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Carmouche v. National Flood Insurance Program

United States District Court, E.D. Louisiana

October 24, 2018


         SECTION “R” (4)



         Before the Court are (1) defendants' motion to dismiss plaintiff's complaint for lack of subject matter jurisdiction and a failure to state a claim upon which relief can be granted; and (2) plaintiff's motion for leave to amend her complaint. The Court finds that it lacks subject matter jurisdiction over the complaint because the United States has not waived sovereign immunity for plaintiff's claims. It also finds that granting plaintiff leave to file her proposed amended complaint would be futile. The Court therefore grants defendants' motion to dismiss and denies plaintiff's motion.

         I. BACKGROUND

         This action arises from the catastrophic flooding in Louisiana during the summer of 2016.[1] The flooding damaged plaintiff Joelle Carmouche's home in Ponchatoula, Louisiana.[2] At the time of the flooding, plaintiff's home was insured through a standard flood insurance policy (SFIP) provided through defendant the National Flood Insurance Program (NFIP).[3] The NFIP is administered by the Federal Emergency Management Agency (FEMA). Plaintiff alleges that she timely reported her losses to FEMA, and that FEMA then hired an insurance adjustor to prepare a damage estimate and Proof of Loss.[4] Plaintiff alleges she was “forced to sign and submit a Proof of Loss” based on the adjustor's estimate “in order to receive an initial damage assessment payment.”[5] Plaintiff then allegedly determined that this initial payment did not cover the full extent of her damages, and retained an independent expert to evaluate her total losses.[6] The independent expert allegedly concluded that FEMA had underpaid plaintiff.[7] Plaintiff then filed a second Proof of Loss with supporting documentation that allegedly covered the full extent of her damages.[8] FEMA had not responded to plaintiff's second insurance claim when plaintiff filed this lawsuit.[9]

         On October 30, 2017, plaintiff filed its initial complaint against (1) the NFIP; (2) W. Brock Long, in his official capacity as Administrator of FEMA; and (3) the Secretary of the Department of Homeland Security (DHS), in her official capacity.[10] Plaintiff alleges that defendants breached the terms of her insurance contract because FEMA “wrongly failed to pay [her] for damages” owed under her insurance policy. Plaintiff seeks monetary damages she has sustained as a “foreseeable and direct result of the breach.”[11] On June 22, 2018, defendants moved to dismiss plaintiff's complaint for lack of subject matter jurisdiction, or, in the alternative, for failure to state a claim upon which relief can be granted under Federal Rule of Civil Procedure 12(b)(6).[12]On July 17, 2018, plaintiff filed both an opposition to defendants' motion[13]and a motion seeking leave to file an amended complaint, [14] which in part seeks to remedy the jurisdictional issues defendants identified. Defendants oppose plaintiff's motion.[15]


         Under Rule 12(b)(1), “[a] case is properly dismissed for lack of subject matter jurisdiction when the court lacks the statutory or constitutional power to adjudicate the case.” Home Builders Ass'n. of Miss., Inc. v. City of Madison, 143 F.3d 1006, 1010 (5th Cir. 1998) (quoting Nowak v. Ironworkers Local 6 Pension Fund, 81 F.3d 1182, 1187 (2d Cir. 1996)). A district court may dismiss a case for lack of subject matter jurisdiction on any one of three bases: “(1) the complaint alone; (2) the complaint supplemented by undisputed facts in the record; or (3) the complaint supplemented by undisputed facts plus the court's resolution of disputed facts.” Clark v. Tarrant County, 798 F.2d 736, 741 (5th Cir. 1986) (citing Williamson v. Tucker, 645 F.2d 404, 413 (5th Cir. 1981)). The plaintiff bears the burden of demonstrating that subject matter jurisdiction exists. See Paterson v. Weinberger, 644 F.2d 521, 523 (5th Cir. 1981).

