Criger v. Becton

• Citation: 702 F. Supp. 761
• Decision Date: 29 December 1988
• Docket Number: No. 88-569C(1).,88-569C(1).
• Parties: Forrest D. CRIGER, Plaintiff, v. General Julius W. BECTON, Jr., etc., Defendant.
• Court: U.S. District Court — Eastern District of Missouri

702 F. Supp. 761

Forrest D. CRIGER, Plaintiff, v. General Julius W. BECTON, Jr., etc., Defendant.

No. 88-569C(1).

United States District Court, E.D. Missouri, E.D.

December 29, 1988.

Allen Surinsky, Clayton, Mo., for plaintiff.

Eric Tolen, Asst. U.S. Atty., St. Louis, Mo., Brenda Goranflo, Office of Gen. Counsel, Federal Emergency Management Agency, Washington, D.C., for defendant.

MEMORANDUM

NANGLE, Chief Judge.

Plaintiff Forrest Criger brought this action, pursuant to the National Flood Insurance Act of 1968, 42 U.S.C. §§ 4001-4127, to obtain judicial review of the Federal Emergency Management Agency's denial of insurance coverage for flood damage to his property, which occurred in October, 1986. Defendant has filed a counterclaim seeking recovery of money paid to plaintiff for a February, 1985, flood loss.

Findings of Fact

1. Defendant General Julius W. Becton, Jr., is Director of the Federal Emergency Management Agency (FEMA). FEMA administers the National Flood Insurance Program (NFIP) under the National Flood Insurance Act.

2. Plaintiff Forrest Criger had a Standard Flood Insurance Policy (SFIP) issued by the NFIP on his home which is located in St. Charles, Missouri, on the Mississippi River. Plaintiff's property was flooded on or about October 7, 1986. (Plaintiff's Exhibit 29).

3. Plaintiff purchased the dwelling in 1975. During the early 1960's, the original structure was moved closer to the river, substantial improvements were made, and the lower level was enclosed. (Plaintiff's Exhibit 1; November 11, 1988, Affidavit of Florence Harkins).

4. An independent adjusting company, Appalachian Adjusting Company, inspected plaintiff's property and filed reports dated October 29, 1986, and November 2, 1986, with the NFIP. (Government Exhibit C).

5. The NFIP notified plaintiff in a December 11, 1986, letter that it accepted the proof of loss for the purpose of meeting the filing date, but rejected the statements therein with respect to the amount of the loss. (Government Exhibit C).

6. Plaintiff's property was reinspected on February 9, 1987. The reinspection report dated February 12, 1987, indicated that plaintiff's residence was an elevated structure. (Government Exhibit F).

7. Defendant denied plaintiff insurance coverage for the October, 1986, flood damage on the basis of an elevated structure exclusion in the SFIP.

8. At plaintiff's request, an adjuster from Joseph P. Caulfield, Public Adjuster, inspected plaintiff's property and filed a report on March 18, 1987. The company estimated that the structural and personal property damage to plaintiff's home as a result of the flood was $12,781.60 less $345.00 depreciation and plaintiff's $1,000.00 deductible. (Plaintiff's Exhibit 29; Testimony of Charles Ehret).

9. Defendant paid plaintiff $3,344.46 for a previous flood loss which occurred in February, 1985.

Conclusions of Law

This Court has subject matter jurisdiction over plaintiff's claim pursuant to 42 U.S.C. § 4072 which provides for judicial review of FEMA's denial of flood insurance claims. It is well established that claims arising under the NFIP are governed by federal common law. Sodowski v. National Flood Insurance Program, 834 F.2d 653, 655 (7th Cir.1987), cert. denied, ___ U.S. ___, 108 S.Ct. 2035, 100 L.Ed.2d 619 (1988); Brazil v. Giuffrida, 763 F.2d 1072, 1074-75 (9th Cir.1985); United States v. Parish of St. Bernard, 756 F.2d 1116, 1121 (5th Cir.1985), cert. denied, 474 U.S. 1070, 106 S.Ct. 830, 88 L.Ed.2d 801 (1986); Atlas Pallet, Inc. v. Gallagher, 725 F.2d 131, 135 (1st Cir.1984).

When Congress enacted the National Flood Insurance Act, it created the NFIP, a federally subsidized program, to provide flood insurance to property owners at affordable rates. Congress found that "flood disasters had created personal hardship and economic distress" requiring "unforeseen disaster relief measures ..." 42 U.S.C. § 4001(a). Because flood insurance generally was not available through the private sector, flood victims had to depend on the federal government and voluntary relief agencies to provide assistance. H.R.Rep. No. 1585, 90th Cong., 2d Sess., reprinted in 1968 U.S.Code Cong. & Admin.News 2873, 2966. The NFIP was designed to meet the "national need for a reliable and comprehensive flood insurance program" and "to provide adequate indemnification for the loss of property" due to flood disasters. S.Rep. No. 583, 93rd Cong., 1st Sess., reprinted in 1973 U.S. Code Cong. & Admin.News 3217, 3218. Congress authorized a plan under which flood insurance could be provided to residential and small business properties "on a nationwide basis through the cooperative efforts of the Federal Government and the private industry." 42 U.S.C. § 4001(d)(1).

