Stoner v. S. Farm Bureau Cas. Ins. Co.
| Decision Date | 15 February 2013 |
| Docket Number | NO. 2:12-CV-00073-BRW,2:12-CV-00073-BRW |
| Parties | JENNIE LEE STONER PLAINTIFF v. SOUTHERN FARM BUREAU CASUALTY INSURANCE COMPANY DEFENDANT |
| Court | U.S. District Court — Eastern District of Arkansas |
Pending is Defendant's Motion to Dismiss (Doc. No. 40). Plaintiff has responded and Defendant has replied.1 For the reasons discussed below, Defendant's Motion to Dismiss is GRANTED.
Defendant issued Plaintiff a flood-insurance policy for Plaintiff's property in Phillips County, Arkansas. Plaintiff's property flooded and she submitted a claim for her loss, which Defendant denied.
Plaintiff sued Defendant claiming Defendant breached the flood-insurance policy and acted in bad faith. She seeks declaratory relief, compensatory and punitive damages, and attorney's fees for the breach and under the Equal Access to Justice Act3 ("EAJA").
Defendant urges me to strike Plaintiff's request for declaratory relief under Federal Rule of Civil Procedure 12(f), and to dismiss Plaintiff's claims for bad faith, punitive damages, and attorney's fees under Federal Rules of Civil Procedure 12(b)(6) or 12(c).4
The parties agree to the dismissal of Plaintiff's claims for bad faith and punitive damages,5 which leaves the requests for declaratory relief and attorney's fees.
The flood-insurance policy giving rise to Plaintiff's claims was issued under the National Flood Insurance Program (the "Program").6 The Federal Emergency Management Agency ("FEMA"), which currently administers the Program, has two options for implementing the Program: Part A and Part B.7
Part A allows a pool of private companies to underwrite flood insurance with optional financial backing from the government. Section 4053 grants jurisdiction over claims arising under Plan A.8 Part A proved unworkable and was scrapped by the late 1970s.9 Since then, the Program has been administered under Part B.10 Part B allows the government to underwrite flood insurance with optional administrative assistance from private companies.11 Under Part B of the Program, the government underwrites flood insurance policies, but consumers choose between buying flood insurance policies from FEMA directly, or from private insurance companies known as Write-Your-Own ("WYO") companies.12 Section 4072 grants jurisdiction over certain claims arising under Plan B. The relevant portions of § 4072 provide:
In the event the program is carried out [under Plan B] . . . and upon the disallowance by the Administrator [of FEMA]13 of any such claim, . . . the claimant . . . may institute an action against the Administrator [of FEMA] on such claim in the United States district court for the district in which the insured property or the major part thereof shall have been situated, and original exclusive jurisdiction is hereby conferred upon such court to hear and determine such action without regard to the amount in controversy.14
Plaintiff invokes subject-matter jurisdiction under 42 U.S.C. § 4053.15 Defendant does not challenge jurisdiction, but suggests that it exists under 42 U.S.C. § 4072.16
Plaintiff's claims arise out of a policy issued in 2011, under Plan B of the Program. Section 4053 -- the jurisdictional grant under the now-defunct Part A -- does not confer jurisdiction here.17
Section 4072 clearly allows suits against the Administrator of FEMA when the Administrator denies a claim; however, it does not mention claims denied by or actions against WYO carriers. Defendant has not sued the Administrator of FEMA, nor did the Administrator disallow Plaintiff's claim. Concluding that jurisdiction exists under § 4072 might well require me to ignore its plain language.18 The Eighth Circuit has never addressed the issue, and there is no consensus among those circuits who have.19 Saving me from such a predicament is 28 U.S.C. § 1331 -- federal-question jurisdiction -- which all courts that have addressed the issue agree grants jurisdiction over policies issued under the Program. Whether or not § 4072 provides jurisdiction over suits against a WYO carrier, I will leave for another day for it is clear that I have jurisdiction under 28 U.S.C. § 1331.20 Satisfied that proper jurisdiction exists, I now turn to the merits of the Motion.
