* Pursuant to 5 TH CIR

. R. 47.5, this Court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5 TH CIR

. R. 47.5.4.

### IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 06-31156
C W GALLUP, also known as Bo Gallup; SUSAN MOCK GALLUP Plaintiffs - Appellees - Cross-Appellants v. OMAHA PROPERTY AND CASUALTY INSURANCE COMPANY Defendant - Appellant - Cross-Appellee

Appeal from the United States District Court for the Eastern District of Louisiana USDC No. 2:03-CV-3476
Before JONES, Chief Judge, and WIENER and CLEMENT, Circuit Judges. PER CURIAM: * C.W. Gallup and Susan Mock Gallup (“the Gallups”) owned a home on the banks ofthe Bouge Falaya river outside ofCovington, Louisiana. The homewas built on pilings to withstand flooding. Two floods in 2002 and 2003 resulted in land erosion which undermined the pilingssupporting onesection oftheir home. After each flood, the Gallups made claims under the Standard Flood Insurance Policy (“SFIP”) program, which is part ofthe National Flood Insurance Program (“NFIP”) administered by the Federal Emergency Management Agency United States Court of Appeals

Fifth Circuit 

### F I L E D May 29, 2008 Charles R. Fulbruge III ClerkNo. 06-31156

2 (“FEMA”). Insurer Omaha Property and Casualty Insurance Co. (“Omaha”), which provides flood insurance under the NFIP as a “Write Your Own” insurer, denied both claims. The Gallups sued in federal court under 42 U.S.C. § 4072. Following a bench trial, the district court awarded the Gallups the cost of moving their home, which it found to be the “fairest, most economical” remedy. We affirm the Gallups’ right to recover for losses from flooding in 2003, but we
reverse the district court’s equitable remedy because it is incompatible with the terms ofthe SFIP. We render judgment in the amount of$117,114.74, which is the amount the Gallups are contractually entitled to recover under the SFIP for direct physical losses to their home. I. FACTS AND PROCEEDINGS The factual background of this case is discussed in detail in Gallup v. Omaha Property & Casualty Insurance Co., 434 F.3d 341, 343 (5th Cir. 2005), a prior interlocutory appeal.

The Gallups purchased a SFIP from defendant Omaha

. . . for their home and its contents in Covington, Louisiana in 2002 and 2003. . . . On December 24, 2002, a flood occurred on the plaintiffs’ property (“Flood I”). An architect and engineer consulted by the plaintiffs determined that the flood caused damage tothe structure of the home. The plaintiffs filed a Proof of Loss with Omaha, claiming damages of$210,000.00

. . . . Omaha’s engineer inspected the home and recommended repairs to restore the structural integrity ofthe home but alsostated that the home had not suffered any damagefrom theflood, other than soil lossfrom underneath the pilings. Omaha modified theclaim, paying only theamount itwould cost to replace the soil beneath the home, approximately $9,000. In June 2003, another flood occurred related to Tropical Storm Bill (“F lood II”). Flood II severely damaged the Gallup home, causing part ofthe hometosag and completely undermining several footings supporting the piers that elevate the home. The plaintiffs filed another Proof of Loss with Omaha seeking approximately $209,000 . . . . Omaha denied the claim after its attempts to settle for a nominal sum were unsuccessful.No. 06-31156

