Pecarovich v. Allstate Ins. Co.

Citation272 F.Supp.2d 981
Decision Date14 July 2003
Docket NumberNo. CV 99-2129 ABC(MANx).,CV 99-2129 ABC(MANx).
CourtUnited States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Central District of California
PartiesRichard PECAROVICH Plaintiff, v. ALLSTATE INSURANCE COMPANY, Defendant.

Paul S Sigelman, Deborah K Perlman, Sigelman & Perlman, Beverly Hills, CA, for Richard Pecarovich, plaintiff.

Peter H Klee, Seth M Friedman, Luce Forward Hamilton & Scripps, San Diego, CA, Gerald J Nielsen, Nielsen Law Firm, Metairie, LA, for Allstate Insurance Co, defendant.


COLLINS, District Judge.

AllState Insurance Company's ("Defendant's") motions for judgment on the pleadings and for summary judgment came on regularly for hearing on July 14, 2003. After considering the materials submitted by the parties, argument of counsel and the case file, the Court hereby GRANTS Defendant's Motion for Judgment on the Pleadings and GRANTS Defendant's Motion for Summary Judgment.


Richard Pecarovich ("Plaintiff") brought suit on a Standard Flood Insurance Policy ("SFIP") issued by Defendant pursuant to the National Flood Insurance Act (the "NFIA"). (See Pl.'s Stmnt. in Resp. to Def.'s Stmnt. of Uncontr. Facts ("Facts"), ¶ 1.) The SFIP was in effect from August 21, 1997 to August 21, 1998 and covered Plaintiff's home, located at 1323 Morning-side Drive in Laguna Beach, California ("the Property"). (Id. ¶¶ 2, 3.) As a result of damage the Property sustained, Plaintiff submitted a claim to Allstate under the SFIP for over $200,000. (Id. ¶ 5.)

The parties are in dispute over Plaintiff's compliance with the SFIP's proof of loss requirements.1 (Id. ¶ 6.) Defendant asserts that Plaintiff never submitted a proof of loss in connection with his claim, in violation of the SFIP's requirement that an insured submit a sworn proof of loss within 60 days of the loss. (Def.'s Stmnt. of Uncontr. Facts ¶ 6.) Plaintiff contends that the SFIP allows Defendant to waive the requirement for completion and filing of a proof of loss, and that an adjuster's report of the loss could be accepted instead. (Facts ¶ 6.) According to Plaintiff, the adjuster's report was never completed because Defendant failed to pay for engineering needed for its completion. (Id.)

On February 25, 1999, Plaintiff filed a Complaint against Defendant, alleging causes of action for (1) breach of contract; (2) breach of the implied covenant of good faith and fair dealing; (3) actual and constructive fraud; and (4) negligence.2 On November 24, 1999, the Court dismissed Plaintiff's negligence claim. On January 24, 2000, the Court dismissed Plaintiff's bad faith and fraud claims and found that Plaintiff's claim for monies due for breach of contract was moot. Plaintiff filed a notice of appeal to the Ninth Circuit on February 24, 2000. The case was reversed and remanded to this Court on February 24, 2003. In its decision, the Ninth Circuit held that (1) the exclusion for flooding affecting only Plaintiff's property and not the surrounding neighborhood did not apply, (2) the "land movement" exclusion could not bar coverage if loss was within the limited coverage for "land subsidence," (3) Defendant had the authority to grant an exception from the proof of loss requirement and (4) an issue of fact existed as to whether Plaintiff ever properly submitted his claim.

On May 24, 2003, Defendant filed the instant motions for judgment on the pleadings and for summary judgment. Plaintiff filed oppositions on June 18, 2003 and on June 30, Defendant filed its replies.

A. Motion for Judgment on the Pleadings

"After the pleadings are closed but within such time as not to delay the trial, any party may move for judgment on the pleadings." Fed.R.Civ.P. 12(c). For purposes of such a motion, "the allegations of the non-moving party must be accepted as true, while the allegations of the moving party which have been denied are assumed to be false." Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1550 (9th Cir.1989) (citing Doleman v. Meiji Mutual Life Ins. Co., 727 F.2d 1480, 1482 (9th Cir.1984); Austad v. United States, 386 F.2d 147, 149 (9th Cir.1967)). "Judgment on the pleadings is proper when the moving party clearly establishes on the face of the pleadings that no material issue of fact remains to be resolved and that it is entitled to judgment as a matter of law." Id. (citing Doleman, 727 F.2d at 1482). "However, judgment on the pleadings is improper when the district court goes beyond the pleadings to resolve an issue; such a proceeding must properly be treated as a motion for summary judgment." Id. (citations omitted).

