morning your honour's jerri nielsen on behalf of southern farm bureau in both cases which appears before you as the fiscal agent and fiduciary of the united states your honor what is the starting point of a district judges case the starting point is the act the statutory scheme designed by congress because in o p m versus richmond the u s supreme court said not one dollar is supposed to come out of the federal treasury by the order of a dip a federal district judge except by what has been sanctioned by congress so how do we accomplish that objective we start with the act and there's two statutes that frame what a district judge would do here the first is forty two u s c section four zero one three where congress delegates to fema exclusively rule making authority as to who is eligible under this act this case presents one of the hardest problems facing congress and fema over the past forty years what do you do with people like ms stoner and mr mccarty who come up at the very last second and want to buy a plot flood policy after they see rain or the hurricane or the snow melt or whatever and unlike their neighbors that are buying flood policies and paying when the sky is blue they want to pay at the last second what do you do with those people there's got to be a rule and congress has rules and fema has rules congress says one rule is you've got have a thirty day waiting period unless you're buying a policy in connection with the loan and the federal regulations are explicit you peg that date at the actual loan closing there's also within the flood policy which is a federal regulation the flood in progress exclusion which and even i say it's wrong sometimes i see it just wrong there is the loss in progress principle a standard insurance law but covers all lines of insurance and then there is the flood in progress exclusion of the n f ip which says that the program does not cover a loss arising directly or indirectly from a flood that was in progress at the inception date of the policy so in that what what is a flood direct counsel for the plaintiff and the district judge viewed this is some fact question do i believe these people and that is the crux of what you have to decide does every united states district court judge all of the country just get to make their own check well like this person i believe this person so i'm going to take a federal treasury check and give it to them or are there the standards that the national government has to set that every judge in the country has to follow and that's the crux of what you have to decide is this actually a fact question where these witnesses credibility is an issue or did fema make a public policy call that says ok this is the standard we're going to have for everybody that wants to pop up at the last second and here's our call how well can you explain the process for determining when the flood starts because i understand in these two cases we've got slightly different approaches to when the flood started so  come in afterwards and say well that flood there that was coming in at x date how is that determined ok you actually have two different floods happening at the exact same time the one that fema was dealing with is the one coming from the northern tier of the country the excessive snow mall melt from that winter fimo working off of flood gauges made a determination of whether or not there was flooding using their definition of flood in every county that had flood in the upper reaches of the mississippi river and going up into the missouri river and that's an after the fact after the nation act and they made that determination that there was flooding in those counties and so and then you also had the flood that arkansas was dealing with which was the excessive rainfall which the governor had fifty seven of seventy five counties was a flood due to that and these two particular counties where these people live right at the cup where those two sets of floats were coming down the lower mississippi the famous says as an objective point if you're one of these people that is coming in at the last second here's going to be the rule if there is a flood in your community which is either your county or your city or your village whatever if any of those are in flood before the inception date of your policy you don't have coverage for that flood event so object of rule the insured may not know that for a while  and meryl and hackler all say they've subjective knowledge of the insured in a federal insurance program is irrelevant it is an object of federal program otherwise a person who's willing to come into court and swear oh i didn't know something they're going to get a federal check a person who says you know i can't go in the courts where i didn't know about this flood they're out and that's not fair i mean we're borderline on morally reprehensible behavior coming in and buying an insurance policy after the whole state is in flood now feel has got to make a lot let's go to the non waiver agreement because if i'm reading this right  one nine where congress said to fema you make the rules for claims adjustment they have made those rules you have to have a proof of loss there is an exception to the proof of last seven j nine in the policy and it's paired with seven d which says only the administrator can waive the rules and it must be in writing so we must find a written waiver by the administrator of the law is clear every appellate court that's looked at this has said the companies cannot waive anything the only exception is this seven j nine and what it says is at our sole option we can accept the adjusters report in lieu of approval of loss but that adjusters report will contain the scription of your damages and you must sign the adjusters report and famous manual which based on the arrangement we have to follow and the us third circuit agreed and several courts of agreed no one's disagreed it's got to be a claim under seventy five hundred dollars and