CATHERINE PEPE,

Plaintiff,

v.

FIDELITY NATIONAL PROPERTY AND

CASUALTY INSURANCE COMPANY, et

al.

Defendants.

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

 

HONORABLE JOSEPH E. IRENAS

CIVIL ACTION NO. 11-3746 (JEI/JS)

OPINION

APPEARANCES:

MARK J. HILL ASSOCIATES, P.C.

By: Mark J. Hill, Esq.

400 North Church Street, Suite 250

Moorestown, NJ 08057

Counsel for Plaintiff

PAUL J. FISHMAN, UNITED STATES ATTORNEY

By: Paul A. Blaine, Assistant United States Attorney

401 Market Street

P.O. Box 2098

Camden, NJ 08101

Counsel for Federal Emergency Management Agency

CARROLL, MCNULTY & KULL LLC

By: Gary Kull, Esq.

Shaun I. Blick, Esq.

120 Mountain View Blvd.

P.O. Box 650

Basking Ridge, NJ 07920

and 

NIELSEN LAW FIRM, LLC

By: Kim Tran Britt, Esq.

3838 North Causeway Blvd., Suite 2850

Metairie, LA 70002

Counsel for Defendants Fidelity National Property and Casualty

Insurance Company and Fountain Group

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IRENAS, Senior District Judge:

Plaintiff Catherine Pepe initiated this action against Fidelity

National Property and Casualty Insurance Company (“Fidelity”),

Fountain Group LLC (“Fountain”), and the Federal Emergency Management

Agency (“FEMA”) seeking damages in connection with the denial of a

claim for flood damage to her property. Pending before the Court is

a Motion for Judgment on the Pleadings pursuant to Fed. R. Civ. P.

12(c) filed by Fidelity and Fountain, and a Motion to Dismiss

pursuant to Fed. R. Civ. P. 12(b)(1) filed by FEMA. 

I.

Plaintiff maintained a Standard Flood Insurance Policy (“SFIP”)

for properties located at 226 E. Cresse Avenue, Wildwood Crest, New

Jersey. (Compl. ¶¶ 1, 10.) The Front Building and the Rear Building

were each covered by separate SFIPs issued by Fidelity pursuant to

the National Flood Insurance Program (“NFIP”). (Id. ¶¶ 11-12.) 1

Between November 11, 2009 through November 15, 2009, the Front and

Rear Buildings allegedly sustained severe flood damage due to

“Hurricane/Tropical Depression Ida and a related nor’easter.” (Id.

¶¶ 16, 18.)

Following the storm, Plaintiff made a flood loss claim to

Fidelity for both Buildings. (Id. ¶ 19.) Fountain was assigned to

 Fidelity is a Write-Your-Own (“WYO”) company 1

participating in the FEMA-administered NFIP. 42 U.S.C. § 4001 et

seq. Through the WYO program, FEMA has authorized private

insurance companies to issue SFIPs with claims and expenses paid

by the National Flood Insurance Fund. See 44 C.F.R. § 62.23.

2

Case 1:11-cv-03746-JEI-JS Document 26 Filed 10/17/11 Page 2 of 9 PageID: 574
adjust Plaintiff’s claim for the Rear Building while a different

adjuster was assigned Plaintiff’s claim for the Front Building. (Id.

¶ 20.) Tom Klein, an agent of Fountain, inspected the Rear Building

and allegedly concluded that no flood had occurred in the area and

that no clear evidence of a water line existed. (Id. ¶¶ 24, 29-30.) 

According to the Complaint, Fidelity never made a determination

regarding Plaintiff’s flood loss claim to the Rear Building and

therefore Plaintiff concludes that her claim was constructively

denied. (Id. ¶¶ 34-35.)

On June 29, 2011, Plaintiff initiated the instant action by

filing a three Count Complaint, alleging claims for breach of

contract against Fidelity and FEMA, as well as a third party

beneficiary claim against Fountain. On September 6, 2011, Fidelity

and Fountain filed their Motion for Judgment on the Pleadings. 

Fidelity seeks to dismiss only Plaintiff’s claims for extracontractual damages, while Fountain seeks to dismiss the third-party

beneficiary claim asserted against it. On September 23, 2011, FEMA

filed its Motion to Dismiss. 

II.

A.

Federal Rule of Civil Procedure 12(b)(1) provides that a court

may dismiss a complaint for lack of subject matter jurisdiction. The

party asserting that jurisdiction is proper bears the burden of

showing that jurisdiction exists. Kokkonen v. Guardian Life Ins. Co.

