Leland v. Federal Ins. Adm'r

Citation934 F.2d 524
Decision Date22 May 1991
Docket NumberNo. 90-3074,90-3074
PartiesEdwin S. LELAND, Plaintiff-Appellant, v. FEDERAL INSURANCE ADMINISTRATOR, United Services Automobile Association, Defendants-Appellees.
CourtUnited States Courts of Appeals. United States Court of Appeals (4th Circuit)

Grover Gray Wilson, argued (Urs R. Gsteiger, on brief), Petree, Stockton & Robinson, Winston-Salem, N.C., for plaintiff-appellant.

Ellen Maren Neubauer, Fed. Emergency Management Agency, Washington, D.C., and Francis Boyd Prior, Crossley, McIntosh & Prior, Wilmington, N.C., argued (Sharon J. Stovall, Crossley, McIntosh & Prior, Wilmington, N.C., Margaret Person Currin, U.S. Atty., and Steven A. West, Asst. U.S. Atty., Raleigh, N.C., on brief), for defendants-appellees.

Before SPROUSE and WILKINSON, Circuit Judges, and COPENHAVER, District Judge for the Southern District of West Virginia, sitting by designation.

COPENHAVER, District Judge:

Edwin S. Leland ("Leland") appeals from the district court's grant of summary judgment in favor of the Federal Insurance Administrator ("FIA") and the United States Automobile Association ("USAA"), asserting that he is entitled to summary judgment on his claim for benefits under the 1988 Upton-Jones amendment to the National Flood Insurance Act, 42 U.S.C. Sec. 4013(c) (the "amendment"). The district court denied summary judgment to Leland and granted summary judgment to the defendants, holding that Leland's losses occurred prior to the effective date of the Upton-Jones amendment and that the amendment did not apply retroactively to cover his losses. We agree and affirm the judgment of the district court.

I.

Appellant Leland is the owner of a beachfront residence at Topsail Beach, North Carolina. In March, 1985, defendant USAA issued to Leland a standard flood insurance policy ("SFIP") on his Topsail Beach property pursuant to the National Flood Insurance Program ("NFIP"). Defendant Federal Insurance Administrator ("FIA") is the official in the Federal Emergency Management Agency ("FEMA") who administers the NFIP.

The policy issued to Leland in 1985 was a single peril policy designed to protect homeowners living in coastal areas from certain enumerated losses due to flooding. The policy, as issued, provided coverage only for "direct physical loss by or from a flood." See 44 C.F.R. Part 61, App. A(1), Art. III. 1 There is no dispute between the parties to this action that the policy as issued in 1985 did not afford coverage, as sought by the plaintiff, for the physical relocation of an insured dwelling which had sustained structural damage due to flooding.

Severe winter storms battered coastal North Carolina, including the Topsail Beach area, in December, 1986, and in January and February, 1987. Leland contends that the high winds, waves and tides during those storms resulted in conditions of flooding as defined by the flood insurance policy issued to him. 2 He further contends that, as a result of each of the floods in December, 1986, and January and February, 1987, he sustained substantial damage to the heating, electrical and septic systems, and to the foundation, pilings and deck of his residence.

On or about March 17, 1987, Leland was advised in writing by Topsail Beach officials that, because of the damage to his residence from the severe winter storms and the underwashing and erosion of the land underlying the property, the residence was unfit for human habitation and, further, that condemnation proceedings were being initiated. Subsequently, in November, 1987, Leland was warned by city officials that the residence was in danger of imminent collapse.

In light of these warnings and fearful of imminent collapse, Leland relocated his residence to a lot which he owned across the street and which was further removed from the beachfront. The relocation commenced on November 16, 1987. Although physical movement of the dwelling was completed in November, 1987, the residence was not ready for occupancy until the septic tank was installed and approved on February 8, 1988.

After relocation of his residence, Leland submitted a claim for relocation costs of approximately $25,000 to FEMA. The claim was denied on the ground that relocation of the dwelling was not compensable under the standard flood insurance policy held by Leland at the time of loss. Denial of the claim was also predicated upon FEMA's contention that the February 5, 1988, amendment to the SFIP which provides benefits for structural relocation of flood-damaged structures was not retroactive and would not afford coverage for relocations occurring prior to its enactment. 3

After denial of his claim for relocation expenses, Leland filed this action against the Federal Insurance Administrator and, subsequently, against USAA.

