Migliaro v. Fidelity National Indemnity Insurance Co.

PRECEDENTIAL

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________

No. 17-1434
_____________

ANTHONY MIGLIARO,
Appellant

v.

FIDELITY NATIONAL INDEMNITY
INSURANCE COMPANY,
a/k/a Wright National Flood Insurance Company

On Appeal from the United States District Court
for the District of New Jersey
(District Court No.: 1-15-cv-05688)
District Judge: Honorable Robert B. Kugler

Argued November 15, 2017

(Opinion Filed: January 29, 2018)

Before: AMBRO, KRAUSE and RENDELL, Circuit Judges
Steven C. Feinstein (Argued)
Daniel W. Ballard
Zenstein Ballard
1240 Old York Road
Suite 101
Warminster, PA 18974

Counsel for Appellant

Francis X. Manning (Argued)
Stradley Ronon Stevens & Young
457 Haddonfield Road
LibertyView, Suite 100
Cherry Hill, NJ 08002

Adam J. Petitt
Brandon M. Riley
Stradley Ronon Stevens & Young
2005 Market Street
Suite 2600
Philadelphia, PA 19103

Counsel for Appellee

____________

OPINION
____________

2
RENDELL, Circuit Judge:

The issue in this case is whether the rejection of a
policyholder’s proof of loss constituted a “written denial of
all or part of the claim,” thereby triggering the one-year
statute of limitations that is set forth in every Standard Flood
Insurance Policy (“SFIP”). After receiving a payment from
Fidelity National Indemnity Insurance Company, based on an
adjuster’s assessment of the damage to his property caused by
Hurricane Sandy, Anthony Migliaro submitted a sworn proof
of loss seeking additional compensation. Fidelity sent
Migliaro a letter rejecting his proof of loss, and he filed suit.
The District Court found that the letter rejecting Migliaro’s
proof of loss was a “written denial of all or part of the claim.”
Since Migliaro filed his complaint almost two years after he
received the letter, the District Court dismissed the suit as
time-barred. We affirm the District Court’s order. Although
the rejection of a proof of loss is not per se a denial of the
claim in whole or in part, it does constitute a denial of the
claim if, as here, the policyholder treats it as such by filing
suit against the carrier.

I. Background1

A. The National Flood Insurance Program

1
The District Court had jurisdiction under 28 U.S.C. § 1331.
This Court has jurisdiction under 28 U.S.C. § 1291.

3
 Congress authorized the creation of the National Flood
Insurance Program (“NFIP”) to “enable interested persons to
purchase insurance against loss resulting from physical
damage to or loss of . . . property . . . arising from any flood
occurring in the United States.” 42 U.S.C. § 4011(a). The
NFIP is administered by the Federal Emergency Management
Agency (“FEMA”). Id. Under FEMA’s Write Your Own
program, individuals may purchase SFIPs from private
insurance carriers (“WYO carriers”). 44 C.F.R. § 62.23.

The national flood insurance system is an unusual
hybrid of government and private insurance, but it is
essentially a government program. WYO carriers are “fiscal
agents” of the United States. 42 U.S.C. § 4071(a)(1). SFIP
policyholders pay premiums to WYO carriers and WYO
carriers service the policies. 44 C.F.R. § 62.23(d). However,
the United States government ultimately pays all SFIP claims.
Van Holt v. Liberty Mut. Fire Ins. Co., 163 F.3d 161, 166 (3d
Cir. 1998) (“[A]n insured’s flood insurance claims are
ultimately paid by FEMA.”).2 In addition, although WYO

2
More specifically, “WYO companies must . . . remit the
insurance premiums to [FEMA]; however, the companies
may keep funds required to meet current expenditures, which
are limited to five thousand dollars. See 44 C.F.R. pt. 62, app.
A., art. VII(B) (2016). When WYO companies deplete their
net premium income, a phenomenon that occurs regularly
because the companies must forfeit a significant portion of
the proceeds from premiums, they draw money from FEMA
through letters of credit to disburse claims. See 44 C.F.R. pt.
62, app. A, art. IV(A). Thus, regardless whether FEMA or a
WYO company issues a flood insurance policy, the United