         When, as is the case here, grounds for dismissal may exist under both Rule 12(b)(1) and Rule 12(b)(6), the Court should address the jurisdictional question first. See Hitt v. Pasadena, 561 F.2d 606, 608 (5th Cir. 1977); see also Colonia Ins. Co. v. Williams, 941 F.Supp. 606, 607-08 (N.D. Miss. 1996) (“[P]rior to deciding whether to exercise its discretion and allow a declaratory judgment action to be brought, the court must first examine jurisdiction.”).


         A. Defendants' Motion to Dismiss

         Defendants contend that federal sovereign immunity precludes the Court from exercising jurisdiction over plaintiff's claims against all three defendants. “The basic rule of federal sovereign immunity is that the United States cannot be sued at all without the consent of Congress.” Block v. North Dakota ex rel. Bd. of Univ. & Sch. Lands, 461 U.S. 273, 287 (1983). Relief “sought nominally against an officer is in fact against the sovereign if the decree would operate against the latter.” Hawaii v. Gordon, 373 U.S. 57, 58 (1963). Accordingly, suits against officials or agencies of the United States are typically barred if there is no waiver of sovereign immunity. See Id. “A waiver of the Federal Government's sovereign immunity must be unequivocally expressed in the statutory text and will not be implied.” Lane v. Pena, 518 U.S. 187, 192 (1996). Any waiver must be “strictly construed, in terms of its scope, in favor of the sovereign.” Id. Absent an express waiver of sovereign immunity, a federal court does not have jurisdiction to adjudicate claims against sovereign defendants. FDIC v. Meyer, 510 U.S. 471, 475 (1994) (“Sovereign immunity is jurisdictional in nature. [Thus, ] the terms of [the United States'] consent to be sued in any court defines that court's jurisdiction to entertain the suit.”) (internal quotation marks omitted). A plaintiff bears the burden of showing Congress' unequivocal waiver of sovereign immunity in a suit against federal agencies or officials. St. Tammany Parish v. Fed. Emergency Mgmt. Agency, 556 F.3d 307, 315 (5th Cir. 2009).

         Here, because plaintiff is seeking a monetary award against a federal agency, and the award would be disbursed from the public treasury, the United States is the real party-in-interest, and sovereign immunity applies to plaintiff's claim. See Dugan v. Rank, 372 U.S. 609, 620 (1963) (“The general rule is that a suit is against the sovereign if the judgment sought would expend itself on the public treasury or domain, or interfere with the public administration.”) (internal quotation marks omitted); Wright v. Allstate Ins. Co., 415 F.3d 384, 386 (5th Cir. 2005) (“Payments on SFIP claims come ultimately from the federal treasury.”).

         Plaintiff asserts two bases for jurisdiction in her complaint. First, she states that the Court has federal question jurisdiction under 28 U.S.C. § 1331, because the matter involves an insurance contract issued by a federal agency.[16] But Section 1331 “is a general jurisdiction statute and does not provide a general waiver of sovereign immunity;” thus, it alone does not grant the Court jurisdiction over plaintiff's claims. Shanbaum v. United States, 32 F.3d 180, 188 (5th Cir. 1994). Second, plaintiff asserts that the Court has jurisdiction under 42 U.S.C. § 4072.[17] Section 4072 provides a limited waiver of sovereign immunity allowing an injured policyholder to sue FEMA when FEMA denies claims under an SFIP. 42 U.S.C. § 4072; Wiedemann v. Harleysville Mut. Ins., No. 06-4723, 2006 WL 3462926, at *1 (E.D. La. Nov. 28, 2006). The provision states, in relevant part:

[U]pon the disallowance by the Administrator of any . . . [flood insurance] claim, or upon the refusal of the claimant to accept the amount allowed upon any such claim, the claimant, within one year after the date of mailing of notice of disallowance or partial disallowance by the Administrator, may institute an action against the Administrator on such claim in the United States district court for the district in which the insured property or the major part thereof shall have been situated. . . .

