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42 U.S.C. §§ 4001-4128.

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 97-30397

CHARLES L. GOWLAND; MARGUERITE C. GOWLAND,

Plaintiffs-Appellants,

versus

AETNA; AETNA FLOOD INSURANCE PROGRAM;

AETNA CASUALTY & SURETY CO.,

 Defendants,

AETNA CASUALTY & SURETY CO.,

Defendant-Appellee.

Appeal from the United States District Court

For the Western District of Louisiana

June 25, 1998

Before POLITZ, Chief Judge, HIGGINBOTHAM and DeMOSS, Circuit Judges.

POLITZ, Chief Judge:

Charles and Marguerite Gowland seek to recover benefits under a Standard

Flood Insurance Policy issued by Aetna Casualty & Surety Co., under the

provisions of the National Flood Insurance Act.1 The district court granted Aetna’s
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motion for summary judgment on the basis that the Gowlands failed to file the

requisite sworn proof of loss. Concluding that the Gowlands have failed to

conform with mandatory policy provisions, we affirm.

 BACKGROUND

On April 27, 1994 the Gowlands’ camp, located on the Banks of Bayou

Mellom in St. Mary Parish, was flooded. The flood waters from the bayou entered

the property, rose to a level of approximately three inches above the floor and did

not begin to recede until three or four weeks later. At the time of the flooding, the

property was insured by a flood insurance policy issued by Aetna. The policy

required that the insured submit to Aetna, within 60 days after the loss, a sworn

proof of loss statement detailing, inter alia, the items damaged and the dollar

amounts claimed.

The day afterthe flood the Gowlandsreported the damage to their local agent

who, in turn, notified Aetna. The loss was reported on a form provided by Aetna

and contained some of the same information that would have been provided in a

proof of loss statement. Aetna sent an adjuster to the property who found water

standing inside the structure and determined that he was not qualified to inspect for

possible foundation damage. Thereafter, Aetna hired an engineer who inspected

the property on May 18, 1994 and determined that there had been no recent earth
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movement caused by the flooding. On June 14, 1994 Aetna asked the Gowlands

to provide the requisite “proof of loss” which it described as “your statement to us

listing the dollar amount of your claim” or to provide an explanation why such a

statement could not be furnished. In order to comply with the policy’s

requirements, the Gowlands needed to submit their proof of lossstatement by June

27, 1994. Instead of submitting the proof of loss, the Gowlands’ agent advised

Aetna that the amount of the loss had yet to be determined because it was not

possible to ascertain the extent of the damage until the water receded from the

structure. 

Meanwhile, Aetna’s adjuster received the engineer’s report and advised the

Gowlandsthat there were no damages found and that their claim was being closed.

In March of 1995 the Gowlands claimed that the damages from the flood began to

be manifested and, through their agent, they made a written request to Aetna to

reopen the file. Aetna agreed and suggested that the Gowlands hire their own

engineer to inspect the property. After the Gowlands’ engineer submitted his

findings, Aetna once again denied the claim and advised that the file would be

closed. In August of 1995 Aetna agreed to, once again, reopen the file to consider

cost estimatessecured by the Gowlands. After receiving this filing, Aetna advised

that the estimates were totally unacceptable. The Gowlands offered to engage a
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contractor to help arrive at a mutually agreeable cost estimate but received no reply

from Aetna. Thereafter, the Gowlands sued Aetna in state court. Aetna removed

the case to federal court and moved for summary judgment, seeking dismissal of

the claim based on the fact that the Gowlands had failed to file a sworn proof of

loss as required by the policy. Aetna’s motion was granted and the Gowlands

timely appealed. 

ANALYSIS

Although the Gowlands acknowledge that they never filed a formal proof of

loss statement as required by the insurance policy, they contend that they

substantially complied with the proof of loss requirement when their adjuster filed

a notice of loss the day after the alleged damage occurred. In addition, they

maintain that Aetna waived the proof of lossrequirement by repeatedly re-opening

their claim and by never mentioning the absence of the proof of loss statement as

a reason for denying coverage. Finally, they contend that the doctrine of equitable

estoppel bars Aetna from asserting the proof of loss requirement as a defense.

