Shuford v. Fidelity Nat. Property & Cas. Ins. Co.

• Decision Date: 10 December 2007
• Docket Number: No. 07-10230.,07-10230.
• Citation: 508 F.3d 1337
• Parties: Dorothy SHUFORD, Plaintiff-Appellant, v. FIDELITY NATIONAL PROPERTY & CASUALTY INSURANCE CO., Defendant-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

508 F.3d 1337

Dorothy SHUFORD, Plaintiff-Appellant, v. FIDELITY NATIONAL PROPERTY & CASUALTY INSURANCE CO., Defendant-Appellee.

No. 07-10230.

United States Court of Appeals, Eleventh Circuit.

December 10, 2007.

Patrick B. Collins, Patrick Collins, PC, Daphne, AL, Mary Eugenia Murchison, Murchison & Howard, L.L.C., Foley, AL, for Shuford.

William R. DeJean, Gerald J. Nielsen, Nielsen Law Firm, L.L.C., Metairie, LA, James Robertson, Scott, Sullivan, Streetman & Fox, P.C., Mobile, AL, for Defendant-Appellee.

Appeal from the United States District Court for the Southern District of Alabama.

Before MARCUS and PRYOR, Circuit Judges, and HANCOCK,^* District Judge.

PRYOR, Circuit Judge:

The two main questions in this appeal involve the timeliness of a proof of loss for an insurance policy issued under the National Flood Insurance Program and whether a related tort claim of bad faith refusal to pay is preempted by federal law. Dorothy Shuford appeals the summary judgment against her complaint regarding the denial of her claim for benefits under a Standard Flood Insurance Policy. Shuford's property was damaged by a flood caused by Hurricane Ivan. After that hurricane, the Federal Insurance Administrator imposed a one-year deadline for the filing of proofs of loss for contested claims, but Shuford failed to file a proof of loss within one year. The district court dismissed Shuford's tort claim on the ground that it was expressly preempted by a federal regulation, 44 C.F.R. pt. 61, app. A(1), art. IX, and the district court entered summary judgment against Shuford's complaint for breach of the policy on the ground that Shuford failed to file a timely proof of loss. We affirm.

I. BACKGROUND

Dorothy Shuford owned a business that was insured by a Standard Flood Insurance Policy issued by Fidelity National Property and Casualty Insurance Company and underwritten by the U.S. Treasury as part of the National Flood Insurance Program. Fidelity served as a "Write-Your-Own" insurance provider—a private provider that participated in the National Flood Insurance Program. See 44 C.F.R. § 62.23. The providers administer National Flood Insurance Program policies as fiscal agents of the United States. See 42 U.S.C. § 4071(a)(1). The Standard Policy provided as follows that only the Federal Insurance Administrator could alter its terms: "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(2), art. VII.D.

On September 16, 2004, Hurricane Ivan caused flooding that damaged Shuford's ice delivery system. The terms of the Standard Policy required the policyholder to file a proof of loss with the insurer within 60 days of the loss. 44 C.F.R. pt. 61, app. A(2), art. VII.J. After the hurricane, the Administrator created a system for expedited payments of claims and, for contested claims, waived the 60-day deadline for a proof of loss and instead imposed a one-year deadline:

Recently, a number of States experienced catastrophic losses as a result of three hurricanes (Charley, Frances, and Ivan) within the span of a few weeks, and a fourth hurricane (Jeanne) is about to make landfall on the Southeast coast. As a result, there is a shortage of qualified adjusters available to adjust the losses resulting from these hurricanes. So, there is an urgent need to expedite claims payments to policyholders.

To expedite claims payments so that policyholders affected by these circumstances are not subject to undue hardship, I am waiving the requirement in VII.J.4 of the SFIP Dwelling and General Property Forms and VIII.J.4 of the SFIP Residential Condominium Building Association Policy Form for the policyholder to file a proof of loss prior to receiving insurance proceeds. Instead, payment of the loss will be based on the evaluation of damage in the adjuster's report. This means the requirement in VII.M.1 and VIII.M.1 that losses will be payable 60 days after the insurer receives the policyholder's proof of loss (or within 90 days after the adjuster files a report signed and sworn to by the policyholder in lieu of a proof of loss) will not apply. Instead, the loss will be payable as soon as practicable after the insurer receives the adjuster's report. This procedure will allow the insurer to promptly adjust, settle, and pay claims based on the adjuster's report. Also, under the terms of this waiver, the following provisions will not apply: VII.J.7, J.9, and M.2.c of the SFIP Dwelling and General Property Forms and VIII.J.7, J.9, and M.2.c of the SFIP Residential Condominium Building Association Policy Form.

