Packard v. Farmers Ins. of Columbus, Inc.
| Decision Date | 01 December 2009 |
| Docket Number | Case No. C-1-06-760. |
| Citation | 672 F.Supp.2d 817 |
| Parties | Dennis PACKARD and Leann Packard, Plaintiffs, v. FARMERS INSURANCE OF COLUMBUS, INC., Defendant. |
| Court | U.S. District Court — Southern District of Ohio |
Robert R. Dever, Portsmouth, OH, for Plaintiffs.
James J. Englert, Leonard Adriel Weakley, Jr., Rendigs Fry Kiely & Dennis, Cincinnati, OH, William T. Treas, Nielsen Law Firm LLC, Metairie, LA, for Defendant.
This matter is before the Court upon defendant's Motion for Summary Judgment (doc. no. 38), plaintiffs' Response in Opposition (doc. no. 46), defendant's Reply (doc. no. 50), plaintiffs' Supplemental Memorandum (doc. no. 55) and the Highlighted and Non-Highlighted Proposed Findings of Fact and Conclusions of Law (doc. nos. 39, 45, and 51). Oral arguments were heard on May 27, 2009.
The plaintiffs, Dennis and Leann Packard, claimed coverage of certain damages caused to their home under a standard flood insurance policy (hereinafter "SFIP") which had been purchased from defendant insurance company, Farmers Insurance Company of Columbus (hereinafter "Farmers"). The claim was denied. Plaintiffs instituted this action in the Court of Common Pleas for Scioto County, Ohio, on October 5, 2006. On November 10, 2006, Farmers filed a Notice of Removal. By Order dated September 28, 2007, the Court found it had jurisdiction pursuant to 28 U.S.C. § 1331 and 42 U.S.C. § 4072. Accordingly, the Court denied plaintiffs' request to remand, but allowed them leave to amend their complaint.
In the Amended Complaint, plaintiffs allege that in November, 2005, Dennis Packard and Leann Packard sought to procure insurance to cover their house in the event it suffered the same type of damage from shifting earth after rain they had suffered to other buildings on their property. After explaining their problem to Donna Wolery (hereinafter "Wolery") and Farmers, they were advised to buy a SFIP. Relying on their representation the SFIP would cover the same damage they had experienced, they paid a premium of Six Hundred Thirty-three Dollars ($633.00). When they made a claim under the SFIP for the same damage to the property as before, their claim was denied. The plaintiffs agree that the loss is not insured under the SFIP and now allege only state law claims
In their first claim, plaintiffs contend that defendants negligently misrepresented to the plaintiffs that they needed flood insurance to protect them from their particular loss, and sold plaintiffs the SFIP, which in fact excluded from coverage their particular loss. In their second claim, plaintiffs allege the defendants defrauded them by selling them the SFIP to protect against their particular loss, when in fact the SFIP did not protect against their particular loss. Plaintiffs contend they detrimentally relied on the fraudulent representations made by the defendants.
On May 14, 2008, plaintiffs voluntarily dismissed defendant Donna Wolery, leaving Farmers as the sole defendant.
As the basis for its Summary Judgment Motion, Farmers contends that (1) the plaintiffs have no facts to support their allegations of misrepresentation and detrimental reliance and (2) even if the plaintiffs did have such facts, their claims still fail as a matter of law. Defendant contends that it acted as a fiduciary of the Government and the Court is bound to apply federal law to the claims contained in the Amended Complaint. Farmers claims plaintiffs could not have obtained any other flood policy for their property, and since their flood policy is a codified federal law, they are charged with knowledge of their flood policy as well as a duty to familiarize themselves with its provisions. Based on this, defendant claims the courts have held that there can be no detrimental reliance in the context of the SFIP. Defendant submits that the "Plaintiffs are apparently attempting a specious claim of supposed assurances to an incredibly broad scope of NFIP coverages to escape the statutory and regulatory limits of this federal program."
Plaintiffs respond that their claims stem from negligent misrepresentation or fraud in the procurement of the policy and must be decided under state tort laws. Plaintiffs contend that their claim is not against Farmers acting in any sort of governmental capacity under the National Insurance Program.
1. Plaintiffs are the owners of property located at 4251 State Route 522, Williamsburg, Ohio 45694.
2. When the Plaintiffs purchased the house in approximately 1997, they had a homeowner's policy of insurance for the property with State Farm.
