Blount v. Wright National Flood Insurance Company

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF LOUISIANA

YVONNE ALCIATORE BLOUNT CIVIL ACTION

VERSUS NO: 22-4416

WRIGHT NATIONAL FLOOD SECTION “H”

INSURANCE COMPANY

ORDER AND REASONS

Before the Court is Defendant Wright National Flood Insurance

Company’s Motion to Dismiss (Doc. 14). For the following reasons, the Motion

is GRANTED.

BACKGROUND

This case arises out of an insurance coverage dispute. Plaintiff Fredrick

R. Blount, as the testamentary executor for the succession of the estate of

Yvonne Alciatore Blount (“Plaintiff”), owns property that was damaged during

Hurricane Ida in August 2021. The property was covered by a Standard Flood

Insurance Policy (“SFIP”) that Plaintiff purchased from Defendant Wright

National Flood Insurance Company.1 Defendant provides flood insurance as a

“Write Your Own” (“WYO”) carrier through the National Flood Insurance

Program (“NFIP”), which is administered by the Federal Emergency

1 The insurance Policy in question bears Policy No. 17-115045-2945 11 and insures against

physical damage from wind, hail, fire and hurricane as well as flood-related damage. Doc. 1-

4 at 5.

Management Agency (“FEMA”).2 After Hurricane Ida, Plaintiff filed a timely

claim and sought insurance proceeds from Defendant under the policy.

Defendant assessed the claim and allegedly returned estimates that were

insufficient to cover the damage.

As a result, Plaintiff filed a breach of contract suit against Defendant for

failing to pay out under the policy. Plaintiff also asserts claims for violations

of Louisiana state law, along with claims for statutory penalties and attorney’s

fees and costs under Louisiana Revised Statutes §§ 22:1973(B)(2) and (C) and

22:1892(B)(1), interest, professional fees and expenses, reimbursement for

additional living expenses, and actual and consequential damages. Defendant

removed to this Court, as federal courts have exclusive subject matter

jurisdiction over flood loss claims against WYO companies.3

Now before the Court is Defendant’s Motion to Dismiss Claims for Bad

Faith and Alleging Violations of Louisiana Valued Policy Law and Louisiana

Revised Statutes §§ 22:1892 and 22:1973, and All Claims For Consequential,

Statutory, Exemplary, Economic and Punitive Damages, Attorneys’ Fees,

Costs of Litigation, Penalties, and Professional Fees, and Pre And Post-

Judgment Interest. To date, Plaintiff has filed no opposition to Defendant’s

Motion.

LEGAL STANDARD

2 Congress created the National Flood Insurance Plan pursuant to the National Flood

Insurance Act. 42 U.S.C. § 4001. In its capacity as a WYO insurer, Defendant is acting as a

fiscal agent of the United States. Wright v. Allstate Ins. Co., 415 F.3d 384, 386 (5th Cir. 2005)

(citing 42 U.S.C. § 4071(a)(1)).

3 Webb v. Aetna Ins. Co., 1997 WL 433500, at *3 (E.D. La. July 31, 1997) (holding that 42

U.S.C. § 4072 specifically precludes state courts having concurrent jurisdiction over NFIP

claims since federal court have “original, exclusive” jurisdiction).

To survive a Rule 12(b)(6) motion to dismiss, a plaintiff must plead

enough facts “to state a claim to relief that is plausible on its face.”4 A claim is

“plausible on its face” when the pleaded facts allow the court to “[d]raw the

reasonable inference that the defendant is liable for the misconduct alleged.”5

A court must accept the complaint’s factual allegations as true and must “draw

all reasonable inferences in the plaintiff’s favor.”6 The Court need not,

however, accept as true legal conclusions couched as factual allegations.7

To be legally sufficient, a complaint must establish more than a “sheer

possibility” that the plaintiff’s claims are true.8 “A pleading that offers ‘labels

and conclusions’ or ‘a formulaic recitation of the elements of a cause of action’”

will not suffice.9 Rather, the complaint must contain enough factual

allegations to raise a reasonable expectation that discovery will reveal evidence

of each element of the plaintiffs’ claim.10

LAW AND ANALYSIS

Defendant alleges that Plaintiff’s extracontractual state law claims for

bad faith, violations of Louisiana Revised Statutes §§ 22:189211 and 22:197312

4 Ashcroft v. Iqbal, 556 U.S. 662, 667 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S.

544, 547 (2007)).

5 Id.

6 Lormand v. U.S. Unwired, Inc., 565 F.3d 228, 232 (5th Cir. 2009).

7 Iqbal, 556 U.S. at 667.

8 Id.

9 Id. at 678 (quoting Twombly, 550 U.S. at 555).

10 Lormand, 565 F.3d at 255–57.

11 “Louisiana Revised Statute 22:1892 provides generally that insurers shall pay the amount

of any claim due any insured within thirty days after receipt of satisfactory proof of loss, and

that all insurers shall make a written offer to settle any property damage claim within thirty

days after receipt of satisfactory proof of loss for the claim.” Favaro v. Wright Nat’l Flood Ins.

