Court Opinion

ID: 8211153
Source: CourtListenerOpinion
Date Created: 2022-10-03 00:00:32.385925+00
Date Added: 2024-06-11T16:42:00.490432
License: Public Domain

Case: 22-30022     Document: 00516491939         Page: 1     Date Filed: 09/30/2022

              United States Court of Appeals
                   for the Fifth Circuit                              United States Court of Appeals
                                                                               Fifth Circuit

                                                                             FILED
                                  No. 22-30022                       September 30, 2022
                                Summary Calendar                        Lyle W. Cayce
                                                                             Clerk

   Lylia McInnis,

                                                           Plaintiff—Appellant,

                                       versus

   Liberty Mutual Fire Insurance Company,

                                                           Defendant—Appellee.

                  Appeal from the United States District Court
                      for the Middle District of Louisiana
                                No. 3:19-CV-12

   Before Stewart, Duncan, and Wilson, Circuit Judges.
   Per Curiam:*
          This dispute concerns a flood insurance policy offered pursuant to the
   National Flood Insurance Act of 1968. Lylia McInnis’ home flooded in
   August 2016 during the record flooding that pummeled large swaths of

          *
            Pursuant to 5th Circuit Rule 47.5, the court has determined that this
   opinion should not be published and is not precedent except under the limited
   circumstances set forth in 5th Circuit Rule 47.5.4.
Case: 22-30022      Document: 00516491939            Page: 2     Date Filed: 09/30/2022

                                      No. 22-30022

   southern Louisiana and Mississippi.1 She sued her insurance carrier after a
   dispute over her policy’s coverage, but the district court found the suit was
   barred by the statute of limitations. We affirm.
                                               I.
          Congress enacted the National Flood Insurance Act of 1968
   (“NFIA”), 42 U.S.C. §§ 4001 et. seq., to ensure the availability of flood
   insurance because in many areas it is uneconomical for private insurers to
   offer coverage. Gowland v. Aetna, 143 F.3d 951, 953 (5th Cir. 1998). NFIA
   established the National Flood Insurance Program (“NFIP”), which allows
   private insurers to issue Standard Flood Insurance Policies (“SFIPs”) on
   behalf of the federal government. Cohen v. Allstate Ins. Co., 924 F.3d 776, 778
   (5th Cir. 2019). These private carriers, known as Write-Your-Own
   (“WYO”) carriers, act as fiscal agents of the federal government by issuing
   and administering policies underwritten by the government. Ibid.
          The     Federal    Emergency      Management         Agency   (“FEMA”)
   administers NFIP and determines the content of SFIPs. Campo v. Allstate Ins.
   Co., 562 F.3d 751, 754 (5th Cir. 2009); 44 C.F.R. Pt. 61, App. A(1) (laying out
   the SFIP terms). WYO carriers must issue SFIPs in FEMA’s precise terms
   as well as adjust and pay claims according to FEMA’s regulations. Campo,
   562 F.3d at 754. Because SFIP claims are paid from the federal treasury, strict
   compliance with the policy terms and applicable regulations is required.
   Ekhlassi v. Nat’l Lloyds Ins. Co., 926 F.3d 130, 133 (5th Cir. 2019).
   Policyholders may file suit against their carrier only “within one year after

          1
              See generally National Weather Service, August 2016 Record Flooding,
   https://www.weather.gov/lix/August2016flood (describing the cause and extent of the
   flooding).

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Case: 22-30022        Document: 00516491939        Page: 3   Date Filed: 09/30/2022

                                    No. 22-30022

   the date of the mailing of notice of disallowance or partial disallowance” of
   their claim. 42 U.S.C. § 4072.
                                             II.
          Lylia McInnis had a SFIP through Liberty Mutual, a WYO carrier.
   Her property in the Baton Rouge, Louisiana, area flooded on or about August
   13, 2016, and Liberty Mutual promptly assigned an independent adjuster to
   assess her loss. After the adjuster’s inspection, McInnis submitted a signed
   and sworn proof of loss claiming $122,576.00 in damages to the building and
   $26,217.56 in contents loss, which Liberty Mutual paid in full.
          On November 20, 2016, Liberty Mutual sent McInnis a letter
   informing her that “content items that were not supported by photographs
   were not able to be included in your claim.” The letter stated that Liberty
   Mutual was “deny[ing] coverage” for those items and that McInnis had the
   right to appeal her claim to FEMA. However, it noted that appeal was
   available only for those portions of her claim “denied, in whole or in part”
   “by the letter.”
          McInnis appealed the denial to FEMA. On June 26, 2017, FEMA
   responded by concurring with Liberty Mutual’s denial, finding McInnis had
   discarded a number of damaged items before the adjuster inspected the
   property. Notably, FEMA stated that “[McInnis] disputes the insurer’s
   partial denial of contents payment” and that appeal was proper because the
   insurer had “issue[d] a written denial, in whole or in part, of the
   policyholder’s claim.”
          McInnis then submitted a revised proof of loss on December 26, 2017,
   claiming $247,749.15. Liberty Mutual sent a letter denying this proof of loss
   on January 8, 2018. It stated: “A letter was previously sent to the insured
   denying payment for content items that were not supported by photographs.
   Therefore, our denial stands.”

