Abend Family Limited Partnership v. NGM Insurance Company
Filing
49
OPINION AND ORDER granting 30 Motion for Summary Judgment. It is further ordered that all claims against NGM are DISMISSED WITH PREJUDICE. Signed by Judge Geoffrey W. Crawford on 11/13/2014. (esb)
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DISTRICT
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13 PM I: 34
UNITED STATES DISTRICT COURT
FOR THE
DISTRICT OF VERMONT
ABEND FAMILY LIMITED
PARTNERSHIP,
Plaintiff,
v.
NGM INSURANCE COMPANY,
Defendant.
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Case No. 5:13-cv-8
OPINION AND ORDER GRANTING DEFENDANT'S
MOTION FOR SUMMARY JUDGMENT
(Doc. 30)
This is a dispute over a claim for flood insurance coverage under a National Flood
Insurance Standard Insurance Policy ("SFIP") issued by Defendant National Grange Mutual
Insurance Company ("NGM"). NGM has moved for summary judgment (Doc. 30) on the
grounds that it has already paid the full amount of coverage available, and Plaintiff Abend
Family Limited Partnership ("Abend") failed to submit the required proof of claim for the
amount it now seeks and also waited too long to file suit. A hearing on the motion was held on
October 29,2014. Plaintiff appeared pro se through general partners Norman and Sydney
Abend. Defendant appeared through local counsel John Paul Faignant, Esq. and William T.
Treas, Esq., admitted pro hac vice.
DISCUSSION
I.
Procedural History and Factual Background.
A.
Factual Background.
The following facts drawn from the parties' pleadings and exhibits filed with the court
are not in dispute. See, e.g., Doc. 41 at 1 ("The Plaintiff does not dispute the chronology of
events."). Abend owns a commercial building in Waitsfield, Vermont ("the building") that
suffered flood damage on August 28,2011 as a result of Hurricane Irene. Since 2007, Abend has
purchased SFIP coverage on the building ("the policy") from NGM. NGM issued and
administered the policy on behalf of the Federal Emergency Management Agency ("FEMA"),
serving as a "Write Your Own" or "WYO" insurance program carrier, pursuant to the National
Flood Insurance Act of 1968,42 U.S.C. § 4001, et seq., ("NFIA"). The SFIP issued to Abend is
the General Property Form SFIP, the text of which is codified at 44 C.F.R. Pt. 61, app. A (pt. 2)
(2011).
Following the notice ofthe loss, NGM assigned an independent adjuster-Sweet Claims
Service--to adjust the claim. Abend also retained a public adjuster-James HarIor of SwerIing
Milton Winnick-to represent its interests. On October 5, 2011, NGM sent Abend an advance
payment of$10,000. (Doc. 30-5.) On November 4,2011, plaintiff executed a Proof of Loss
statement ("Original Proof of Loss") on a FEMA form, prepared by the independent adjuster.
(Docs. 30-6 and 34-5.) 1 The Original Proof of Loss lists $61,818.50 as the full cost of repair or
Two different versions of the Original Proof of Loss appear in the record. The version submitted by
NGM includes the handwritten notations, "Undisputed" at the top of the form and "is an undisputed
amount of," next to the full cost of repair or replacement value. (Doc. 30-6 at 2.) The version of this
document submitted by Abend does not include the handwritten notations. (Doc. 34-5 at 2.) Ultimately,
these handwritten notations are not material for purposes of dispensing with the pending motion, and
2
replacement. Mr. Harlor forwarded the executed Original Proof of Loss to the independent
adjuster on November 8, 2011. In his cover letter, Mr. Harlor stated in part:
Enclosed is a copy of the signed Proof of Loss that you provided to
the insured. As you are aware, the insured is not in agreement with
the figures on the Proof of Loss and are only signing the Proof of
Loss, so they can get paid the undisputed payment of $50,218.39.
Please alert the insurer that the insured is not in agreement with
your proposed settlement. On November 1, 2011, we sent you a
list of the items which we were disputing.
(Doc. 34-5.) On November 30,2011, NGM paid Abend $40,218.39. (Doc. 30-6 at 3.) This
payment covered damages approved by the independent adjuster totaling $55,218.39, less the
$10,000 advance payment, the $5,000 policy deductible, and depreciation. (Doc. 30-4 at 2.)
NGM issued a letter to Abend dated November 30,2011, stating the following:
The adjuster's final report indicates the insured building has a
basement. We are denying all non-covered items located in the
basement, pursuant to the Standard Flood Insurance Policy ... [.]