1 All citations are to the 2000 version of the SFIP in effect at the time of the Gallups’ loss. See Gallup v. Omaha Prop. & Cas. Ins. Co., 434 F.3d 341, 344 (5th Cir. 2005). 3 Id. The Gallups’ home, which has since been sold, had an unusual design. It consisted of two glass-walled steel frame buildings connected by exterior walkways and supported by eight-foot-high steel pilings. The interior walls of the home were not load-bearing. Building A was constructed in 1964 and Building B was constructed in 1976. Only Building B was affected by the 2003 floods. In December 2003, theGallupssued Omaha and broughtfederal and state
claims for breach of contract. The district court issued an interlocutory order finding that the Gallups’ state law claims were not preempted by the NFIP. Omaha appealed from the order and this Court reversed, concluding that state lawtort claims arising from claims handling by an NFIP insurance provider are preempted by federal law. Gallup, 434 F.3d at 344–45. On remand, the district court held a bench trial and rendered a verdict of $85,000 in favor of the Gallups. The district court found that the soil damage from Flood I and Flood II was flood-induced land subsidence covered under the SFI P. See SFIP, 44 C.F.R. Pt. 61, App. A(1), Art. II(a)(2), Art. V(c)(6). 1 The district court found that the Gallups did not violate their regulatory or common law duty to mitigate their damages following Flood I because the mitigation
measures available to them were either prohibitively expensive or would not have prevented the damage caused by Flood II. The district court found that there was no “direct physical loss” tothe Gallups’ residence following Flood I, as required for recovery under the SFIP. SeeSFIP, 44 C.F.R. Pt. 61, App. A(1), Art. I. The district court found that following Flood II the Gallups’ home “was either
a constructive total loss because the housewas not safe to live in, or the losswas the cost of moving it.” The district court noted that the Gallups’ architect had estimated that it would cost around $85,000tomove the home toa safer locationNo. 06-31156

4 following Flood I. The district court awarded the Gal lups $85,000 because it found that the home could still be moved after Flood II, and thiswas “thefairest, most economical way to try to implement

. . . the spirit and purpose ofthe flood program” and was “preferable to finding this a total loss.” Omaha appealed the $85,000judgment, and the Gallups cross-appealed, claiming that they should have been awarded their policy limit of$210,000. The Gallups also appealed an evidentiary order and an order denying their motion to amend their complaint to include a claim under Bivens v. Six Unknown Named Agents of Federal Bureau of Narcotics, 403 U.S. 388 (1971). II. STANDARDS OF REVIEW In an action tried without a jury, we review the district court’s factual findings f

or clear error. U nited States v. U.S. Gypsum Co., 333 U.S. 364, 395 (1948); Peavey Co. v. M/V ANPA, 971 F.2d 1168, 1174 (5th Cir. 1992). We interpret the languageofthe SFIP denovo
. McHugh v. United Serv. Auto. Ass’n, 164 F.3d 451, 454 (9th Cir. 1999); Sodowski v. Nat’l Flood Ins. Program of Fed. Emergency Mgmt. Agency, 834 F.2d 653, 655 (7th Cir. 1987). We review the district court’s decisions regarding the admission of expert testimony and its denial of the Gallups’ motion for leave to amend their complaint for abuse of discretion. S&W Enters. v. Southtrust Bank of Ala., 315 F.3d 533, 535–36 (5th Cir. 2003); Reliance Ins. Co. v. La. Land & Exploration Co., 1 10 F.3d 253, 257–58 (5th Cir. 1997). III. DISCUSSION A. Flood I Loss We affirm the district court’s factual finding that there was no covered damage following Flood I, because we do not think this conclusion is clearly
erroneous. See U.S. Gypsum Co., 333 U.S. at 395. The SFIP only covers “direct physical loss” to the insured dwelling. SFIP, 44 C.F.R. Pt. 61, App. A(1), Art. I. The evidence in the record, particularly the photographs of the Gallups’ home,No. 06-31156

5 support the conclusion that the only damage after Flood I was exposure of the concrete footings supporting two of the pilings upon which Building B stood. Although there was conflicting evidence at trial as to the structural integrity of Building B after Flood I, weighing the credibility of conflicting witness testimony is the responsibility ofthedistrict court. U nited Statesv. Ornelas-Rodriguez, 12 F.3d 1339, 1346 (5th Cir. 1994). The district court’s finding that there was no direct physical loss to the Gallups’ home after Flood I was not clearly erroneous, and we affirm. See Peavey Co., 971 F.2d at 1174. B. Duty to Mitigate (1) Duty to Mitigate under the SFIP We affirm the district court’s legal conclusion that after Flood I the Gallups did not breach their duty to mitigate damages under the SFIP. The district court correctly found that the SFIP duty to mitigate was not implicated by the facts here. The SFIP mitigation provision states:

D. We do not insure for direct physical loss c aused by directly or indirectly by . . . 4. Water, moisture, mildew, or mold damage that results from any condition: . . . b. That is within your control, including but not limited to: . . . (3) Failure to inspect and maintain the property after a flood recedes. SFIP, 44C.F.R. Pt. 61, App. A(1), Art. V(D)(4)(b)(3). The district court concluded that this mitigation provision did not apply to the Gallups because it concerns water and mold damage, which are not at issue in this case. We therefore affirm the district court’s conclusion that the Gallups did not breach this section ofthe SFIP.

(2) Duty to Mitigate under Federal Common LawNo. 06-31156

2 The Gallups investigated the possibility of bulkheading prior to Flood I, and they stated that National ResourceConservation Service (“NRCS”) estimated that itwould costover $270,000 to protect their home using bulkheading. 6 The district court alsocorrectly found that the Gallups did not breach the
common law duty to mitigate because the measures they could have taken to preventfurther damage totheir homefollowing Flood I wereeither prohibitively expensive or insufficient to have prevented the damage from Flood II. The Gallups had a duty to mitigate their damages under the general principles of insurance law which govern the SFIP. Hanover Bldg. Materials, Inc. v. Guiffrida, 748 F.2d 1011, 1013 (5th Cir. 1984) (stating that disputes under the National Flood InsuranceActof1968“are resolved under federal lawby drawing upon standard insurance law principles”). Under standard insurance law principles, mitigation is “the duty of insureds to do all that they reasonably can to minimize the loss.” COUCH ON I NSURANCE § 168:9. Because the duty to mitigate is a common law duty, it exists “in the absence of an explicit policy provision or statutory provision imposing such a duty.” I d. § 168:11. Thus, although the mitigation provision in the SFIP does not apply to this case, the Gallups still had a common law duty to take reasonable steps to mitigate their damages. The district court found that the mitigating measures available to the Gallups following Flood I were not reasonable. The district court found that it
was not reasonable for the Gallups to bulkhead the riverbank because this measure was prohibitively expensive compared to the value of the house. 2 The district court also found that moving the home after Flood I, which would have cost over $85,000, was tooexpensive tobea reasonable mitigating measure. The district court evaluated the testimony ofthe witnesses for both sides and found that other mitigating measures, such as the dirt and concrete fill proposed byNo. 06-31156

7 Omaha following Flood I, would not have prevented the damage which occurred in Flood II. In Real Asset Management, Inc. v. Lloyd’sofLondon, this Court held that the plaintiff insured’s recovery should be reduced to the extent that he failed to take reasonable temporary measures, such as putting up a tarp, to prevent further damage toa building whose roofhad been destroyed. 61 F.3d 1223, 1230 (5th Cir. 1995). This Court held that “[t]he defendant bears the clear burden to showwhat extent of [the] damagesshould be mitigated” and remanded the case to determine what part of the damages could be attributed to the plaintiff’s failure to mitigate. Id. Real Asset is not binding upon us here because it applies Louisiana law, not Federal common law, but it is instructiveon twopoints. First, the “reasonable” mitigation efforts required of the Real Asset insured included inexpensive and temporary measures like putting up a tarp, rather than expensive, permanent measures like re-roofing the building. Id. The district court’s finding that costly long-term solutions like bulkheading or moving the whole house w

ere not reasonable mitigation measures is consistent with this holding. Second, the Real Asset court required the insurer to show that the insured’s fail ure to implement these reasonable mitigation measures caused additional damage. Id. Here, the district court found that Omaha had not shown that therewas additional damage, because the reasonable mitigation measures available tothe Gallups following Flood I would not have prevented the damage from Flood II. After reviewing the record and giving due weight to the district court’s evaluation of conflicting testimony regarding the efficacy of the reasonable mitigating measures available to the Gallups prior to Flood II, we find the district court did not err. We affirm the district court’s finding that the Gallups did not breach their common law duty of mitigation.No. 06-31156