         42 U.S.C. § 4072 (emphasis added).

         As the emphasized language makes clear, Congress waived federal sovereign immunity only when (1) FEMA disallows a party's flood insurance claim or (2) a party refuses to accept the amount allowed based upon a federally-issued policy. Id.; see also Gumpert v. Allstate Ins. Co., No. 97- 1531, 1997 WL 538003, at *4 (E.D. La. Aug. 26, 1997). The next clause states that if a claimant wishes to bring an action in federal court, she must initiate the action within one year of receiving a notice of disallowance or partial disallowance. 42 U.S.C. § 4072; see also 44 C.F.R. § 62.22. The statute therefore contemplates that the claimant will receive a notice of total or partial disallowance before filing suit. When viewing the provision as a whole, courts have interpreted it as requiring FEMA to deny all or part of an insurance claim before the claimant can sue the agency in federal court. See Downey v. State Farm Fire & Cas. Co., 276 F.3d 243, 244 (7th Cir. 2001) (Section 4072 waives sovereign immunity “only when the Director has disallowed a claim”); Wiedemann, 2006 WL 3462926, at *1 (Section 4072's waiver of sovereign immunity “only applies when FEMA denies claims submitted to it pursuant to a federally-issued SFIP”).

         Plaintiff's suit does not fall under Section 4072's limited waiver of sovereign immunity. Defendants have attached to their motion (1) a declaration from Russell M. Tinsley, a FEMA Insurance Examiner; and (2) relevant documents from plaintiff's claim file, which clarify plaintiff's interactions with FEMA before she filed this lawsuit.[18] This evidence shows that after the August 16, 2016 flood, plaintiff made an initial claim for property loss to the NFIP.[19] Plaintiff received advance payments totaling $15, 000 on September 4, 2016.[20] An NFIP-certified Independent Adjustor then assisted plaintiff in assessing the extent of her property damage.[21] On October 18, 2016, plaintiff signed a Proof of Loss assessing her damages as $124, 639.57.[22] Roughly two weeks later, on November 2, 2016, plaintiff received further payments of $112, 089.22, for a total compensation of $127, 089.22-slightly more than the amount reflected in her Proof of Loss.[23]FEMA thus allowed the entirety of plaintiff's initial claim. Plaintiff concedes in her amended complaint and in her opposition to defendants' motion to dismiss that she accepted the initial payment FEMA offered.[24] Plaintiff then submitted to FEMA an additional claim for payment, along with a second and revised Proof of Loss, in October 2017, the same month she filed this lawsuit.[25] Tinsley declares that he reviewed plaintiff's policy file on or about June 20, 2018, and that the file did not contain a denial letter from FEMA for plaintiff's October 2017 claim.[26] Plaintiff does not allege in either her complaint or proposed amended complaint that she received a notice of disallowance or partial disallowance for this second claim. There is thus no indication in the record that FEMA has disallowed all or part of either of plaintiff's two claims, or that plaintiff refused any funds FEMA has offered.

         Plaintiff argues in her opposition that Section 4072 nonetheless waives sovereign immunity for her suit because she has “refus[ed] to accept the amount allowed on the original” claim by virtue of filing this complaint, and that under the statute she need not wait for FEMA to evaluate her second claim for additional payment.[27] Plaintiff in effect argues that Section 4072 waives sovereign immunity if FEMA pays in full the amount contained in a Proof of Loss, but a claimant later comes to believe that this Proof of Loss did not contain the full extent of her damages.

         Plaintiff's interpretation of Section 4072 is incorrect. The text of Section 4072 requires FEMA to disallow all or part of plaintiff's claim, and for plaintiff to refuse “to accept the amount allowed” in the event of a partial disallowance. 42 U.S.C. § 4072; see Downey, 276 F.3d at 244-45. Plaintiff's “refusal” to let FEMA's full payment be the end of her interactions with the agency does not waive the agency's sovereign immunity. Plaintiff's reading would allow every federally-insured claimant to file suit in federal district court, because the claimant could file suit regardless of whether FEMA allows or disallows a claim. Such a construction would render Section 4072's limited waiver of sovereign immunity meaningless, when the Court must in fact “constru[e] waivers of sovereign immunity narrowly in favor of the sovereign.” Lane, 518 U.S. at 195. A court in the Middle District of Louisiana recently came to this same conclusion, and found that two different suits were barred by ...

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