Opinion
CIVIL ACTION NO. 03-1405, SECTION "L" (1)
January 13, 2004
ORDER REASONS
Before the Court is the Defendant's Motion for Summary Judgment. For the following reasons, the Motion is hereby GRANTED.
I. FACTUAL AND PROCEDURAL BACKGROUND
The Defendant Omaha Property and Casualty Insurance Company ("Omaha") is a Write-Your-Own Carrier participating in the U.S. Government's National Flood Insurance Program ("NFIP") created by the National Flood Insurance Act of 1968, 42 U.S.C. § 4110, et. seq. The Plaintiff purchased a Standard Flood Insurance Policy ("SFIP") with Omaha to protect his property.
On or about September 26, 2002, the Plaintiffs home allegedly sustained flooding caused by rainfall associated with Hurricane Isidore. Thereafter, the Plaintiff made a claim for flood loss damages under his SFIP. After receiving the claim, Omaha contacted Central Claims Services, Inc., an independent adjusting company, which in turn assigned Barry Murray, an independent adjuster, to inspect the property. Murray performed his inspection on November 1, 2002 and found that there was apparently water damage to some portions of the Plaintiffs property, but he believed the damage was old and not caused by any recent flooding. Furthermore, Murray concluded that a general condition of flood, as defined in and required by the SFIP, was not present on the property.
Following this inspection, Murray informed the Plaintiff that he would recommend that the claim be denied by Omaha. At the request of the Plaintiff, Murray spoke with one of the Plaintiffs neighbors who allegedly suffered flood damage from Isidore and re-inspected the Plaintiffs property. In his amended report dated December 13, 2002, Murray confirmed his initial finding that a general condition of flooding did not exist on the properly and that the claim should be denied. Nevertheless, Murray prepared an estimate of the damages he observed and submitted the estimate along with his reports to Omaha for a determination of whether any of the damages were covered under the SFIP. By letter dated December 17, 2002, Omaha denied the Plaintiffs claim on the basis that no general condition of flood existed on the property. Omaha further explained that there must be a general condition of flood directly responsible for the damage before coverage is available under the SFIP.
Following rejection of his claim, the Plaintiff contacted Omaha to dispute its findings. On January 6, 2003, Omaha referred the Plaintiffs file to the National Flood Insurance Program Bureau and Statistical Agent for assistance from a General Adjuster regarding the claim. Two General Adjusters for the NFIP Bureau and Statistical Agency, Robert Hodges and Joseph Buzzelli, attempted to contact the Plaintiff three times by phone and one time in person on January 13, 2003 to set up another inspection of the property. While at the property, the Adjusters performed an inspection of the exterior of the property and found no evidence of flooding.
The Adjusters continued to attempt to contact the Plaintiff on January 14, 2003. Eventually, the Plaintiff contacted the Adjusters who informed the Plaintiff that the inspection would have to be completed by the evening of January 16, 2003, as they were returning to the home office on January 17, 2003. The Plaintiff indicated that he would contact the Adjuster again on the morning of January 16, 2003. to schedule an inspection for that afternoon. However, the Plaintiff did not contact the Adjusters. The Adjusters prepared a report based on their inspection of the exterior of the property. They concluded that no general condition of flood existed on the property and adopted the findings of Murray.
The Plaintiff contacted Omaha on February 6, 2003 inquiring about the status of his claim. By letter dated February 7, 2003, Omaha again denied the Plaintiffs claim referring to the report issued by the General Adjusters. On February 12, 2003, the Plaintiff contacted Omaha, objecting to the denial of his claim and stating that he planned to hire an attorney. Plaintiff's attorney, Chris Bruno, sent a letter to Omaha on March 5, 2003, regarding Plaintiff-claim. By letter dated March 12, 2003, Omaha again contacted the NF1P Bureau and Statistical Agent requesting assistance with the Plaintiffs claim. Before any further action was taken by the Bureau and Statistical Agent, the Plaintiff filed the instant lawsuit in the 24th Judicial District Court for the Parish of Jefferson, claiming that he is entitled to coverage under the SF1P. The matter was removed to this Court on May 16, 2003.
II. THE NATIONAL FLOOD INSURANCE PROGRAM
Congress created the National Flood Insurance Program to provide coverage at or below actuarial rates because private insurance companies could not economically underwrite these policies. See Gowland v. Aetna, 143 F.3d 951, 953 (5th Cir. 1998). The program is operated by the Federal Emergency Management Agency ("FEMA") and underwritten by the U.S. Treasury. All flood loss claims presented under the NFIP are paid directly with U.S. Treasury funds. See id.
Under the NFIP, flood loss policies can be issued directly by FEMA or through private insurers, such as Omaha in the instant matter. See id. The National Flood Insurance Act provides that private insurers who issue these policies are fiscal agents of the United States. 42 U.S.C. § 4071. However, the private insurers such as Omaha do not have authority to establish the terms and conditions of the NFIP policies. See 44 C.F.R. § 61.4(b). Rather, FEMA sets the terms and conditions, and the policies must be issued in the form of the SF1P. Id. The provisions of the SFIP may not be altered, varied, or waived absent the express written consent of the Federal Insurance Administrator, 44 C.F.R. § 61.13(d).