3 We note that our determination that the Flood II damage was limited to Building B is well supported by the record. Building A was a separate structure connected to Building B by only a deck. There is no evidence in the record of actual physical loss to Building A following Flood II, which is what is required for recovery under the SFIP. The district court also found that there was no physical damage to Building A after Flood II.

4 The SFIP provides up to $30,000 for building relocation under the “Increased Cost of Compliance” section, which “pays [the insured] to comply with a State or local floodplain management lawor ordinance affecting repair or reconstruction ofa structure suffering flood damage.” SFIP, 44 C.F.R. Pt. 61, App. A(1), Art. III(D)(1). As neither party has pointed us to a state or local law requiring relocation ofthe Gallups’ home, this section is not applicable. 8 C. Flood II Loss and Award We affirm the district court’s conclusion that the Gallups suffered a covered loss following Flood II. After Flood II, two of the pilings underneath Building B were completely undermined. Building B listed noticeably and was unsafe to use. Due to the unusual geographic and architectural features of the Gallups’ home, Building B was a total loss after Flood II. 3 Although we hold that the Gallups were entitled to recover under their policy for the damage to Building B following Flood II, we reverse the district court’saward ofthecost ofrelocating the Gallups’ home. The district court erred when it used its equitable powers to fashion this award. The Gallups’ recovery is limited to the terms of the SFIP. Gowland v. Aetna, 143 F.3d 951, 954 (5th Cir. 1998). We render judgment in the amount necessary to compensate the Gallups for the loss of Building B under the terms of their insurance policy. In addition to being an equitable remedy, the district court’s award of relocation costs is also specifically prohibited by the terms of the SFIP. “[T]he provisions ofan insurance policy issued pursuant to a federal program must be strictly construed and enforced

. . . .” Id

. The Loss Settlement section of the SFIP excludes recovery for building relocation. 4 SFIP, 44 C.F.R. Pt. 61, App. A(1), Art. VII(V)(2)(b) (“If the dwelling is rebuilt at a new location, the cost described above is limited to the cost that would have been incurred if theNo. 06-31156

9 dwelling had been rebuilt at its former location.”). The district court’s award of the cost of relocation is improper in light of this provision of the SFIP. The Gall ups’ loss is determined under the “Actual Cash Value Loss Settlement” section of the SFIP because, according to the Gallups’ August 28, 2003 amended ProofofLoss, the amount ofinsurance on their home ($210,000),
was less than eighty percent ofthe home’s full replacement value and less than the maximum available coverage ($250,000). 42 U.S.C. § 4013(b)(2) (statutory maximum coverage); SFIP, 44 C.F.R. Pt. 61 , App. A(1), Art. VII(V)(4)(a). We hold that the proper amount of recovery under the SFIP insurance contract is the amount to which the Gallups are entitled to under the proportional loss settlement provision ofthe “Actual Cash Value Loss Settlement” section. SFIP, 44 C.F.R. Pt. 61, App. A(1), Art. VII(V)(4)(a)(2). Ordinarily, we would remand this case to permit the district court to determine the cost to replace Building B and to calculate the award under the SFIP. Here, however, remand would serve little if any practical purpose. The home and the considerable acreage on which it stood were sold in 2006 for less than 50% of the property’s pre-flood value. The riverbank erosion which undermined Building B has undoubtedly continued. There is little useful information that could be obtained on remand. We will therefore calculate the Gallups’ recovery based on the information they and Omaha submitted to the NFIP in 2003. We realize that our method is imprecise, but the passage of time, the changed circumstances, and the state of the record combine to prevent us from calculating the exact dollar amount ofthe actual “cost to repair or replace the damaged part ofthe dwelling,” asspecified by the SFIP. These same factors plus the additional cost to the Gallups argue against remand for further fact finding. Given this limitation, and the fact that this case involves a unique set of circumstances which defy a perfect solution, we are satisfied that our result is fair and principled.No. 06-31156