Under the National Flood Insurance Act, Congress delegated authority to the Director of FEMA to promulgate regulations setting forth the general terms and conditions of flood insurance coverage. 42 U.S. C. § 4013(a). Insurance provided under the NFIP is subject to the terms of the SFIP. The SFIP is published as part of the administrative regulations at 44 C.F.R. Ch. 1, Pt. 61, App. A(1). On October 1, 1983, the SFIP was amended to exclude coverage for enclosures and contents below the elevated floor of an elevated structure.¹

Plaintiff argues that the elevated structure exclusion is vague, discriminatory and unenforceable, defendant is estopped from claiming plaintiff's structure is elevated because defendant previously treated plaintiff's residence as a nonelevated structure and paid for plaintiff's February, 1985, flood loss, and the elevated structure exclusion is not applicable because plaintiff's residence is an initial construction under FEMA's Interpretation No. 1-87. The Court need not reach plaintiff's contentions because the Court determines that plaintiff is entitled to insurance coverage under a new regulation promulgated by FEMA.

FEMA promulgated a regulation, effective October 1, 1988, which amends the SFIP to make the elevated structure exclusion applicable only to elevated Post-FIRM buildings and not to elevated Pre-FIRM buildings. 53 Fed.Reg. 27989 (1988). Post-FIRM buildings are those buildings which were constructed or substantially improved on or after the effective date of the initial Flood Insurance Rate Map (FIRM) for the community or after December 31, 1974, whichever is later. Pre-FIRM buildings are those which were constructed or substantially improved prior to the relevant date. The effective date of the initial FIRM for the community of St. Charles County, where plaintiff's property is located, was September 15, 1978. (November 2, 1988, Declaration of Brenda Goranflo). Plaintiff's residence, which was substantially improved and enclosed in the early 1960's, clearly falls within the definition of a Pre-FIRM structure.

In the new regulation, FEMA recognized the unfairness of applying the elevated structure exclusion to Pre-FIRM elevated structures. FEMA noted that the 1983 limitation provided flood insurance coverage to nonelevated Pre-FIRM buildings but did not provide such coverage to elevated Pre-FIRM buildings, even though both structures were constructed in compliance with the then existing building ordinances. Id. at 27990. FEMA indicated that the new regulation was designed to "correct an unintended disparity in flood insurance coverage" for the two structures. Id. at 27989. With respect to the applicability of the new regulation to losses which occurred before the effective date of the regulation, FEMA stated that losses "would be adjusted on the basis of current policy provisions." Id. The new provisions were incorporated into the SFIP. Id. at 27991.

The new FEMA regulation came to the Court's attention while this case was before the Court for resolution following the non-jury trial. Thus, the Court instructed the parties to submit post-trial briefs on the issue of whether the new rule should be applied to the present action.

Defendant vigorously argues that the amendments set forth in the new regulation, like a legislative enactment, should be given prospective effect only.² Although statutes and administrative rules should normally be given prospective effect only, unless retroactive application is clearly indicated, see e.g., Greene v. United States, 376 U.S. 149, 160, 84 S.Ct. 615, 621, 11 L.Ed.2d 576 (1964); Bruner v. United States, 343 U.S. 112, 117 n. 8, 72 S.Ct. 581, 584 n. 8, 96 L.Ed. 786 (1952); Union Pacific R.R. Co. v. Laramie Stock Yards Co., 231 U.S. 190, 199, 34 S.Ct. 101, 102, 58 L.Ed. 179 (1913), the court must "apply the law in effect at the time it renders its decision" absent manifest injustice or a contrary legislative intention. Bradley v. Richmond School Board, 416 U.S. 696, 711, 94 S.Ct. 2006, 2016, 40 L.Ed.2d 476 (1974); see Hamling v. United States, 418 U.S. 87, 102, 94 S.Ct. 2887, 2809, 41 L.Ed.2d 590 (1974); Seniors United for Action v. Ray, 675 F.2d 186, 189 (8th Cir.1982). The rule requiring application of existing law governs changes made by an administrative agency acting in its rulemaking capacity as well as statutory and judicial changes. Thorpe v. Durham Housing Authority, 393 U.S. 268, 282, 89 S.Ct. 518, 526, 21 L.Ed.2d 474 (1969). Because the new FEMA regulation became effective while this case was pending before the Court, the Court concludes that the Bradley rule governs.

In determining whether manifest injustice would result from application of a new rule, the Court must consider: "(a) the nature and identity of the parties, (b) the nature of their rights, and (c) the nature of the impact of the change in law upon those rights." Bradley, 416 U.S. at 717, 94 S.Ct. at 2019. With respect to the first Bradley factor, the Court indicated that retroactivity was favored in cases involving a governmental entity and "great national concerns." Id. at 718-19, 94 S.Ct. at 2019-20; see also Seniors United for Action, 675 F.2d at 189. The first factor weighs in favor of...