The provisions of an insurance policy issued pursuant to a federal program must be strictly construed and enforced. Gowland, 143 F.3d at 954; Forman v. FEMA, 138 F.3d 543, 545 (5th Cir. 1998). Failure to so construe runs afoul of the Appropriations Clause of the United States Constitution. Gowland, 143 F.3d at 955. The SFIP issued to the Plaintiff, as with all SFIP's, requires the insured to send a signed and sworn proof of loss to Omaha within 60 days after the alleged loss. (SFIP, Article VII(J)(4) found at Plaintiffs Opp. Memo, Ex. A). As an alternative, the insurance company may opt to accept an adjuster's report, signed by the insured, instead of a formal Proof of Loss. However, this alternative is only available for claims having a value of under S7500. (NFIP Flood Insurance Manual, CL1, found at Defendant's Reply Memo, Ex. A; FEMA Adjuster Manual, pg. 82, found at Defendant's Reply Memo, Ex. A). Failure to submit a timely Proof of Loss, then, for claims exceeding S7500 are not payable unless the Federal Insurance Administrator has waived the Proof of Loss requirement.
III. DISCUSSION
In its motion, the Defendant claims that the Plaintiff was properly denied benefits under his SFIP because the Defendant did not timely submit a signed and sworn Proof of Loss and because this requirement was not waived. Secondly, the Defendant argues that the types of damages alleged by the Plaintiff are not covered under the SFIP because no general condition of flood exists as required by the policy. Lastly, the Defendant claims that the Plaintiff has no cause of action because the SFIP requires the insured to comply with all the requirements of the policy before bringing a lawsuit. As the Plaintiff did not fulfill the Proof of Loss requirement, the Defendant submits that the Plaintiff is divested of his right to sue the Defendant.
The Plaintiff admits that he did not submit a Proof of Loss, but argues that he was never presented with one. The Plaintiff claims that Omaha accepted the adjuster's report in lieu of requiring a Proof of Loss. According to the Plaintiff, Omaha's acceptance of the adjuster's report constitutes a waiver of the Proof of Loss requirement.
It is undisputed that the Plaintiff did not submit a timely signed and sworn Proof of Loss as required by his SFIP. Thus, absent a waiver by the Administrator, the Plaintiffs claim was properly denied. The primary issue before the Court, then, is whether a waiver was executed in this case.
The Court notes that the Plaintiffs argument that the independent adjuster was at fault for not supplying him with a formal Proof of Loss to submit is wholly without merit. The SFIP makes clear that it is the insured's responsibility to submit a timely Proof of Loss, not the adjuster. (SFIP, Article VII(J)(7) found at Plaintiffs Opp. Memo, Ex. A).
The Code of Federal Regulations provides that no provision of the SFIP may be altered. varied, or waived without the express, written consent of the Administrator. 44 C.F.R. § 61.13. The Plaintiff does not claim and there is no evidence to suggest that an express, written waiver occurred in this case with regard to the Proof of Loss requirement. Rather, the Plaintiff seems to argue that a waiver of the Proof of Loss occurred for two reasons. First, the Plaintiff claims that a waiver occurred because the investigation of the Plaintiffs property continued beyond the 60-day deadline imposed by the SFIP. Second, the Plaintiff maintains that Omaha accepted the adjuster's report in lieu of a formal Proof of Loss. The Court is not persuaded by the Plaintiffs arguments.
First the SFIP does not provide that a waiver may occur in any way other than through the express, written consent of the Administrator. In light of this waiver provision. the Plaintiffs contention that Omaha or the NFIP Bureau and Statistical Agent Genera! Adjusters waived that requirement by continuing to investigate the Plaintiffs claim after the 60-day deadline is without merit. Neither Omaha nor the General Adjusters had authority to waive the Proof of Loss requirement, and there is no evidence to suggest that they represented to the Plaintiff that such a requirement had been waived. At most, the continued investigation of the property might be deemed a constructive waiver, which could not be effective.
Second, as outlined above, a private insurance carrier such as Omaha could opt to accept an adjuster's report signed by the insured in lieu of a formal Proof of Loss. However, such an alternative is only available for claims having a value of under $7500, and the evidence shows that the Plaintiffs claims exceed that amount. Thus, even if the Plaintiff had signed the report, it would not satisfy the requirements of the SFIP.
Accordingly, the Court finds that the Plaintiff failed to submit a timely, signed and sworn Proof of Loss form as stipulated by the SFIP. The Court further finds that no waiver of this requirement occurred. Thus, as a matter of law, the Plaintiff failed to preserve his claim and cannot recover benefits under the SFIP. The Court is satisfied that Omaha has shown that no genuine issue of material fact exists in this matter such that disposition of the case by summary judgment is proper. As the Court decides the matter on the failure of the Plaintiff to submit the required Proof of Loss, the Court need not reach the other issues raised by the Defendant in its motion.
IV. CONCLUSION
Accordingly, and for the reasons given herein, the Defendant's Motion for Summary Judgement is hereby GRANTED, and the Plaintiffs claims against the Defendant are hereby DISMISSED.