Quesada v. Director, Federal Emergency Mgmt. Agency

• Decision Date: 29 December 1983
• Docket Number: No. 82-1658-Civ.-SMA.,82-1658-Civ.-SMA.
• Citation: 577 F. Supp. 695
• Parties: G. Frank QUESADA and Rosa A. Quesada, his wife, Plaintiffs, v. DIRECTOR, FEDERAL EMERGENCY MANAGEMENT AGENCY, a United States Agency, and State Farm Fire and Casualty Company, an Illinois Corporation, Defendants.
• Court: U.S. District Court — Southern District of Florida

577 F. Supp. 695

G. Frank QUESADA and Rosa A. Quesada, his wife, Plaintiffs, v. DIRECTOR, FEDERAL EMERGENCY MANAGEMENT AGENCY, a United States Agency, and State Farm Fire and Casualty Company, an Illinois Corporation, Defendants.

No. 82-1658-Civ.-SMA.

United States District Court, S.D. Florida.

December 29, 1983.

G. Frank Quesada, Coral Gables, Fla., for plaintiffs.

Ira F. Gropper, Asst. U.S. Atty., Miami Fla., Wayne W. Pomeroy, Fort Lauderdale, Fla., for defendants.

MEMORANDUM OPINION CONTAINING FINDINGS OF FACT AND CONCLUSIONS OF LAW

ARONOVITZ, District Judge.

THIS CAUSE WAS TRIED TO THE COURT on Wednesday, November 2, 1983, in a non-jury trial during which testimony was adduced, exhibits were received and oral argument heard. This MEMORANDUM OPINION contains the Court's Findings of Fact and Conclusions of Law thereon.

Plaintiffs G. FRANK QUESADA and ROSA A. QUESADA, his wife, claim property damage insurance covered loss to their residence, at 3625 S.W. 130th Avenue, Miami, Dade County, Florida, in the sum of nineteen-thousand, five-hundred thirty-six dollars and sixty-four cents ($19,536.64). Said loss occurred on or about August 18, 1981, and was caused by heavy flooding and rains attributable to the weather event known as "Tropical Storm Dennis," which passed through South Florida on that day. Plaintiffs were insured by Defendants, DIRECTOR, FEDERAL EMERGENCY MANAGEMENT AGENCY ("FEMA") and STATE FARM FIRE AND CASUALTY COMPANY ("STATE FARM"), under policies of, respectively, flood insurance and homeowners' insurance.

With respect to the FEMA policy, this Court's jurisdiction is founded upon the National Flood Insurance Act of 1968, as amended, 82 Stat. 583, 42 U.S.C. §§ 4001 et seq., and pursuant to the insurance contract issued to Plaintiffs by FEMA. This action having "arisen under" an applicable federal law, the general federal jurisdictional provision of 28 U.S.C. § 1331 applies and it is therefore appropriate to apply federal law. See Clearfield Trust Co. v. United States, 318 U.S. 363, 63 S.Ct. 573, 87 L.Ed. 838 (1943); Gibson v. Secretary of HUD, 479 F.Supp. 3, 5 (M.D.Pa.1978). The STATE FARM policy, not having been issued under the federal statutes, is to be interpreted in accordance with Florida law.

Although these Defendants were brought into this Court in a single action arising out of a single occurrence, the merits of this case differ as to each Defendant, as does the language of their respective policies. Thus, the Court will address each policy separately.

THE STATE FARM POLICY

As to the Defendant STATE FARM, the Court finds that the subject homeowners' policy was not intended to cover, and does not protect Plaintiffs against, losses of the type sustained by Plaintiffs' home in this case. The clear language of the policy specifically excludes damage caused by flood and related events. Section One, page 7, ¶ 3 of the STATE FARM policy provides:

EXCLUSIONS ... We do not cover loss resulting directly or indirectly from: ...

3. Water damage, meaning:

a. flood, surface water, waves, tidal water, overflow of a body of water, or spray from any of these, whether or not driven by wind;

b. water which backs up through sewers or drains; or

c. natural water below the surface of the ground, including water which exerts pressure on, or seeps or leaks through a building, sidewalk, driveway, foundation, swimming pool or other structure.

With regard to the interpretation of the STATE FARM policy, Florida law controls where, as here, jurisdiction is premised upon diversity, the damaged property (the residence) is within the state, the alleged breach and damage occurred within the state, the Plaintiffs are state residents, and the Defendant is a foreign corporation authorized to do business, and doing business, within the state. See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941); Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938).

Under Florida law, when the terms of a contract are unambiguous, the Court is bound to give the language therein its plain and ordinary meaning. Equitable Life Assurance Society of the United States v. Pinon, 344 So.2d 880 (Fla. 3d DCA 1977). In such a case, contract construction is a matter of law for the Court to decide. Smith v. State Farm Mutual Automobile Ins. Co., 231 So.2d 193 (Fla.1970). In interpreting the words of a clearly-worded contract, the Court may not add or subtract language from the face of the instrument, see Emmco Ins. Co. v. Southern Terminal and Transport Co., 333 So.2d 80 (Fla. 1st DCA 1976), and may not make a new contract for the parties where their intent can be easily inferred from the contract itself. Jefferson Ins. Co. v. Fischer, 166 So.2d 129 (Fla.1964).

