Paoella v. Federal Emergency Management Agency, Civil Action No. 98-3476 (NHP) (D. N.J. 7/29/1999)
| Decision Date | 29 July 1999 |
| Docket Number | Civil Action No. 98-3476 (NHP) |
| Parties | Paul A. Paoella v. Federal Emergency Management Agency |
| Court | U.S. District Court — District of New Jersey |
Robert A. Weiss, Esq., Union, NJ, Attorney for Plaintiff
Susan Handler-Menahem, Assistant U.S. Attorney
FAITH S. HOCHBERG, UNITED STATES ATTORNEY Newark, NJ, Attorneys for Defendant
This matter comes before the Court on the motion by defendant Federal Emergency Management Agency to dismiss plaintiff Paul A. Paolella's Complaint for lack of subject matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1) or, in the alternative, for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). Since both parties have relied upon documents outside of the pleadings, however, this Court will construe defendant Federal Emergency Management Agency's motion as a motion for summary judgment.1 This Court heard oral argument on June 28, 1999. For the reasons stated herein, defendant Federal Emergency Management Agency's Motion for Summary Judgment pursuant to Federal Rule of Civil Procedure 56 is GRANTED and plaintiff Paul A. Paolella's Complaint is DISMISSED WITH PREJUDICE.
Plaintiff Paul A. Paolella (hereafter "plaintiff") purchased a general property Standard Flood Insurance Policy, No. FL 1-0874-0938-7 ("SFIP") which was issued through the National Flood Insurance Program ("NFIP") pursuant to the National Flood Insurance Act of 1968, as amended, 42 U.S.C. §4001 (West 1999). Said insurance policy insured plaintiff's commercial building located at 120 Millburn Avenue, Millburn, New Jersey. See Declaration of James P. Shortley ("Shortley") dated January 14, 1999, ¶3; see also Declaration of Paul A. Paolella ("Paolella") dated May 3, 1999.2 Plaintiff's SFIP provided coverage beginning from October 25, 1995 through October 25, 1998. See Shortley, ¶3. The policy's limit of liability was $200,000.00 for the building minus a $500.00 deductible. Plaintiff did not purchase coverage for the contents of the building.
Plaintiff alleges that the insured property sustained direct physical loss by or from a flood on July 24, 1997. See Complaint, ¶5.
On July 28, 1997, plaintiff's insurance representative sent written notice of the loss via facsimile, identifying July 24, 1997 as the date of loss. See Shortley, Exhibit 1. That same day, defendant Federal Emergency Management Agency ("FEMA") wrote plaintiff to advise that the claim had been assigned to Charter Adjustment Co., for an independent investigation. See id., Exhibit 2. FEMA also reminded plaintiff that the policy required submission of a Proof of Loss within sixty days of the loss and referenced the "requirements in case of loss" provisions of the SFIP which contain the technical requirements to perfect a claim. See id.
On July 31, 1997, the claim was investigated by Steve Misto, an independent adjustor employed by Charter Adjustment Co., and reviewed by James R. Lawson, Claims Examiner, employed by a servicing contractor for the NFIP. See id., ¶6.
On October 21, 1997, FEMA again wrote plaintiff and identified the SFIP requirement that a written Proof of Loss be submitted within sixty days of the loss. See id., Exhibit 3. FEMA informed plaintiff that the elapsed deadline for filing a written Proof of Loss, September 24, 1997, had passed, and that the claim could be denied for violation of the SFIP's terms and conditions. See id. Plaintiff was allowed an additional fifteen day grace period (i.e., November 5, 1997) to file a written Proof of Loss. See id.
However, plaintiff did not submit a signed and sworn Proof of Loss until November 20, 1997 and then only verified and swore to damages in the amount of $65,908.21. See id., Exhibit 4. Despite the late submission, FEMA subsequently issued check number FL 03270, dated December 9, 1997, payable to plaintiff and his mortgagee, Inter Community Bank of Springfield, New Jersey in the amount of $65,908.21 for plaintiff's flood claim number 1087409387970724. Thereafter, plaintiff's flood claim was closed. See id., Exhibit 5.
On July 23, 1998, plaintiff filed a Complaint in the United States District Court, District of New Jersey. See Complaint. Plaintiff alleges that he suffered losses totaling $ 336,170.02. See Complaint. The record reveals that plaintiff did not serve the United States Attorney with process until February 5, 1999.
