IN THE UNITED
STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 14-30944
RON FERRARO; PATRICIA FERRARO,
Plaintiffs–Appellants
v.
LIBERTY MUTUAL
FIRE INSURANCE COMPANY,
Defendant–Appellee
Appeal from the United States
District Court for the Eastern
District of Louisiana
Before REAVLEY, PRADO, and COSTA,
Circuit Judges. EDWARD C. PRADO,
Circuit Judge:
Ron and Patricia Ferraro sued
Liberty Mutual to recover
flood-insurance proceeds
after their house was damaged
by Hurricane Isaac. The Ferraros submitted an original
signed, sworn proof of loss with the handwritten note “Will send supplement later.”
They later sought payment from Liberty
Mutual for the supplemental amount without providing a second proof of loss. The district court granted summary judgment for Liberty
Mutual, holding that a second sworn proof of loss is necessary
to support a claim under the National Flood Insurance
Program. We affirm.
I.
BACKGROUND
The Ferraros
own the house
at 133 Somerset Road, LaPlace,
Louisiana. They purchased
a Standard Flood Insurance Policy (SFIP) from Liberty Mutual via the National Flood Insurance
Program’s (NFIP) Write-Your-Own (WYO) program. The policy was in place on August 29, 2012, after Hurricane Isaac made landfall
on Louisiana.
The Ferraros’ home suffered damage,
and they filed a claim
for benefits with Liberty
Mutual. Liberty Mutual
dispatched an independent adjuster, who recommended payment of $103,826.83 and prepared a proof-of-loss form in that amount. The Ferraros signed the proof of loss and handwrote on the form: “Will send supplement later.” Liberty Mutual
paid the Ferraros
the full amount on the proof-of-loss form.
The Ferraros
then hired Dan Onofrey, a public adjuster,
to evaluate the damage on their home. Onofrey issued a report valuing
the Ferraros’ loss at $320,436.55. The Ferraros submitted
Onofrey’s report to Liberty Mutual, but they did not submit
a second signed,
sworn proof-of-loss form.
A Liberty Mutual adjuster
told them no additional forms
were necessary to support
their claims.
Liberty Mutual made no further
payments to the Ferraros.
The Ferraros filed
suit in federal district
court, seeking recovery
from Liberty Mutual under the flood policy for property damage, loss of use, depreciation, mold and damage remediation, debris clean-up
and removal, cost of compliance, and any other available
damages. Liberty
Mutual moved for summary judgment,
arguing the Ferraros are barred from the instant litigation because they did not comply with the SFIP’s prerequisites for filing suit under 44 C.F.R.
Pt. 61 app. A(1), art. VII. In particular, for claims relating to Hurricane
Isaac, policyholders were required to provide a complete, signed, sworn-to proof of loss within 240 days of the loss. The district court granted summary judgment, noting that the NFIP requires strict
compliance and holding that the Ferraros’ failure to provide
a second proof
of loss to accompany Onofrey’s
loss valuation barred their suit. The Ferraros timely appealed.
II. DISCUSSION
The district court had jurisdiction pursuant to 42 U.S.C. § 4072, which provides exclusive
federal jurisdiction over litigation arising out of the NFIP. We have appellate
jurisdiction to review a district court’s
grant of summary judgment under
28 U.S.C. § 1291.
We review de novo a district court’s
grant of summary judgment, applying the same standard as the district court
in the first instance. E.E.O.C.
v.
LHC
Grp., Inc., 773 F.3d 688, 694 (5th Cir. 2014). 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). We view all facts and evidence in the light most favorable to the non-moving party. LHC
Grp., 773 F.3d at 694.
A. The SFIP’s
Proof-of-Loss Requirement
Congress created the NFIP to provide flood-insurance coverage
at affordable rates. Marseilles Homeowners Condo.
Ass’n v. Fidelity Nat’l Ins. Co., 542 F.3d 1053, 1054 (5th Cir. 2008).
The program, which is operated
by the Federal
Emergency Management
Agency (FEMA), draws funds from the federal treasury.
Id. Homeowners can purchase
an SFIP policy directly from FEMA or through private insurers,
which serve as WYO providers
and are fiscal agents of the United States.1 Id.; see 42 U.S.C.