In the case at bar, the plain meaning of the STATE FARM contract gives rise to the undeniable inference that flood or flood-related damage was not within the ambit of the coverage contemplated by the parties. As to Defendant STATE FARM, therefore, the Court finds no liability to Plaintiffs.

THE FEMA POLICY

The Court finds Defendant FEMA liable to Plaintiffs for the full amount of the proven damages to Plaintiffs' home, less the two-hundred dollars ($200) policy deductible.

Earlier in this litigation, FEMA had moved for summary judgment, asserting that Plaintiffs had not filed a proof of loss within sixty days of the event causing the damage, as required by the policy. See FEMA Policy, "General Conditions and Provisions," ¶ N. The Court DENIED FEMA's Motion. See Order Denying Defendant FEMA's Motion for Summary Judgment (file docket entry no. 58). For the reasons articulated in that Order, the Court again denies the Motion, which was renewed ore tenus during and at the close of the trial. Additionally, the Court reiterates its ruling that under the circumstances of this case, Plaintiffs' failure to file a proof of loss is not fatal to Plaintiffs' claim. See Meister Bros., Inc. v. Macy, 674 F.2d 1174 (7th Cir.1982); Dempsey v. Director, FEMA, 549 F.Supp. 1334 (E.D.Ark. 1982). These cases, and those cited therein, hold that failure to file a proof of loss does not per se bar an action on the policy where, as here, the claimant can show that he was affirmatively misled into thinking the filing was unnecessary by the conduct of a claims adjuster, where there is no prejudice to the insurer, and where it can be inferred that the insurer was otherwise on notice of the claim and of the information that would have appeared in a proof of loss. See Pavone v. Secretary of HUD, 1982 Fire & Casualty Cas. 1477 (D.Conn. 1982); Beck v. Director, FEMA, 1982 Fire & Casualty Cas. 483 (N.D.Ohio 1981); Del Boring Tire Serv. v. FEMA, 496 F.Supp. 616 (W.D.Pa.1980); Jackson v. National Flood Insurers Ass'n, 398 F.Supp. 1383 (S.D.Tex.1974).

In the case at bar, an insurance adjuster was sent by FEMA to the Plaintiffs' residence just two days after the flood, and after thoroughly examining the home, the adjuster submitted a full report of the damage to FEMA. Subsequently, a technical advisor from the National Flood Insurance Program also inspected Plaintiffs' house. Moreover, FEMA sent a letter denying liability ON THE MERITS to Plaintiffs, on September 10, 1981, before the expiration of the sixty-day period during which Plaintiffs were supposed to file the proof of loss. It can be inferred, and reasonably was so by Plaintiffs, that FEMA had determined that no further information, contained in a proof of loss or otherwise, was required by the agency for its consideration and denial of Plaintiffs' claim. Plaintiffs' Notice of Loss, filed on August 20, 1981, itself contained virtually all of the information which would have been filed in a proof of loss, with the exception of a sworn notarization. Under these facts and circumstances, it would be inequitable and unfair to preclude Plaintiffs from claiming a loss under the FEMA policy, where the agency itself can be deemed to have constructively waived, and, by its actions, should be affirmatively estopped from asserting, this formal requirement through the actions of its agents and employees.

The Court finds, further, that the FEMA policy does cover, and was intended to cover, the particular loss sustained by Plaintiffs herein. This is not to say, and the Court does not hold, that every incident of flood-related damages is covered by the policy. Rather, the facts peculiar and attendant to this case bring it within the scope of policy coverage. The proximate cause of the damage to Plaintiffs' residence was the flooding of the area surrounding and immediately underneath the structure, which flooding resulted from Tropical Storm Dennis having passed through and having inundated South Florida on August 18, 1981 with torrential downpours and heavy gusts of wind. See M. Lawrence and J. Pelissier, "Atlantic Hurricane Season of 1981," Monthly Weather Review, vol. 110, no. 7 at 858-859 (July 1982) ("Hurricane Dennis ... centered over east-central Florida on 18 August. Some of the most intense convective clouds were located over extreme South Florida, where a 24 hour rainfall total of 390 millimeters was measured in Dade County on 18 August ...") (Plaintiff's Exhibit 13). Additionally, claims adjuster Carlos de la Torre, who examined the premises for FEMA, reported as follows:

Origin: On 8/18/81 as a result of Tropical Storm Dennis, this area in which the insured resides which is a semi rural area, was completely flooded and the general condition did in fact exist. Even on 8/19/81, the area was completely inaccessible. There is evidence that water rose in this area, a good two to three feet from the street level. All neighbors around the insureds, especially the ones that were sitting lower, received 18 inches of water throughout their homes.

(Plaintiffs' Exhibit 4) (Admitted at trial with respect to Defendant FEMA only).

Given that the proximate cause of the damage was unquestionably flooding, the...