Chatelain v. United States Department of Homeland Security

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF LOUISIANA

STEVE CHATELAIN CIVIL ACTION

v. NO. 18-7242

UNITED STATES DEPARTMENT SECTION "F"

OF HOMELAND SECURITY, ET AL.

ORDER AND REASONS

Before the Court is the defendants’ motion for summary

judgment. For the reasons that follow, the motion is GRANTED.

Background

This lawsuit arises from an attempt to collect additional

flood insurance proceeds after catastrophic rains caused flooding

in southeast Louisiana in August 2016.

From August 13-15, 2016, heavy rains in southeast Louisiana

caused flooding, which damaged Steve Chatelain’s property located

at 29494 West Bates Road in Hammond, Louisiana. Chatelain had

purchased a Standard Flood Insurance Policy issued directly

through the Federal Emergency Management Agency, under the

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National Flood Insurance Program, which was then in effect to

insure his Hammond residence.1 The building had a liability limit

of $250,000 with a $1,250 deductible; contents coverage was limited

to $100,000 with a separate $1,250 deductible.

When Chatelain notified FEMA of his flood loss, FEMA sent an

independent adjuster for inspection. Working with the adjuster,

Chatelain submitted a proof of loss to FEMA dated October 28, 2016

in the amount of $75,898.48. FEMA denied that proof of loss, but

accepted Chatelain’s revised claim for $77,032.19, which deducted

certain above-water items from his contents estimate and sought

additional replacement cost coverage. By November 2016, FEMA had

paid Chatelain the total amount of $77,032.19 ($60,006.45 for

building and $17,005.74 for contents; both after deductibles).

FEMA explained in a November 28, 2018 letter that it denied the

original proof of loss, but that it accepted the claim for the

revised amount; FEMA also wrote: “[i]f you do not agree with the

final decision reached on your claim, please refer your

[SFIP]...which states...’If you do sue, you must start the suit

within 1 year after the date of written denial of all or part of

the claim.’”

1 Chatelain’s SFIP was in effect from July 18, 2016 through July

18, 2017.

2

Dissatisfied with FEMA’s payment, Chatelain, through counsel,

wrote to FEMA on March 30, 2017 claiming that the prior payment

“was deficient in unit cost and scope of work/damage.”

Accompanying the letter, Chatelain submitted a supplemental proof

of loss for $319,069, along with his own private appraiser’s

report. On April 7, 2017, FEMA rejected in writing Chatelain’s

$319,069 supplemental proof of loss for insufficient

documentation. Chatelain did not respond. Nor did he submit any

additional material to FEMA.

On August 1, 2018, Chatelain sued the Department of Homeland

Security and the Federal Emergency Management Agency, claiming

that FEMA’s “building payment was deficient by more than

$150,000.00.” The defendants now move for summary judgment

dismissing the plaintiff’s lawsuit as untimely.

I.

Federal Rule of Civil Procedure 56 instructs that summary

judgment is proper if the record discloses no genuine dispute as

to any material fact such that the moving party is entitled to

judgment as a matter of law. No genuine dispute of fact exists if

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the record taken as a whole could not lead a rational trier of

fact to find for the non-moving party. See Matsushita Elec. Indus.

Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). A genuine

dispute of fact exists only "if the evidence is such that a

reasonable jury could return a verdict for the non-moving party."

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

The Court emphasizes that the mere argued existence of a

factual dispute does not defeat an otherwise properly supported

motion. See id. Therefore, "[i]f the evidence is merely

colorable, or is not significantly probative," summary judgment is

appropriate. Id. at 249-50 (citations omitted). Summary judgment

is also proper if the party opposing the motion fails to establish

an essential element of his case. See Celotex Corp. v. Catrett,

477 U.S. 317, 322-23 (1986). In this regard, the non-moving party

must do more than simply deny the allegations raised by the moving

party. See Donaghey v. Ocean Drilling & Exploration Co., 974 F.2d

646, 649 (5th Cir. 1992). Rather, he must come forward with

competent evidence, such as affidavits or depositions, to buttress

his claims. Id. Hearsay evidence and unsworn documents that

cannot be presented in a form that would be admissible in evidence

at trial do not qualify as competent opposing evidence. Martin v.

John W. Stone Oil Distrib., Inc., 819 F.2d 547, 549 (5th Cir.

1987); Fed. R. Civ. P. 56(c)(2). "[T]he nonmoving party cannot

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defeat summary judgment with conclusory allegations,

unsubstantiated assertions, or only a scintilla of evidence."

