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Construction Funding, LLC v. Fidelity Nat'l Indem. Ins. Co.

United States District Court, E.D. Louisiana

November 17, 2014

CONSTRUCTION FUNDING, LLC
v.
FIDELITY NATIONAL INDEMNITY INSURANCE CO, ET AL

For Construction Funding L.L.C., Plaintiff: Keith Michael Couture, LEAD ATTORNEY, Couture & Levesque LLC, Madisonville, LA; Richard Allard Richardson, Richard Richardson, Attorney at Law, Madisonville, LA.

For Fidelity National Indemnity Insurance Company, Defendant: Keith M. Detweiler, LEAD ATTORNEY, Gerald J. Nielsen, John Dennis Carter, Nielsen, Carter & Treas, LLC, Metairie, LA.

ORDER AND REASONS

CARL J. BARBIER, UNITED STATES DISTRICT JUDGE.

Before the Court is a Motion for Summary Judgment (Rec. Doc. 17) filed by Defendant, Fidelity National Indemnity Insurance Company (" Fidelity"), as well as an Opposition (Rec. Doc. 18) by Plaintiff, Construction Funding, LLC (" Plaintiff"). Having considered the motion, the parties' submissions, the record, and the applicable law, the Court finds, for the reasons expressed below, that the motions should be GRANTED.

PROCEDURAL AND FACTUAL BACKGROUND

Fidelity serves as a Write-Your-Own (" WYO") Program carrier participating in the U.S. Government's National Flood Insurance Program (" NFIP"). The NFIP was established by the National Flood Insurance Act of 1968, 42 U.S.C. § 4001, and is administered by the Federal Emergency Management Agency (" FEMA"). Under the NFIP, Fidelity acts as a WYO Program Carrier pursuant to an Arrangement with FEMA (" the Arrangement"), in which Fidelity issues Standard Flood Insurance Policies (" SFIP's") to claimants insured under the NFIP. Fidelity garners the responsibility of investigating, settling, and defending all claims and losses arising from SFIP's under the Arrangement. All payments made by Fidelity pursuant to the Arrangement are derived entirely from federal funds. As compensation for participating in this program, FEMA pays all WYO Program Carriers, including Fidelity, 1.5% of the amount paid to the insured. As such, the greater the claims Fidelity pays to its claimants, the greater the profit Fidelity earns.

Plaintiff, which is insured by Fidelity pursuant to the NFIP, alleges that on or about August 28, 2012, as a result of Hurricane Isaac, it sustained serious damage to property covered by the insurance policy. Plaintiff subsequently filed an insurance claim with Fidelity, seeking coverage for the damage sustained. The terms of Plaintiff's SFIP require that in order to recover a claim for flood damage, an insured must submit within sixty (60) days after the loss is incurred, a proof of loss supported by " specifications of damaged buildings and detailed repair estimates" (among other documentation requirements). Fidelity granted a blanket extension of this requirement for all claimants who sustained flood damage during Hurricane Isaac, allowing them to file documented proofs of loss within 240 days of the August 28, 2012 date on which Hurricane Isaac made landfall.

In an attempt to assist Plaintiff in compiling a documented proof of loss, Fidelity assigned Scott O'Berry as the independent adjuster to inspect Plaintiff's property and reach an estimate for the amount of damage sustained. Mr. O'Berry met with Plaintiff on September 2, 2012 to inspect the property, and upon inspection provided Plaintiff with a Proof of Loss form including his estimation of the total value of damage in the amount of $266.81 (reflecting a recommended payment of $5, 266.81 less the $5, 000 deducible provided for by the SFIP). This amount was calculated in light of Mr. O'Berry's conclusion that Plaintiff had failed to make repairs to the property for damages sustained from Hurricane Katrina in 2005, for which Plaintiff had previously been reimbursed by Fidelity after filing a valid insurance claim. As such, Mr. O'Berry's estimate reflected only those damages sustained by Hurricane Isaac, to the exclusion of those damages he concluded were previously sustained during Hurricane Katrina.

On or about January 17, 2013, Plaintiff submitted to Fidelity its own proof of loss form in the amount of $76, 218.01. This form was supported by no documentation other than an estimate compiled by Plaintiff and a sworn affidavit by Plaintiff, stating that damages to the property were repaired after Hurricane Katrina and prior to Hurricane Isaac. In reliance on Plaintiff's alleged failure to submit sufficient documentation, Fidelity refused to verify the amount included in the proof of loss and consequently denied Plaintiff's claim to recover flood damages for all items on the property that had not been repaired after the 2005 damage. Plaintiff then filed the present lawsuit against Fidelity on August 28, 2013, claiming that Fidelity breached the SFIP, acted in bad faith, and negligently misrepresented itself in the terms of the SFIP by refusing to pay Plaintiff's claim.

On November 4, 2014, Fidelity filed the instant motion, seeking summary judgment and the dismissal of all Plaintiff's claims. Fidelity argues that because Plaintiff failed to satisfy the strict requirements mandated by its SFIP, namely by failing to provide a sufficiently documented proof of loss, under the terms of the policy, Plaintiff is barred from filing a lawsuit against Fidelity seeking payment of its claim.

LEGAL STANDARD

Summary judgment is appropriate when " the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no material issue as to any material fact and that the movant is entitled to judgment as a matter of law." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (citing Fed.R.Civ.P. 56(c)); See also Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994). When assessing whether a dispute as to any material fact exists, the Court considers " all of the evidence in the record but refrains from making credibility determinations or weighing the evidence." Delta & Pine Land Co. v. Nationwide Agribusiness Ins. Co., 530 F.3d 395, 398 (5th Cir. 2008). All reasonable inferences are drawn in favor of the nonmoving party, but a party cannot defeat summary judgment with conclusory allegations or unsubstantiated assertions. Little, 37 F.3d at 1075. A court ultimately must be satisfied that " a reasonable jury could not return a verdict for the nonmoving party." Delta, 530 F.3d at 399.

If the dispositive issue is one on which the moving party will bear the burden of proof at trial, the moving party " must come forward with evidence which would 'entitle it to a directed verdict if the evidence went uncontroverted at trial.'" Int'l Shortstop, Inc. v. Rally's, Inc., 939 F.2d 1257, 1263-64 (5th Cir. 1991) (citation omitted). The nonmoving party can then defeat the motion by either countering with sufficient evidence of its own, or " showing that the moving party's evidence is so sheer that it may not persuade the reasonable fact-finder to return a verdict in favor of the moving party." Id. at 1265.

If the dispositive issue is one on which the nonmoving party will bear the burden of proof at trial, the moving party may satisfy its burden by merely pointing out that the evidence in the record is insufficient with respect to an essential element of the nonmoving party's claim. See Celotex, 477 U.S. at 325. The burden then shifts to the nonmoving party, who must, by submitting or referring to evidence, set out specific facts showing that a material issue exists. See id. at 324. The nonmovant may not rest upon the ...


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