In the event a policyholder disagrees with the insurer's adjustment, settlement, or payment of the claim, a policyholder may submit to the insurer a proof of loss within one year from the date of the loss. The proof of loss must meet the requirements of VII.J.4 of the SFIP Dwelling or General Property Form or VIII.J.4 of the SFIP Residential Condominium Building Association Policy Form. The insurer will then process the policyholder's proof of loss in its normal fashion. If the insurer rejects the proof of loss in whole or in part, the policyholder may file a lawsuit against the insurer within one year of the date of the written denial of all or part of the claim as provided in VII.R of the SFIP Dwelling or General Property Form or VIII.R of the SFIP Residential Condominium Building Association Policy Form.

For example, a policyholder who suffered a flood loss from Hurricane Charley on August 14, 2004, and disagrees with the insurer's decision based on the adjuster's report, has until August 13, 2005, to file the proof of loss detailing the area(s) of disagreement. A policyholder who suffered a flood loss from Hurricane Frances on September 7, 2004, has until September 6, 2005, to file the proof of loss detailing the area(s) of disagreement, and those who suffered a flood loss from Hurricane Ivan on September 24 have until September 23, 2005, to file a proof of loss detailing the area(s) of disagreement.

This waiver is pursuant to the provisions dealing with amendments, waivers, and assignments of the SFIP (VII.D. of the SFIP Dwelling Form and General Property Form and VIII.D. of the SFIP Residential Condominium Building Association Policy Form). Since the adjuster availability problem will affect not only the claims from the three hurricanes referred to above, but also any other flood events that may occur while the adjustment of claims from those hurricanes is ongoing, this waiver applies to all claims arising on August 12, 2004, and thereafter until December 31, 2004.

Shuford filed a claim with Fidelity but never submitted a proof of loss. On February 22, 2005, Fidelity denied Shuford's claim on the ground that the Standard Policy did not cover Shuford's ice delivery system. Shuford filed a complaint for breach of contract and the tort of bad faith refusal to pay against Fidelity in state court. Fidelity removed the action to federal court, which is the exclusive forum for claims arising under the National Flood Insurance Act. See 44 C.F.R. pt. 61, app. A(2), art. VII.R. The district court dismissed Shuford's tort claim on the ground that it was preempted by federal law. The district court then granted summary judgment against Shuford's complaint for breach of contract because Shuford had not filed a proof of loss within one year of her loss. Finally, the district court denied Shuford's motion to alter or amend the summary judgment under Federal Rule of Civil Procedure 59(e).

II. STANDARDS OF REVIEW

A few different standards of review govern this appeal. We review a grant of summary judgment by a district court de novo. Cruz v. Publix Super Mkts., Inc., 428 F.3d 1379, 1382 (11th Cir. 2005). We apply the same legal standards that bound the district court and view all facts and reasonable inferences in the light most favorable to the nonmoving party. Id. (citing Strickland v. Water Works & Sewer Bd., 239 F.3d 1199, 1203 (11th Cir. 2001)). We review the denial of a motion for leave to conduct limited discovery under Rule 56(f) for abuse of discretion. Carmical v. Bell Helicopter Textron, Inc., 117 F.3d 490, 493 (11th Cir.1997) (citing Wallace v. Brownell Pontiac-GMC Co., 703 F.2d 525, 527-28 (11th Cir.1983)). We review the determination that a state law claim is preempted by federal law de novo. Irving v. Mazda Motor Corp., 136 F.3d 764, 767 (11th Cir.1998) (citing Lewis v. Brunswick Corp., 107 F.3d 1494, 1498 (11th Cir.1997)). We review the denial of a motion to alter or amend a judgment under Rule 59(e) for abuse of discretion. Mays v. U.S. Postal Serv., 122 F.3d 43, 46 (11th Cir.1997) (citing Am. Home Assurance Co. v. Glenn Estess & Assocs., Inc., 763 F.2d 1237, 1238-39 (11th Cir.1985)).

III. DISCUSSION

Shuford challenges four rulings by the district court. First, Shuford challenges the summary judgment against her complaint for breach of contract. Second, Shuford argues that the district court abused its discretion when it denied her motion for leave to conduct limited discovery under Rule 56(f). Third, Shuford argues that the district court erred when it ruled that her tort claim was preempted by federal law. Fourth, Shuford argues that the district court abused its discretion when it denied her motion to alter or amend the summary judgment under Rule 59(e) because the interpretation by the district court of the Administrator's waiver conflicted with the standard practice in the flood claim adjusting industry. Each of Shuford's arguments fails.

A. Shuford's Complaint for Breach of Contract Fails.

Shuford presents three arguments to excuse her failure to file a proof of loss within one year. First, Shuford argues that the Administrator's waiver dispensed with the proof-of-loss requirement and converted the adjuster's report into a proof of loss, and Shuford contends that she was not required to file a proof of...