $40,627.69 for building damages and $3,505.00 for contents from the
first flood, and an additional $8,429.57 in building damages from the second flood. (Def.’s Mot,
Exs. 1, 9, 10, 30, 31.) Plaintiffs unsuccessfully appealed the partial denial to FEMA on the basis
that the house was non-elevated. (Def.’s Exs. 25, 27.) Plaintiffs no longer maintain this position
and concede that the house is elevated. (Pls.’ Stat. of Facts ¶¶ 3-5.) Instead, Plaintiffs argue that
Defendant is estopped from denying coverage as a result of having agreed to insure the home as
non-elevated, which Plaintiffs claim is evidenced by the “declarations page” of their policy.
(Def.’s Mot., Ex. 7.)
Plaintiffs filed their complaint on August 14, 2012, seeking the full amount available
under the policy for the August flood, plus $26,000 for the September flood, for a total of

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$169,700. Defendant filed its motion for summary judgment on November 22, 2013, arguing that
the status of the house as post-FIRM elevated precludes any payments beyond the applicable
limits found in the SFIP.
III.

LEGAL STANDARD
Under Federal Rule of Civil Procedure 56(a), summary judgment is proper “if the movant

shows that there is no genuine dispute as to any material fact and the movant is entitled to
judgment as a matter of law.” A dispute is “genuine” if there is a sufficient evidentiary basis on
which a reasonable jury could return a verdict for the non-moving party, and a factual dispute is
“material” if it might affect the outcome of the case under governing law. Kaucher v. County of
Bucks, 455 F.3d 418, 423 (3d Cir. 2006) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
248 (1986)). The court must view the evidence in the light most favorable to the non-moving
party. Galena v. Leone, 638 F.3d 186, 196 (3d Cir. 2011). However, “unsupported assertions,
conclusory allegations or mere suspicions” are insufficient to overcome a motion for summary
judgment. Schaar v. Lehigh Valley Health Servs., Inc., 732 F. Supp. 2d 490, 493 (E.D. Pa. 2010)
(citing Williams v. Borough of W. Chester, Pa., 891 F.2d 458, 461 (3d Cir. 1989)).
The movant “always bears the initial responsibility of informing the district court of the
basis for its motion, and identifying those portions of [the record] which it believes demonstrate
the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323
(1986). Where the non-moving party bears the burden of proof on a particular issue at trial, the
moving party’s initial Celotex burden can be met by showing that the non-moving party has
“fail[ed] to make a showing sufficient to establish the existence of an element essential to that
party’s case.” Id. at 322.

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After the moving party has met its initial burden, summary judgment is appropriate if the
non-moving party fails to rebut the moving party’s claim by “citing to particular parts of
materials in the record, including depositions, documents, electronically stored information,
affidavits or declarations, stipulations . . . , admissions, interrogatory answers, or other materials”
that show a genuine issue of material fact or by “showing that the materials cited do not establish
the absence or presence of a genuine dispute.” FED. R. CIV. P. 56(c)(1)(A).
IV.

DISCUSSION
Notwithstanding the declarations page description of Plaintiffs’ house as “non-elevated

without basement,” the record reflects that the house is in fact a post-FIRM elevated structure.
(Def.’s Stat. of Facts ¶ 13; Def.’s Mot., Exs. 7, 12-23; Pls.’ Stat. of Facts ¶ 2.) The house was
elevated by the Munns between 2002 and 2003 following a flood. Although Plaintiffs claim not
to have known about the elevation when they purchased the house, they do not dispute that the
house is elevated at this time. (Def.’s Mot. Exs. 12-23.) Defendant argues that this fact alone
dictates that the coverage limits pertaining to elevated structures set forth in Section III A(8) and
B(3) of the SFIP apply, necessitating judgment be entered in its favored.
The SFIP entitles its purchasers to insurance “under the terms of the National Flood
Insurance Act of 1968[,]” provided that they:
(1) Have paid the correct premium;
(2) Comply with all terms and conditions of this policy; and
(3) Have furnished accurate information and statements.
44 C.F.R § 61, App. A(1)(I).
The policy continues: “We have the right to review the information you give us at any
time and to revise your policy based on our review.” Id. Defendant contends that this is exactly