§ 4071(a)(1). “An SFIP is
Under this framework, the federal government underwrites the policies and private WYO carriers perform significant administrative functions including arranging for the adjustment, settlement, payment and defense of all claims arising from the policies. WYO carriers must issue policies containing the exact terms
and conditions of the SFIP set
forth in FEMA regulations.
Additionally, FEMA regulations govern the methods by which WYO carriers
adjust and pay
‘a
regulation of [FEMA], stating
the conditions under which federal flood- insurance funds may be disbursed to eligible
policyholders.’” Marseilles, 542 F.3d at 1054 (alteration in original) (quoting
Mancini v. Redland Ins. Co., 248 F.3d 729, 733 (8th Cir. 2001)).
Because the NFIP puts at stake the government’s liability, its regulations implicate sovereign
immunity. DeCosta v. Allstate
Ins. Co., 730 F.3d 76, 84 (1st Cir. 2013). Although
WYO insurers administer SFIP policies, payments
made pursuant to such policies
are “a direct charge
on the public treasury.” Gowland v. Aetna, 143 F.3d 951, 955 (5th Cir. 1998) (quoting
In re Estate of Lee,
512 F.2d 253, 256 (5th Cir. 1981)). Therefore, “the provisions of an insurance policy
issued pursuant
to a federal program
must be strictly construed and enforced.” Id. at 954;
accord DeCosta, 730 F.3d at 84; Mancini, 248 F.3d at 734–35.
The central issue
in this case is the interpretation of the proof-of-loss requirement
in Article VII of the SFIP. The regulation reads as follows:
In case of a flood loss to insured
property, you must:
.
. .
4. Within 60 days after the loss,[2]
send us a proof of loss, which is your statement of the amount you are claiming
under the policy signed and sworn to by you, and which furnishes us with the following information:
a. The date and time of loss;
b. A brief explanation of how the loss happened;
claims. Although WYO carriers play a
large role, the government ultimately pays a WYO carrier’s
claims. When claimants sue their WYO carriers
for payment of a claim, carriers bear the defense costs,
which are considered part of the claim expense allowance; FEMA
reimburses these costs.
562 F.3d 751, 754 (5th Cir. 2009) (footnotes, alteration, and internal quotation marks omitted).
loss.
c.
Your interest (for example, “owner”)
and the interest, if any, of others in the damaged property;
d.
Details of any other insurance that may cover the loss;
e.
Changes in
title or occupancy of the covered property during the term of the policy;
f.
Specifications of damaged
buildings and detailed
repair estimates;
g.
Names of mortgagees or anyone else having a lien, charge, or claim against the insured
property;
h.
Details about who occupied any insured building at the
time of loss and for what purpose; and
i. The inventory
of damaged personal
property . . . . 44 C.F.R. pt. 61, app. A(1) art. VII(J) (emphasis added).
The regulations make strict compliance with the proof-of-loss requirement a condition precedent to suit.
You may
not sue us to recover
money under this policy unless
you have complied
with all the requirements of the policy. . . . 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.
44
C.F.R. pt. 61, app.
A(1) art. VII(R)
(emphasis added). As we have held,
“an insured’s failure
to provide a complete, sworn proof of loss statement, as required by the flood insurance
policy, relieves
the federal insurer’s
obligation to pay what otherwise might be a valid claim.” Gowland, 143 F.3d at 954.
The Ferraros
argue that they discharged their proof-of-loss obligation when they filed a signed, sworn statement claiming
$103,826.83 in damages and advised
Liberty Mutual that a supplement would follow. They contend that they seek only additional benefits (for a total of $320,436.55) and not a wholly separate, “materially different” claim.
“The policy at issue,”
they assert, “does not
require the Ferraros to submit
supplementary proof of loss forms to sue for additional payments for
previously perfected
claims.” In reply, Liberty
Mutual asserts that the district
court properly strictly
construed the SFIP and concluded that a second
proof of loss is a condition precedent to suit.