A. The National Flood Insurance Program

Before addressing the merits of the Gowlands’ claims, we must focus on the

essential fact that this claim involves the National Flood Insurance Program. It is

uneconomical for private insurance companies to provide flood insurance with
 

2

42 U.S.C. § 4071.

 

3

44 C.F.R. §§ 61.4(b), 61.13(d).

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reasonable terms and conditions to those in flood prone areas. Therefore, in 1968

Congress established the National Flood Insurance Program to provide insurance

coverage at or below actuarial rates. The program is currently operated by the

Federal Emergency Management Agency (FEMA) and actually issupported by the

federal treasury.

Flood insurance policies can be issued directly by FEMA or through private

insurers known as “Write Your Own” companies. By statute, these companies are

fiscal agents of the United States.2

The terms and conditions of all federal flood insurance policies, including the

policy issued to the Gowlands, are fixed by FEMA. Policies must be issued in the

form of a Standard Flood Insurance Policy and no provision of the policy can be

altered, varied, or waived without the express written consent of the Federal

Insurance Administrator.3

B. Substantial Compliance

The Gowlands contend that the notice of loss provided to Aetna

contained substantially the same information asrequired by the formal proof ofloss

form and should be deemed sufficient. The flood policy issued to the Gowlands’
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provided in pertinent part:

Should a flood loss occur to your insured property,

you must:

1. Notify us in writing as soon as practicable;

2. As soon as reasonably possible, separate the

damaged and undamaged property, putting it

in the best possible order so that we may

examine it; and

3. Within 60 days after the loss,send us a proof

of loss, which is your statement as to the

amount you are claiming under the policy

signed and sworn to by you and furnishing

us with the following information:

a. The date and time of the loss; 

b. A brief explanation of how the

loss happened;

c. Your interest in the property

damaged (for example,

“owner”), the interest, if any, of

othersin the damaged property;

d. The actual cash value of each

damaged item of insured

property . . . and the amount of

damage sustained;

e. Names ofmortgagees or anyone

else having a lien, charge or

claim against the insured

property;

f. Details asto any other contracts

of insurance covering the

property, whether valid or not,

g. Details of any changes in

ownership, use, occupancy,

location or possession of the

insured property since the

policy was issued;
 

4Federal Crop. Ins. Corp. v. Merril, 332 U.S. 380 (1947).

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h. Details as to who occupied any

insured building at the time of

the loss and for what purpose;

and

i. The amount you claim is due

under this policy to cover the

loss, including stats concerning:

(1) The limits of coverage

stated in the policy; and

(2) The cost to repair or replace

the damaged property

(whichever is less).

Although the notice of loss provided by the Gowlands gave some of the

information required by the formal proof of loss statement, it is clear that giving

notice of loss and providing a sworn proof of loss statement are separate and

distinct requirements of the policy. The policy calls for written notice of loss to be

given as soon as practicable and a formal proof of loss statement to be submitted

within 60 days after the loss. The Gowlands provided written notice of loss

through their agent, but never filed a formal proof of loss statement as required by

the policy. As the provisions of an insurance policy issued pursuant to a federal

program must be strictly construed and enforced,4 we hold that an insured’sfailure

to provide a complete, sworn proof of loss statement, as required by the flood

insurance policy, relieves the federal insurer’s obligation to pay what otherwise
 

5

44 C.F.R. § 61.13 (d).

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might be a valid claim. 

C. Waiver

The Gowlands contend that Aetna waived the proof of loss requirement by

failing to mention it as a basis for denying their claim, and by repeatedly reopening their file after the sixty-day deadline. The policy at issue herein provides

that the insurer, at its option, may waive the proof of loss requirement in certain

cases. In such cases, the insured is required to sign, and at the insurer’s option,

swear to the adjuster’s report of the loss. As the district court noted, the Gowlands

never signed an adjuster’s report of loss. 