3. In approximately 2002, the detached garage/workshop near the home and a retaining wall were damaged. Plaintiffs made a claim under their homeowners policy to State Farm.
4. State Farm sent an adjuster to the property and denied coverage under their homeowners insurance for the damage to the garage/workshop and retaining wall.
5. After the 2002 event, Mr. Packard fixed the garage and retaining wall. Plaintiff testified that it took nearly two years to complete the work. As part of those repairs, Mr. Packard installed drains to help with the water runoff.
6. After Plaintiffs fixed the property, Mr. Packard approached his agent, Ms. Wolery, in November 2005 to purchase insurance for his house.
7. Mr. Packard explained the damage to the detached garage/workshop and the collapsed wall to Ms. Wolery and inquired as to what type of insurance he could obtain to cover the main home from the same damage. Mr. Packard testified that he explained to his agent that from all the rain from prior years the hillside could not handle it and pushed the garage and the wall between the house and the garage.
8. Mr. Packard informed his agent of the drains he had constructed and drew a sketch in her office indicating the drains and work he had done.
9. While Packard admitted that water was a "big concern" as the underlying cause of future damage to his home because it had shifted the property in the past, he stated that he did not go to her office expressing to her that he had a water problem.
10. During this consultation with his agent, Ms. Wolery informed plaintiff that she did not know what she could get for him and offered to call underwriting at Farmers.
11. Ms. Wolery placed a call to the service person, and plaintiff heard her say "he wants to know if this would ever happen again, could he be covered for his house". Mr. Packard heard her explain the situation he had described to her. Ms. Wolery testified that she was informed that "you could still have flood coverage that will cover water damage to a home if there's an influx of water."
12. When informed that he needed flood insurance, plaintiff was shocked and questioned that advice because he lives on a hillside.
13. Ms. Wolery agreed and called Farmers again. She explained that plaintiff was concerned that flood insurance wouldn't cover him because he lives on a hill and the problem is the hill pushing the property. Again she was informed that water damage to a home even on a hillside could be covered.
14. After these two phone calls, Ms. Wolery recommended the SFIP to Mr. Packard. Convinced that Ms. Wolery had explained his situation correctly and that Farmers responded that , he agreed to buy flood insurance.
15. An application for flood insurance with Farmers was submitted. Plaintiff was informed that a geological survey would have to be done, however, no agent of Farmers investigated the residence of the Packards before Farmers issued the insurance and represented to Mr. Packard that the risk would be covered.
16. The Plaintiffs were issued an NFIP Standard Flood Insurance Policy ("SFIP") by Farmers for the property with effective dates of December 23, 2005 to December 23, 2006.
17. The flood policy limits were $122,000 for building and $10,000 for contents, each with a $1,000.00 deductible. The policy number is 87025743562005.
18. Mr. Packard received a copy of his SFIP. Although he did not read it, he believed he was covered for a landslide if it was caused as a result of water.
19. The SFIP at issue is codified in federal law found at 44 C.F.R. Pt. 61, App. A(1).
20. The SFIP at issue contains an exclusions section under Article V. Article V(c) sets forth examples of excluded damages caused by earth movement including but not limited to landslide, land subsidence, and subsurface earth movement. See 44 C.F.R. Pt. 61, App. A(1), Article V(c).
21. Heavy rains inundated the Ohio area where the Plaintiffs' property was located during February and March of 2006.
22. Mr. Packard testified that he noticed on March 1, 2006 that the garage door of his home had shifted and the steel cable popped that operates the garage door. He also noticed that the ceiling in the garage was cracked and paint chips were on his car. He experienced total loss of his home. Plaintiffs made a claim under their SFIP with their agent.
23. Upon notice of the potential flood loss claim, Farmers contacted Colonial Claims Corporation, an independent adjusting company, which in turn assigned Teresa and Buddy Combs, independent adjusters to assist the Plaintiffs in presenting their flood loss claim.
24. The Combs inspected the property and determined that the property had sustained damages from water, but that the damages that were sustained were not covered under the SFIP. On July 14, 2006, Farmers sent a letter to the Plaintiffs denying their claim based on the exclusion that their flood policy does not cover landslide or settlement/earth movement.
25. The denial was based on the language of the SFIP and an engineer's report dated May 22, 2006 by Brian Webb.
26. Mr. Webb opined that the damages to the Plaintiffs' property were caused by soils pushing against...
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