if that is all interpreted that any time a claim that is the claims for fifty thousand and ninety two thousand dollars if we can waive through our contact these claims then we can wai anything anything at all so you don't have a non waiver rule there's also a different issue here the document is a non waiver agreement that happens thousands of times every day in this country where insurance company sends out an adjuster and that adjuster hands the person a non waiver agreement says look there's some squirrelly here we're not certain about this we don't know if you have coverage so sign this waiver that you know this non waiver that we're investigating you claim we want to figure out the facts on the ground but we're not waiving any rights and then the district judge says well that's a waiver somehow i challenge my opponent to show you any case state or federal anywhere in the united states any time where any judge has ever held that a non waiver agreement is somehow a waiver of all respect it makes absolutely no sense we're informing the insured we haven't waived anything and the district judge rules again and you know you say well then you've got to sign the final report it's got to be less than seventy five hundred dollars right but i don't think there are good case law there are good in their own the language of their own government regulations  looking at the holdings of the eighth circuit in man seanie gunter in dixon this court agrees with every other circuit in the land that the s a five piece conditions must be shrigley construed and inforced by the courts on a national uniform basis that there is a compelling governmental interest in assuring uniformity of decision in cases involving the end of five p so everybody gets the same deal this provision article seven j nine is explicit the insurance companies option and we testified repeatedly we did not exercise this option but it will contain the adjusters report contains your damages the damages were never written up the justice report has a zero on every line so if the claim is based on the adjusters report they should get zero and you must sign the adjusters report not something else submitted with it you must sign the adjusters report is what it said and it's not signed and then the manual adds the additional clarifying feature that this this option by the insurance company may only be exercised in claims under seventy five hundred dollars but we don't have the lawful right to waive it and we don't have the lawful right to exercise this exception for tiny claims unless it's under seventy five hundred dollars and it didn't happen here and i assume you argued this to judge wilson yes repeatedly what was his you know i read i read as i read the transcript because it does opinion in the transcript but what was your understanding in his response to that you can do this and i rule that you did and again is this a fact question does every district judge in the united states get to do this i have judges ask me this question it's an important  what if i just believe that insured what if i just have this gut sense that their honest will is that enough for a federal judge in a federal insurance program to award money from the federal treasury and i say absolutely not appearing people don't get more money than people who come across less credibly femurs got object of standers the supreme court is most clear on this it doesn't turn on whether or not you like the insured what these people did as mr owner put in your letter to fema i found a loophole ok and i'm taking advantage of it well that's fine you do get to take advantage of loopholes in the law but you better read everything if you're going to play hardball like that is there anything in the record on why these two people did not submit proof proof a law statements there must be some form yes there's nothing in the record as to why they didn't do that i there is nothing in the record as to why they didn't they didn't our claimed in our letters in both situations were issued within the first sixty days so they were on the written notice from the companies that their claims were being denied before the running of the sixty days so they had time to get those crucial loss in it is the standard practice of the n f ip going back decades that you have a finite number of adjusters in a disaster once that adjuster reaches a situation where it is not a payable claim they shut it down and move on to the next victim we don't sit there writing up non covered damages if that person disagrees with the claim it is incumbent upon them to perfect their proof of loss get a detailed estimate together and get that in and preserve their claim for judicial review how difficult is it it happens all the time you've got public adjusters out there you have legal counsel you've got people that do it on their own there's no need to fill out the particular female form that you can print  right off of their website it takes a little bit of time you figure it out and as the courts have ruled the proof of last form itself must contain all of the information it's laid out in the policy and the female form you can just track it and  it does require that you have detailed line item estimates of what are your damages you can't just come in with a lump sum estimate i want eighty thousand dollars but if done all of the time and so and that is in their court cases about people coming in difficult or it's hard or i didn't have enough time what the courts have said that's all true but that is what the rule requires and if they run afoul of that rule thema stands ready willing and able or through the administrator to waive the rules if somebody messes up and it is theme is decades old practice that if somebody has run afoul of the rules but is owed federal dollars on of this program and hasn't done anything in bad fa more likely than not i'm not speaking for fema just normal practice a waiver will be granted well i'm just out of curiosity