The Gowlands further contend that Aetna’s reminder letter regarding the

proof of loss statement waived the proof of loss requirement by failing to specify

accurately the information prescribed in the policy. As noted above, the federal

regulations provide that no provision of the policy may be altered, varied, or

waived without the express written consent of the Federal Insurance

Administrator.5 It is clear that no such waiver was sought or obtained herein.

The reminder letter sent by Aetna expressly stated that it was not waiving

any rights or defenses under the policy. It is therefore beyond peradventure that

Aetna’s letter may not be interpreted as an express written waiver. In light of the
 

6The elements of estoppel are that (1) the party to be estopped was aware of the facts;

(2) the party to be estopped intended its act or omission to be acted upon; (3) the party

asserting estoppel did not have knowledge of the facts; and (4) the party asserting

estoppel reasonably relied on the conduct of the party to be estopped to his substantial

injury. Ingalls Shipping, Inc. v. Director, Office of Workers’ Compensation

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provision that an express written waiver is necessary to dispense with the proof of

lossrequirement, the Gowlands’ contention that Aetna waived that requirement by

merely re-opening the file after the sixty-day deadline is devoid of merit. At most,

the re-opening of the file after the deadline might be deemed a constructive waiver

which, however, could not be effective in light of the policy and federal regulations

mandating that any waiver be express and in writing. 

D. Equitable Estoppel

Finally, the Gowlands contend that the doctrine of equitable estoppel bars

Aetna from asserting the proof of loss requirement as a defense. Their contention

is based on the premise that Aetna was aware that their camp had been damaged

by the flood and took steps which led them to believe that their claim was being

routinely processed.

The Gowlands notified Aetna the day after the flood. Thereafter, adjusters

were sent to inspect the property and Aetna and the Gowlands continually

negotiated the insurance claim. While we may empathize with the Gowlands’

position, they have not advanced a valid claim for traditional estoppel,6and
Programs, U.S. Dept. of Labor, 976 F.2d 934 (5th Cir. 1992). As the district court

noted, the Gowlands cannot satisfy the third element of the test. Not only did Aetna

remind them of their obligation to file a proof of loss statement, the record indicates that

the Gowlands had filed flood claims and satisfied the proof of loss requirement in the

past.

 

7

In re Estate of Lee, 812 F.2d 253, 256 (5th Cir. 1987).

 

8Office of Personnel Management v. Richmond, 496 U.S. 414, 425 (1990).

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decidedly have not advanced a valid claim, should such exist, for estoppel against

the government.

Although the Gowlands’ policy was written by Aetna, a private insurance

company, payments made pursuant to that policy are “a direct charge on the public

treasury.”7 When federal funds are involved, the judiciary is powerless to uphold

a claim of estoppel because such a holding would encroach upon the appropriation

power granted exclusively to Congress by the Constitution. “Any exercise of a

power granted by the Constitution to one of the other branches of Government is

limited by a valid reservation of congressional control overfundsin the Treasury.”8

To date, the Supreme Court has not upheld an estoppel claim resulting in the

payment of money out of the treasury.

Conclusion

We find that the theories of substantial compliance, waiver, and equitable

estoppel are inapplicable to the facts presented herein. While this result may seem
 

9Federal Crop Ins. Corp. v. Merrill, 332 U.S. 380, 385 (1947).

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harsh in light of the Gowlands’ ongoing negotiations with Aetna, we must remind

that the National Flood Insurance Program is federally subsidized and enables

consumers to obtain flood insurance which virtually would be impossible to

purchase in the marketplace. Requiring the Gowlands to turn square corners when

dealing with the Treasury “does not reflect a callous outlook. It merely expresses

the duty of all courts to observe the conditions defined by Congress for charging

the public treasury.”9 Accordingly, the judgment of the district court must be and

is AFFIRMED.