3

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of Am., 511 U.S. 375, 377 (1994). When considering a motion to

dismiss for lack of subject matter jurisdiction, a court may not

presume the truthfulness of plaintiff’s allegations, but must

“evaluate for itself the merits of jurisdictional claims.” Hedges v.

United States, 404 F.3d 744, 750 (3d Cir. 2005)(quoting Mortensen v.

First Federal Sav. & Loan Ass’n, 549 F.2d 884, 891 (3d Cir. 1977)). 

The court may consider exhibits outside the pleadings and is “free to

weigh the evidence and satisfy itself as to the existence of its

power to hear the case.” Mortensen, 549 F.2d at 891. 

B.

Pursuant to Fed. R. Civ. P. 12(c), “[a]fter the pleadings are

closed--but early enough not to delay trial--a party may move for

judgment on the pleadings.” Fed. R. Civ. P. 12(c). A Rule 12(c)

Motion for Judgment on the Pleadings is subject to the same standard

of review as a Rule 12(b)(6) Motion to Dismiss. Turbe v. Gov’t of

V.I., 938 F.2d 427, 428 (3d Cir. 1991); see also Spruill v. Gillis,

372 F.3d 218, 223 n.2 (3d Cir. 2004); Collins v. F.B.I., 2011 WL

1624025, at *4 (D.N.J. April 28, 2011). 

Federal Rule of Civil Procedure 12(b)(6) provides that a court

may dismiss a complaint “for failure to state a claim upon which

relief can be granted.” In order to survive a motion to dismiss, a

complaint must allege facts that raise a right to relief above the

speculative level. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555

(2007); see also Fed. R. Civ. P. 8(a)(2). 

4

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While a court must accept as true all allegations in the

plaintiff’s complaint, and view them in the light most favorable to

the plaintiff, Phillips v. County of Allegheny, 515 F.3d 224, 231 (3d

Cir. 2008), a court is not required to accept sweeping legal

conclusions cast in the form of factual allegations, unwarranted

inferences, or unsupported conclusions. Morse v. Lower Merion Sch.

Dist., 132 F.3d 902, 906 (3d Cir. 1997). The complaint must state

sufficient facts to show that the legal allegations are not simply

possible, but plausible. Phillips, 515 F.3d at 234. “A claim has

facial plausibility when the plaintiff pleads factual content that

allows the court to draw the reasonable inference that the defendant

is liable for the misconduct alleged.” Ashcroft v. Iqbal, 129 S.Ct.

1937, 1949 (2009). 

III.

A.

FEMA moves to dismiss the claims against it arguing that

“Congress has not waived sovereign immunity to permit this lawsuit to

be brought directly against FEMA under 42 U.S.C. § 4072.” (FEMA Br.

in Support at 1.)

It is well established that the United States and its agencies

are immune from suit unless Congress explicitly waives sovereign

immunity. U.S. Dept. of Energy v. Ohio, 503 U.S. 607, 615 (1992). 

The National Flood Insurance Act (“NFIA”) contains a limited waiver

of sovereign immunity where a claim was directly submitted to,

5

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evaluated, and denied by the FEMA Director, as opposed to a WYO

company. See 42 U.S.C. § 4072; see also Van Holt v. Liberty Mut. 2

Fire Ins. Co., 163 F.3d 161, 166 (3d Cir. 1998)(noting that “the

plain text appears to restrict the reach of § 4072 to suits against

FEMA.”).

In this case, Plaintiff purchased the SFIPs from Fidelity, filed

a claim with Fidelity, and Fidelity assigned Fountain to adjust

Plaintiff’s claim. The SFIP at issue was not directly issued from

FEMA and FEMA did not participate in the evaluation of Plaintiff’s

claim. (Christian Dec. ¶¶ 5-6, 9). 3

 In pertinent part, 42 U.S.C. § 4072 provides: 2

In the event the program is carried out as

provided in section 4071 of this title, the

Director [of FEMA] shall be authorized to

adjust and make payment of any claims for

proved and approved losses covered by flood

insurance, and upon the disallowance by the

Director of any such 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 Director, may institute an action

against the Director on such claim in the

United States district court for the district

in which the insured property of the major

part thereof shall have been situated, and

original exclusive jurisdiction is hereby

conferred upon such court to hear and

determine such action without regard to the

amount in controversy.

42 U.S.C. § 4072.

 In her Opposition Brief, Plaintiff argues that “it is not 3

clear that FEMA was not a participant in the denial of [her]

claim.” (Opp. Br. at 2.) However, this argument is wholly

6

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Other federal courts to have considered this issue under

circumstances similar to those presented here--where an insured

obtained an SFIP from a private WYO company, which evaluated and

denied the insured’s claim--have dismissed claims against FEMA,

reasoning that the NFIA’s limited waiver of sovereign immunity is not

satisfied. See Bruno v. Paulison, 2009 WL 377300, *5-6 (D.Md Feb.

