Petition for Writ of Certiorari — Dawkins v. Witt

Supreme Court brief2003

Ask Donna

What actually matters in this document.

Text

O |

In The FICE OF 'HE CLERK

Supreme Court of the Gnited States

HOWARD G. DAWKINS, JR., M.D.;

ANNETTE DAWKINS,

Petitioners,

JAMES LEE WITT, Director

of the Federal Emergency Management Agency,

Respondent.

ON PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

PETITION FOR WRIT OF CERTIORARI

A. Charles Ellis

Counsel of Record

WARD and SMITH, P.A.

120 West Fire Tower Road

Post Office Box 8088

Greenville, NC 27835-8088

(252) 215-4000

Counsel for Petitioners

THE LEX GROUP ¢ 1108 East Main Street # Suite 1400 ¢ Richmond, Virginia 23219

(804) 644-4419 @ (800) 856-4419 @ Fax: (804) 644-3660 ¢ www.thelexgroup.com 0

sisdesises ionicity RRM NS

sig haerestO Deg Pottbe NL A Nan a ON MENS RRR M EEE :

in ote e Lye npn

A Sa Ra a

QUESTIONS PRESENTED FOR REVIEW

Whether actions by agents and representatives of the

National Flood Insurance Program, including but not

limited to: (a) telling the insureds that the NFIP does

not enforce the 60-day proof of loss requirement in

major disasters, such as hurricanes; (b) telling the

insureds that claims for flood damage may be

reopened by the NFIP if additional flood damage is

discovered; (c) inspecting only the first floor of a

three-story home, and refusing to inspect the second

and third floors, following a __ hurricane;

(d) continuing negotiations with the insureds and

causing them to incur substantial time and money in

submitting additional documentation to the NFIP

and hiring structural engineers to inspect the insured

premises; (e) accepting the first proof of loss after the

60-day period and paying on the loss, but not

accepting a second claim for additionally discovered

damage, constitute affirmative misconduct for the

application of estoppel against the Government?

Whether through the misrepresentations of the NFIP

agents and its acceptance of the first proof of loss

after expiration of the 60-day deadline, the NFIP

waived the 60-day proof of loss requirement?

Whether the requirements for filing a proof of loss in

the Flood Policy are ambiguous and, therefore,

should be construed in favor of Petitioners?

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED FOR REVIEW .........:s:sssssseesesseesees i

TABLE OF CITED AUTHOR ITIEG..........:sessseesessessseseeeesenens iv

OPINIONS BELOW. ..........:cscssssssseesesseenesesenseaseneseseneanensenseneensens 1

BASIS FOR JURISDICTION ........:secsseessesesssnseseeseeseenennennenee raees 2

CONSTITUTIONAL AND

STATUTORY PROVISIONS INVOLVED ........:.ssssssssesesesenenenes 2

STATEMENT OF THE CASE.........ccccssesessesseeeseeseeeneeneeneneenennens 3

REASONS FOR GRANTING THE WRIT........:.seceseseseesesesenees 11

A. THIS COURT SHOULD GRANT

CERTIORARI TO PROVIDE AN

EXAMPLE OF THE TYPE OF

GOVERNMENTAL AFFIRMATIVE

MISCONDUCT TO WHICH

ESTOPPEL MAY APPLY. .......:sesssessssessessesees 11

1. Estoppel.......sccscscsesesesesersssssssrseseseseeees 11

y WYO ....seccvvsesneerserencvccvernevernncersnaconenee 19

B. THIS COURT SHOULD GRANT

CERTIORARI BECAUSE THE

REQUIREMENTS FOR FILING A

PROOF OF LOSS ARE AMBIGUOUS

AND SHOULD BE CONSTRUED IN

FAVOR OF PETITIONERS;

THEREFORE, THE DECISION BY

THE FOURTH CIRCUIT SHOULD BE

REVERSED..........scsssssssssssseorsersocscssrseessesenessenees 21

Ce AF ieisccassenstiniaecsniamnintiemncninnibantinenamniictenntieninpane ite

APPENDIX

TABLE OF CITED AUTHORITIES

Page(s)

Cases:

Chesapeake Ship Propeller Co. v. Stickney,

S20 F. Seay. FIG (ELA. VR. TIS) oveensescnssvnsssnevnniviinsestnn 21

Dawkins v. Witt,

SFR ek GG FO CE, I) evevvevessensntsnesvenneninvnninchabenbinie 1

Dempsey v. Director,

349 F. Supp. 1334 (E.D. Ark. 1962).........r0ccsvesessere 12, 20

Heckler v. Community Health Servs. of

Crawford County, Inc.,

467 U.S. 51, 104 S. Ct. 2218,

1 1. heh. a eC sisi cession sessnibanenenetnnnen 11,12

Humphrey v. Nat'l Flood Ins. Program,

SES FE. Sangee, EID CD. WG: TPG wseesessisicasvornsavicsanvsssnovvns 14

McCrary v. Fed. Emergency Management Agency,

642 F. Supp. 544 (E.D.N.C. 1986).............r-sesseesseessseees 12

Meister Bros., Inc. v. Macy,

674 F.2d 1174 (7th Cir. 1982)............000 12, 16, 17, 18, 19

Montana v. Kennedy,

366 U.S. 308, 815. Ct. 1336,

Office of Personnel Management v. Richmond,

496 U.S. 414, 110 S. Ct. 2465,

SO Las FR Re CPE wivieretsenincaicictcninsnovenisickanbeenibenten 14

Riverside Bldg. Supply, Inc. v.

Fed. Emergency Management Agency,

Fed En Ae A, FD) cvecctnsninsninssenssnoineniensvanasonne 22

Schweiker v. Hansen,

450 U.S. 785, 101 S. Ct. 1468,

OF Sy Hees IE I RN srvisesepnnitcsinemcanitersaennoninin 15, 16, 18

United States v. Slaughter,

PO Fie Ae CE NE. BI cose cecnvassrsssiseiunsscitinmnntionns 19

Statutes

BF Baer Fete vinsaresecissvienintetesisemeicindip asniaamaaiaaadaaaan 2

Be ein Se FB tisctnsiivncnitiaistrsninbenisucianeidbanahmensanaiae siete 2

ER. BE Bc insnincinnnccienphndeaea eaten 43

CS UBL... GR GIRL, BO icrisscnssisnestienicnicsnanaabans 3

IN THE

SUPREME COURT OF THE UNITED STATES

HOWARD G. DAWKINS, JR., M.D.;

ANNETTE DAWKINS,

Petitioners,

Vv.

JAMES LEE WITT, Director of the

Federal Emergency Management Agency,

Respondent

On Petition for Writ of Certiorari to the

United States Court of Appeals for the

Fourth Circuit

PETITION FOR WRIT OF CERTIORARI

The Petitioners pray that a writ of certiorari issue to

review the decision and judgment of the United States Court

of Appeals for the Fourth Circuit, dated and entered

February 3, 2003.

OPINIONS BELOW

The opinion of the United States District Court for

the Eastern District of North Carolina (App. 12) is not

reported. The opinion of the United States Court of Appeals

for the Fourth Circuit (App. 1) is reported in 318 F.3d 606.

BASIS FOR JURISDICTION

The judgment of the Court of Appeals was entered

on February 3, 2003. The jurisdiction of the Court is invoked

under 28 U.S.C. § 1254.

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

Statutory Provisions

National Flood Insurance Act of 1968

42 U.S.C. § 4072 - Adjustment and payment of claims;

judicial review; limitations; jurisdiction

in the event the program is carried out as

provided in section 1340 [42 U.S.C. § 4071],

the Director 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 or 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.

STATEMENT OF THE CASE

Petitioners, as Plaintiffs, brought the action against

Respondent, Defendant James Lee Witt, Director of the

Federal Emergency Management Agency, seeking to recover

property damages sustained as a result of Hurricane Fran

under the terms of a flood insu ance policy ("Policy") issued

to Petitioners pursuant to the provisions of the National

Flood Insurance Act of 1968, 42 U.S.C. §§ 4001, et_seq.

Pursuant to the authority provided by 42 U.S.C. § 4072,

Petitioners brought their suit in the United States District

Court for the district in which the insured property was

situated.

