Case: 15-30040 Document: 00513336184 Page: 1 Date Filed: 01/08/2016
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 15-30040 United States Court of Appeals
Summary Calendar Fifth Circuit
FILED
January 8, 2016
CONSTRUCTION FUNDING, L.L.C., Lyle W. Cayce
Clerk
Plaintiff–Appellant,
v.
FIDELITY NATIONAL INDEMNITY INSURANCE COMPANY,
Defendant–Appellee.
Appeal from the United States District Court
for the Eastern District of Louisiana
USDC No. 2:13-CV-5630
Before JOLLY, DENNIS, and PRADO, Circuit Judges.
PER CURIAM:*
Plaintiff–Appellant Construction Funding, LLC filed a flood insurance
claim with Defendant–Appellee Fidelity National Indemnity Insurance
Company (“Fidelity”) after Hurricane Isaac struck southeastern Louisiana in
August 2012. Fidelity denied the claim, and Construction Funding filed suit
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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No. 15-30040
alleging various contract and tort claims. The district court granted summary
judgment in favor of Fidelity, and Construction Funding appeals.
For the reasons stated below, we affirm the district court’s grant of
summary judgment.
I. BACKGROUND
The National Flood Insurance Act of 1968 created the National Flood
Insurance Program (“NFIP”) to provide affordable flood insurance on fair
terms. Spong v. Fidelity Nat’l Prop. & Cas. Ins. Co., 787 F.3d 296, 304 (5th Cir.
2015). The NFIP is administered and regulated by the Federal Emergency
Management Agency (“FEMA”). Id. Fidelity participates in the NFIP as a
Write-Your-Own Program (“WYO”) carrier. As a WYO carrier, Fidelity issues
Standard Flood Insurance Policies (“SFIP”) to NFIP participants and is
responsible for handling all claims that arise under the SFIPs it issues. The
terms of the SFIP are set by FEMA. Spong, 787 F.3d at 304; see also 44 C.F.R.
pt. 61, app. A(1).
Construction Funding owns a piece of property located in Mandeville,
Louisiana, that is insured under a SFIP issued by Fidelity. According to
Construction Funding, this property suffered severe damage when Hurricane
Isaac struck southeastern Louisiana in August 2012. Seeking reimbursement
for the damage, Construction Funding submitted a claim to Fidelity to recover
for a loss of $76,218.01. Fidelity denied the claim, concluding that Construction
Funding’s damages were “unsubstantiated” and there was insufficient proof to
confirm that the damage was caused by Hurricane Isaac and not a prior flood.
Following denial of its claim, in August 2013 Construction Funding filed
suit against Fidelity for breach of contract, breach of the duty of good faith and
fair dealing, and negligent misrepresentation. In November 2014, Fidelity
moved for summary judgment, arguing that Construction Funding failed to
comply with the terms of the SFIP, which is a prerequisite to bringing suit
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under the policy. The district court agreed and granted summary judgment.
Construction Funding now appeals.
II. DISCUSSION
The district court had jurisdiction over this dispute under 42 U.S.C.
§ 4072, which grants federal courts exclusive jurisdiction over disputes
between claimants and insurers in the NFIP. We have jurisdiction to hear the
appeal under 28 U.S.C. § 1291.
This Court reviews a district court’s grant of summary judgment de novo,
viewing “all facts and evidence in the light most favorable to the non-moving
party.” Amerisure Mut. Ins. Co. v. Arch Specialty Ins. Co., 784 F.3d 270, 273
(5th Cir. 2015). Summary judgment is appropriate “if the movant shows that
there is no genuine dispute as to any material fact and the movant is entitled
to judgment as a matter of law.” Fed. R. Civ. P. 56(a). A genuine dispute of
material fact exists when “the evidence is such that a reasonable jury could
return a verdict for the nonmoving party.” Savant v. APM Terminals, 776 F.3d
285, 288 (5th Cir. 2014) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
248 (1986)).
Disputes arising out of NFIP policies are governed by federal common
law. Spence v. Omaha Indem. Ins. Co., 996 F.2d 793, 796 (5th Cir. 1993).
Because NFIP claims are paid through treasury funds, our Court has long
recognized that the terms and conditions of SFIPs must be “strictly construed
and enforced.” E.g., Ferraro v. Liberty Mut. Fire Ins. Co., 796 F.3d 529, 532 (5th
Cir. 2015) (quoting Gowland v. Aetna, 143 F.3d 951, 954 (5th Cir. 1998)).
In order to recover under an SFIP, FEMA regulations require strict
compliance with the SFIP itself. Marseilles Homeowners Condo. Ass’n Inc. v.
Fidelity Nat’l Ins. Co., 542 F.3d 1053, 1057 (5th Cir. 2008). This requirement
is also incorporated into the language of the SFIP. Article VII(R) of the SFIP
states that a claimant “may not sue [] to recover money under this policy unless
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[the claimant has] complied with all the requirements of the policy.” 44 C.F.R.
pt. 61, app. A(1), art. VII(R). Therefore, in order to file suit under the SFIP, the
claimant must “show prior compliance with all policy requirements.”
Marseilles, 542 F.3d at 1055. Strictly construing this provision of the SFIP,
Construction Funding must comply with all of the policy’s requirements in
order to recover in this action and therefore survive summary judgment.
Fidelity argues that Construction Funding failed to comply with Article
VII(J) of the SFIP. Under the SFIP issued through Fidelity, Construction
Funding is required to “[g]ive prompt written notice” of flood damage and
“[p]repare an inventory of damaged property showing the quantity,
description, actual cash value, and amount of loss.” 44 C.F.R. pt. 61, app. A(1),
art. VII(J). Construction Funding is instructed to “[a]ttach all bills, receipts,
and related documents” to the inventory. Id. Additionally, Construction
Funding must file a timely, sworn “proof of loss,” which must include
“[s]pecifications of damaged buildings and detailed repair estimates.” Id.
Construction Funding is instructed to use its “own judgment concerning the
amount of loss and justify that amount.” Id.
Fidelity does not dispute that Construction Funding filed a timely and
sworn proof of loss claiming $76,218.01 in damages. The proof of loss form
submitted to Fidelity itemized the claim into general categories, such as
“ACTUAL CASH VALUE of building structures” and “ACTUAL CASH VALUE
OF CONTENTS of personal property insured,” but Construction Funding
failed to submit any substantiating documentation or explanation to support
its claim, as required by the SFIP. Construction Funding concedes that failure
to file a proof of loss is “grounds for summary judgment” but that summary
judgment is improper when there is a dispute as to the sufficiency of the proof
of loss submitted. But, Construction Funding’s theory fails, as substantial
compliance with the SFIP is not enough to meet the compliance requirement
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of Article VII(R). See, e.g., Marseilles, 542 F.3d at 1056; Gowland, 143 F.3d at
953–54. The “failure to provide a complete, sworn proof of loss statement . . .
relieves the federal insurer’s obligation to pay what otherwise might be a valid
claim.” Gowland, 143 F.3d at 954 (emphasis added). Construction Funding’s
failure to substantiate and justify the amount of its claim is a failure to comply
with Article VII(J) of the SFIP. Therefore, because Construction Funding has
failed to demonstrate that it submitted a proof of loss complying with all SFIP
requirements, no genuine dispute of material fact exists as to whether
Construction Funding can recover in this suit. Accordingly, Fidelity is entitled
to summary judgment.
III. CONCLUSION
For the foregoing reasons, we AFFIRM the district court’s grant of
summary judgment.
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