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                                    No. 22-30022

          Exactly one year later, on January 8, 2019, McInnis sued Liberty
   Mutual for breaching the SFIP. Liberty Mutual moved for summary
   judgment, which the district court granted, finding McInnis’ suit was time-
   barred because it had not been filed “within one year after the date of mailing
   of notice of disallowance or partial disallowance” of her claim, as required by
   42 U.S.C. § 4072. This appeal followed.
                                           III.
          We review a grant of summary judgment de novo. Davidson v. Fairchild
   Controls Corp., 882 F.3d 180, 184 (5th Cir. 2018). Summary judgment is
   proper when “there is no genuine dispute as to any material fact and the
   movant is entitled to judgment as a matter of law.” Fed R. Civ. P. 56(a).
          SFIP policyholders have a limited window in which to bring claims
   against their WYO carriers. The pertinent provision, 42 U.S.C. § 4072,
   provides in relevant part:
          [U]pon the disallowance by the Administrator 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 Administrator, may institute an action
          against the Administrator on such claim . . . .”
   On appeal, McInnis argues that her claim was not disallowed until Liberty
   Mutual rejected her proof of loss on January 8, 2018. She contends that a
   disallowance or partial disallowance of a proof of loss is the exclusive
   mechanism for triggering the statute of limitations. Liberty Mutual counters
   that while denial of a proof of loss may be one way of triggering the statute of
   limitations, it is not the only way, and therefore its denial letter of November
   2016 started the clock. The question before us, then, is when McInnis was
   mailed a “notice of disallowance or partial disallowance” of her “claim.”

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          The district court found that the November 2016 letter started the
   clock, and we agree. We begin with the statutory text. In re Nowlin, 576 F.3d
   258, 261 (5th Cir. 2009) (“When interpreting a statute, we begin by
   examining its language.”). Section 4072 does not mention a proof of loss,
   much less require the disallowance of one. Instead, it refers to the
   “disallowance . . . of any such claim.” 42 U.S.C. § 4072 (emphasis added).
   Therefore, a claim and a proof of loss are distinct. As FEMA explains in its
   NFIP Claims Manual, “[t]he proof of loss is not the claim. The claim is the
   policyholder’s assertion that they [sic] are entitled to payment for a Insured
   [sic] loss under the terms of the SFIP. A policyholder has only one claim from
   a flood event regardless of the number of proofs of loss and amount of
   documentation the policyholder may submit in support of that claim.”
   FEMA, National Flood Insurance Program Claims Manual at 68 (Oct. 2021).
   See also 44 C.F.R. § 62.23(i)(1) (requiring WYO carriers to be “guided by
   NFIP Claims manuals” in adjusting claims); Nguyen v. Hartford Underwriters
   Ins. Co., 514 F. Supp. 3d 831, 838 (M.D. La. 2021) (“Courts read the SFIP in
   pari materia with the Claims Manual to resolve coverage disputes.”). This
   basic distinction is reflected in McInnis’ own actions: her property flooded
   once, giving rise to one claim, but she submitted two different proofs of loss
   in support of that claim.
          We have held that letters containing language similar to Liberty
   Mutual’s November 2016 letter constituted the denial of a claim. For
   instance, we concluded that a letter from a WYO carrier purporting to “deny
   coverage for various items that [the insured] claimed pending documentation
   of replacement” sufficed to start the statute of limitations. Cohen, 924 F.3d
   at 779 (cleaned up). Likewise, the November 2016 letter here plainly put
   McInnis on notice that a part of her claim had been disallowed. The letter
   stated that “content items that were not supported by photographs were not
   able to be included in your claim” and referred to that as a “decision to deny

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                                    No. 22-30022

   coverage.” It also informed McInnis of her right to administratively appeal
   any portion of her claim “denied by th[is] letter.”
          McInnis insists the November 2016 letter contained mere
   “boilerplate language” insufficient to show the disallowance of a claim, but
   her own actions belie that assertion. McInnis acted on the “boilerplate”
   language by filing an appeal of the denial with FEMA. By law, an appeal to
   FEMA is only “available after the issuance of the insurer’s written denial, in
   whole or in part, of the insured’s claim.” 44 C.F.R. § 62.20(b); see also Cohen,
   924 F.3d at 781 (“[A] participant in the federal flood insurance program . . .
   is presumed to have constructive knowledge of all rules and regulations
   associated with it.”). The November 2016 letter even warned McInnis that
   her appeal could only challenge portions of her claim that had been denied.
   And FEMA explained that McInnis’ appeal was properly before it because
   she “disputes the insurer’s partial denial of contents payments for failure to
   document the loss.” Because McInnis appealed, she accepted that the
   November 2016 letter partially denied her claim, as required by FEMA’s
   regulations. She cannot now argue that the November 2016 letter did not
   provide adequate notice.
          Accordingly, the one-year period for filing suit under § 4072 began to
   run from the November 2016 letter, not the January 2018 letter. The district
   court correctly found that McInnis’ suit was untimely.
                                                                   AFFIRMED.

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