as this so complicated never having done one that a lay person can do it or do you have to go out and find a lawyer people do it on their own all the time it is not the case in females even remove the requirement used to be that you had to go to a notary and have it sworn to prove law sworn in the presence of a notary and a couple of years back famous and at weymouth is a federal statute for like your tax return if fema puts the magic language sworn under penalty of perjury and has the person sign it date it congress has deemed that in documents submitted for federal funds or to a federal agency that is a swearing so you don't even have to go to a notary to have to have it done so you can fill the thing out sign it attach all your documents and mail it in and it happens all the time and that's been the rule in this program for decades i've been doing this for thirty years the rules in place before i showed up that's always been our rule it's never been changed and the courts have uniformly always been for after hurricane katrina ten cases went to the us fist circuit on this rule people all kinds of different trying to get around this rule with every imaginable argument very creative plaintiff's lawyers are that's their job ten times the fist circuit said no dealing with katrina they said no it's a strict rule because there is a safety valve you've got the administrative review process through fim if you are honestly actually owed money out of the program and all you did was run afoul of the price argument you're going back to begin any of your argument the government's encouraging buying these things ahead of time and collecting premiums over time rather than racing in the last minute i mean that's right i suppose the public policy argument of it one of the public policy jesting the possibility that and i'm using into my rebuttal time is a federal agency they've got no incentive to tell someone no their incentive is to treat everyone equally and that's their main objective they've been dealing with people doing this for decades and so they work real hard to have a system that's purely objective that works across the board both in terms of the eligibility issue and the claims presentment people i'm not talking about fema i'm tell you we're talking about congress and what congress is trying to do was to avoid people coming in at the last you if you encourage and enable people to buy their policies at the last second then nobody's going to pay premiums year after year a twenty billion dollar deficit the program becomes a fifty billion dollar deficit and that's kind of follows in the supreme court cases and then also i guess our case judge arnold's case yes ok if i may reserve limited time i have for a bottle ok thank you thank your hono case this is a case about holding farm during the terms of the contract that they enter into with the citizens of east arkansas so this is no waiver case first off i'd also like to point out that the apple is didn't wait to the last minute to get any insurers for example mr mccarthy has an insurance policy in place approximately one month before the blood waters reached his property in addition missed own she obtained her insurance policy when the water flood waters were miles away from her property so it is disingenuous for farm bureau to state that our clients wanted to the last minute to take advantage of this program because farm bureau offered not one witness to contradict the testimony of our clients that there was no cutting in their area so what this case is about is holding farm bureau the terms their policy what farm bureau sticks to turn this case in to as an opportunity to hide behind famous when in fact famous which issues these date of last bulletins whatever they mean however they're determined famous specifically sent memos and they're in the record that you won one one one zero two farm bureau and other rational carriers saying the facts for flood in progress must be determined on an individual basis that's a factual question famous specifically said to write your own carriers such as farm bureau that don't rely on administrative declaration but what do they do they told judge wilson and both trials it's again the trial in the record we don't have any evidence there was a flood in progress when these when these policies were obtained instead farm bureau says they made the decision with fame and never made the decision i guess at the beginning what this case about is holding farm bureau to the terms of its policy the policy defines blood and it does say a flood in progress will not be covered but what is a flood flood is a time in your community when two more years or two or more properties are inundated with water that the so the sole intent so logic intent is to revive for the determination of value and amount of loss and damage so our clients stand off on this investigation of their loss and damage and just report was completed and it was sent back to g m s who process these coins and it's important to note that the coins were not an ad for failure smid a proof of loss that's not why they were doing that it was the flood in progress issue so i don't believe that the district ordered it all and the be in the record is that is that they just were sent back just before they also sent back the non labor which was signed it's i guess it's a separate document judge wilson i believe my defining that it rests civically referenced an adjuster before so  explained that sounds like you're arguing not a strict construction but then the other thing is how do you distinguish i don't know i pronounce it the sloppy versus omaha proper property whatever that is  but it's a third circuit case which seems awfully close here that if we ruled in your favor that it would create a circuit split well first off i would i would a stand for that proposition should this disregarded by this court because i don't see interpretations of their own regulations are only acceptable