In 1989, Petitioners purchased a home located at 219

Beach Road North on Figure Eight Island in Wilmington,

North Carolina (the "Insured Property"). Figure Eight

Island is a private island with restricted access through a

guarded gate. Access is limited to owners, their family,

guests, and authorized construction and service personnel.

At or about the same time of the purchase of the home,

Petitioners also purchased flood insurance through the

National Flood Insurance Program ("NFIP") for which they

paid annual premiums. In addition, Petitioners purchased a

homeowners' policy with Lloyd's of London, which

provided coverage, among other things, for wind damage to

the Insured Property.

On or about September 5, 1996, the Insured Property

was severely damaged by Hurricane Fran. Immediately

thereafter (on or about September 6, 1996), Dr. Dawkins

contacted the office of Fickling & Clement Insurance

("Fickling & Clement"), the insurance agent through whom

he purchased the NFIP Policy, so that Fickling & Clement

could notify the NFIP and Lloyd's of London that the

Insured Property had been damaged by the Hurricane. The

office of Fickling & Clement in turn promptly notified the

NFIP and Lloyd's of London.

On September 7, 1996, following the Hurricane,

Figure Eight Island was opened to homeowners, but no

motor vehicles were allowed due to the condition of the

streets which were completely covered with sand. The only

means of transportation was by foot or bicycle. Petitioners

arrived as soon as they could that morning to examine the

damage to the Insured Property. Upon arriving on the

island, they at once observed the force of the Hurricane - the

dunes in front of the beachfront cottages on the southern

90% of the island were completely destroyed; the sand in

three lots in front of the Insured Property, including the

dunes, was washed away; air conditioning units, beach

walks, and landscape timbers from other homes were

washed into Petitioners’ backyard.

Dr. Dawkins realized that the first thing that he

would have to do, after cleaning up all of the debris, would

be to hire a contractor and an architect to assess the damage

so that he could have an accurate idea as to the cause of the

damage and the amount that the repairs and/or

replacements would cost. He contacted Nick Garrett, a

licensed contractor, to inquire whether he would assess the

damage and handle the repairs to the Insured Property. In

order to comply with the Homeowners Associations' Rules

and Regulations for Figure Eight Island, Dr. Dawkins also

contacted Michael Kerstin, an architect, to assist with this

process.

On September 13, 1996, Dr. Dawkins had his first

direct encounter with the NFIP. On this day, he met with an

NFIP adjuster, Bob Hughes. During this meeting, Mr.

Hughes would not acknowledge that the Hurricane was

accompanied by waves and, surprisingly, he inspected only

the first level and declined to inspect any other portion of

the Insured Property. Subsequently, Mr. Hughes and

Petitioners agreed upon the amounts to be claimed based

upon damage due to flood that was readily ascertainable. It

was in this context that Dr. Dawkins first saw a proof of loss

form. The proof of loss is only a one-page form, but it

requires very detailed information including the full cost of

repair or replacement to the building and/or contents that

have been damaged. Mr. Hughes sent Petitioners an initial

proof of loss, the net amount of which Petitioners did not

feel was reasonable, so they did not execute it, but returned

it to Mr. Hughes. Mr. Hughes then sent a second proof of

loss with a net amount of $6,965.20, which Petitioners

executed on December 12, 1996, and swore under oath that

the amounts set forth therein were accurate. [App. 30]. This

proof of loss was paid by the NFIP in January, 1997. [App.

34]. The proof of loss did not state that Petitioners were

swearing under oath that this was the only damage that was

done to the Insured Property or, that by signing it, they

would be precluded from claiming any additionally

discovered losses.

Based upon the manner in which this claim was

handled, Petitioners reasonably understood that once they

and the NFIP had agreed upon what would be covered in

the proof of loss (that is, what the NFIP would pay), the

proof of loss would be prepared by the NFIP, and

Petitioners then would execute it. At no time did Mr.

