Dorothy Shuford is appealing a summary judgment that denied her claim for benefits under a Standard Flood Insurance Policy issued by Fidelity National Property and Casualty Insurance Company. The appeal, heard by the Eleventh Circuit, raises two primary issues: the timeliness of her proof of loss submission following flood damage from Hurricane Ivan and whether her related bad faith tort claim is preempted by federal law.
Following the hurricane, the Federal Insurance Administrator established a one-year deadline for submitting proofs of loss for contested claims, superseding the standard 60-day requirement. Shuford did not file her proof of loss within this one-year timeframe. The district court ruled that her tort claim was expressly preempted by federal regulation, specifically 44 C.F.R. 61, app. A(1. art. IX, and granted summary judgment against her breach of policy claim due to her failure to timely file the proof of loss.
The Standard Flood Insurance Policy stipulates that only the Federal Insurance Administrator can modify its terms. The policy required proof of loss submission within 60 days of the loss, but the Administrator's subsequent waiver allowed for an extended one-year period in response to widespread hurricane damage and a shortage of adjusters. Ultimately, the court affirmed the district court's decisions.
The procedure outlined enables insurers to efficiently adjust, settle, and pay claims based on adjuster reports. Certain provisions from the SFIP (Standard Flood Insurance Policy) regarding claims will not apply under this waiver, specifically VII.J.7, J.9, and M.2.c from the Dwelling and General Property Forms, and VIII.J.7, J.9, and M.2.c from the Condominium Building Association Policy Form. Policyholders who disagree with the insurer's claims adjustment can submit a proof of loss within one year of the loss, adhering to specific requirements. If the insurer partially or wholly rejects the proof of loss, the policyholder may file a lawsuit within one year of the denial.
The waiver applies to claims arising from August 12, 2004, to December 31, 2004, due to anticipated issues with adjuster availability following multiple hurricanes. Shuford filed a claim with Fidelity but did not submit a proof of loss. After Fidelity denied the claim citing lack of coverage, Shuford sued for breach of contract and bad faith refusal in state court, which was removed to federal court. The district court dismissed the tort claim as preempted by federal law and granted summary judgment against the breach of contract claim due to Shuford's failure to file a proof of loss within the required timeframe. The court also denied Shuford's motion to alter the judgment.
The appeal is governed by various standards of review, including de novo review for summary judgment and preemption determinations, and an abuse of discretion standard for denying discovery requests under Rule 56(f).
The court reviews the denial of a motion to alter or amend a judgment under Rule 59(e) for abuse of discretion. Shuford contests four district court rulings: (1) the summary judgment against her breach of contract claim; (2) the denial of her motion for limited discovery under Rule 56(f); (3) the ruling that her tort claim was preempted by federal law; and (4) the denial of her motion to alter or amend the summary judgment, claiming it conflicted with industry standards. All arguments presented by Shuford are rejected.
Regarding the breach of contract claim, Shuford attempts to justify her failure to file a proof of loss within the required one-year period through three arguments: (1) she alleges the Administrator’s waiver eliminated the proof-of-loss requirement and turned the adjuster’s report into a proof of loss; (2) she claims Fidelity should be estopped from using her failure to file as a defense; and (3) she argues that Fidelity constructively waived the requirement. Each argument fails as Shuford did not comply with the proof-of-loss requirement outlined in the Administrator’s waiver.
The waiver indeed removed the initial 60-day proof-of-loss deadline but established a one-year deadline for contested claims. The waiver clarifies that a proof of loss is necessary if the insurer rejects it, which is a condition for legal action. The term 'may' indicates that filing a proof of loss is a requirement for obtaining judicial relief rather than an optional step. Shuford's claims that the adjuster’s report served as a proof of loss and that she was unaware of the estimate are inconsistent with the waiver's explicit language, which stipulates that a proof of loss is necessary for contested claims.
Shuford’s argument regarding the denial of her claim is flawed because she was required to submit a proof of loss even without knowledge of the adjuster's report, as the Administrator's waiver permits policyholders to submit proof when they disagree with the insurer's payment. Fidelity cannot be equitably estopped from enforcing the proof-of-loss requirement based on an erroneous letter it sent, as equitable estoppel is not applicable in cases against the government concerning public treasury funds, as established by the Supreme Court in Office of Personnel Mgmt. v. Richmond. This ruling prohibits altering the disbursement requirements set by Congress, which applies to Fidelity acting as a fiscal agent under the National Flood Insurance Program. Even if equitable estoppel were theoretically available, Shuford failed to demonstrate "affirmative and egregious misconduct," as noted in Sanz v. U.S. Sec. Ins. Co., where similar circumstances did not warrant estoppel. Lastly, Shuford's claim that Fidelity constructively waived the proof-of-loss requirement is also unsubstantiated; the precedent set in Sanz indicates that mere lack of a denial based on the proof of loss does not constitute a waiver.
Strict compliance with federal flood insurance policy provisions is mandated, as payments are sourced from the federal treasury. Recovery is barred if a proof of loss is not filed unless there is an express written waiver from the Administrator. The district court did not err in denying Shuford’s request for limited discovery regarding the waiver interpretation, as her motion lacked justification for needing to clarify the waiver's meaning. Shuford’s tort claim of bad faith is expressly preempted by federal law, which overrides state law claims when Congress has clearly indicated such intent. The Standard Policy, established under federal regulation, specifies that all claims are governed by FEMA regulations and federal common law, asserting a uniform interpretation across all policies. This preemption is further supported by the 2000 amendment to the Standard Policy, which necessitates that issues related to claims handling be resolved in federal court. Lastly, the district court did not abuse its discretion in denying Shuford’s motion to amend the summary judgment since her arguments regarding the Administrator's waiver interpretation were inconsistent with industry standards.
Shuford referenced an affidavit from claim adjuster Scott McColl, who indicated that the industry perceived the Administrator’s waiver as eliminating the need for a proof of loss, asserting that the adjuster's report sufficed. The court rejected Shuford's argument for two main reasons. First, the district court appropriately disregarded McColl’s affidavit since Shuford did not include it in her summary judgment opposition, and a motion to reconsider typically requires showing that the evidence was previously unavailable. Shuford claimed insufficient time for discovery prevented her from including the affidavit, but her request for limited discovery did not address the need to interpret the waiver. Second, even had the affidavit been considered, the district court would not have erred in denying Shuford’s motion to alter or amend the judgment, as it adhered to the plain language of the waiver. Consequently, the summary judgment favoring Fidelity, along with the orders regarding limited discovery, dismissal of Shuford’s tort claim due to federal preemption, and denial of the motion to amend the judgment, were all affirmed.