4
carriers are also responsible for defending lawsuits arising
under SFIPs, the United States government reimburses the
cost of defending such claims. 44 C.F.R. §62.23(i)(6); Van
Holt, 163 F.3d at 165 (“Although WYO companies have the
responsibility of defending against claims, FEMA reimburses
the WYO companies for their defense costs.”). Because SFIP
claims are ultimately paid by the United States government,
all SFIPs must be identical to the form codified at 44 C.F.R.
pt. 61, app. A(1).3 Every SFIP contains the following statute-
of-limitations provision:

You may not sue us to recover
money under this policy unless
you have complied with all the
requirements of the policy. If you
do sue, you must start the suit
within one year after the date of
the written denial of all or part of
the claim[.] . . . This requirement
applies to any claim that you may
have under this policy and to any
dispute that you may have arising
out of the handling of any claim
under the policy.

States treasury funds pay off the insureds’ claims.” Van Holt,
163 F.3d at 165.
3
Although an SFIP may be modified with the “express
written consent of the Federal Insurance Administrator,” 44
C.F.R. pt. 61, app. A(1), art. VII(D), Migliaro’s SFIP was not
modified.

5
44 C.F.R. pt. 61, app. A(1), art VII(R) (emphasis added).

The SFIP and corresponding FEMA bulletins describe
the SFIP claims process. After an SFIP policyholder suffers a
loss, the WYO carrier sends an insurance adjuster to assess
the damages. FEMA Bulletin W-12092a (Nov. 9, 2012). The
adjuster then makes a recommendation as to the amount of
money the policyholder is entitled to recover under the
policy. Id. The WYO carrier typically adopts the adjuster’s
recommendation and pays the policyholder the recommended
amount. Id. If the policyholder’s coverage limits have not
been exhausted and he believes he is entitled to recover more,
he must send the carrier a proof of loss no later than a year
and a half from the date of the loss. FEMA Bulletin W-
13060a (Oct. 1, 2013).4 A proof of loss is the policyholder’s
signed and sworn estimate of the additional covered damages.
44 C.F.R. pt. 61, app. A(1), art. VII(J)(4). The SFIP’s Loss
Payment provision sets forth the options available to the
policyholder if the proof of loss is rejected. See 44 C.F.R. pt.
61, app. A(1), art. VII(M)(2).

4
The claims process described in these FEMA bulletins
differs slightly from the process described in the codified
SFIP. While submission of a proof of loss within sixty days is
typically a condition precedent to payment, see 44 C.F.R., pt.
61, app. (a)(1), art. IX(J)(7), in the aftermath of Hurricane
Sandy, FEMA temporarily modified the scheme in order to
expedite the claims process and to give policyholders more
time to submit an initial proof of loss. FEMA Bulletin W-
12092a (Nov. 9, 2012). Migliaro’s claim was governed by
this modified scheme.

6
 B. Factual Background

Migliaro purchased an SFIP from WYO carrier
Fidelity for his New Jersey property. The property sustained
flood damage in October 2012 as a result of Hurricane Sandy.
Fidelity sent an independent adjuster to assess the damage.
The adjuster recommended a payment of $90,499.11. Fidelity
adopted the adjuster’s recommendation and sent Migliaro a
check for the recommended amount.5
Five months later, Migliaro submitted a proof of loss,
claiming an additional $236,702.57 in damages. On July 15,
2013, Fidelity sent Migliaro a letter titled “Rejection of Proof
of Loss.” A189. The letter read, in pertinent part:

The Proof of Loss cannot be
accepted under the terms and
conditions of the insurance policy
for the following reason:

1. The amount claimed is not
an accurate reflection of
covered damage.

5
Before the adjuster inspected the property, Migliaro had
requested and received $35,000 in advance payments to cover
the damage. The adjuster then inspected the property and
submitted a report recommending a total payment of
$90,449.11. Fidelity then paid Migliaro $55,449.11, the
difference between the total covered damages and the
$35,000 advanced to Migliaro.