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what happened in Plaintiffs’ case: FEMA conducted an investigation after questions arose about
the elevation of the house and determined that, contrary to the information provided by Plaintiffs
when they applied for the policy, the house was in fact post-FIRM elevated. FEMA then applied
the coverage limits pertaining to elevated structures and paid Plaintiffs accordingly. While
Plaintiffs claim to have been unaware that the house was elevated at the time they purchased it
from the Munns, Defendant argues that this assertion is: (a) belied by the disclosures made by
the Munns upon selling the house to Plaintiffs; and (b) immaterial, as the SFIP and the limits
therein are federal regulations requiring coverage consistent with the actual status of the house,
rather than Plaintiffs’ mistaken characterization of it. Plaintiffs’ sole argument in response is that
Defendant is estopped from denying Plaintiffs’ coverage in the full amount of their policy due to
Defendant’s conduct at the time it agreed to insure the house.
The doctrine of equitable estoppel is “grounded on a notion of fair dealing and good
conscience” Gibbs ex rel. Gibbs v. Carnival Cruise Lines, 314 F.3d 125, 133 (3d Cir. 2002)

(internal quotation marks omitted). Traditionally, it is applied to preclude a party who has made
representations of fact through words or conduct from asserting rights against a person who has
reasonably relied on those words or conduct to his detriment. Id. (citing Oxford Shipping Co.,
Ltd. v. New Hampshire Trading Corp., 697 F.2d 1, 4 (1st Cir. 1982)). Plaintiffs contend that, at
the time Defendant agreed to insure Plaintiffs’ house, it knew that the building was post-FIRM
elevated, but did not disclose that information to Plaintiffs.2 Plaintiffs claim that they reasonably
relied on Defendant’s non-disclosure of this information and subsequent agreement to insure the
house as non-elevated to their detriment. Had they known that their house was subject to the
coverage limits, Plaintiffs contend, they would have taken the necessary steps to adequately

2

That Defendant knew the status of the house is purportedly evidenced by the fact that the
Munns elevated the house using NFIP payments and a FEMA grant.
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insure it. Plaintiffs point to the policy’s declarations page, which describes the house as nonelevated without basement, as proof that Defendant agreed to insure the property on this basis.
As a result, Plaintiffs urge that Defendant should be estopped from denying coverage.
Defendant responds that: (1) equitable estoppel cannot be invoked to obtain an improper
payment from the United States Treasury; (2) precedent establishes that an SFIP declarations page
comprises representations made by the insured to the insurer and not the other way around, and that
estoppel does not apply in SFIP coverage cases; and (3) Plaintiffs fail to meet their burden for
applying estoppel, because they have not demonstrated that Defendant knew that the house was
elevated and, more importantly, Plaintiffs themselves knew or should have known that it was
elevated. We will address these arguments in turn.

The United States Constitution provides that “No Money shall be drawn from the
Treasury, but in Consequence of Appropriations made by Law.” U.S. Const., art. I, § 9, cl. 7. The
question arises, then, whether the equitable doctrine of estoppel based on the conduct of
government officials or agencies can constitutionally result in payment from the government that
would otherwise be prohibited by law. The United States Supreme Court addressed this question
at length in Office of Pers. Mgmt. v. Richmond, 496 U.S. 414, 424 (1990), finding that it cannot.
Id. at 426. While declining to adopt an across-the-board rule prohibiting the use of estoppel
against the government, the Court explained that “[i]f agents of the Executive were able, by their
unauthorized oral or written statements to citizens, to obligate the Treasury for the payment of
funds, the control over public funds that the Clause reposes in Congress in effect could be
transferred to the Executive.” Id. at 428. Thus, applying the doctrine of estoppel to compel
Treasury payments would render the Appropriations Clause a nullity. Simply put, “[c]ourts
cannot estop the Constitution.” Id. at 434. Accordingly, Plaintiffs cannot claim payments based