when they don't conflict the statute a we've got a policy it's a contract between farm bureau ginny stein or mike mccarthy it doesn't have anything to do about the seventy five hundred dollars limit it's not there so if farm bureau authorize payment it's outside the terms of their agreement with fame that's their own problem this is about a policy in a contract between two private parties i don't go his way well go ahead but the question i have that came up before i forget was you that he accepted you have any time you have any case law or regulation or statute says farm bureau has authority to waive anything by its actions or  distinct factual situation being a waiver this is instead an insurance company granting permission to use an alternative policy procedure the jesters reports not a waiver of the proof of loss requirement it's just not alternative  and i'll also say the only reason the jesters report didn't get signed and this came out in testimony is it was never provided well time if you understand the case law seem to indicate that this is not an insurance company and so some of those waiver rules will imply this the government in the supreme court has said you don't get you don't get these waivers you don't get any money out of the federal treasury without strict compliance with the letter of the law i mean that's what we're all living with so there is a difference between government money versus insurance money so where one authority do you have that says that the farm bureau is acting as an agent for the federal second one the policy itself says that that the insurance policy should be construed and in accordance with traditional principles of federal common law it says it itself and for example you might we've we've said that we've made the argument a trial and it's never really i don't think specifically ruled on even if our clients did not sign the jesters report the doctor material breach is applicable in flood insurance cases a couple courts a struggle with  e most recently in two thousand and eight and how the state farm where i believe the district court recognize that material first material breach argument is applicable in that case they found there was not of course material breach issue because the insured basically waived and continued to perform in this case i would go so far to say our clients were prevented from signing the jesters report because even after they signed this agreement which judge wilson made the factual finding could be incorporated or considered incorporated in the jesters report even after they signed off and agreed with farm bureau that the gestural do this damage estimate the insurance company didn't send enough to sarve its line of cases and that circuit the court made clear that the prevention doctor is also affable as a federal common law doctor and insured cannot be required to sign something that is not provided what about the availability of a proof of loss form on the internet website there's no indication that your client did that independently right that is correct i think it's important remember that our clients claims were denied before the prove loss was done and i would say that would excuse any further performance but also say they had already signed an agreement manuever that seems to explicitly to me decided that the gestures were going to establish the loss and the damage now there is some dispute as to exactly what the adjuster reports show and i know the farm bureau doesn't want to say they show damage and i show loss the raid the testimony co counsel for the defense wants so far as to withdraw that test on what's your response to the argument that a non waiver agreement cannot waiver something that other words seems kind of a moron it does if you just look at the title of the agreement that when you get into the  came up to this today it was man seine and the footnotes it was reckoned as you know there is the possibility and the jesters report should be accepted we've got one now and then we've also got equitable arguments that are applicable because federal common crimes farm bureau did not do so they just unilaterally didn't add these crimes moreover not mccarthy had a policy before anybody says there was a flood darling the farm bureau argued there was a flood as i point six and a shake in the arkansas he's got a policy dated april twenty fifth and then after he files a loss farmer unilaterally cancels that and changes the date of coverage what about do you disagree farm bureau didn't realize it at the time but they had the date right the first time what's the exception the exception is when your lender requires you to have flood insurance product of time in a loan and that's exactly what happened in matt mccartney case he couldn't get a loan to that flood insurance so in that case and i think exhibit thirty four point is thirty four i got here one is exhibit thirty four mccarty coverage effective no waiting period in connection with linda requirement of the title on the plaintiff thirty four the cover effective upon the completion of an application and present payment of premium so michael twenty fifth he had what insurance coverage prior to anybody's allegations of flooding quoting famous there in cooper became didn't run here the last second you'll know that's not correct i don't know by that it is there's no flood in progress case in this country where a flood was in progress and you'd be in your house doesn't you floated for a mo want to ask you about that seventy five hundred dollar limit for the alternative proof of loss why do you think that is your argument that that in contradiction to the statute that's why we shouldn't defer to that that's one of them insurance policy same thing sign contract or insurance there's no seventy five hundred hour limit in that pool at seventy five hundred dollars limit out of a claims manual which is i guess an interpretation of how famous administer the  policy that is distinct in