7
 This is not a denial of your claim.
Your field adjuster provided you
with an estimate and Proof of
Loss regarding covered damages.
If there are additional covered
damages identified, please
forward documentation and they
will be considered on a
supplemental basis and a new
corrected estimate and a new
Proof of Loss will be provided.

A189. Migliaro did not provide additional documentation or
otherwise attempt to submit a second proof of loss. Instead,
he brought suit against Fidelity in federal court.

C. Procedural Background

Migliaro initially filed suit in the District Court for the
District of New Jersey on December 13, 2013, “to recover
damages arising from Defendants’ unfair refusal to pay
insurance benefits as represented by . . . the subject insurance
policy Defendants sold to Plaintiff.” A208. In September
2014, Migliaro filed a motion for voluntary dismissal under
Fed. R. Civ. P. 41(a)(2). The District Court granted the
motion and dismissed Migliaro’s first complaint without
prejudice. Migliaro filed a second complaint against Fidelity
in the same court on July 22, 2015, alleging that Fidelity
“ha[d] failed and refused to pay to Plaintiff those benefits due
and owing under [the SFIP].” A4.

Fidelity moved for summary judgment, arguing that
the suit was barred by the SFIP’s one-year statute of

8
limitations. Fidelity urged that the July 15, 2013 letter
rejecting Migliaro’s proof of loss was a “written denial of all
or part of the claim,” which triggered the statute of
limitations. Since Migliaro’s second complaint was filed
almost two years after he received the letter, Fidelity argues
that his claim was time-barred. In response, Migliaro argued
that the letter rejecting his proof of loss was not a “written
denial of all or part of the claim” because it explicitly said it
was not a denial of his claim. According to Migliaro, he had
never received a written denial of his claim, so the statute of
limitations had never begun to run. The District Court granted
summary judgment in favor of Fidelity. This timely appeal
followed.

II. Analysis6

The issue here is whether Fidelity’s rejection of
Migliaro’s proof of loss constituted a “written denial of all or
part of the claim,” thereby triggering the SFIP’s one-year
statute of limitations. As the District Court correctly noted,
“The Third Circuit has not explicitly defined what qualifies as

6
We exercise plenary review over a grant of summary
judgment and apply the same standard the district court
applies. Kelly v. Borough of Carlisle, 622 F.3d 248, 253 (3d
Cir. 2010). Summary judgment is appropriate when there is
no genuine issue of material fact and the movant is entitled to
judgment as a matter of law. Fed. R. Civ. P. 56(a). We may
affirm the decision of the District Court on any basis
supported by the record. Helvering v. Gowran, 302 U.S. 238,
245 (1937).

9
a written denial of a claim seeking benefits under the SFIP.”
Migliaro v. Fidelity Nat’l Indem. Ins. Co., Civ. No. 15-5688,
2017 WL 462631, at *2 (D.N. J. Feb. 3, 2017). Nor does it
appear that any other federal court has done so.7 Given the
language of the SFIP’s Loss Payment provision and the
restrictions placed on a policyholder’s private right of action
against a WYO carrier, we conclude that the written rejection
of a proof of loss constitutes a denial of the claim if, based on
it, the policyholder files suit against the WYO carrier, thereby
accepting the written rejection of a proof of loss as a written
denial of the claim.

