Marseilles Homeowners Condominium v. Fidelity Nat.

• Decision Date: 10 September 2008
• Docket Number: No. 07-31005.,07-31005.
• Citation: 542 F.3d 1053
• Parties: MARSEILLES HOMEOWNERS CONDOMINIUM ASSOCIATION, INC., Plaintiff-Appellant, v. FIDELITY NATIONAL INSURANCE COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

542 F.3d 1053

MARSEILLES HOMEOWNERS CONDOMINIUM ASSOCIATION, INC., Plaintiff-Appellant, v. FIDELITY NATIONAL INSURANCE COMPANY, Defendant-Appellee.

No. 07-31005.

United States Court of Appeals, Fifth Circuit.

September 10, 2008.

James M. Garner, Peter L. Hilbert, Jr., Kevin Michael McGlone, Sher, Garner, Cahill, Richter, Kelin & Hilbert, Stephen P. Schott, Montgomery, Barnett, Brown, Read, Hammond & Mintz, New Orleans, LA, for Plaintiff-Appellant.

Gerald Joseph Nielsen, William Ross DeJean, Nielsen Law Firm, Metairie, LA, for Defendant-Appellee.

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

Before BARKSDALE, BENAVIDES and DENNIS, Circuit Judges.

PER CURIAM:

This suit stems from extensive damage wrought by Hurricane Katrina to property located on Lake Marina Drive, New Orleans. The plaintiff-appellant, Marseilles Homeowners Condominium Association (Marseilles) was the insured pursuant to a flood insurance policy issued under the National Flood Insurance Program by the defendant-appellee, Fidelity National Insurance Company (Fidelity). Fidelity paid Marseilles $973,246.75. Marseilles submitted a claim for additional damages, which was denied by Fidelity. Marseilles subsequently filed suit, and the district court, ruling that the insured's failure to submit a proof of loss precluded the claim, granted summary judgment in Fidelity's favor. We affirm.

I. BACKGROUND

This case involves the National Flood Insurance Program (NFIP) that Congress created to provide insurance coverage at or below actuarial rates. Gowland v. Aetna, 143 F.3d 951, 953 (5th Cir.1998). The Federal Emergency Management Agency (FEMA) operates the NFIP, which is supported by the federal treasury. A policy issued under the NFIP is called a Standard Flood Insurance Policy (SFIP). A SFIP is "a regulation of [FEMA], stating the conditions under which federal flood-insurance funds may be disbursed to eligible policyholders." Mancini v. Redland Ins. Co., 248 F.3d 729, 733 (8th Cir.2001). FEMA sets the terms and conditions of all SFIPs. Gowland, 143 F.3d at 953. SFIPs may be issued directly by FEMA or through private insurers, which are called "Write Your Own" (WYO) companies. Id. Pursuant to statute, WYO insurance companies are fiscal agents of the United States. Id. (citing 42 U.S.C. § 4071(a)(1)). Here, Fidelity, as a WYO company, issued the policy to Marseilles. The property was insured for $12,000,000.

After Hurricane Katrina, the insured property suffered damage due to flood water. Marseilles filed a claim under its policy with Fidelity. Fidelity sent an independent adjuster to inspect and adjust the flood loss under the terms of the SFIP. Fidelity ultimately determined that the damages were $973,246.75, and paid that amount to Marseilles. Marseilles submitted further information to Fidelity requesting an additional $642,000 in losses. Fidelity issued a writing denying coverage of the additional claim.

Marseilles subsequently filed suit in district court. During the course of the proceedings, Fidelity asserted for the first time that the suit should be barred because Marseilles had not submitted a sworn proof of loss as required by the regulations. Fidelity filed a motion for summary judgment based on this assertion, and the district court granted summary judgment. Marseilles filed a motion to alter or amend the judgment, arguing that new evidence showed that Fidelity had obtained waivers of the proof-of-loss requirement in other cases. The district court denied the motion. Marseilles appeals.

II. ANALYSIS

A. Standard of Review

This Court reviews a district court's grant of summary judgment de novo, applying the same standards as the district court. E.g., Hanks v. Transcontinental Gas Pipe Line Corp., 953 F.2d 996, 997 (5th Cir.1992). Summary judgment is proper if the record reflects "that there is no genuine issue as to any material fact and that the movant is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c).