Whether an insured must submit an additional proof of loss to recover an additional amount on a preexisting claim is a question of first impression in this circuit. See,
e.g., Rogers
v. S. Fid. Ins. Co., No. 13-5695, 2014 WL 3587379, at *4 (E.D. La. July 18, 2014) (“As this Court has previously pointed out, the Fifth Circuit has not directly addressed this issue.” (citing Bechtel
v. Lighthouse
Prop. Ins. Co., No. 13-5289, 2014 WL 1389631,
at *3 (E.D. La. Apr. 1, 2014))). However,
two out-of-circuit cases, DeCosta, 730 F.3d 76, and Gunter
v. Farmers Ins. Co., 736
F.3d 768 (8th Cir. 2013), provide strong
persuasive authority
for the conclusion that a second proof of loss is indeed
required.
In DeCosta,
the plaintiff
submitted two proofs of loss and a sixteen-page report from one of his adjusters to
Allstate. 730 F.3d at 78. The report estimated $212,071.32
in damages—about double the amount in the proofs of loss—and, crucially, was not sworn to or signed by the insured.
Id. Allstate paid the plaintiff the amount claimed on the two original,
executed proof-of- loss forms and on two subsequent, signed and sworn-to proofs of loss, but not for the remaining amount on the originally appended sixteen-page damage estimate. Id. at 78–80.
The insured sued Allstate
for the difference. Id. at 80.
The First Circuit
granted summary judgment for Allstate. Id. at 87–88. After reviewing the history
of the NFIP and reiterating that courts strictly construe the SFIP’s requirements, the First
Circuit rejected the argument that simply providing
an insurance company with notice of a claim satisfies the condition precedent
to suit. Id. at 84–85 (citing Evanoff v. Standard Fire Ins. Co., 534 F.3d 516, 520–21
(6th Cir. 2008);
Mancini, 248 F.3d at 732, 734).
Applying this rule, the court continued: “[I]t is clear that [the plaintiff] did not sign and swear
to claiming $212,071.32 on a proof of loss, as required. Merely attaching
his adjuster’s
estimate of damages to two executed proof-of-loss forms claiming a smaller amount does not comply.”
Id. at 84. The First Circuit concluded: “It does not matter that the estimate from [the insured’s] adjuster was submitted at the same time and along with compliant proof-of- loss forms claiming undisputed sums because, under the plain terms of the SFIP, [the insured]
still had to sign
and swear to the amount in that estimate, which he did not do.” Id. at 85.
Similarly, in Gunter, the Eighth Circuit affirmed summary
judgment for an insurance company
against a plaintiff seeking
flood-damage compensation in excess of the amount sworn-to and signed on a proof-of-loss form. 736 F.3d at 770–71. The Eighth Circuit rejected the insured’s
argument that an adjuster’s report satisfied the SFIP’s
condition precedent to suit: “The SFIP is clear that statements by an adjuster are provided
only as a courtesy,
and the proof of loss is the signed and sworn final statement of the insured as to how much damage is claimed.”
Id. at 774. The Gunter
court followed DeCosta’s lead and held that an insured’s “failure to provide a proof of loss for any supplemental amount is a bar to recovery.” Id. at 775.3
We find this reasoning
persuasive and apply the same principles apply here. An insured’s failure to strictly
comply with the SFIP’s
provisions— including the
proof-of-loss requirement—relieves the federal insurer’s
3 This Court reached a
similar conclusion in litigation arising from the flooding following Hurricane
Katrina. See Marseilles, 542 F.3d at 1057–58;
Richardson v. Am. Bankers Ins. Co. of Fla., 279 F. App’x 295, 298–99 (5th Cir. 2008) (per curiam).
FEMA issued a memo permitting insureds with SFIP coverage
to receive payment based on an adjuster’s report without submitting a sworn proof of loss within sixty days. Richardson, 279 F. App’x at 298. If the insured disagreed
with the insurer’s
calculation of the amount owed, he was required to submit a sworn proof of loss within a
year of the loss. Id. In both Marseilles and Richardson, the plaintiffs made claims without sworn proofs of loss within the statutory period, then
sought to supplement their award
amounts after the close of the one-year
filing deadline.