II.

Inasmuch as the flood insurance policy issued to Leland in 1985 and in effect at the time his residence was relocated in November, 1987, provided coverage only for "direct physical loss by or from a flood," both the insurance administrator at the claims level, and the district court in the proceedings below, determined that the relocation of Leland's residence was not a covered loss under the policy provisions in effect at the time of the relocation in November, 1987. 4 Leland does not contest the district court's ruling in this regard.

Leland asserts, however, that the Upton-Jones amendment to the National Flood Insurance Act, which was enacted and became effective on February 5, 1988, affords him coverage under the Act for expenses incident to the relocation of his residence. 5 He contends that the district court erred in its decision that the Upton-Jones amendment is not retroactive in application and in its determination that his loss occurred prior to the amendment's effective date of February 5, 1988.

III.

The Upton-Jones amendment to the National Flood Insurance Act, 42 U.S.C. Sec. 4013(c), was enacted in order to provide coverage under the National Flood Insurance Act for the relocation or demolition of flood-damaged structures determined to be subject to imminent collapse. The amendment states in pertinent part:

(1) If any structure covered by a contract for flood insurance under this subchapter and located on land that is along the shore of a lake or other body of water is certified by an appropriate State or local land use authority to be subject to imminent collapse or subsidence as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels, the Director shall (following final determination by the Director that the claim is in compliance with regulations developed pursuant to paragraph 6(A)) pay amounts under such flood insurance contract for proper demolition or relocation.

42 U.S.C. Sec. 4013(c)(1) (1988). 6

No reported cases specifically address whether enactment of Sec. 4013(c) should be given retroactive effect, nor does the amendment itself expressly provide for retroactive application. It is a fundamental and well established principle of law, however, that statutes are presumed to operate prospectively unless retroactive application appears from the plain language of the legislation. See, e.g., Bowen v. Georgetown University Hospital, 488 U.S. 204, 208, 109 S.Ct. 468, 471, 102 L.Ed.2d 493 (1988); Bennett v. New Jersey, 470 U.S. 632, 639, 105 S.Ct. 1555, 1559, 84 L.Ed.2d 572 (1985); United States v. Magnolia Petroleum, 276 U.S. 160, 162-63, 48 S.Ct. 236, 237, 72 L.Ed. 509 (1928).

In light of this well established principle of statutory construction, Leland argues that subparagraph (4)(A) of Sec. 4013(c), which states that "[t]he provisions of this subsection shall apply to contracts for flood insurance under this title that are in effect on, or entered into after, February 5, 1988," warrants retroactive application of the amendment. The district court correctly noted, however, that subparagraph (4)(A) merely provides for application of the amendment to those standard flood policies which were in effect on the date of the amendment's enactment on February 5, 1988, and to those issued thereafter, without the necessity of amending such policies to reflect the new statutory coverage. Absent such a provision, it would have been necessary for FEMA to attach riders or endorsements to policies issued prior to incorporation of the new amendment into the standard flood insurance policy in order for policy holders to benefit prospectively from the amendment.

Support for the district court's interpretation of subsection (4)(A) of Sec. 4013(c) is found within the liberalization clause of the standard flood insurance policy which was issued to Leland and which was in effect at the time of the relocation of his residence. The liberalization clause provides:

While this policy is in force, should we have adopted any forms, endorsements, rules or regulations by which this policy could be broadened or extended for your benefit by endorsement or substitution of policy form, then, such matters shall be considered to be incorporated in this policy without additional premium charge and shall inure to your benefit as though such endorsement or substitution has been made.

44 C.F.R. Part 61, App. (A)(1), Art. IX (1988).

Other courts which have considered the effect of the liberalization clause in standard flood insurance policies have held that, rather than providing for retroactive application of amendments to FEMA, the clause is designed to foster administrative convenience and efficiency. As the Eighth Circuit recently held in Criger v. Becton:

We are convinced the SFIP liberalization clause was intended merely to give the insured the benefit of favorable changes made by FEMA during the policy term. The clause fosters administrative efficiency by allowing FEMA to give an insured the benefit of an amendment without requiring each SFIP to be rewritten or endorsed every time FEMA makes a change. The liberalization provision does not give retroactive effect to new...

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