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on Defendant’s conduct that would otherwise contravene the law and regulations constituting the
NFIP.
The NFIP regulations provide that “[t]he standard flood insurance policy is authorized
only under terms and conditions established by Federal statute, the program's regulations, the
Administrator's interpretations and the express terms of the policy itself. As such, representations
regarding the extent and scope of coverage which are not consistent with the National Flood
Insurance Act of 1968, as amended, or the Program's regulations, are void.” 44 C.F.R. § 61.5.
We read this language to directly preclude Plaintiffs from claiming coverage based on
Defendant’s conduct. Other courts addressing this very issue agree and have held that estoppel
cannot apply, or if it can, that it did not apply in similar situations. As set forth infra, precedent
supports Defendant’s contention that an SFIP’s declarations page is merely a computergenerated summary of representations made by the insured to the insurers, which does not define
the limits of coverage or bind the insurer. Rather, coverage limits are established by the federal
laws and regulations that make up the NFIP.
In Garcia v. Omaha Property and Cas. Ins. Co., 933 F.Supp. 1064 (S.D. Fla., 1995) aff'd,
95 F.3d 58 (11th Cir. 1996), the plaintiff sued a private insurer from whom he had purchased
flood insurance through the NFIP’s Write Your Own program. After the plaintiff’s three-story
residence suffered flood damage as a result of Hurricane Andrew, the plaintiff submitted a claim
that was partially paid and partially denied. The insurer paid for damage to the top two floors of
the house, but denied payment for damage to the first floor. Id. at 1065. The insurer explained
that the houses in the plaintiff’s development should have been rated as elevated for the purposes
of the NFIP, and thus were subject to the limitations in coverage that apply to elevated structures.
Id. at 1066.

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While the parties did not dispute that the home was post-FIRM, the declarations page of
the plaintiff’s SFIP contained the notation “non-elevated building.” Yet, the elevation data
clearly established that the building was elevated above sixteen feet. Noting that the SFIP defines
the policy’s declarations page as “a computer generated summary of information furnished by
[the insured] in the application for insurance,” the court found that the contradiction between the
declarations page and the actual elevation of the house did not entitle the plaintiff to full payment
contrary to federal regulations, but rather would normally result in voiding the policy for mutual
mistake of the parties, which the insurer did not seek. Id. at 1069.
The plaintiff also argued that the insurer was estopped from denying coverage because a
previous claim he had filed was paid as if the house was non-elevated. The court also rejected
this argument, holding that an earlier improper payment of government funds cannot bar the
insurer from later assessing the property in accordance with FEMA directives. Id. at 1070.
The United States Court of Appeals for the Eleventh Circuit adopted similar reasoning in
Carneiro Da Cunha v. Standard Fire Ins. Company/Aetna Flood Ins. Program, 129 F.3d 581,
(11th Cir. 1997). Appellants in that case owned three-story townhouses in the same development
at issue in Garcia, all insured through the NFIP and flooded during Hurricane Andrew. A FIRM
was in place for the area that established a base flood elevation of 10-12 feet. The insurers
determined that the ground floors of the townhouses, which were below base flood elevation,
were used as living areas, contrary to local and federal regulations. Accordingly, the insurers
partially denied the claims.
The plaintiffs argued that the policies were ambiguous and should be construed against
the insurer, because some of their declarations pages described the homes as “non-elevated.”
The court disagreed, noting that the declarations page is a summary of information provided by

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the insured and not a promise to provide coverage, and that the policy clearly states that coverage
is limited by federal regulation. Id. at 587.
The plaintiffs next argued that the insurer should be estopped from denying coverage,
because it knew that the ground floors were being used a habitable space at the time it agreed to
insure. The court held that even if estoppel could apply, the elements of estoppel were not met,
as there was no evidence that the insurer had assured the plaintiffs that the lowest floors would
be covered. The court also found that the declarations page could not reasonably lead an insured
to believe that the lowest floor was covered, because it would have been clear to any owner that
the lowest floor was not elevated above the base flood elevation. Id. at 588.
Finally, In Goldman v. Witt, 1994 WL 905577 (D.N.J. 1994), a group of plaintiffs
insured through the NFIP—some through FEMA directly and some through WYO private
insurers—submitted claims that were partially denied when it was found that their ground floors
were below base flood elevation. The ground floors were originally intended to be used only for
storage/laundry, but at some point were converted to habitable space. The court found that many
of the plaintiffs had inaccurately described their houses as non-elevated when applying for flood
insurance. Id. at 1-2.
Several of the plaintiffs who had been paid claims earlier as if their lowest levels were
fully covered argued that the government should be estopped from denying them coverage in this
instance. The district court noted preliminarily that estoppel should only be used against the
government in extreme cases. Id. at 5. In the Third Circuit, this has traditionally required
affirmative misconduct on the part of the government. Id. (citing United States v. Asmar, 827
F.2d 907, 912 (3d Cir. 1987)). The district court held that even if estoppel could be invoked
against FEMA, the only plaintiff who had presented evidence that he relied on the government’s