Hathaway v. Bazany, 507 F.3d 312, 319 (5th Cir. 2007)(internal

quotation marks and citation omitted). In deciding whether a fact

issue exists, courts must view the facts and draw reasonable

inferences in the light most favorable to the nonmoving party.

Scott v. Harris, 550 U.S. 372, 378 (2007). Although the Court

must "resolve factual controversies in favor of the nonmoving

party," it must do so "only where there is an actual controversy,

that is, when both parties have submitted evidence of contradictory

facts." Antoine v. First Student, Inc., 713 F.3d 824, 830 (5th

Cir. 2013)(internal quotation marks and citation omitted).

II.

A.

Congress established the National Flood Insurance Program

through the National Flood Insurance Act in 1968 to provide

affordable flood insurance coverage at or below actuarial rates.

See 42 U.S.C. §§ 4001, et seq.; Ferraro v. Liberty Mut. Fire Ins.

Co., 796 F.3d 529, 531 (5th Cir. 2015). The NFIP, which is

supported by funds from the federal treasury, is administered by

the Federal Insurance and Mitigation Administration, which is

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organized under the Federal Emergency Management Agency. See

Gowland v. Aetna, 143 F.3d 951, 953 (5th Cir. 1998). All federal

flood policies are issued in the form of a Standard Flood Insurance

Policy and “no provision of the policy can be altered, varied, or

waived without express written consent of the Federal Insurance

Administrator.” Id.; Ferraro, 796 F.3d at 531 (“An SFIP is ‘a

regulation of [FEMA], stating the conditions under which federal

flood-insurance funds may be disbursed to eligible

policyholders.’”)(citation omitted).

“Because the NFIP puts at stake the government’s liability,

its regulations implicate sovereign immunity.” Ferraro, 796 F.3d

at 531. FEMA regulations mandate “strict adherence...to all terms

of the SFIP.” Forman v. Fed. Emergency Mgmt. Agency, 138 F.3d

543, 545 (5th Cir. 1998)(citing 44 C.F.R. § 61.13(a), (d), & (e));

see also Gowland, 143 F.3d at 954 (“[T]he provisions of an

insurance policy issued pursuant to a federal program must be

strictly construed and enforced.”). The conditions precedent to

filing suit to recover for flood damage are strictly enforced.

See, e.g., Marseille Homeowners Condominium Assoc., Inc. v.

Fidelity Nat’l Ins. Co., 542 F.3d 1053 (5th Cir. 2008); Wright v.

Allstate Ins. Co., 415 F.3d 384, 387-88 (5th Cir. 2005); Gowland

v. Aetna, 143 F.3d at 954; Forman, 138 F.3d at 545-46. To be sure,

“[t]hose seeking public funds are held to a demanding standard and

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are expected to comply with statutory requirements.” Cohen v.

Allstate Ins. Co., 924 F.3d 776, 780 (5th Cir. 2019).

When flood damage occurs to an NFIP participant’s property,

“FEMA...has established that a claimant must file a Proof of Loss

containing certain specified information before his claim may be

considered.” Forman, 138 F.3d at 545-46. The NFIA, its

implementing regulations, and the SFIP impose a one-year statute

of limitations to file suit in district court if an insured seeks

review of FEMA’s denial of a flood insurance claim. 42 U.S.C. §

4072 (“[U]pon the disallowance...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..., may institute

an action against the Administrator on such claim in the United

States district court.”); 44 C.F.R. § 62.2(a)(same); 44 C.F.R. Pt.

61, App’x A(2), Art. VII(R)(“If you do sue, you must start the

suit within one year of the date of the written denial of all or

part of the claim....”); Cohen, 924 F.3d at 778 (citing article

VII(R) and noting that “the [one-year] limitations provision

applies to any claim brought under the policy and to any dispute

arising from the handling of such claim.”).

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B.

The defendants move for summary judgment dismissing

Chatelain’s lawsuit for failure to timely file suit within one

year of FEMA’s rejection of his proof of loss. Chatelain counters

that the one-year clock never started because the defendants failed

to send a rejection of his proof of loss to his counsel, and, he

argues, that the defendants cannot prove that Chatelain himself

ever received the April 7, 2017 denial of his proof of loss. The

summary judgment record demonstrates that Chatelain’s August 2018

lawsuit was not filed within one year of FEMA’s denial or partial

denial of his claim. Chatelain fails to submit any evidence

creating a genuine dispute as to any material fact. Accordingly,

summary relief in favor of the defendants must be granted.