5 The omitted deck was a rectangular area running along the inside wall of Building B and connecting to the end of Building A. The scale drawings of the Gallups’ home in engineer John Garner’s August 25, 2003 report show that this deck area was approximately ten feet by twenty feet. Because one whole side of the omitted deck was connected to the inside wall of Building B and thus subject to the same structural damage suffered by the rest of Building B, we include the deck in Building B’s total area.

6The district court stated that after Flood II, theGallupswereseeking $209,000, which it incorrectly characterized as “the total replacement value of the home less the deductible.” 434 F.3d at 343. The Gallups’ August 26, 2003 Proofof Loss claimed $209,585 and listed the cost to repair or replace the home plus the contents as $210,585. The Gallups amended their Proofof Loss on August 28, 2003 to include a replacement cost estimate of$314,000 provided by Albert Waterson, the home’s original architect. 10 The November 18, 2003 National Flood Insurance Final Reportsubmitted by independent adjuster Joel Schaefer showed that the combined area of BuildingsA and B was 2176squarefeet. Schaefer erroneously omitted the deck between Buildings A and B from his estimate of the total square footage ofthe home. See SFIP, 44 C.F.R. Pt. 61, App. A(1), Art. III(2) (“We insure against direct physical loss

. . . to

. . . additions and extensions attached toand in contact with the dwelling by means of a rigid exterior wall . . . .”). 5 Correcting for this omission, the total square footage of the Gallups’ home was 2376 square feet. Building B, which contained two bedrooms, one full bathroom, one half bathroom, a laundry room, a den, and the deck, was 1064 square feet, or 44.78% of the total area of the home. The Gallups, in their Flood II amended Proof of Loss, estimated that the “full cost torepair or replace” their homewas $314,000, and we find that the cost to replace the damaged part of the home was $140,612.79, or 44.78% of the full replacement cost. 6 The Gallups are entitled to the proportion of this cost equal to the amount of insurance they actually carried ($210,000) divided by the maximum insurance available ($250,000), or 84%. After subtracting the $1,000deductible, we render an award totheGallups in the amount of $117,114.74 under the proportional loss settlement provision ofthe “Actual Cash Value Loss Settlement” section of the SFIP. SFIP, 44 C.F.R.No. 06-31156

11 Pt. 61, App. A(1), Art. VII(V)(4)(a)(2). The basis for the award is the SFIP contract, not this Court’s equitable powers. D. Pretrial Orders The Gallups appeal from the district court’s order denying them leave to amend their complaint to i nclude a Bivens claim. 403 U.S. at 395–96. The district court denied their motion because it was filed seven days prior to trial. Thedistrict court did not abuse its discretion by denying theGallups’ motion for untimeliness and we affirm. See S&W Enters., 315 F.3d at 535–36. The Gallups also appeal from the district court’s order denying their motion to designate engineer Charles Sloan as an expert witness and to submit
an untimely expert report for Sloan. The district court denied the Gallups’ motion becausetheGallups“failed tosubmit any semblanceofa[n expert] report prior to trial,” as required by the pretrial order. This was not an abuse of discretion and we affirm. See Reliance , 110 F.3d at 257–58. IV. CONCLUSION We REVERSE the judgment of the district c ourt and RENDER JUDGMENT in favor ofthe Gallups in the amount of$117,114.74. We AFFIRM the district court’s denial ofthe Gallups’ motions to amend their complaint and to designate Charles Sloan as an expert witness.