B. Waiver of Proof-of-Loss Requirement

Marseilles contends that the district court erred in granting summary judgment because Fidelity waived the proof-of-loss requirement. The regulations state that no provision of a SFIP can be waived without the express written consent of the Federal Insurance Administrator. 44 C.F.R. § 61, app. A(2), art. VII(D). Under this program, an insured cannot file a lawsuit seeking further federal benefits under the policy unless the insured can show prior compliance with all policy requirements. 44 C.F.R. § 61, app. (A)(1), art. VII(R). Here, Marseilles failed to submit a sworn proof of loss, which is a condition precedent to bringing the instant litigation. See 44 C.F.R. § 61, app. A(2), art. VII(J)(4). Generally, the deadline for filing a proof of loss is 60 days. Id. However, in a August 31, 2005 memo after Hurricane Katrina, the Acting Federal Insurance Administrator changed the 60-day deadline to a one-year deadline.

In its initial brief, Marseilles contends that the district court exalted form over substance in granting summary judgment based on Marseilles's failure to submit a proof of loss. Marseilles states that it provided adequate claim information sufficient to allow Fidelity to adjust the claim prior to suit being filed. Marseilles points out that Fidelity paid Marseilles based on the initial claim without a sworn proof of loss being filed. Further, Marseilles asserts that the Fifth Circuit precedent relied on by the district court did not consider whether a proof of loss is required after the insurer has accepted the claim information and issued payment to the insured without a proof of loss. However, shortly after Marseilles filed its initial brief, this Court issued a decision considering just such a fact pattern.

In Richardson v. American Bankers Ins. Co., 279 Fed.Appx. 295 (5th Cir.2008) (unpublished), the insured, Richardson, filed a claim pursuant to his SFIP and received $16,125.50 for damage to his property after Hurricane Katrina. Richardson later sought additional benefits and provided invoices and estimates but he never submitted a sworn proof of loss for the additional sum. The insurance company denied his coverage. Richardson contended that the insurance company's lawyer told him over the phone that "proof of loss was not and would not be an issue in this lawsuit." Id. at 297. Richardson filed suit, and the district court granted the insurer's motion for summary judgment based solely on the ground that Richardson had not submitted a sworn proof of loss with respect to the denied claims. This Court affirmed the grant of summary judgment, stating that "Richardson's position is contrary to federal statutory law, the Administrator's Waiver, and our precedent." Id. at 298. The panel referred to the submission of a sworn proof of loss within one year as a "strict" requirement. Id. The regulations provide that an insured in the NFIP "cannot file a lawsuit seeking further federal benefits under the SFIP unless the [insured] can show prior compliance with all of the policy's requirements, including the [proof-of-loss] requirement." Id. (emphasis in opinion) (citing 44 C.F.R. § 61, app. (A)(1), arts. VII(J), VII(R)).

This Court rejected Richardson's theory of "substantial compliance" as contrary to our caselaw, explaining that:

because "the provisions of an insurance policy issued pursuant to a federal program must be strictly construed and enforced, ... an insured's failure to provide a complete, sworn proof of loss statement, as required by the flood insurance policy, relieves the federal insurer's obligation to pay what otherwise might be a valid claim."

Id. at 299 (quoting Gowland, 143 F.3d at 954). This Court also rejected Richardson's estoppel argument, which was based on the insurer's attorney's alleged representation that no proof of loss was needed, recognizing that the Supreme Court "`has never upheld an assertion of estoppel against the Government by a claimant seeking public funds.'" Id. (quoting Office of Pers. Mgmt. v. Richmond, 496 U.S. 414, 434, 110 S.Ct. 2465, 110 L.Ed.2d 387 (1990)).¹

We follow the persuasive analysis in Richardson, which simply applies controlling precedent in a manner consistent with prior precedent. See Shuford v. Fidelity Nat'l Prop. & Cas. Ins. Co., 508 F.3d 1337 (11th Cir.2007) (rejecting insured's claim that insurer was equitably estopped from arguing failure to submit proof of loss); Wright v. Allstate Ins., 415 F.3d 384 (5th Cir.2005) (holding that insurer was not equitably estopped from raising insured's failure to file an adequate proof of loss); Forman v. FEMA, 138 F.3d 543 (5th Cir. 1998) (explaining that inadequate proof of loss precluded suit and that the conditions Congress imposes for disbursing the federal treasury cannot be estopped). Because Marseilles's argument is unavailing in light of this Court's precedent, we conclude that the district court properly found that the proof-of-loss requirement precluded the claim.

C. Interpretation of FEMA Memo

Marseilles next contends that FEMA waived the proof-of-loss requirement in its August 31, 2005 memo that extended the 60-day deadline to a one-year deadline. As set forth previously, in the aftermath of Hurricane Katrina, the Acting Federal Insurance Administrator changed the 60-day deadline to a one-year deadline. In pertinent part, the memo provides that:

I am waiving the requirement in VII.J.4 of the SFIP ... 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 ....

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 .... The insurer will then process the policyholder's...