Hebert v. American Bankers Insurance Company of Florida

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF LOUISIANA

BENJAMIN HEBERT CIVIL ACTION

VERSUS NO: 23-5514

AMERICAN BANKERS INSURANCE

COMPANY OF FLORIDA SECTION “H”

ORDER AND REASONS

Before the Court is Defendant American Bankers Insurance Company of

Florida’s Motion to Dismiss for Failure to State a Claim (Doc. 8). For the

following reasons, the Motion is GRANTED.

BACKGROUND

This case arises out of an insurance contract dispute following Hurricane

Ida. Plaintiff Benjamin Hebert alleges that Defendant American Bankers

Insurance Company of Florida issued a Standard Flood Insurance Policy

(“SFIP”) covering property located at 1842 Highway 1 in Grand Isle, Louisiana

(“the Policy”).1 Defendants provide flood insurance as a “Write Your Own”

(“WYO”) carrier through the National Flood Insurance Program (“NFIP”),

which is administered by the Federal Emergency Management Agency

(“FEMA”).2

1 Doc. 1 at 2–3.

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

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

After Hurricane Ida, Plaintiff “reported the loss” to Defendant.3 On

October 23, 2021, Defendant sent Plaintiff a letter notifying him that

$13,735.97 of damage was covered under the Policy, but part of his claim was

denied.4 Plaintiff thereafter hired a public adjuster to resolve a dispute over

Defendant’s adjustment of his claim. On July 26, 2022, Plaintiff provided

Defendant a signed proof of loss form. On September 26, 2022, Defendant sent

Plaintiff a letter informing him that his proof of loss was rejected in full, and

his claim was denied. Plaintiff avers that Defendant failed to adequately

compensate Plaintiff for his losses sustained and covered under the Policy.5

Plaintiff filed a Complaint on September 25, 2023, asserting breach of

contract and bad faith claims. Now before the Court is Defendant’s Motion to

Dismiss for Failure to State a Claim. Plaintiff opposes.6

LEGAL STANDARD

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.”7 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.”8

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

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 Doc. 1 at 3.

4 Doc. 8-2 at 1. Defendant also notified Plaintiff that it had “exercised [its] option to accept

[Plaintiff’s] adjuster’s report of [the] flood loss instead of a signed proof of loss to evaluate

and pay [Plaintiff’s] claim.” Id.

5 Doc. 1 at 4–8.

6 Doc. 11.

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

544, 547 (2007)).

8 Id.

all reasonable inferences in the plaintiff’s favor.”9 The Court need not, however,

accept as true legal conclusions couched as factual allegations.10

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

possibility” that the plaintiff’s claims are true.11 “A pleading that offers ‘labels

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

will not suffice.12 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.13

LAW AND ANALYSIS

Defendant argues that Plaintiff’s breach of contract claim should be

dismissed as time-barred because Plaintiff failed to file this action within one

year from the date of partial denial of coverage. Defendant specifically argues

that Plaintiff’s breach of contract claim against it is time barred under 42

U.S.C. § 4072, which provides in pertinent part that:

[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 notice of disallowance or partial disallowance by the

Administrator, may institute an action against the Administrator

. . . .14

The SFIP also includes the following provision:

You may not sue us to recover money under this policy unless you

have complied with all requirements of the policy. If you do sue,

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

10 Iqbal, 556 U.S. at 667.

11 Id.

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

13 Lormand, 565 F.3d at 255–57.

14 42 U.S.C. § 4072 (emphasis added).

you must start the suit within one year of the date of the written

denial of all or part of the claim . . . .15

The one-year limitations period applies to any claim brought under the SFIP

and to any dispute arising from the handling of such claim.16

Defendant attached to its motion a copy of the two letters denying

Plaintiff’s insurance claim dated October 23, 2021 and September 26, 2022.17

In the October 23, 2021 letter, Defendant notified Plaintiff that it had exercised

its option to accept Plaintiff’s adjuster’s report of the alleged flood loss rather

than a signed proof of loss.18 The letter also notified Plaintiff that it denied a

portion of his claim, namely his claims for damage to the meter box, debris and

sand brought in by flood waters, and damage to the enclosure walls and

secondary egress staircase to a deck located below the first elevated level of

Plaintiff’s post-firm building.19 The September 26, 2022 letter notified Plaintiff

that Defendant had received a signed proof of loss. Defendant, however,

rejected the document in full and again denied coverage “for items located

below the first elevated floor of [Plaintiff’s] post-FIRM elevated home.”20

Defendant avers that the first denial letter sent on October 23, 2021,

began the one-year prescriptive period. Plaintiff, however, contends that the

15 44 C.F.R. pt. 61, App. A(1), Art. VII(R) (emphasis added); Wright, 415 F.3d at 386 (“The

terms of SFIP policies are dictated by FEMA.”).