Hughes tell Petitioners that a proof of loss could be made in

any other manner than the form document, and at no time

did he ever raise the issue of the timeliness of the December

proof of loss. To the contrary, Mr. Hughes told Dr. Dawkins

that he only could claim items as losses that had been

verified on the proof of loss form. In addition, he said that

in major disasters, the 60-day time period was of no concern

to the NFIP and that if more damage was discovered which

was verifiable as flood damage, the NFIP would reopen the

claim. Hurricane Fran indisputably was a major disaster,

and Mr. Hughes' comments made perfectly good sense to

Petitioners.

Meanwhile, Dr. Dawkins still was attempting to

secure the services of Mr. Garrett to repair the Insured

Property. This was no easy task, as the damage suffered to

the homes on Figure Eight Island, as well as along the entire

North Carolina coast, was massive. Mr. Garrett was not the

original builder of the Insured Property, and he felt

obligated first to repair the houses that he had built on the

island. Petitioners also were under other restraints in

getting Mr. Garrett to begin to assess the damage and work

on their home, as the restrictive covenants for Figure Eight

Island required that the Homeowners Association, through

its Architectural Review Committee, provide prior approval

for any repairs, construction, and even painting. Petitioners

did not receive the necessary approval for repairs until

December 2, 1996, and shortly thereafter, Mr. Garrett began

working on the Insured Property. The house was under

repair from December, 1996 until September, 1997.

In addition to Mr. Hughes, the NFIP adjuster,

Lloyd's of London also sent an adjuster, C.P. Warren (who

also happened to be a certified flood adjuster), to inspect the

Insured Property. Unlike Mr. Hughes, Mr. Warren spent a

substantial amount of time inspecting the Insured Property

and, in July, 1997, Mr. Warren determined that the majority

of the damage to the Insured Property was caused by flood.

[App. 36]. This was the very first indication Petitioners ever

had of any additional damage to the Insured Property

because of flood. When Dr. Dawkins received Mr. Warren's

evaluation, which included a list of damage above the first

level of the home, the office of Fickling & Clement

immediately sent it to the NFIP. [App. 42]. Approximately

one month later, Petitioners received a response from the

NFIP, in which it refused to reopen their claim on the basis

that the Policy, pursuant to Article 6, did not provide

coverage for items on the lower level or items located

outside the perimeter of the building. [App. 44]. The NFIP

did not raise the issue of a proof of loss in this letter. Upon

receipt of the response, both Petitioners and Fickling &

Clement realized that the NFIP had not read the contents of

their claim, which was made for damage to the second and

third levels, not the first level, of the Insured Property.

The office of Fickling & Clement made numerous

telephone calls to the NFIP from September, 1996 well into

1998, many of which were requests that the NFIP send

someone else to inspect the Insured Property. During these

numerous telephone calls, the parties at times spoke at

length; however, the NFIP did not send an adjuster to

inspect the Insured Property. At no time did anyone raise

the issue of a 60-day time period being a bar to the

Petitioners' claim. Based upon Mr. Hughes' representations

to Dr. Dawkins that the claim could be reopened if any

additional flood damage was discovered, Dr. Dawkins

believed that there would be no problem with reopening the

claim when the additional flood damage first was

discovered in July, 1997.

The negotiations between the NFIP and Fickling &

Clement continued for months after July, 1997. On October

8, 1997, Sherry Edwards of Fickling & Clement spoke to

Freda Copeland, a "direct" representative of the NFIP, to

discuss the claim. Ms. Copeland asked that Petitioners

submit a statement from the contractor detailing the

damages, an itemized bill for window replacement, and

photographs both prior to and after the Hurricane. In

compliance with this request, Petitioners and Fickling &

Clement compiled the voluminous requested information

and sent it to the NFIP on December 4, 1997. At no time

during Ms. Edwards' conversation did Ms. Copeland raise

any issue regarding the proof of loss.

On December 19, 1997, Petitioners received yet

another letter denying coverage for items on the lower

enclosed level of the house, damage that Petitioners had

never claimed. In response, Fickling & Clement, on January

8, 1998, sent another letter to the NFIP, again explaining that

the claim was for damage above the lower enclosed level

and that no damage on the lower enclosed level was part of

Petitioners' claim. [App. 46]. On January 20, 1998, Frances

Norman, another "direct" representative of the NFIP, called

Ms. Edwards, and Ms. Edwards explained to Ms. Norman

the nature of the damage that was being claimed. During

this conversation, Ms. Norman indicated that the NFIP

needed proof that the damage claimed was caused by flood,

and requested that Petitioners hire a structural engineer, at

their expense, to inspect the damage and prepare a report as

to the cause and extent of the damage. Ms. Edwards

requested that Ms. Norman send a letter directly to

Petitioners, specifically identifying the information that the

NFIP needed to process their claim.

