Bull's Corner Restaurant, Inc. v. Director of Federal Emergency Management Agency, 84-3672

• Decision Date: 06 May 1985
• Docket Number: No. 84-3672,84-3672
• Citation: 759 F.2d 500
• Parties: The BULL'S CORNER RESTAURANT, INC., Plaintiff-Appellant, v. The DIRECTOR OF the FEDERAL EMERGENCY MANAGEMENT AGENCY, Defendant-Appellee. Summary Calendar.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 500

759 F.2d 500

81 A.L.R.Fed. 407

The BULL'S CORNER RESTAURANT, INC., Plaintiff-Appellant, v. The DIRECTOR OF the FEDERAL EMERGENCY MANAGEMENT AGENCY,

Defendant-Appellee.

No. 84-3672

Summary Calendar.

United States Court of Appeals, Fifth Circuit.

May 6, 1985.

Clement F. Perschall, Jr., New Orleans, La., for plaintiff-appellant.

John P. Volz, U.S. Atty., P. Kevin Colomb, Asst. U.S. Atty., New Orleans, La., Susan K. Bank, Fed. Emergency Management Agcy., Washington, D.C., for defendant-appellee.

Appeal from the United States District Court for the Eastern District of Louisiana.

Before WILLIAMS, JOLLY, and HILL, Circuit Judges.

JERRE S. WILLIAMS, Circuit Judge:

Appellant brought this action to recover under a flood insurance policy issued pursuant to the National Flood Insurance Act. Appellant alleged that its business premises had sustained damage from flooding on February 5, 1983, and on April 7, 1983. The parties settled the February 5 claim and agreed to submit all evidence on the April 7 claim to the district court in documentary form.

The district court held that appellant was not entitled to insurance recovery for damage which occurred on April 7. The court noted that heavy rains did in fact fall in the New Orleans area on April 6-7. The court found, however, that in appellant's neighborhood only his property and the property next door suffered any water entry. Several disinterested witnesses testified that his street, Decatur, was not submerged in water. In addition, the court found that a drain in a low area of the restaurant was clogged with trash and when two employees unclogged the drain, the water began to recede. The court concluded that the damage was not the result of flooding within the meaning of the insurance policy. Appellant timely served a motion for a new trial as required by Fed.R.Civ.P. 59(b). It was denied. Appellant then filed timely notice of appeal.

The National Flood Insurance Act empowers the Director of the Federal Emergency Management Agency to issue regulations defining "the nature and limits of loss or damage ... which may be covered by [flood] insurance." 42 U.S.C. Sec. 4013(a)(2). The Director has accordingly defined "flood" or "flooding" as

(a) A general and temporary condition of partial or complete inundation of normally dry land areas from:

(1) The overflow of inland or tidal waters.

(2) The unusual and rapid accumulation or runoff of surface waters from any source.

(3) Mudslides....

44 C.F.R. Sec. 59.1 (1984). Appellant's insurance policy contained this definition. It also contained a provision excluding from coverage

water, moisture or mudslide ... damage of any kind resulting primarily from conditions, causes or occurrences which are solely related to the described premises or are within the control of the insured (including but not limited to design, structural or mechanical defects, failures, stoppages or breakages of water or sewer lines, drains, pumps, fixtures, or equipment) or any condition which causes flooding which is substantially confined to the described premises or properties immediately adjacent thereto ....

The district court relied upon the above exclusion and the definition of "flooding" in ruling against appellant. Federal law governs the construction of these provisions. Mason Drug Co. v. Harris, 597 F.2d 886, 887 (5th Cir.1979); West v. Harris, 573 F.2d 873, 881 (5th Cir.1978), cert. denied, 440 U.S. 946, 99 S.Ct. 1424, 59 L.Ed.2d 635 (1979).

As an initial matter, appellant argues that appellee waived any right to rely on the exclusion by failing to plead it in his answer. We do not agree. This Court has stated, "Where [an affirmative defense] is raised in the trial court in a manner that does not result in unfair surprise, ... technical failure to comply precisely with Rule 8(c) is not fatal." Allied Chemical Corp. v. Mackay, 695 F.2d 854, 855 (5th Cir.1983); see also Dickinson v. Auto Center Mfg. Co., 733 F.2d 1092, 1097 (5th Cir.1983). The Director in the instant case pleaded as an affirmative defense that "[p]laintiff's alleged damage was not the result of a general condition of flooding as is required under the provisions of the standard flood insurance policy." This pleading can be taken as involving the exclusion at issue because that exclusion in part defines "general condition of flooding" by excluding coverage where only the covered premises or property immediately adjacent thereto suffer damage. Furthermore, the Director stated in his answer that he had denied appellant's claim pursuant to Article III(A)(3) of the policy, which is the exclusion at issue. Appellant's complaint also cited the exclusion, and appellant discussed the exclusion in its trial memorandum. Finally, appellant did not raise the Rule 8(c) issue in its motion for a new trial. Appellant plainly was not a victim of unfair surprise.

Appellant raises various challenges to the district court's findings of fact. Those findings are subject to the "clearly erroneous" standard of Fed.R.Civ.P. 52(a). We have noted, however, that "the degree of deference to be accorded a district court's findings of fact is lower when the case is submitted wholly on documents than in the situation where the evidence is presented by witnesses appearing before the district court." Onaway Transportation Co. v. Offshore Tugs, Inc., 695 F.2d 197, 200 (5th Cir.1983). Nevertheless, this Court is bound by Rule 52(a) and can overturn findings of fact only if a review of "the entire evidence" leaves the Court with "the definite and firm conviction that a mistake has been committed." Id. (quoting McAllister v. United States, 348 U.S. 19, 20, 75 S.Ct. 6, 8, 99 L.Ed. 20 (1954).

Appellant first challenges the district court's determination that other residents of the area near its premises did not experience flooding. Appellant argues that the witnesses so testifying were unable to describe the conditions "during the time period in question, that is around 3:00 A.M. and 4:00 A.M." Appellant urges that this was the time when the heaviest rainfall occurred.

The district court's finding was not clearly erroneous. Five persons who live or work close to appellant restaurant stated in their stipulated testimony that neither they nor anybody they knew, except appell...