7
Both parties cite a number of cases in which courts have
considered, on a case-by-case basis, whether a particular
writing constituted a written denial of a claim. See, e.g., State
Bank of Coloma v. Nat’l Flood Ins. Program, 851 F.2d 817,
819 (6th Cir. 1988) (finding that a letter offering to pay 50%
of the claimed damages was a partial denial of the claim and
triggered the statute of limitations); St. Germain Place
Owners Ass’n Inc. v. Texas Farmers Ins. Co., Civ. A. No. G-
11-071, 2012 WL 2564441 (S.D. Tex. June 29, 2010)
(finding that a letter offering to pay some of the claimed
damages was a partial denial of the claim); House v. Bankers
Ins. Co., 43 F. Supp. 2d 1329 (M.D. Fla. 1999) (finding that a
letter from a WYO carrier was not a denial of the claim).
However, we are not aware of any case providing a generally
applicable definition of “written denial of all or part of the
claim.” Nor are we aware of any case in which the court has
categorically determined whether the rejection of a proof of
loss constitutes a “written denial of all or part of the claim.”

10
 At the outset, we reject Fidelity’s argument that the
rejection of a proof of loss is per se a denial of the claim.
Fidelity’s argument hinges on the SFIP’s Loss Payment
provision, 44 C.F.R. pt. 61, app. A(1), art. VII(M)(2), which
reads in pertinent part:

2. If we reject your proof of loss in whole or in part
you may:
a. Accept our denial of your claim
b. Exercise your rights under this policy; or
c. File an amended proof of loss as long as it is
filed within 60 days of the date of the loss.

Id. Fidelity reasons that, since subsection (a) equates a
rejection of a proof of loss with a denial of the claim, a
rejection of a proof of loss is per se a denial of the claim.

But Fidelity misreads the Loss Payment provision.
Under it, (a) is just one of three options a policyholder has
after his proof of loss has been rejected. He need not accept
the rejection as a denial of his claim. Alternatively, under
option (b) he may exercise his rights under the SFIP. These
include the right to demand an appraisal of the loss (44 C.F.R.
pt. 61, app. A(1), art. VII(P)), the right to cancel the policy
(44 C.F.R. pt. 61, app. A(1), art. VII(E)), and the right to file
suit “within one year after the date of the written denial of all
or part of the claim” (44 C.F.R. pt. 61, app. A(1), art. VII(R)).
Finally, option (c) allows the policyholder to file an amended
proof of loss and attempt to show the WYO carrier that he is
indeed entitled to additional compensation.

Migliaro urged that he exercised his rights under
option (b) by bringing suit against Fidelity (See Tr. Oral Arg.
at 11:35-11:50), and therefore since the provision is in the

11
disjunctive, he did not choose option (a) and accept the
rejection as a denial of his claim. But, in so arguing, Migliaro
necessarily admits that he viewed the July 15, 2013 letter
rejecting his proof of loss as a written denial of his claim.
This is because the private right of action against a WYO
carrier is limited to a suit challenging the complete or partial
denial of his claim. Therefore, the very act of bringing suit
signaled that, to Migliaro’s mind, his claim had been denied.
Second, by statute the policyholder’s cause of action arises
“upon the disallowance . . . of any [SFIP] claim, or upon the
refusal of the claimant to accept the amount allowed upon any
such claim.” 42 U.S.C. § 4072. The only communication of
the disallowance was the written rejection of the proof of loss
in the July 15 letter. Thus, by filing suit, Migliaro himself
held out the July 15 letter rejecting his proof of loss as a
denial of his claim. He cannot now argue otherwise.

When Congress created the NFIP, its authorization of
policyholders to sue FEMA upon disallowance of their claims
constituted a limited waiver of the sovereign immunity
typically enjoyed by the federal agency. FDIC v. Meyer, 510
U.S. 471, 475 (1994) (“Absent a waiver, sovereign immunity
shields the Federal Government and its agencies from suit.”).
We must interpret this waiver of sovereign immunity—and
the cause of action authorized under it—narrowly. See Lane
v. Pena, 518 U.S. 187, 192 (1996) (a waiver of sovereign
immunity must be “strictly construed, in terms of its scope, in
favor of the sovereign”). We cannot “enlarge the waiver
beyond what the language requires.” Library of Congress v.
Shaw, 478 U.S. 310, 381 (1986) (internal quotation marks
omitted). Strictly construed, 42 U.S.C. § 4072 provides a
limited right to sue upon the disallowance of all or part of a
claim, i.e. the complete or partial denial of a claim.