On or about January 21, 1998, the NFIP sent

Petitioners a letter advising them that if they "wish[ed] to

pursue their claim," they should secure the services of a

structural engineer, at their own expense, to examine the

Insured Property and to submit a report stating "how the

action of the flood waters caused the damage and exactly ~

when this occurred." [App. 49]. In this letter, the NFIP

indicated that it did not believe that flood was the cause of

the damage to the Insured Property. However, the NFIP

did not raise the issue of a 60-day time period to file a proof

of loss.

In compliance with this letter, Dr. Dawkins hired

Thomas W. Harwell, a structural engineer. In addition, Mr.

Harwell also is a former naval officer with expertise

regarding storms and waves. Mr. Harwell drove to Figure

Eight Island with Dr. Dawkins on or about March 3, 1998,

and inspected the Insured Property and the Island. In

September, 1996, immediately after Hurricane Fran, Mr.

Harwell had inspected property damage on the neighboring

North Topsail Island. Mr. Harwell concluded that the

second and third levels of the Insured Property had been

damaged by the flood, as the home had been twisted by the

water surge during the Hurricane. This twisting

substantially damaged the structure of the second and third

levels. According to Mr. Harwell, it is not at all unusual for

this type of damage to take weeks or even months to

manifest itself. On April 8, 1998, Mr. Harwell prepared a

report setting forth his conclusions [App. 51], and Fickling &

Clement forwarded it to the NFIP on April 21, 1998.

In May, 1998, Marlin Barnett, the Senior General —

Adjuster, NFIP Bureau and Statistical Agent, and another

"direct" representative of the NFIP, met with Dr. Dawkins,

Kurt Fickling of Fickling & Clement, Mr. Harwell, and Mr.

Warren at the Insured Property to discuss and potentially

resolve Petitioners' claim. Prior to this meeting, Dr.

Dawkins had provided the NFIP with detailed information,

including correspondence with Lloyd's of London, and the

detailed construction estimates and expenses which the

NFIP had requested. It soon became apparent to everyone

present at the meeting, however, that Mr. Barnett had not

reviewed any of the written information that had been

prepared and provided to the NFIP at its request. Even

more disturbing at that time was Mr. Barnett's behavior - he

was very rude to everyone present, and displayed an

attitude of disdain in response to the information that was

being presented to him at the meeting.

Subsequently, on May 20, 1998, Mr. Barnett

requested additional information from Fickling & Clement

regarding Petitioners' claim. As with the prior requests, this

information immediately was sent to the NFIP. [App. 53].

On June 18, 1998, however, Petitioners received yet

another and final denial letter from the NFIP, this time

stating that the NFIP's right to investigate had been

impaired because the property had been repaired and, thus,

it would not entertain any additional payments on -the

claim. Incredibly, the NFIP took this position in spite of

the fact that Petitioners repeatedly had requested that the

NFIP send an inspector to the Insured Property, to no avail.

The NFIP further notified Petitioners that they had until

August 26, 1998 to file a lawsuit against the agency. No

issue about the proof of loss ever was raised.

On August 24, 1998, Petitioners brought suit

against Respondent, seeking damages for the property

damage to the Insured Property caused by flood. In

Respondent's Answer to the Complaint, filed almost 1 ¥2

years after Petitioners first discovered additional flood

damage and began dealing with the NFIP on a regular basis

regarding their claim, Respondent first raised the issue that

Petitioners had not timely filed a proof of loss. Although

Petitioners argued that they did not discover the flood

damage until July, 1997 (10 months after Hurricane Fran),

and thus could not comply with the 60-day time period

established by the Policy and that the NFIP should be

precluded from raising the issue of the proof of loss

requirement based on the principles of estoppel and waiver,

the United States District Court for the Eastern District of

North Carolina granted Respondent's Motion for Summary

Judgment [App. 12], which was affirmed on appeal by the

Fourth Circuit. [App. 1].