The summary judgment record establishes this chronology

relevant to the one-year statute of limitations imposed by

Chatelain’s SFIP and the NFIA on actions seeking judicial review

of flood-insurance-claim denials:

•

In August 2016, Chatelain claimed that his SFIP-insured

property located at 29494 West Bates Road in Hammond was

damaged by flooding. He immediately notified FEMA, which

sent an adjuster.

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•

Chatelain submitted a proof of loss to FEMA dated October 28,

2016 in the amount of $75,898.48.

•

Chatelain submitted a revised claim seeking $77,032.19.

•

By letter dated November 28, 2016, FEMA accepted Chatelain’s

revised claim, explained that “[w]e have rescinded our total

denial of your Proof of Loss and accepted your claim for the

revised amount of $71,281.07[;]” and advised Chatelain “[i]f

you do not agree with the final decision reached on your

claim, please refer to your [SFIP]...which states...’If you

do sue, you must start the suit within 1 year after the date

of written denial of all or part of the claim.’”

•

On March 30, 2017, Chatelain’s counsel wrote to FEMA seeking

additional payment on a supplemental proof of loss for

$319,069.00 minus prior payments.

•

On April 7, 2017, FEMA wrote to Chatelain at the insured

property address, rejecting his $319,069 supplemental proof

of loss for insufficient documentation.

•

On August 1, 2018, Chatelain filed this lawsuit.

To authenticate the recounted correspondence, the defendants

submit the sworn declaration of Robert Montgomery, an Insurance

Examiner for the NFIP, who is responsible for reviewing NFIP claims

and correspondence. He states that he reviewed Chatelain’s claim

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file and that “[t]he documents attached [to] this declaration were

made at or near the time of the dates referenced therein and were

made and kept in the course of FEMA’s regularly conducted

activities in administering the NFIP.”

Based on this chronology, the defendants submit that

Chatelain’s lawsuit must be dismissed as untimely whether FEMA’s

November 28, 2016 letter or its April 7, 2017 letter is the

operative clock-starter. The Court agrees.

1. Chatelain failed to file suit within one year of FEMA’s

mailing of its April 7, 2017 rejection letter.

The summary judgment record shows that FEMA paid Chatelain’s

initial revised claim, Chatelain submitted a supplemental proof of

loss, FEMA rejected it by mailing a letter to Chatelain on April

7, 2017, and Chatelain filed suit more than one year later.2 To

2 The plaintiff does not appear to challenge whether the April 7,

2017 could suffice as a “written denial” of his March 30, 2017

proof of loss; rather, he focuses on whether the letter should

have been addressed to his counsel and whether FEMA can prove that

he received the letter. The Court need not determine whether, as

a matter of law, the written rejection of a proof of loss

constitutes a written denial of a claim. See Migliaro v. Fidelity

Nat’l Indem. Ins. Co., 880 F.3d 660, 664 n.7 (3d Cir. 2018)

(collecting cases and observing that no federal court “has

categorically determined whether the rejection of a proof of loss

constitutes a ‘written denial of all or part of the claim.’”).

Just like in Migliaro, the record here is sufficient to determine

that “by filing suit, [Chatelain] himself held out the...letter

rejecting his proof of loss as a denial of his claim...” See id.

at 665. By exercising his right under SFIP art. VII(M)(2)(b) to

file suit after FEMA’s April 7, 2017 rejection of his supplemental

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avoid summary judgment, Chatelain seeks to create a factual

controversy concerning the April 7, 2017 letter. He takes issue

with the addressee, arguing that FEMA did not send the rejection

of his March 30, 2017 proof of loss “to [his] counsel.” And, he

argues that the defendants have “no proof” that the April 7, 2017

rejection letter “was actually sent and/or received by

[Chatelain].” The defendants reply that the plaintiff’s mere

argument, without evidence, fail to identify any genuine disputes

of material fact. The Court agrees.3

Summary judgment procedure mandates that “[a] party asserting

that a fact...is genuinely disputed must support the assertion by

citing to particular parts of materials in the record, including

depositions, documents, electronically stored information,

affidavits or declarations, stipulations..., admissions,

interrogatory answers, or other materials.” Fed. R. Civ. P.

56(c)(1)(A). Yet Chatelain identifies no record evidence in

support of his arguments regarding the mailing or receipt of the

April 7, 2017 letter. The defendants submit Mr. Montgomery’s sworn

proof of loss, the rational inference is that Chatelain treated

FEMA’s rejection letter as a claim denial. By filing suit more

than one year after that rejection letter, Chatelain untimely

exercised his rights and his lawsuit must be dismissed as untimely.