12
 An SFIP policyholder is limited to bringing a suit
against the WYO carrier if he desires to challenge the denial
of his claim. Under the WYO program, WYO carriers stand
in FEMA’s shoes for litigation purposes. When Congress
authorized a private right of action to challenge the denial of a
claim in 42 U.S.C. § 4072, it only referred to suits against
FEMA. But Congress also charged FEMA with implementing
the NFIP, and it authorized the agency to promulgate
regulations and to utilize private insurance companies as
fiscal agents of the United States in order to do so. 42 U.S.C.
§§ 4011, 4019, 4041, 4071. Pursuant to this authority, FEMA
created the WYO program. 44 C.F.R. § 62.23. In so doing, it
authorized WYO carriers to stand in FEMA’s shoes for
purposes of issuing and servicing SFIPs and, importantly, for
defending lawsuits arising under SFIPs. See 44 C.F.R. §
61.13(f) (“Policies issued by WYO Companies may be
executed by the issuing WYO Company as Insurer, in the
place and stead of [FEMA].”); 44 C.F.R. § 62.23(g) (“WYO
Companies are solely responsible for their obligations to their
insured under any flood insurance policies[,] . . . such that the
Federal Government is not a proper party defendant in any
lawsuit arising out of such policies”). Because a suit against a
WYO company is the “functional equivalent of a suit against
FEMA,” Van Holt, 163 F.3d at 166, an SFIP policyholder
may only bring a suit against the WYO carrier.

Moreover, the United States government bears
ultimate financial responsibility for all SFIP claims,
regardless of whether FEMA or a WYO carrier has issued the
policy. We must carefully “observe the conditions defined by
Congress for charging the public treasury,” Fed. Crop Ins.
Corp. v. Merrill, 332 U.S. 380, 384-85 (1947), and “when
dealing with a statute subjecting the Government to liability

13
for potentially great sums of money, [we] must not promote
profligacy by careless construction[,]” Indian Towing Co. v.
United States, 350 U.S. 61, 69 (1955). Therefore, restrictions
on a policyholder’s right of action against FEMA apply with
equal force to suits against WYO carriers. See Flick v. Liberty
Mut. Fire Ins. Co., 205 F.3d 386, 394 (9th Cir. 2000)
(“Because flood losses, whether insured by FEMA or by a
participating WYO insurer, are paid out of the [United States
Treasury], a claimant under a standard flood insurance policy
must comply strictly with the terms and conditions that
Congress has established for payment.”); Suopys v. Omaha
Prop. & Cas., 404 F.3d 805, 809 (3d Cir. 2005) (“Because
any claim paid by a WYO Company is a direct charge to the
United States Treasury, strict adherence to the conditions
precedent to payment is required.”).

Because the only suit a policyholder can bring against
a WYO carrier is one challenging the denial of his claim, by
bringing suit on December 13, 2013, Migliaro necessarily
acknowledged that Fidelity had denied his claim. To the
extent that Migliaro’s suit was based upon something other
than the denial of his claim, it would have also been properly
dismissed for lack of jurisdiction because there is no waiver
of sovereign immunity except for the causes of action
provided for in the statute.8 See United States v. Dalm, 494

8
For example, Migliaro has suggested that his suit was based
upon a wrongful denial of his proof of loss, common law
breach of contract, or a breach of the covenant of bad faith.
See Tr. Oral Arg. at 40:56-41:11 (characterizing the cause of
action as the “failure to honor proof of loss as it was
submitted”); Oral Argument at 5:55-7:12; 38:25-39:15

14
U.S. 596, 608 (1990) (“[T]he United States, as sovereign, is
immune from suit, save as it consents to be sued . . . and the
terms of its consent to be sued in any court define that court’s
jurisdiction to entertain the suit.”) (internal quotation marks
omitted).