(Doc. 30-4 at 2.) The letter quotes the provisions of the SFIP relating to building property
coverage, which in general terms, excludes surfaces and limits coverage of damage in basement
areas to heating and cooling equipment, other utilities, and structural damage. See 44 C.F.R. Pt.
61, app. A (pt. 2), Paragraph III(A)(8) (2011).
On December 30,2011, Abend executed a second, supplemental Proof of Loss
("Supplemental Proof of Loss") on a FEMA form prepared by the independent adjuster. (Doc.
30-7.) The Supplemental Proof of Loss covered a supplemental payment of $25,648.09 after
depreciation, which NGM paid on January 12, 2012. (Doc. 30-7 at 3.)
therefore the court need not determine which of these two documents constitutes the authentic Original
Proof of Loss.
3
On January 31,2012, Mr. Harlor wrote a letter to NGM stating that he and the
independent adjuster were at an "impasse" concerning the status of the ground floor of the
building. (Doc. 34-4.) Mr. Harlor argued that the ground floor could not be considered a
basement because the entrance and retail space were at grade leveL He attached photos to
support Abend's position. He also questioned NGM's reliance on an "elevation certificate"
dated May 10, 2006, which described a 2.4 - 5.2 foot difference between the ground floor and
the exterior elevation. He argued that a minimum difference of 2.4 feet is impossible, since there
are no steps at the ground floor entrance. He concluded by advising that Abend:
[H]as exhausted $120,280.36 on repairs and still needs to perform
more but for monetary reasons, they have deferred certain repairs
for now. All expenses to date are enclosed. This policy of
insurance has a limit of $125,000, which the insured will clearly
exhaust. It is our position that the insured should be entitled to the
entire limit of liability.
(Doc. 34-4 at 2.) On March 5, 2012, NGM wrote Abend a second letter denying portions of the
claim, stating in part:
The adjuster's final report indicates the insured building has a
basement. Weare denying all non-covered items located in the
basement, including the radiant baseboard heaters, condensate
piping and antifreeze, pursuant to the Standard Flood Insurance
Policy ... [.]
(Doc. 34-8 at 1.) Like the previous denial letter, the March 5, 2012 letter advised Abend that it
could appeal the denial directly to FEMA "within 60 days ofthe date of this denial letter." Id.
~t
3. Through Mr. Harlor, Abend filed an appeal with FEMA on April 12, 2012. (Doc. 30-10.) On
August 14,2012, NGM forwarded a copy of its claim file to FEMA for review. (Doc. 30-11).
FEMA denied Abend's appeal by letter dated October 15,2012 from the Director of Claims for
the National Flood Insurance Program. (Doc. 30-12.)
4
B.
Procedural History.
On December 14,2012, Abend filed a small claims complaint in the Chittenden Civil
Division seeking the jurisdictional limit of$5,000. The complaint read:
Flood damage from Irene was $135,000. Insurance was for
$125,000. Company paid only $75,000. After 5 years of
classifying building "no basement," [NGM] reclassified building
as having a basement and denied full coverage. Grade of land
outside of building is even with floor of damaged area.
(Doc. 5.) NGM removed the case to this court on the basis offederal question jurisdiction
pursuant to 28 U.S.C. § 1331. (Doc. 1.) On March 13,2013, the court granted Abend's Motion
for Leave to File Amended Complaint, increasing the total damages sought by Abend to
$50,000. (See Docs. 10 and 16.)
NGM moves for summary judgment on three separate grounds: (1) coverage for the
ground floor portion ofthe building is governed by a policy provision limiting the types oflosses
to be paid for damage to basements; (2) Abend's claim is barred because plaintiff failed to
submit a sworn proof ofloss for the disputed damage; and (3) Abend's claim is barred because it
failed to file suit within one year ofthe written denial of coverage on November 30, 2011. (Doc.
30 at 2.) Abend opposes the motion, arguing that while it does not dispute the chronology of
events alleged by NGM, the building is not below grade on all four sides, and therefore does not
qualify as a basement. (Doc. 34 at 2.) Abend further argues that the supplemental
documentation it submitted to the insurer constitutes its proof of loss for the claim, and it need
not utilize the form generated by FEMA. (Doc. 36 at 3.) Finally, Abend argues that it is entitled
to equitable tolling of the one-year limitations period for bringing suit for the duration of time
FEMA took to consider Abend's appeal. (Doc. 34 at 4.)
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II.
Conclusions and Analysis of Law.
A.
Standard of Review.