16 44 C.F.R. pt. 61, App. A(1), Art. VII(R).

17 Docs. 8-2 & 8-3. On a motion to dismiss, the Court may consider documents attached

thereto when the documents are referred to in the pleadings and are central to a plaintiff’s

claims. See Brand Coupon Network, LLC v. Catalina Mktg. Corp., 748 F.3d 631, 635 (5th

Cir. 2014). “Courts have generally concluded that when a plaintiff’s complaint alleges the

denial of all or part of an insurance claim, it is appropriate to consider the letter denying

coverage under Rule 12(b)(6).” Bateman v. Am. Bankers Ins. Co. of Fla., No. 23-6338, 2024

WL 894790, at *2 (Vance, J.) (collecting cases).

18 Doc. 8-2 at 1.

19 Id. at 2–3.

20 Doc. 8-3 at 2. The letter also notified Plaintiff that he must file suit “in the Federal District

Court where the damage occurred within one (1) year of when your insurer first denied all

or part of your claim (42 U.S.C. § 4072; 44 C.F.R. § 62.23(g)). Id. at 4 (emphasis added).

“denial that was after the sworn proof of loss” dated September 26, 2022 began

the prescriptive period.21 Thus, the parties disagree as to whether a written

denial must be preceded by a sworn proof of loss to begin the prescriptive

period.

The Court first considers the October 23, 2021 letter. The letter

instructed Plaintiff: “[I]f you wish to take further action concerning this denial,

the Policyholder Rights document attached to this letter explains your options,

several of which require prompt action.”22 The letter specifically “denied a

portion of [Plaintiff’s] claim based upon the appliable provisions of the

Standard Flood Insurance Policy (SFIP).”23 Courts, including the Fifth Circuit,

have repeatedly held that letters with similar language constitute “notice[s] of

disallowance” that begin the one-year prescriptive period under the National

Flood Insurance Act.24 Accordingly, the October 23, 2021 letter clearly

constitutes a “written denial” or “notice of partial disallowance” that began the

one-year prescriptive period.

Plaintiff responds by citing to Qader v. Federal Emergency Management

Agency for the proposition that a notice of disallowance cannot begin the one-

year filing period where an insurer denied flood claims before receiving proof

21 Doc. 11 at 3.

22 Doc. 8-2 at 3 (emphasis added).

23 Doc. 8-2 at 1. See also id. at 3 (denying coverage for damage to a meter box, debris and sand

brought in the yard from flood waters, and damage to enclosure walls and secondary egress

staircase to a deck located below the first elevated level of Plaintiff’s post-firm elevated

building).

24 See Bateman, 2024 WL 894790, at *2 (citing McInnis v. Liberty Mut. Fire Ins. Co., No. 22-

30022, 2022 WL 4594609, at *3 (5th Cir. Sept. 30, 2022); Cohen v. Allstate Ins. Co., 924

F.3d 775, 781 (5th Cir. 2019)); Verret v. SafeCo Ins. Co. of Am., No. 23-2292, 2023 WL

5608018 (E.D. La. Aug. 30, 2023) (Brown, J.); McInnis v. Liberty Mut. Fire Ins. Co., No.

19-00012-BAJ-EWD, 2021 WL 5985145, at *2 (M.D. La. Dec. 16, 2021) (Jackson, J.),

affirmed by No. 22-30022, 2022 WL 4594609 (5th Cir. Sept. 30, 2022).

of loss.25 This Court, however, finds the holding of Qader inapplicable. In

Qader, the court interpreted an August 31, 2005 order issued by FEMA that

extended proof of loss deadlines to assist policyholders following Hurricane

Katrina.26 The August 31, 2005 order is inapplicable to claims for damage

caused by Hurricane Ida.