A policyholder must also wait until his claim has been
denied before he can file suit against a WYO carrier.
According to the SFIP, “If you do sue, you must start the suit
within one year after the date of the written denial of all or
part of the claim[.]” 44 C.F.R. pt. 61, app. A(1), art. VII(R)
(emphasis added). For the same reasons that we must
narrowly construe the type of suit a policyholder may bring
against a WYO carrier, we must also narrowly construe when
a policyholder may bring suit. See Block v. North Dakota, 461
U.S. 273, 287 (1983) (“When Congress attaches conditions to
legislation waiving the sovereign immunity of the United
States, those conditions must be strictly observed, and
exceptions thereto are not to be lightly implied.”). Narrowly
interpreted, this clause provides that a policyholder may not
bring suit against a WYO carrier until after his claim has been
denied in writing.
Because a policyholder cannot bring suit until his
claim has been denied in writing, Migliaro must have
accepted that this had occurred when he brought suit. The

(“We’re basing [the suit] upon a breach of contract. We’re not
basing it upon a denial of a claim.”); Br. for Appellant 25-27
(arguing that his claim should be allowed to proceed based on
a theory of bad faith and unfair dealing). As noted, however,
there is no waiver of sovereign immunity in connection with
these common law claims.

15
only writing in the record that Migliaro could have construed
as a denial of his claim was the July 15, 2013 letter rejecting
his proof of loss. Thus, by bringing suit, Migliaro
acknowledged that the letter constituted a written denial of his
claim.
Migliaro’s pleadings bear out this characterization of
his suit as one challenging the denial of his claim. His
complaint alleged that, “despite demand for benefits under its
policy of insurance, [Fidelity] failed and refused to pay
benefits due and owing under said policy[.]” A4. Surely this
is the same as saying that his claim was denied in whole or in
part.
Finally, we note Migliaro’s contention that, even if a
rejected proof of loss could constitute a denial of the claim,
his particular rejection letter did not because it stated that it
was “not a denial of [the] claim.” A189. We do not agree.
Given the language of the Loss Payment provision, the
statement was technically true at the time it was made. At that
time, the door to additional compensation for his claim
remained open. In the July 15 letter, Fidelity actually invited
him to submit additional documentation to support his initial
proof of loss. Also, by law he had the right to seek an
appraisal of the loss or file an amended proof of loss within
sixty days. 44 C.F.R. pt. 61, app. A(1), art. VII(M)(2). But
Migliaro closed the door by failing to seek an appraisal, file
an amended proof of loss within sixty days, or submit
additional documentation. Instead, he sued, and in doing so
acknowledged that, by virtue of the letter rejecting his proof
of loss, his claim had been denied.
Migliaro takes the position that because the rejection
letter stated that it was not a denial, the statute of limitations
never commenced to run. He effectively claims an open-

16
ended right to file suit. But his position is undercut by his
own conduct—he brought suit because his claim was denied.
Thus, because Migliaro’s second complaint was filed almost
two years after he received the July 15, 2013 letter, his suit
was properly dismissed as time-barred.9

III. Conclusion

For the foregoing reasons, we affirm the District
Court’s order granting summary judgment.

9
It is of no moment that Migliaro’s first complaint was timely
and was dismissed without prejudice. Cardio-Med Assocs. v.
Crozer-Chester Med. Ctr., 721 F.2d 68, 77 (3d Cir. 1983) (it
is a “well recognized principle that a statute of limitations is
not tolled by the filing of a complaint subsequently dismissed
without prejudice. As regards the statute of limitations, the
original complaint is treated as if it never existed”).

17