Under Rule 56 ofthe Federal Rules of Civil Procedure, summary judgment is appropriate
"if the pleadings, the discovery and the disclosure materials on file, and any affidavits show that
there is no genuine issue as to any material fact and that the movant is entitled to judgment as a
matter oflaw." Fed. R. Civ. P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322
(1986). To determine whether there is a genuine issue of material fact, the Court must "interpret
all ambiguities and draw all factual inferences in favor of the nonmoving party." Salah uddin v.
Goord, 467 F.3d 263, 272 (2d Cir. 2006). The burden of demonstrating the absence of a genuine
issue of material fact rests upon the party seeking summary judgment. Adickes v. S.H Kress &
Co., 398 U.S. 144, 157 (1970). Once a properly supported motion for summary judgment has
been made, the burden shifts to the nonmoving party to set out specific facts showing a genuine
issue for triaL See Fed. R. Civ. P. 56(2). The rules require that a nonmoving party set forth
specific facts in the affidavits, depositions, answers to interrogatories, or admissions, showing
that a genuine issue exists for triaL Cifarelli v. Vill. ofBabylon, 93 F.3d 47, 51 (2d Cir. 1996)
(citing Celotex, 477 U.S. at 324).
We note that although Mr. Abend has not fully complied with Local Rule 56(b) by
providing "a separate, concise statement of disputed material facts" to oppose certain material
facts alleged by NGM, Abend's submissions to the court are sufficiently detailed to make it plain
that the parties disagree sharply over the facts concerning the basement. See Local Rule 56(b);
see also Tracy v. Freshwater, 623, F.3d 90, 101 (2d Cir. 2010) ("It is well established that a
court is ordinarily obligated to afford a special solicitude to pro se litigants."). NGM does not
6
seek to take advantage of any shortcomings in Abend's pro se response to summary judgment,
and the court will not do so either. See also Jackson v. Fed. Express, _ F.3d
2014 WL
4412333, at *5 (2d Cir. Sept. 9,2014) (observing that even where partial response made, "an
examination of the legal validity of an entry of summary judgment should [be] made in light of
the opposing party's pro se status.").
B.
Denial of Coverage.
The court first considers NGM's contention that its partial denial of coverage with
respect to the damage to the ground floor space can be decided on summary judgment. It is
obvious that the parties' dispute about whether the ground floor of the insured building is a
"basement" for purposes of the coverage limitation raises significant questions of fact. These
factual issues include the exact differences in grade between the exterior and the interior of the
building on each of its sides, the basis for NGM's determination in previous policy years that the
building was constructed on a slab at grade, and the presence (or not) of any steps leading from
the exterior into the ground floor space. All of these factual issues were the subject of dispute
between the two adjusters and cannot be resolved on the basis of the affidavits and exhibits
submitted by the parties.
C. Sworn Proof of Loss Requirement.
Next, the court turns to the issue of whether Abend failed to comply with a policy
requirement by not submitting a signed and sworn proof of loss with respect to the disputed
portions of its claim. Under the policy promulgated by FEMA, an insured "may not sue [the
insurer] to recover money under this policy unless [the insured has] complied with all of the
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requirements ofthe policy." 44 C.F.R. Pt. 61, app. A (pt. 2), Paragraph VII (R) (2011). The
policy's proof of loss requirement states as follows:
J. Requirements in Case of Loss.
In case of a flood loss to insured property, [the insured] must:
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 ofloss;
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;
£ 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 ofloss and for what purpose;
i. The inventory of damaged personal property described in
J.3 above.
44 C.F.R. Pt. 61, app. A (pt. 2), Paragraph VII (J) (2011).
Abend does not dispute that neither the Original Proof of Loss nor the Supplemental
Proof of Loss included amounts arising from damage to the ground floor area for which NOM
partially denied coverage, nor does Abend dispute that it did not submit a signed and sworn
proof ofloss form for the additional funds. 2 Instead, Abend argues that "supplemental proofs of
loss in the form ofpaid bills and the amount and type of work involved were submitted as the
2 The parties also do not dispute that FEMA issued two limited waivers of the proof of loss requirement,
which extended the deadline for submitting a proof ofloss to January 23,2012 for insureds impacted by
Hurricane Irene in the state of Vermont. See Doc. 30-9.
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damage from the flood became apparent." (Doc. 38 at 2.); see also November 8, 2011 Letter to
Sweet Claims (Doc. 34-5); January 31,2012 Letter to NGM (Doc. 34-4). Abend argues that the
use of the FEMA proof of loss form is not required by the policy, and therefore, the failure to
submit the form does not bar its claim.
