Neuser v. Hocker
| Decision Date | 22 July 1999 |
| Docket Number | No. 4:98-CV-104 M/B.,4:98-CV-104 M/B. |
| Parties | Richard NEUSER, Plaintiff, v. Nancy HOCKER, Hocker-Frick Agency, Inc., and Auto Owners Insurance Co., Defendants and Nancy Hocker and Hocker-Frick Agency, Inc., Third Party Plaintiffs v. Auto Owners Insurance Co., Third Party Defendant. |
| Court | U.S. District Court — Western District of Michigan |
John E. Dewane, Butzbaugh & Dewane, St. Jospeh, MI, for plaintiff.
David S. York & Michael J. Miller, York & Tiderington, PC, Kalamazoo, MI, for Defendants Hocker and Hocker-Fritz.
Arthur W. Brill, James, Dark & Brill, Kalamazoo, MI, for Third-Party Defendant Auto Owners.
This matter is before the court on the motions of Auto Owners Insurance Company (herein "the Company") for summary judgment on plaintiff's claims (docket no. 31) and for summary judgment on the third-party claims of Nancy Hocker and the Hocker-Frick Agency, Inc. (herein collectively "the Agency") (docket no. 32), and the motion of the Agency for summary judgment on plaintiff's claims (docket no. 37).
Plaintiff's house fell into Lake Michigan. He sought coverage for his losses from the Company based on flood insurance he had purchased through the Agency. The Company denied coverage. Plaintiff contends the Agency and the Company are liable to him for his losses because of their tortious conduct in the nature of fraudulent misrepresentations (or omissions) and negligence. The Agency, in turn, contends that there is indeed coverage for plaintiff's loss and that the Company wrongfully denied coverage or, alternatively, if there is not coverage, the Company is liable for plaintiff's losses under tort theories similar to those raised by plaintiff.
Plaintiff filed this action in Berrien County Circuit Court against only the Agency. The Agency then filed a third party claim against the Company which, in part, sought coverage under the flood insurance policy. The Company then removed the case to this court in that such claims are subject exclusively to federal jurisdiction. Once the parties were before this court, plaintiff sought and was granted leave to amend to add his claim against the Company. All of the claims between the parties were before the court in connection with the pending summary judgment motions. Since the summary judgment motion was argued, however, all claims between plaintiff and the Agency have been resolved. Accordingly, the Agency's motion for summary judgment on plaintiff's claims against it is DENIED as moot.
In Copeland v. Machulis, 57 F.3d 476 (6th Cir.1995), the Sixth Circuit described the standard for deciding a Rule 56 motion as follows:
Summary judgment is proper if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); LaPointe v. UAW, Local 600, 8 F.3d 376, 378 (6th Cir.1993). The moving party bears the initial burden of establishing an absence of evidence to support the nonmoving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2552-53, 2552-53, 91 L.Ed.2d 265 (1986). Once the moving party has met its burden of production, the nonmoving party cannot rest on its pleadings, but must present significant probative evidence in support of the complaint to defeat the motion for summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49, 106 S.Ct. 2505, 2510-11, 91 L.Ed.2d 202 (1986); LaPointe, 8 F.3d at 378. The mere existence of a scintilla of evidence to support plaintiff's position will be insufficient; there must be evidence on which the jury could reasonably find for the plaintiff. Anderson, 477 U.S. at 252, 106 S.Ct. 2505.
Many of the facts relevant to this action are not in dispute. There appears to be no dispute that plaintiff purchased the home at 2761 Lake Bluff Terrace, St. Joseph, Michigan, during August of 1989. The home was situated on a bluff overlooking Lake Michigan. According to plaintiff, at the time he purchased the home, the bluff was sixty to seventy-five feet from the home; however, he was aware at that time that there was a danger the bluff would erode causing the house to collapse into the lake. Plaintiff acknowledged that he obtained the home at a discount probably because of that danger.
In connection with the purchase of the home, plaintiff purchased homeowners insurance through the Agency. A couple of months after he bought the home he also purchased flood insurance. Plaintiff acknowledges that he received a copy of the Upton-Jones Amendment relating to his flood insurance coverage.
