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Graham v. Republic Fire and Casualty Insurance Co.

United States District Court, M.D. Louisiana

September 26, 2018




         Before the Court is the Motion for Judgment on the Pleadings (Doc. 16) by Defendant American Bankers Insurance Company of Florida ("American Bankers"), seeking the dismissal of all claims filed by Plaintiffs Eric Graham and Caroline Graham ("Plaintiffs"). For the reasons explained herein, the Motion for Judgment on the Pleadings (Doc. 16) is DENIED IN PART and GRANTED IN PART.

         I. BACKGROUND

         Plaintiffs reside in Baton Rouge, Louisiana. (Doc. 21 at p. 1) Their home is characterized by a pier and beam construction with crawl spaces underneath. (Id.) American Bankers issued Plaintiffs a flood insurance policy on their home from May 16, 2016 to May 17, 2017. (Doc. 1-1 at p. 4) Republic Fire and Casualty Insurance Company ("Republic"), a codefendant in this case, is an insurance company which issued Plaintiffs a homeowner's insurance policy on their home from August 2, 2016 to August 2, 2017. (Id.)

         American Bankers issued Plaintiffs' flood insurance policy under the National Flood Insurance Program ("NFIP"), which Congress created pursuant to the National Flood Insurance Act ("NFIA") of 1968. (Doc. 16-1 at p. 2). The NFIP allows an individual to purchase a Standard Flood Insurance Policy ("SFIP") either directly from the Federal Emergency Management Agency ("FEMA") or from private insurance companies. (Id. at 3). These private insurance companies are known as "Write Your Own" ("WYO") carriers and are authorized by federal regulation to sell SFIPs under their own names. (Id.) The terms of an SFIP are standardized and codified in the federal regulations. 44 C.F.R. pt.61, app. A(1). As such, all flood insurance policies issued by WYO companies, including American Bankers, are identical to the terms of the SFIP. (Doc. 16-1 at p. 3) The United States Treasury pays out all SFIP claims as well as the costs involved in the adjustment of such claims. (Id.)

         Plaintiffs assert that Baton Rouge suffered historic flooding and moisture due to heavy rainfall starting on August 12, 2016. (Doc. 1-1 at p. 5) During this flood, surface water allegedly accumulated underneath their home. (Doc. 21 at p. 1) On or about August 21, 2016 the original wood floods in Plaintiffs' home allegedly began to buckle, which resulted in warped floors rising over five inches in certain locations. (Id.) Plaintiffs claim that on or about September 2, 2016, they timely noticed both American Bankers and Republic. (Doc. 1-1 at p. 5) American Bankers denied Plaintiffs' claim for damages to the floor because its investigation did not "identify evidence of a general condition of flood, nor direct flood damage to their home." (Id.) Plaintiffs appealed American Bankers' decision to FEMA, which denied their claim on the same basis. (Id.) In contrast, Republic denied Plaintiffs coverage because the damaged appeared to result from "high moisture levels from flood or surface water" beneath the home. (Id.) Plaintiffs then sued both American Bankers and Republic for breach of contract and violation of Louisiana bad faith insurance statutes. (Doc. 1-1 at p. 8)


         "The standard for deciding a Rule 12(c) motion is the same as a Rule 12(b)(6) motion to dismiss." Guidry v. Am. Pub. Life Ins. Co., 512 F.3d 177, 180 (5th Cir. 2007). To avoid dismissal, "a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" In re Great Lakes Dredge & Dock Co. LLC, 624 F.3d 201, 209 (5th Cir. 2010) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). "In deciding whether the complaint states a valid claim for relief, [courts] accept all well-pleaded facts as true and construe the complaint in the light most favorable to the plaintiff." Id. (citing Doe v. Myspace, Inc., 528 F.3d 413, 418 (5th Cir. 2008). Courts, however, will not accept as true "conclusory allegations, unwarranted factual inferences, or legal conclusions." Id. (quoting, Ferrer v. Chevron Corp., 484 F.3d 776, 780 (5th Cir. 2007)). A court may grant a motion for judgment on the pleadings only if "there are no disputed issues of material fact and only questions of law remain." Brittan Communications Intern. Corp. v. Sw. Bell Tel. Co., 313 F.3d 899, 904 (5th Cir. 2002).


         A. Breach of Contract Claim

         1. Plaintiffs' Allegation Regarding the Occurrence of a Flood

         American Bankers argues that Plaintiffs have not sufficiently alleged that they experienced a flood that damaged their floors, which precludes the SFIP from covering their loss. (Doc. 16-1 at p. 8) The Court disagrees. The SFIP defines "flood" as the "partial or complete inundation of two or more acres of normally dry land area or of two or more properties from . . . unusual and rapid accumulation or runoff of surface waters from any source." (Doc. 16-1 at p. 6). Plaintiffs allege that East Baton Rouge Parish experienced historic flooding from August 12 to August 14, 2016. (Doc. 1-1 at p. 5). American Bankers correctly points out that this alone is not sufficient to allege a claim of flooding specific to Plaintiffs' property. (Doc. 16-1 at p. 9). However, Plaintiffs also allege that during this event, surface water accumulated under their house and in their yard. (Id.) Moreover, while Plaintiffs do not specifically allege that the surface water covered two or more properties or acres of land, the Court finds that it is not required to do so under the federal pleading standard. (Id.) As Plaintiffs correctly point out, the Federal Rules of Civil Procedure utilize a "simplified notice pleading standard" that "relies on liberal discovery rules." Twombly, 550 at 585. "A complaint need not set out detailed factual allegations." Id. at 555. Thus, the Court finds Plaintiffs' alleged facts sufficient to state a plausible claim that flooding occurred on their property.

         Furthermore, because American Bankers denies the occurrence of a flood, it is a disputed material fact that cannot be resolved at this stage in the litigation. (Doc. 10 at p. 3) The Court must allow discovery to proceed on the extent of the accumulation ...

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