This Court nevertheless finds the rationale employed in Qader supports

a finding that the October 23, 2021 letter constituted a proper notice of partial

allowance. In Qader, the court noted that the SFIP typically requires

policyholders to submit a sworn proof of loss to their NFIP insurers within

sixty days of a loss to initiate a claim.27 The post-Hurricane Katrina order

partially waived the proof of loss requirement and extended the deadline for

submission of proof of loss to one year from the date of such loss.28 The Qader

court therefore concluded that “[t]he one-year filing period begins to run when

FEMA denies a claim that is accompanied by a proof of loss, unless proof of loss

is waived.”29 FEMA issued a similar order following Hurricane Ida, which

directed NFIP insurers to “exercise their option to accept their adjuster’s report

to evaluate and pay a claim instead of a signed proof of loss.”30 Defendant

indeed notified Plaintiff in its October 23, 2021 denial letter that it was

25 Doc. 11 at 2 (citing Qader v. Fed. Emergency Mgmt. Agency, 543 F. Supp. 2d 558, 562 (E.D.

La. 2008)).

26 Qader, 543 F. Supp. 3d at 561–62.

27 Id. at 561 (citing 44 C.F.R. pt. 61, App. A(1), Art. VII(J)(4)).

28 Id. at 561–62.

29 Id. at 562 (emphasis added).

30 See Jeffrey Jackson, Acting Assistant Administrator for Federal Insurance, Hurricane Ida

Claims Payment Process, FED. EMERGENCY MGMT. AGENCY (Sept. 16, 2021),

https://nfipservices.floodsmart.gov/sites/default/files/w-21020.pdf. The Fifth Circuit has

held that WYO companies cannot waive the requirements set forth in SFIPs because “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.” See Gowland

v. Aetna, 143 F.3d 951, 954 (5th Cir. 1998) (citing 44 C.F.R. §§61.4(b), 61.13(d)).

exercising its option to waive proof of loss.31 Accordingly, the October 23, 2021

letter constituted a proper notice of partial disallowance that began the one-

year prescriptive period.

And even if application of Qader suggested a different result, the Fifth

Circuit has considered a similar timeline of events and held that the first

denial letter, sent before sworn proof of loss was provided, nevertheless

constituted a “notice of disallowance” to begin the one-year prescriptive

period.32 In so holding, the court reasoned that 42 U.S.C. § 4072, which sets

forth the prescriptive period for Plaintiff’s claim, does not mention a proof of

loss.33 Rather, it refers to the “disallowance. . . of any such claim.”34 Thus, the

court concluded that “a claim and a proof of loss are distinct,” and denial of the

claim begins the prescriptive period—not denial of the proof of loss.35

Because Plaintiff filed her Complaint more than one year after

Defendant mailed the October 23, 2021 notice of disallowance,36 this Court

finds that Plaintiff’s breach of contract claim has prescribed pursuant to 42

U.S.C. § 4072. Additionally, the Fifth Circuit has held that extra-contractual

state law claims “arising from claims handling by a WYO” such as those

Plaintiff asserts here “are preempted by federal law.”37 Accordingly, this Court

finds that Plaintiff’s contractual claims are time-barred, and his extra-

contractual claims are preempted by federal law.

31 Doc. 8-2 at 1.

32 See McInnis v. Liberty Mut. Fire Ins. Co., No. 22-30022, 2022 WL 4594609, at *2–3 (5th

Cir. Sept. 30, 2022). While this opinion is not precedent pursuant to 5th Circuit Rule 47.5,

this Court nevertheless finds the Fifth Circuit’s rationale persuasive.

33 Id. at *2.

34 Id. (citing 42 U.S.C. § 4072).

35 Id.

36 See Doc. 1 (filed August 25, 2023).

37 Gallup v. Omaha Prop. & Cas. Ins. Co., 434 F.3d 341, 344 (5th Cir. 2005) (quoting Wright

v. Allstate Ins. Co., 415 F.3d 384, 390 (5th Cir. 2005)) (internal quotations omitted).

CONCLUSION

For the following reasons, Defendant’s Motion to Dismiss for Failure to

State a Claim is GRANTED. Plaintiffs claims are DISMISSED WITH

PREJUDICE.

New Orleans, Louisiana this 27th day of June, 2024.

gy TRICHE MILAZZO

UNITED STATES DISTRICT JUDGE