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previous payment had improperly accepted money based on his own inaccurate description of his
property. Thus, the court ruled that FEMA’s failure to detect that inaccuracy once should not bar
it from later accurately assessing the property.3 Id.
Here, Plaintiffs’ estoppel argument presents a slightly new twist in that Plaintiffs claim
that Defendant knew, but did not disclose the status of the house to Plaintiffs at the time they
bought their policy. In effect, however, Plaintiffs ask us to do the same thing that the above
courts declined to do: determine the extent of coverage under an SFIP based on the purported
representations, non-disclosures or other conduct of government officials, rather than the federal
laws and regulations that explicitly lay out what is covered and what is not. We agree with the
above courts that to do so would be improper. The SFIP declarations page is “a computergenerated summary of information [the insured] provided in the application for insurance,” and
not representations that bind the insurer. 44 C.F.R. § 61, App. A(1)(II)(B)(10). As to the claim
that Defendant knew but did not disclose the true status of the house, even if true, it does not
negate the explicit language in the SFIP requiring homeowners to furnish accurate information,
granting FEMA the right to review and revise the policy, and strictly limiting coverage for postFIRM elevated structures.
Finally, we agree with Defendant that even if estoppel could, in theory apply in SFIP
coverage cases, Plaintiffs have not met their burden here. We agree with Defendant’s contention
that Plaintiffs cannot claim to have relied on any information provided by Defendant regarding
the elevation of the house. This is because Plaintiffs either knew or should have known that the
house was elevated. Indeed, the undisputed record reflects that upon selling the house to
3

See also Benbenek v. Fidelity Nat. Property and Cas. Ins. Co., 2013 WL 5366395 (S.D. Ind.
2013), in which the court noted that “no federal court has ever upheld a claim of equitable
estoppel by an insured seeking an award of public funds under a [SFIP].” Benbenek 2013 WL
5366395, at *8 (quoting Bruinsma v. State Farm Fire & Cas. Co., 410 F. Supp. 2d 628, 635
(W.D. Mich. 2006)).
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Plaintiffs, the Munns disclosed that the house had been lifted thirteen feet. (Def.’s Mot., Ex. 23.)
Regardless of what Defendant knew, Plaintiffs themselves knew or had information showing that
the house was elevated, and thus could not reasonably rely on Defendant’s non-disclosure of that
same information.4
V.

CONCLUSION
For the reasons set forth above, Defendant’s motion will be granted. As a result,

Defendant’s two motions in limine seeking to limit the testimony of Plaintiffs’ experts and
second motion to compel will be denied as moot. Our order follows.

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Defendant also argues that because Plaintiffs’ house was not insured to 80% of replacement
cost value, Plaintiffs are entitled only to the actual cash value of their loss, which is defined as
the cost to replace the property at the time of the loss, less the value of physical depreciation. 44
C.F.R. § 61, App. A(1)(II)(B)(2). The SFIP section VII(V)(1)(a)(2) provides replacement cost
value only for homes insured for up to 80% of their replacement cost value. Plaintiffs offer no
response to Defendant’s contention that they are not entitled to replacement cost value. Further,
there is evidence of record showing that the house was not insured to 80% of replacement cost
value. (Def.’s Mot., Ex. 32.) Accordingly, we find that Plaintiffs are entitled only to actual cash
value of their loss.
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