42 U.S.C. §4072 confers exclusive subject matter jurisdiction upon district courts in cases arising under Part B of the National Flood Insurance Act. Specifically, the Act provides that an insured may file suit against FEMA if it adjusts a claim and improperly refuses to pay benefits. Van Holt v. Liberty Mutual Fire Ins. Co., 163 F.3d 161, 166-67 (3d Cir. 1998); see also Linder and Associates, Inc. v. Aetna Casualty and Surety Co., 166 F.3d 547, 550 n.3 (3d Cir. 1999).
Since plaintiff alleges that FEMA improperly refuses to pay the total amount of benefits in connection with plaintiff's flood insurance claim, thereby allegedly violating the insurance policy contract, this court has jurisdiction pursuant to 42 U.S.C. §4072.
The standard governing a summary judgment motion is set forth in Fed. R. Civ. P. 56(c), which provides, in pertinent part, that:
[t]he judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.
Fed. R. Civ. P. 56(c). A fact is material if it might affect the outcome of the suit under the governing substantive law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).
Procedurally, the movant has the initial burden of identifying evidence that it believes shows an absence of genuine issues of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). When the movant will bear the burden of proof at trial, the movant's burden can be discharged by showing that there is an absence of evidence to support the non-movant's case. Id. at 325. If the movant establishes the absence of a genuine issue of material fact, the burden shifts to the non-movant to do more than "simply show that there is some metaphysical doubt as to material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986).
In this matter, there are no genuine issues of material fact and therefore, summary judgment is appropriate.
By way of background, Congress passed the National Flood Insurance Act in response to its concern over enormous personal hardship and economic distress caused by flood disasters. 42 U.S.C. §4001 (West 1999). The Act allows the public to overcome the devastation accompanying floods by providing "a reasonable method of sharing the risk of flood losses. . .through a program of flood insurance which can complement and encourage preventive and protective measures." 42 U.S.C. §4001(a). Congress found that "many factors have made it uneconomic for the private insurance industry alone to make flood insurance available to those in need of such protection on reasonable terms and conditions" and, therefore, authorized the development of the NFIP "with large-scale participation of the Federal Government and carried out to the maximum extent practicable by the private insurance industry." 42 U.S.C. §4001(b) (West 1999).
The NFIP is a federally subsidized program which provides flood insurance at or below actuarial rates. See Meister Bros, Inc. v. Macy, Jr., 674 F.2d 1174, 1175 n.1 (7th Cir. 1982). The organization and administration of the NFIP are prescribed in Subchapter II of the National Flood Insurance Act. Prior to 1978, private insurance companies administered the program with federal financial participation under Part A of Subchapter II. In January 1978, however, the Federal Government "took control of the program and assumed all operational responsibilities." In re Estate of Lee, 812 F.2d 253, 256 (5th Cir. 1987). Presently, the Director of FEMA administers the NFIP and carries out the duties pursuant to Part B of Subchapter II.3 42 U.S.C. §4011(a) (West 1999); see also Reorganization Plan No. 3 of 1978, §202, 43 Fed. Reg. 41943 (1978).
The Act authorizes the Director of FEMA to "provide by regulation for general terms and conditions of insurability which shall be applicable to properties eligible for flood insurance coverage under [the Act]." 42 U.S.C. §4013(a) (West 1999).4 The terms and conditions of all federal flood insurance policies have been fixed by the FEMA regulations in the form of the Standard Flood Insurance Policies and no provision may be "altered, varied, or waived other than by the express written consent of the [Federal Insurance] Administrator. . ." 44 C.F.R. §§61.13(d); see also §§61.13(e); 61.4(b).
The SFIP, a single risk insurance policy, provides coverage against "all Direct physical loss by or from flood to the insured property." See 44 C.F.R. 61, App. A(2), Insuring Agreement (West 1999). The SFIP also provides that, should a loss occur, the insured is obligated to:
3. Within 60 days after the loss, send the Insurer a proof of loss, which is the Insured's statement as to the amount it is claiming under the policy signed and sworn to by the Insured and furnishing the following information:
* * *
d. The actual cash value of each damaged item of insured property and the amount of damages sustained;
* * *
i. The amount the Insured claims is due under this policy to cover the loss. . .
44 C.F.R. 61, App. A(2), Art. 8, ¶O (West 1999).
Article 8, paragraph O(6) of the SFIP emphasizes that the insured is personally responsible for complying with the Proof of Loss requirement and simply cannot rely upon the independent adjustor to certify the claim or complete the paperwork:
The...
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