State Bank of Coloma v. National Flood Ins. Program, 87-1647
| Citation | 851 F.2d 817 |
| Decision Date | 11 July 1988 |
| Docket Number | No. 87-1647,87-1647 |
| Parties | STATE BANK OF COLOMA and Raymond and Rita Janecko, Plaintiffs-Appellants, v. NATIONAL FLOOD INSURANCE PROGRAM and General Julius W. Becton, Director of the Federal Emergency Management Agency, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Sixth Circuit |
Randall L. Juergensen (argued), Butzbaugh & Ryan, P.C., St. Joseph, Mich., for plaintiffs-appellants.
Janice Kittel Mann (argued), Grand Rapids, Mich., for defendants-appellees.
Before MERRITT and KENNEDY, Circuit Judges, and CONTIE, Senior Circuit Judge.
Plaintiffs filed this action June 10, 1986 to recover for flood damage to their property which was insured under the National Flood Insurance Program. The District Court dismissed the action because it was not filed within the one year statute of limitations for suits under the National Flood Insurance Act, 42 U.S.C. Sec. 4072. Plaintiffs appeal, alleging that the District Court erred in determining that their cause of action accrued on May 30, 1986, and, in the alternative, that the government should be equitably estopped from asserting a statute of limitations defense, that the present action should be considered an amendment to a prior suit under Rule 15(c), Fed.R.Civ.P., and that the statute of limitations should be tolled because the relevant parties were aware of proceedings in the case prior to the filing of this action. Because we find no error in the District Court's disposition of the case, we AFFIRM.
The facts of this case are relatively simple. Plaintiffs purchased a flood insurance policy from the National Flood Insurance Program (NFIP). After their property allegedly suffered flood damage in 1982, they filed a claim under their policy. On May 30, 1985 a claims supervisor at the NFIP sent plaintiffs a letter offering a 50% settlement of the claim. This was based on the agency's determination that some of the damage resulted from floods which occurred prior to the issuance of the policy.
The plaintiffs did not accept the offer. Rather they rejected it by letter from their counsel dated June 6, 1985. One week before the letter was written, the plaintiffs had sued the NFIP in a state court. The NFIP successfully removed the case to federal court and then had the case dismissed on the grounds that the federal court lacked jurisdiction because the case had been originally filed in a state court that lacked jurisdiction. The National Flood Insurance Act clearly mandates that United States District Courts have exclusive jurisdiction over suits under the Act. 42 U.S.C. Sec. 4072. The plaintiffs responded to this dismissal by filing a new suit in federal court on November 19, 1985 naming the NFIP as the defendant. On March 26, 1986 a default judgment was entered against the NFIP. However, one of the defendants in this case, the Director of the Federal Emergency Management Agency (FEMA), intervened and filed a motion to set aside the default judgment and to dismiss on the grounds that the government was not properly served with the summons and complaint, and that the suit was against the wrong party because it did not name the Director of the Federal Emergency Management Agency (Director) as a party, as required by 42 U.S.C. Secs. 4072 and 4003(a)(6). This motion was granted on June 3, 1986. Rather than simply filing a motion to amend the complaint under Fed.R.Civ.P. Rule 15(c) to add the Director, plaintiffs accepted the dismissal without prejudice and filed the instant suit against the proper parties on June 10, 1986. This third suit was then dismissed by the District Court as barred by the statute of limitations for these actions, 42 U.S.C. Sec. 4072, because more than one year had elapsed from disallowance of the claim before the suit was filed.
Plaintiff appeals arguing first that the District Court was clearly erroneous when it found that the May 30, 1985 letter offering a settlement was a "partial disallowance of the claim within the meaning of section 4072." Section 4072 allows parties to sue "[w]ithin one year after the date of mailing of notice of disallowance or partial disallowance." 42 U.S.C. Sec. 4072 (emphasis added). In this case, therefore, we must examine whether the letter was a partial disallowance of the claim. In the letter, the NFIP offered a 50% compromise of the claim
based upon the fact that the engineer concluded that there was [sic] at least two major floodings to the insured's property. One flood occurred in 1979 and the other was on March 17, 1982. Since coverages under this policy became effective February 6, 1980, we have concluded that a 50% compromise offer would be a fair settlement.... It should be noted that if we do not receive a response within fifteen (15) days, we will close this file without payment due to your failure to pursue the matter.
The clear intent of this letter is to categorically reject part of plaintiffs' claim. The only issue remaining after the letter is whether plaintiffs will accept payment for the other portion of their claim. We agree with the District Court that the letter constitutes a partial disallowance, which caused the statute of limitations to begin running on May 30, 1985.
Plaintiffs next argue that even if the statute of limitations started to run on May 30, 1985, the Director's involvement in the earlier suits should estop him from claiming a statute of limitations bar here. Equitable estoppel precludes a party to a lawsuit from raising a certain defense, regardless of the merits of the defense, because of some improper conduct on that party's part. Courts invoke the defense when "one person makes a definite misrepresentation of fact to another person having reason to believe that the other will rely upon it and the other, in reasonable reliance upon it" acts to his or her detriment. Restatement (Second) of Torts Sec. 894(1) (1977); Phelps v. Federal Emergency Management Agency, 785 F.2d 13 (1st Cir.1986). In this case, we cannot find that the Director acted improperly or deceptively by intervening in the previous suit. Without some form of misrepresentation, the government cannot be estopped from asserting the statute of limitations defense.
Plaintiffs next argue that Fed.R.Civ.P. 15(c) should be applied here by analogy to allow the suit to go forward. Rule 15(c) provides that
Whenever the claim or defense asserted in the amended pleading arose out of the conduct, transaction, or occurrence set forth or attempted to be set forth in the original pleading, the amendment relates back to the date of the original pleading. An amendment changing the party against whom a claim is asserted relates back if the foregoing provision is satisfied and, within the period provided by law for commencing the action against him, the party to be brought in by amendment the party (1) has received such notice of the institution of the action that he will not be prejudiced in maintaining his defense on the merits, and (2) knew or should have known that, but for a mistake concerning the identity of the proper party, the action would have been brought against the party.
Fed.R.Civ.P. 15(c) (emphasis added).
While we agree that the policy behind Rule 15(c) could be furthered by applying it in this case, the fact remains that the plaintiffs never attempted to amend their complaint, as Rule 15(c) envisions. Instead, they simply filed a completely separate lawsuit against a party who was not previously named. We need not decide whether the District Court could have chosen to treat the new case, filed only seven days after the prior case was dismissed, as a motion to amend the original complaint. It did not. We decline to reverse the District Court for simply applying the Federal Rules of Civil Procedure as written. We note that in cases where the federal government has consented to suit, courts must construe waivers strictly in favor of the sovereign and not enlarge the waiver beyond what the language requires. Library of Congress v. Shaw, 478 U.S. 310, 106 S.Ct. 2957, 92 L.Ed.2d 250 (1986). The sovereign provided a procedure through which plaintiffs could have corrected their mistake. It was they who failed to utilize it.
Plaintiffs, in an analogous argument finally assert that because the proper defendants had actual knowledge that the suit was being prosecuted before the expiration of one year, the statute of limitations should be tolled. Congress, in creating the National Flood Insurance Program, provided...
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