Initially, plaintiff was not sure whether he would resell the home or maintain it as his residence. Accordingly, at first, plaintiff purchased only a one-year flood insurance policy. Plaintiff put the house on the market for a period of time; however, he eventually became sufficiently comfortable with the insurance coverage and the home that he decided to stay there. At that time, during 1991, he purchased a three year flood insurance renewal policy through the Agency from the Company. In plaintiff's words he wanted to make sure he was "covered for the day it finally went." Transcript of plaintiff's deposition, September 11, 1998, p. 25 (). He "was going to ride it over." Transcript, p. 28.
As time passed, the bluff eroded. By 1993, the bluff's edge was within three feet of the northern corner of the home. Although the erosion caused structural changes in the home, such as twisting and cracking, and prompted plaintiff's friends and family to encourage him to abandon the home, plaintiff stayed. He kept the Agency informed as to the progress of the erosion, but when they pressed him about making a claim, he informed them he intended to wait until the last possible minute before filing.
The Company sent plaintiff a renewal notice for the flood insurance policy during the fall of 1994 which indicated that his insurance would expire on October 17, 1994, if he did not renew it. Plaintiff paid the three year renewal premium by check dated September 15, 1994. There is no dispute that plaintiff had coverage in place at all times relevant to this action.
Shortly after plaintiff renewed his policy in 1994, Congress changed the coverage available to plaintiff by repealing the Upton-Jones Amendment. As will be discussed in more detail below, the Upton-Jones Amendment to the National Flood Insurance Act permitted recovery under the policy prior to the presence of actual damage to the insured building. Under the Amendment, if a state or local agency certified that a building was subject to imminent collapse or subsidence because of erosion or undermining caused by waves or currents exceeding anticipated cyclical levels, the insurance contract would permit payment for demolition or relocation of the structure. 42 U.S.C. § 4013. Plaintiff acknowledges that his home could not have been moved and that he wanted to stay in it as long as he could.
The repeal, enacted September 23, 1994, permitted payment of claims for a period of one year following enactment. Thus, to be eligible for Upton-Jones benefits, plaintiff would have had to submit a claim before September 23, 1995. He did not. Instead, he continued his position of waiting until the last possible minute, enjoying the house as long as he could before cashing in on his insurance policy.
At some time during 1996, a representative of the Agency attended a seminar where he learned that Upton-Jones coverage had been repealed. He informed plaintiff of this fact. Plaintiff then turned the matter over to counsel.
In March of 1997, plaintiff's house began to fall into Lake Michigan. Plaintiff eventually submitted a claim to the Company during October of 1997; however, he did not tell the Company when the home began to fall into the lake. The Company informed plaintiff that the Federal Emergency Management Agency would pay claims if the lake levels during 1997 exceeded those during 1973 and, because that did not occur during 1997, there could be no coverage. The stated reason for denying coverage (comparing lake levels from 1973 to levels when the loss accrued) was expressly rejected by the Sixth Circuit in Berger v. Pierce, No. 91-3892, 1992 WL 393595 (6th Cir. December 22, 1992) (herein Berger II). Nonetheless, the Company has since offered additional reasons in support of the denial of coverage including plaintiff's failure to timely submit a proof of loss within sixty days of the loss.
The National Flood Insurance Program (the "NFIP") was established in 1968 by the National Flood Insurance Act (the "Act"), 42 U.S.C. §§ 4001 et seq. Congress established the NFIP "because private insurance companies were unable to write flood insurance policies on an economically feasible basis and something had to be done to alleviate some of the extreme hardships suffered by flood victims." Quesada v. Director, Federal Emergency Management Agency, 753 F.2d 1011, 1014 (11th Cir.1985). Congress determined that a reasonable method of sharing the risk of flood losses would "complement and encourage preventative and protective measures ...." 42 U.S.C. § 4001(a).
The Act's purpose is accomplished in part through offering a Standard Flood Insurance Policy1 to persons who are at risk of suffering flood losses to buildings. The SFIP is a single risk insurance policy. It provides coverage only for "direct physical loss by or from flood." Initially the Act employed a limited definition of flood: "[flood shall have] `such meaning as may be prescribed in regulations of the Director, and may include inundation from rising waters or from overflow of streams, rivers, or other...
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