B. Motion for Summary Judgment

The party moving for summary judgment has the initial burden of establishing that there is "no genuine issue as to any material fact and that [it] is entitled to a judgment as a matter of law." Fed. R. Civ. Pro. 56(c); see British Airways Bd. v. Boeing Co., 585 F.2d 946, 951 (9th Cir. 1978); Fremont Indemnity Co. v. California Nat'l Physician's Insurance Co., 954 F.Supp. 1399, 1402 (C.D.Cal.1997).

If the moving party has the burden of proof at trial (e.g., a plaintiff on a claim for relief, or a defendant on an affirmative defense), the moving party must make a "showing sufficient for the court to hold that no reasonable trier of fact could find other than for the moving party." Calderone v. United States, 799 F.2d 254, 259 (6th Cir.1986) (quoting from Schwarzer, Summary Judgment Under the Federal Rules: Defining Genuine Issues of Material Fact, 99 F.R.D. 465, 487-88 (1984)). Thus, if the moving party has the burden of proof at trial, that party "must establish beyond peradventure all of the essential elements of the claim or defense to warrant judgment in [its] favor." Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir. 1986) (emphasis in original); see Calderone, 799 F.2d at 259. On an issue for which the opposing party will have the burden of proof at trial, the moving party need only point out "that there is an absence of evidence to support the nonmoving party's case." See Celotex, 477 U.S. at 323, 106 S.Ct. 2548.

Once the moving party satisfies this initial burden, "an adverse party may not rest upon the mere allegations or denials of the adverse party's pleadings ... [T]he adverse party's response ... must set forth specific facts showing that there is a genuine issue for trial." Fed. R. Civ. Pro. 56(e) (emphasis added). A "genuine issue" of material fact exists only when the nonmoving party makes a sufficient showing to establish the essential elements to that party's case, and on which that party would bear the burden of proof at trial. Celotex, 477 U.S. at 322-23, 106 S.Ct. 2548. "The mere existence of a scintilla of evidence in support of the plaintiff's position will be insufficient; there must be evidence on which a reasonable jury could reasonably find for plaintiff." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The evidence of the nonmovant is to be believed, and all justifiable inferences are to be drawn in favor of the nonmovant. Id. at 248, 106 S.Ct. 2505. However, the Court must view the evidence presented "through the prism of the substantive evidentiary burden." Id. at 252, 106 S.Ct. 2505.

A. Defendant's Motion for Judgment on the Pleadings.

Defendant moves for judgment on the pleadings that Plaintiff's bad faith claim is preempted by federal law, as are Plaintiff's prayers for punitive damages and interest. Defendant's argument relies heavily upon Scherz v. South Carolina Insurance Company, 112 F.Supp.2d 1000 (C.D.Cal.2000). Plaintiff opposes the motion, arguing that his claims are not preempted for the reasons set forth in Davis v. Travelers Property and Casualty Co., 96 F.Supp.2d 995 (N.D.Cal.2000).

1. The National Flood Insurance Act.

In 1968, Congress passed the National Flood Insurance Act (the "NFIA") in order to guarantee that those who need affordable flood insurance can obtain it. The NFIA established the National Flood Insurance Program (the "NFIP"), which provides flood insurance in areas which have the greatest need. The NFIP is run by the Federal Emergency Management Agency ("FEMA"). Because FEMA lacks sufficient resources to administer the NFIP on its own, the Write Your Own ("WYO") program was created to allow private insurers to serve as fiscal agents of the United States and to issue federal flood policies. All flood claims are paid from the United States Treasury, regardless of whether the policy is issued by FEMA or by a WYO insurer. 44 C.F.R., Pt. 62, App. A Art. III(D)(1). The terms of the Standard Flood Insurance Policy ("SFIP") and the procedures for paying and handling claims are dictated by federal regulation to ensure consistency across the country. Under the WYO program, WYO insurers receive a 3.3% commission only if they approve a claim and authorize payment. 44 C.F.R., Pt. 62, App. A. Art. III(C)(1).

2. Plaintiff's State Law Claims Are Preempted by Federal Law.

Defendant contends that it is entitled to judgment on the pleadings because Plaintiff's state law claim is preempted, because (1) every SFIP expressly states that flood insurance is provided subject to the terms of the NFIA and the regulations promulgated thereunder and (2) under Wagner v. Director, FEMA, "the conditions of an insurance policy offered pursuant to a congressionally mandated program, such as the NFIP, must be strictly observed." 847 F.2d 515, 518 (9th Cir.1988). According to Defendant, the issue before the Court is whether state law claims relating to the manner in which an insurer handles a claim for federal treasury monies are preempted. In Defendant's estimate, express preemption, field preemption and conflict preemption all apply to Plaintiff's bad faith claim.

a. Express Preemption.

Under the doctrine of express preemption, a given field may be...

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