Marseilles, 542 F.3d at 1054–55;
Richardson, 279 F. App’x at 298. This Court rejected
the argument that
the insureds’ claims
could proceed by supplementing the original loss amount;
we held that a sworn proof of loss was required
to sue for additional payment. Marseilles, 524 F.3d
at 1056–57; Richardson, 279 F. App’x at 298–99.
obligation to pay the non-compliant claim. Because
the Ferraros’ additional claim for $320,436.55 was neither signed
nor sworn-to, it cannot serve as a proof of loss under
the plain terms of the SFIP. Mere notice—in the form of the handwritten note “Will send supplement
later”—cannot supplant the SFIP’s regulatory proof-of-loss requirement.4
Consistent with our colleagues in the First and Eighth
Circuits, we hold that a second proof of loss was necessary for the Ferraros to perfect
their claim. Therefore, the district court properly
granted summary judgment for Liberty Mutual.
B. The Ferraros’
Detrimental Reliance
Claim
The Ferraros
next contend that summary judgment
should be reversed because they justifiably relied
on Liberty Mutual adjuster Lee Holcomb’s claim that the Ferraros
did not have to file any special
forms alongside their supplement. They
refer the Court to
an
email, which reads: “No special
forms for the supplement. Just send the info that you have from Inspector 21 and I will be able to let you know if it will be ok, then I can do a supplement.”
The Ferraros
did not make this argument in their
opposition to summary judgment before
the district court. Rather, they moved the court for reconsideration under Rule 59(e) based on newly discovered evidence not presented at trial. The
district court
declined to reconsider, concluding that the
4 The Ferraros invoke Stogner v. Allstate Insurance Co., No. 09-3037, 2010 WL 148291 (E.D. La. Jan 11, 2010), and Smith v. American Bankers Insurance Co. of Florida, No. 13- 5684, 2014 WL 2155030 (E.D. La. May 22, 2014),
for the proposition that a later supplement to an incomplete proof of loss sufficiently complies with SFIP regulations. But Stogner and Smith—neither
binding on this Court—left open only the narrow possibility that “if the same amount
is claimed, and only the decision is disputed, additional proofs of loss may not be necessary,” Stogner, 2010 WL 148291 at *4, see also Smith, 2014 WL 2155030 at *3 (noting
that original proof of loss requested $250,000 and supplemental estimate itemized claim at
$221,431.90). The Ferraros now request a greater sum than they listed on their original
proof- of-loss form,
distinguishing this case from Stogner
and Smith.
Ferraros
failed to carry their burden to demonstrate that the email was unavailable to them at the outset of litigation.
We liberally construe the Ferraros’ argument on this issue
as challenging
the district court’s denial of the motion for reconsideration. We review the district
court’s ruling
on the motion to reconsider for abuse of discretion because the district court declined
to consider the Ferraros’ additional materials. Templet v. HydroChem
Inc., 367 F.3d 473, 477 (5th Cir. 2004). Under this standard,
“the district court’s
decision and decision-making process need only be reasonable.” Id. “A motion
to reconsider based on an alleged discovery of new evidence should
be granted only if (1) the facts discovered are of such a nature
that they would probably change
the outcome;
(2)
the facts alleged are actually
newly discovered and could not have been discovered earlier by proper diligence; and (3) the facts are not merely cumulative or impeaching.” Johnson v. Diversicare Afton Oaks, LLC,
597 F.3d 673, 677 (5th Cir. 2010) (internal quotation marks omitted).
Before this Court, the Ferraros offer no reason why they did not include the email in their opposition to Liberty
Mutual’s motion for summary judgment. Based on the message’s date stamp, we presume the email was in the Ferraros’
possession during the course of the litigation. The Ferraros have not shown that the email is “the type of ‘new evidence’
that a truly diligent litigant would be powerless
to unearth” prior to summary judgment,
Diaz v. Methodist Hosp.,
46 F.3d 492, 495 (5th Cir. 1995), particularly given that the plaintiffs have been afforded a full opportunity to conduct discovery. Moreover, though the evidence may support the Ferraros’ theory of the case, they have not carried
their burden to show that consideration of these new facts “would probably change the outcome,” of their suit. See Johnson
597 F.3d 673.
Because
the plaintiffs have made no argument
that the evidence
was indeed “newly
discovered” for purposes
of Rule 59(e),
we find no abuse of
discretion in
the district court’s
denial of
the Ferraros’ motion for reconsideration.
III. CONCLUSION
For
the foregoing reasons, the judgment of the district
court
is AFFIRMED.
Case: 14-30944 Document: 00513143970 Page: 10 Date
Filed: 08/06/2015