3 One can only wonder why, if, as he infers, no one knew of the

rejection of his claim he or his counsel made no further inquiry

before filing suit. His argument corrupts logic and common sense.

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declaration, which states that “[o]n April 7, 2017, FEMA responded

in writing [to Chatelain’s March 30, 2017 letter], rejecting

Chatelain’s $319,069.00 proof of loss for insufficient

documentation[;]” and an April 7, 2017 letter from FEMA to

Chatelain is included as an exhibit to Montgomery’s declaration.

In response to this competent summary judgment evidence, Chatelain

offers mere argument. He offers no support for his suggestion

that a FEMA rejection letter addressed to the insured at the

insured’s residence renders the letter ineffective. Likewise, he

offers nothing more than argument (regarding “proof” that the

letter was sent or received)4 to contend with the defendants’

4 Chatelain does not submit a declaration of his own in which he

makes a statement probative of whether he received the April 7,

2017 letter. There is no factual controversy to resolve in his

favor; the Court must resolve factual controversies in favor of

the nonmoving party only when "there is an actual controversy,

that is, when both parties have submitted evidence of contradictory

facts." Antoine v. First Student, Inc., 713 F.3d 824, 830 (5th

Cir. 2013)(internal quotation marks and citation omitted). The

Court thus need not determine whether a sworn statement by

Chatelain that he did not receive the letter would create a factual

controversy concerning whether FEMA mailed the April 7, 2017

letter. Notably, the one-year statute of limitations runs from

the date of FEMA’s mailing, not the date of the insured’s receipt.

See 42 U.S.C. 4072; see also 44 C.F.R. pt. 61, app. A(2), art.

VII(R); see also Cohen v. Allstate Ins. Co., No. 17-2484, 2018 WL

1144761, at *5 (S.D. Tex. March 2, 2018)(“Even if [the plaintiff’s

and his adjuster’s] statements that they never received the

[denial] letters are true, the critical fact is mailing, not

receipt.”), aff’d. Because FEMA submitted a sworn declaration in

support of its assertion that it rejected Chatelain’s supplemental

proof of loss in written correspondence to him dated April 7, 2017,

and there is no evidence in the record to genuinely dispute this

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evidentiary submission. But a mere argued existence of a factual

dispute does not defeat the defendants’ supported motion. No

reasonable jury could return a verdict for Chatelain on this issue;

he has identified no genuine dispute of material fact.5 On this

record, no reasonable fact-finder could conclude that FEMA failed

to mail its rejection of Chatelain’s supplemental proof of loss to

his residence, thereby triggering the statute of limitations.

Summary judgment in favor of the defendants is warranted.

2. Chatelain failed to file suit within one year of FEMA’s

mailing of its November 28, 2016 denial letter.

The defendants alternatively submit that Chatelain’s lawsuit

was untimely when measured from the November 28, 2016 partial

disallowance of his original proof of loss. Chatelain fails to

respond to this argument. Chatelain admits that FEMA partially

denied his original proof of loss and mailed him a letter on

November 28, 2016 explaining its denial and alerting him to the

one-year statute of limitations to file suit. Even if Chatelain

had submitted evidence creating a genuine dispute regarding

whether FEMA mailed the April 7, 2017 letter or if he had persuaded

material fact, summary judgment in favor of the defendants is

warranted.

5 Again, a genuine dispute of fact exists only "if the evidence is

such that a reasonable jury could return a verdict for the non-

moving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248

(1986).

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the Court that the April 7 letter did not effect a claim denial,

on this record, that simply results in Chatelain’s August 2018

lawsuit being tardier. Chatelain has failed to dispute that FEMA’s

November 28, 2016 triggered the one-year statute of limitations by

denying part of Chatelain’s claim. Thus, summary judgment is

equally appropriate considering that Chatelain’s August 1, 2018

lawsuit was filed more than 20 months after FEMA sent the November

28, 2016 partial denial letter.

Because Chatelain’s lawsuit was untimely no matter which FEMA

letter started the clock, IT IS ORDERED: that the defendants’

motion for summary judgment is hereby GRANTED. The plaintiff's

claims are hereby dismissed with prejudice.

New Orleans, Louisiana, July 25, 2019

MARTIN C. FELDMAN

UNITED STATES DISTRICT JUDGE

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