As the administrator of Abend's SFIP claim, NGM acts as a fiscal agent of the United
States and must adhere to SFIP requirements. See 42 U.S.C. § 4071 (a)(l). Unlike private
insurance contracts, SFIP requirements must be strictly construed and enforced in all instances.
Jacobson v. Metro. Prop. & Cas. Ins. Co., 672 F.3d 171, 175 (2d Cir. 2012) (collecting cases);
see also Mancini v. Redland Ins. Co., 248 F.3d 729, 734 (8th Cir. 2001) (requiring strict
construction of signed and sworn proof of loss requirement); Gowland v. Aetna, 143 F.3d 951
(5th Cir. 1998) (observing that strict construction ofSFIP required even where the "result may
seem harsh."); Diamond v. Fed. Emergency Mgmt. Agency, 689 F. Supp. 163, 169 (E.D.N.Y.
1988) (strictly construing proof of loss requirement and dismissing). In Jacobson, the Second
Circuit held that an insured who submitted a proof of loss without a liquidated statement of the
amount claimed was barred from suing for insurance proceeds. Id. The Second Circuit adopted
the reasoning of its sister circuit courts, concluding that "[p]rotection of the public fisc requires
that those who seek public funds act with scrupulous regard for the requirements of the law ...."
Id. (quoting Heckler v. Cmty. Health Servs. ofCrawford Cnty., Inc., 467 U.S. 51, 63 (1984)
(quotation marks omitted). This policy promotes uniformity and protects the public treasury. Id.
at 175-76.
A year later in DeCosta v. Allstate Ins. Co., 730 F.3d 76 (1 st Cir. 2013), the First Circuit
reached the same conclusion in a case virtually identical to the present case. In DeCosta, the
9
insured submitted proofs ofloss for the undisputed portion of his flood insurance claim along
with a separate, unsigned, and unsworn estimate from an independent adjuster for the disputed
portion ofthe claim. Id. at 82. Like the Second Circuit in Jacobson, the First Circuit held that
the expenditure of federal money to pay flood claims requires strict compliance with the proof of
loss requirement, even where an insurer paying claims out of company funds might be required
to honor the claim. Id. at 83. Strict compliance with the policy requires the submission of a
signed and sworn proof of loss statement for all funds sought by the insured, not just the
undisputed funds. Id. The First Circuit cited the constitutional concerns that would arise if the
courts ordered claims to be paid from government coffers that were not authorized by statute. Id.
at 83-84 (citing U.S. Const. art. 1 § 9, cL 7 and U.S. Const. amend. XI); see also Heckler, 47
U.S. at 63 (holding claims against Government strictly construed where award of damages
requires payment from the United States Treasury).
Much like the plaintiff in DeCosta, Abend submitted signed and sworn proof of loss
forms only with respect to the undisputed amounts and did not fulfill this requirement with
respect to the additional amount it now seeks from this court. Partial or even substantial
compliance with the proof-of-loss requirement is not sufficient. See, e.g., Destefanis v. Fugate,
No. CV 12-4730,2013 WL 6796425, slip op. at *4 (E.D.N.Y. Dec. 19,2013) (granting
Defendant's motion for judgment on the pleadings where insured failed to file separate proof of
loss for amounts claimed in suit); Kehoe v. Travelers Ins. Co., No.1 :08-CV-566 (GLSIDRH),
2009 WL 87589, slip op. at *2 (N.D.N.Y. Jan. 12,2009) (granting summary judgment where
insured submitted documentation but did not submit separate signed and sworn proof of loss
forms totaling damages); Evanoffv. Standard Fire Ins. Co., 534 F.3d 516, 521 (6th Cir. 2008)
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(holding that unsworn letter to insured signed by insured does not satisfy proof ofloss
requirement); Mancini, 248 F.3d at 734 (holding that third party statement of total damages
sought, where not signed and sworn by the insured, does not satisfY proof of loss requirement).
Mr. Harlor's January 31, 2012 letter and other correspondence with Sweet Claims Service and
with NGM documenting the disputed repairs and summarizing the basement damage cannot
satisfY the requirement because Abend did not sign or swear to the correspondence, nor did
Abend provide all of the other information required by Paragraph VII (1). Accordingly, NGM is
entitled to summary judgment because Abend failed to comply with the proof-of-loss policy
requirement, and NGM's Motion for Summary Judgment is GRANTED.
D.
One-Year Limitations Period.
Even assuming that Abend had complied with the proof ofloss requirement, NGM is also
entitled to summary judgment on the ground that Abend failed to file suit within the limitations
period. The NFIA statute authorizes a one-year period within which the insured must bring suit
in the United States District Court seeking payment for disallowed or partially disallowed claims.