Co., No. CV 17-1711, 2018 WL 3419271, at *1 (M.D. La. July 13, 2018).

12 “Louisiana Revised Statute 22:1973 imposes a duty of good faith and fair dealing on

insurers and provides that an insured may recover any damages that he sustains as a result

of his insurer’s breach of the duty.” Id.

and all claims for consequential, statutory, exemplary, economic and punitive

damages, attorneys’ fees, costs of litigation, penalties, and professional fees are

preempted and barred.13 Defendant, therefore, asks the Court to dismiss these

claims. Having filed no opposition, Plaintiff provides no response to this

argument.

The Court finds that Plaintiff’s extracontractual state law claims are

preempted by federal statutory law and, as such, must be dismissed. The NFIP

was established by the National Flood Insurance Act of 1968 and is

administered by FEMA.14 In 1977, FEMA promulgated the Standard Flood

Insurance Program, which allows private insurers to operate as WYO

companies.15 These WYO insurance companies issue their own SFIP’s and

arrange for the adjustment, settlement, payment and defense of claims arising

out of these policies.16 FEMA regulates the Standard Flood Insurance Program

and claims are ultimately paid out of the United States Treasury. In 2000,

FEMA added the following language to Article IX of the SFIP:17

IX. What Law Governs

This policy and all disputes arising from the handling of any claim

under the policy are governed exclusively by the flood insurance

regulations issued by FEMA, the National Flood Insurance Act of

1968, as amended (42 U.S.C. § 4001, et seq.), and Federal common

law.18

Following the promulgation of this regulation, the Fifth Circuit reaffirmed its

holding from Wright v. Allstate Ins. Co, in which it held “that state law tort

13 Doc. 14-2 at 2.

14 Gallup v. Omaha Prop. and Cas. Ins. Co., 434 F.3d 341, 342 (5th Cir. 2005).

15 Id.

16 Id.

17 Id. at 343.

18 44 C.F.R. pt. 61, App. A(1), Art. IX (2001).

claims arising from claims handling by a WYO are preempted by the National

Flood Insurance Act.”19 It is now settled law that any claims for damages,

penalties, and attorney’s fees under state law are preempted.20 “In other words,

insureds under SFIP policies have one remedy, and only one remedy for

nonpayment of claims: a suit for breach of contract.”21 As such, Plaintiff’s

extracontractual state law claims are preempted by federal law. Thus, all

claims for bad faith, violations of Louisiana Revised Statutes §§ 22:1892 and

22:1973, and all claims for consequential, statutory, exemplary, economic and

punitive damages, attorneys’ fees, costs of litigation, penalties, and

professional fees are preempted and barred.

Additionally, Defendant requests the Court dismiss Plaintiff’s claim for

pre and post-judgment interest. As claims for judicial interest in lawsuits

brought against FEMA are barred by sovereign immunity, the claim for pre

and post-judgment interest must also be dismissed.22 Plaintiff’s claim for

breach of contract is the sole remaining claim.

CONCLUSION

For the foregoing reasons, Defendant’s Motion is GRANTED.

19 Gallup, 434 F.3d at 345.

20 Favaro, 2018 WL 3419271, at *3 (holding that “relying on well-settled, binding Fifth Circuit

jurisprudence, the Court finds that Plaintiffs’ state law claims are preempted by federal

law.”); Howell-Douglas v. Fid. Nat. Indem. Ins. Co., 24 F. Supp. 3d 579, 583 (E.D. La. 2014)

(holding that FEMA “regulations expressly preempt state law tort claims arising from claims

handled by a WYO”); Nichols v. Wright Nat’l Flood Ins., No. 18-441, 2019 WL 639170, at *3

(W.D. La. Jan. 16, 2019) (stating that “[t]he Fifth Circuit has clearly held that federal law

preempts state law tort claims arising from claims handling by a WYO insurer”).

21 Howell-Douglas, 24 F. Supp. 3d at 583.

22 Bercier v. Bernard, No. 9-1794, 2010 WL 4938657, at *4 (W.D. La. Nov. 29, 2010) (holding

that “payment by the WYO for denial of coverage would be precluded by the no-interest rule

because it is a direct charge on the federal treasury”); Favaro, 2018 WL 3419271, at *3

(dismissing the plaintiff’s claims for interest pursuant to state law with prejudice as

preempted by federal law); Nichols, 2019 WL 639170, at *4 (holding that the plaintiff’s claims

for interest against a WYO insurer were barred by the “no-interest” rule).

New Orleans, Louisiana this 14th day of February, 20238.

( yh JANE TRICHE MILAZZO

UNITED STATES DISTRICT JUDGE