that seventy five hundred dollar limit also point out doesn't even reference this provision of the policy that we're reliant on the article seven provisions not mention the seventy five hundred dollars limit again i'd also like to  read reiterate my position that this is not a waiver case whatever i do believe that they can waive privilege requirements for claims under seventy five hundred dollars i believe farm bureau can make that white but this is not the situation they don't they still have proof of loss because i've got an adjuster to report i think that the more you did the more you read these claims manuals they say a memo was the policy itself it becomes evident that the smoke and mirrors can be seen through what about the the reg that says at our option we may accept the adjusters report of the loss of state of your proof of loss of course goes on say you sign it you didn't sign it but it says add our option we may what evidence do you have that they exercise that option the testimony of jim as a factual finding of a district court judge was the exercise option jim took those adjuste for the denial to as well a who's who has the authority to exercise the option farm bureau that's the way and i think the preserve a case plan like that is that the our in it in the regulation violates its agreement with famous it does bother me if our bureau violates the contract it has with our clients and you say that the non waiver agreement that not preclude waiver of the proof of loss yes yes your honor and all the like it's really a waiver i think yes and exercise a policy alternative except the gesture for and material breach doctrine very strong very strong material breach argument and jim was the jester admitted under cross in direct farm bureau took no true investigation of this case they didn't i didn't investigate when the flood started they departed fame of bulletins fame a bulletins in sales but that's not acceptable that you won one one one zero that that's the that's the crux of the argument i guess rest asked this court poll to factual terminations by the district court judge first there was not a flood in progress again the burden is on the defendant out of the common law anyway but they didn't last requirement that said operation at your time is there any agency governmental or otherwise or insurance company or ernst company represent those that have  right to make these determinations for who is really in charge of determining when a flood is in progress the national weather bureau  a department of agriculture policy controls this when two or more riker's of water death is defined clearly a policy two or more years of water in your community or two or more records of land excuse me in your community are flooded and famous said itself that the policy terms contro and administrative declarations and flood gauges are not controlling i want to flood stars it has to be made on an individual basis it's absurd that we hear the defense come up here and say i will buy it makes a decision famous said in writing that we don't make the decision a policy controls the factual question for the judge and the judge issued a special determination in our favor we asked you uphold that and you whole farm bureau to their agreement with our clients ok thank you counsel is saying what the record has just as to the flood in progress every document any party wanted to put into the record went into the record without objection you've got all kinds of documentation both from the governor of arkansas for the arkansas flood and from fema as to the national flood going on at the exact same time you've got testimony for instance in the stoner case that her son was building a six foot berm around the house four days before they bought the policy and she moved out with all of her contents two days after i think that's significant evidence they knew a flood was coming as to the valuation of the risk the adjuster is required to do an evaluation of the property what is it value that's not its damage council wants to keep doing this a shell game the adjusters report seven j nine says the adjusters report will include information about your loss and the damages  sustained you just as report here has zero for every one of those numbers the separate valuation of what is the house worth so we can figure out if the right amount of insurance is being purchased is in there as well those are two separate documents this is a federal insurance program this isn't for council to come in and just play word games the loan date controls regardless of what he was saying about how you get your loan or why you get your loan the trigger date for eligibility is when the loan closes these adjusters did not waive anything they did not accept they did not exercise there's no such testimony if this federal insurance program is going to work it's got to work based on positive law and the record is replete both in terms of the governor's information themas information they didn't come in with evidence to rebut themas finding hey there was no flooding in our county you are wrong fema what they came back with was i didn't see any i didn't subjectively know that it was going to get to my house if that's the standard then they do when if it's an object a standard based upon themis nationally known rule i win could have presented testimony that no there was no flooding in my county absolutely and that would have been except to pull back finding for the court to undertake yes but it's not just come in and say i didn't see flooding at my house you gotta come in and actually prove up themas determination is wrong there was no flooding in my county and then that would be ok but that's not what they did it was i subjectively didn't know and if every person in the country can come in and turn congressional statutes and federal regulations based on what they subjectively knew then take all the supreme court cases and throw them away care time's expired thank you