Plaintiff asserts a breach of contract claim in Count I of her complaint and a claim for declaratory relief in Count II.21 Defendant admits that Plaintiff may properly seek declaratory relief,22 but argues that the two claims are procedurally incompatible, redundant, and that the claim for declaratory relief is immaterial; thus, Defendant wants to strike the claim under Rule 12(f).23
Striking a pleading or a portion of a pleading is a drastic remedy; therefore, motions to strike are viewed with disfavor and infrequently granted.24 Nonetheless, district courts have liberal discretion under Rule 12(f) to strike any redundant, immaterial, impertinent, or scandalous matter.25 Defendant suggests that Plaintiff's substantive rights will not be prejudiced by the dismissal of her request for declaratory relief,26 and Plaintiff does not argue that she would be prejudiced. Instead, Plaintiff expressed in a January 23, 2012 phone conference, that she hopes to use the claim for declaratory relief as a means for me to determine whether Defendant breached the SFIP at issue as a matter of law.
It is clear there is a dispute about the rights and obligations of the parties under the SFIP. Yet, Plaintiff has not stated any facts that taken as true would suggest an ongoing need to interpret the SFIP because of possible future events. Plaintiff will get nothing more from a declaratory judgment than she would from prevailing on her breach of contract claim -- which Defendant has not sought to dismiss. Although Plaintiff hopes to have a ruling on the breach of contract as a matter of law, dismissing the request for declaratory judgment will not prejudice her, for she may still seek summary judgment.27
In the absence of any readily apparent prejudice, Plaintiff's claims for declaratory relief are DISMISSED.
Defendant asks that I dismiss Plaintiff's requests for attorneys fees under Rule 12(b)(6) or Rule 12(c) because (1) federal law preempts state law to the extent Plaintiff might be entitled to attorney's fees under state law; and (2) the EAJA does not apply to suits against WYO companies, only to suits against the United States or United States agencies or officials.
Plaintiff asserts that state law is not preempted by federal law and the EAJA allows fees here because a WYO company is the functional equivalent of FEMA -- an agency of the United States. Plaintiff also adds, that she is entitled to attorney's fees under common law principles of equity.28
In ruling on a Rule 12(b)(6) or 12(c) motion to dismiss, I must "accept as true all of the factual allegations contained in the complaint, and review the complaint to determine whether its allegations show that the pleader is entitled to relief."29 Conclusory allegations "are not entitled to the assumption of truth,"30 but all reasonable inferences from the complaint must be drawn in favor of the nonmoving party.31 A complaint need only contain "a short and plain statement of the claim showing that the pleader is entitled to relief,"32 but to survive a motion to dismiss, a complaint must "contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face."33 Judgment on the pleadings under Rule 12(c), "is appropriate only when there is no dispute as to any material facts and the moving party is entitled to judgment as a matter of law."34
Any rights to attorney's fees Plaintiff might have are tied to her claim for breach of the SFIP and the EAJA.
Under the Supremacy Clause of the United States Constitution, courts are bound to apply federal law that preempts state law.35 To determine whether federal law preempts state law, I must look to Congressional intent. When a federal statute or regulation36 expresses clear intent to preempt state law, state law must give way to federal law.
I note, the issue here is whether federal law preempts state law regarding disputes arising from the handling of a claim made on SFIPs issued under the Program. This distinction is important because, while there may be some dispute whether federal law preempts state-law procurement claims,37 federal law expressly preempts state-law claims related to the handling of policy claims.38 Thus, cases related to the procurement of flood insurance offer little guidance.39
The federal law relevant here is found both in a federal regulation and the SFIP that Plaintiff claims Defendant breached.40 Article nine of the SFIP reads:
I find the SFIP -- a federal law -- expressly preempts state law with respect to issues related to and arising out of claims handling. This conclusion is consistent with one reached recently by Chief Judge Miller in Gunter v. Farmers Ins. Co., Inc.43 Plaintiff disagrees with the holding in Gunter and urges44 me to rely instead on Stanton v. State Farm Fire and Casualty Company, Inc.45 But Stanton offers little guidance. First, Stanton, as pointed out in Gunter, occurred before FEMA added the express preemption in article...
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