12, 2009); Tucard v. Fidelity Nat’l Prop. & Cas. Ins. Co., 567

F.Supp. 2d 215, 218-19 (D.Mass. 2008); Sutor v. FEMA, 2008 WL

1959693, *3-4 (E.D.Pa. May 5, 2008); Hower v. FEMA, 2004 WL 2577503,

*2-3 (E.D.Pa. Oct. 21, 2004). 

Since FEMA neither issued the SFIP to Plaintiff nor participated

in the denial of her claim, the conditions for the limited waiver of

sovereign immunity in 42 U.S.C. § 4072 are not met. Accordingly,

this Court lacks subject matter jurisdiction over Plaintiff’s claim

against FEMA and FEMA’s Motion to Dismiss will be granted. 

B.

In Count Three of the Complaint, Plaintiff asserts a third-party

beneficiary claim against Fountain arising out of its investigation

and adjustment of Plaintiff’s flood loss claim. (See Compl. Count

Three.) Plaintiff also seeks interest and attorney’s fees and costs

against both Fountain and Fidelity. (See Compl. Counts One and

Three.) 

unsupported and even contradicted by the allegations in the

Complaint that she purchased the SFIPs from Fidelity, that her

claim was adjusted by Fountain and that it was ultimately denied

by Fidelity. (See Compl. ¶¶ 10-11, 20, 32.)

7

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Fidelity argues for dismissal of Plaintiff’s claims for extracontractual damages, while Fountain argues for dismissal of the 4

third-party beneficiary claim asserted against it. In their Motion

for Judgment on the Pleadings, Fidelity and Fountain argue that these

claims are preempted by federal law.

The Court agrees. First, extra-contractual and negligence

claims are barred against all persons involved in the claims

adjustment process, including the WYO company. See C.E.R. 1988, Inc.

v. Aetna Cas. & Surety Co., 386 F.3d 263, 272 n.12 (3d Cir. 2004);

Sutor v. FEMA, 2009 WL 2004375, at *5-6 (E.D.Pa. July 9, 2009); Messa

v. Omaha Prop. & Cas. Ins. Co., 122 F.Supp. 2d 513, 523 (D.N.J.

2000). 

Second, Fidelity, as the WYO company, is the only proper

defendant in this action. The NFIA expressly permits suits only

against the director of FEMA, see supra note 2, and FEMA regulations

extend liability to WYO companies. 44 C.F.R. § 62.23(d); C.E.R., 386

F.3d at 267 n.4 (3d Cir. 2004)(noting that “42 U.S.C. § 4072

authorizes suit against the FEMA Director upon disallowance of a

claim” and that “[b]y regulation, the WYO company is sued in place of

the FEMA Director”). There is no provision in the NFIA or in the

regulations authorizing suit against independent adjusters such as

Fountain for claims arising from the adjustment of claims under

 Plaintiff does not oppose the dismissal of her claims 4

against Fidelity for extra-contractual damages. (Pl’s Opp. at

2.)

8

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SFIPs. See Sutor v. FEMA, 2008 WL 1959693, *6 (E.D.Pa. May 5, 2008). 

Because Plaintiff’s claims plainly arise out of allegedly improper

investigation and adjustment of a claim pursuant to a SFIP, and the

only proper defendant in such an action is the WYO company, Plaintiff

cannot maintain claims against Fountain. 

Accordingly, Fidelity’s Motion with respect to Plaintiff’s

claims for extra-contractual damages and Fountain’s Motion with

respect to the third-party beneficiary claim will be granted.5

IV.

For the foregoing reasons, FEMA’s Motion to Dismiss will be

granted. Fidelity’s Motion for Judgment on the Pleadings with

respect to Plaintiff’s claims for extra-contractual damages and

Fountain’s Motion with respect to the third-party beneficiary claim

will be granted. An appropriate order will be issued. 

Dated: October 17, 2011

 s/Joseph E.Irenas 

JOSEPH E. IRENAS, S.U.S.D.J.

 While there is some procedural irregularity in that 5

Fidelity and Fountain have prematurely moved for Judgment on the

Pleadings, the only Defendant to not have filed an answer is

FEMA, which is no longer a party to the action. See supra

section III, A. Therefore, any procedural issue concerning the

timing of Fidelity and Fountain’s Motion for Judgment on the

Pleadings is now moot. 

9

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