42 U.S.C. § 4072. 3 The statutory requirement is further codified in the SFIP promulgated by
FEMA:
If you do sue, you must start the suit within one year of the date of
the written denial of all or part of the claim, and you must file suit
in the United States District Court of the distriet in which the
insured property was located at the time of loss.
The statute more specifically provides that, "the claimant, within one year after the date of mailing of
notice of disallowance or partial disallowance by the [FEMA] Director, may institute an action against the
Director [or its insurance company agents] on such claim in the United States district court for the district
in which the insured property or a major part of thereof shall have been situated ...." 42 U.S.C. § 4072.
3
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44 C.F.R. Pt. 61, app. A (pt. 2), Paragraph VII (R) (2011). This requirement equally applies to
suits against WYO carriers such as NGM. Palmieri v. Allstate Ins. Co., 445 F.3d 179, 187 (2d
Cir. 2006). WYO carriers cannot waive, alter, or amend this requirement. See 44 C.F.R. §
61.13(d) (1993)4; 44 C.F.R. Pt. 61, app. A (pt. 2), Paragraph VII (D) (2011).5 Abend does not
dispute that its claim was partially denied on November 30, 2011 (see Doc. 31-2), and that it did
not file suit until over a year later on December 14, 2012 (see Doc. 41-1). Instead, Abend argues
that equitable tolling should apply to the six-month period during which FEMA considered
Abend's appeal of the partially denied claim.
After a WYO company issues a final claim determination denying in whole or in part the
insured's claim, the insured has a right to appeal any action taken by the insurer, FEMA
employee, FEMA contractor, insurance adjuster, or insurance agent. See 44 C.F.R. § 62.20(b)
(2009). The administrative appeal process provides the insured with an alternative to filing suit. 6
The regulations expressly state that, "[tJhe one-year period to file suit commences with the
written denial from the insurer and is not extended by the appeals process." 44 C.F.R. §
62.20(f)(4) (2009); see also 44 C.F.R. § 62.20(c) ("Filing an appeal does not waive any ofthe
requirements for perfecting a claim under the SFIP or extend any of the time limitations set forth
4 The regulations provide that, "[the SFIP] ... must be used in the Flood Insurance Program, and no
provision of said documents shall be altered, varied, or waived other than by express written consent of
the Federal Insurance Administrator ...." 44 C.F.R. § 61. 13(d).
5 "This policy cannot be changed nor can any of its provisions be waived without the express written
consent of the Federal Insurance Administrator." 44 C.F.R. Pt. 61, app. A (pt. 2), Paragraph VII (D)
(2011).
Abend cites the portion of the regulation recited in NGM's denial letters as implying it was required to
exhaust this administrative remedy prior to filing suit: "An insured who files suit against an insurer on the
flood insurance claim issue is prohibited from filing an appeal under this section." See 44 C.F.R. §
62.20(d) (2009). However, this provision merely guards against inconsistent results that could arise if the
two parallel proceedings remained ongoing at the same time.
6
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in the SFIP."). Although a significant amount oftime passed while Abend awaited the outcome
of the administrative appeal, the existence of the appeal itself does not provide any basis for
tolling the one-year limitations period. Because the parties do not dispute that more than one
year elapsed prior to Abend filing suit against NGM, Abend's failure to satisfy this requirement
provides an alternate independent basis for summary judgment.
E.
Leave to Amend.
The Second Circuit has held that district courts should not dismiss the claim of a self
represented party without granting leave to amend at least once "when a liberal reading of the
complaint gives any indication that a valid claim might be stated." Thompson v. Carter, 284
F.3d 411,416 (2d Cir. 2002); see also Fed. R. Civ. P. 15(a)(2) ("[T]he court should freely give
leave [to amend] when justice so requires"). However, leave to amend the complaint is not
required where an amendment would be futile. See Cuoco v. Moritsugu, 222 F.3d 99, 112 (2d
Cir. 2000) ("The problem with [plaintiffs] causes of action is substantive; better pleading will
not cure it. Repleading would thus be futile. Such a futile request to replead should be
denied."). The court finds granting leave to amend would be futile in this case because no
reformulation of the facts at issue would alter the existence of several grounds for dismissal
based upon already undisputed facts.
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CONCLUSION
For the reasons set forth above, NGM's Motion for Summary Judgment (Doc. 30) is
GRANTED, and all claims against NGM are DISMISSED WITH PREJUDICE.
SO ORDERED.
Dated at Rutland, in the District of Vermont, this
,:3 day ofNovember, 2014.
Geoffrey W. Crawford, Judge
United States District Court
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