REASONS FOR GRANTING THE WRIT

A. . THIS COURT SHOULD GRANT CERTIORARI TO

PROVIDE AN EXAMPLE OF THE TYPE OF

GOVERNMENTAL AFFIRMATIVE MISCONDUCT

TO WHICH ESTOPPEL MAY APPLY.

Ls Estoppel

In light of the undisputed facts in this case,

Respondent should be estopped from raising the defense of

Petitioners’ failure to file a proof of loss for the additional

flood damage discovered to the Insured Property. This

Court has stated that "[e]stoppel is an equitable doctrine

invoked to avoid injustice in particular cases." Heckler v.

Community Health Servs. of Crawford County, Inc., 467

USS. 51, 59, 104 S. Ct. 2218, 2222, 81 L. Ed. 2d 42, 51 (1984).

Petitioners acknowledge the well-established rule of law,

however, that "the Government may not be estopped on the

same terms as any other litigant" and that when the

government is involved, a party claiming estoppel bears a

heavier burden. Notably, this Court in Heckler expressly

declined, upon the government's request, to go even further

to establish a flat rule of law that "estoppel may not in any

circumstances run against the Government." Id. at 60, 104 S.

Ct. at 2224, 81 L. Ed 2d at 52. There, this Court stated:

Though the arguments the Government

advances for the rule are substantial, we are

hesitant, when it is unnecessary to decide this

_case, to say that there are no cases in which

the public interest in ensuring that the

Government can enforce the law free from

estoppel might be outweighed by the

countervailing interest of citizens in some

minimum standard of decency, honor, and

reliability in their dealings with their

Government.

Id. at 60-61, 104 S. Ct. at 2224, 81 L. Ed 2d at 52 (emphasis in

original). This is precisely the case presented to this Court.

See, e.g., Meister Bros., Inc. v. Macy, 674 F.2d 1174 (7th Cir.

1982); Dempsey v. Director, 549 F. Supp. 1334 (E.D. Ark.

1982) (both courts holding that the conduct of the Federal

Emergency Management Agency and its agents was

sufficient to estop the Government from asserting the

untimely filing of a proof of loss as a defense).

According to this Court in Heckler, supra, a party

asserting estoppel against the government must in the first

instance demonstrate that the traditional elements of

estoppel are present. The traditional elements of estoppel

are as follows: (1) the party to be estopped knew the true

facts; (2) the party to be estopped intended for his conduct

to be acted upon or acted in such a way that the party

asserting estoppel had a right to believe that it was

intended; (3) the party claiming estoppel was ignorant of

the true facts; and (4) the misconduct was relied upon to the

detriment of the parties seeking estoppel. McCrary v. Fed.

Emergency Management Agency, 642 F. Supp. 544, 547

(E.D.N.C. 1986).

All of the elements of estoppel are present in the

instant case. As to the first element, it is indisputable that

the NFIP knew the true facts - that is, that a proof of loss

was strictly required to be filed within 60 days after the date

of loss. Secondly, Petitioners have established that through

its course of conduct with Petitioners and their contractor,

insurance agent, and structural engineer, the NFIP, through

its agents, intended for its conduct to be acted upon or acted

in such a way that Petitioners had a right to believe that it

was intended to be acted upon. In this regard, the evidence

reveals that Mr. Hughes, NFIP's agent, made several gross

misrepresentations, including telling Dr. Dawkins that in

major disasters, the 60-day time period was of no concern to

the NFIP, and, telling Dr. Dawkins that as additional flood

PR Aor

AOS Sa et i wee

damage was discovered, the claim could be reopened. In

addition, the NFIP accepted Petitioners' December, 1996

+ proof of loss, which was untimely under the terms of the

Policy. Also, "direct" representatives of the NFIP, not just

the NFIP's independent adjuster, engaged in protracted

negotiations with Petitioners regarding the additional flood

damage discovered to the Insured Property, causing

Petitioners to spend substantial and additional time, effort,

and money. At the NFIP's request, and long after the 60-day

deadline, Dr. Dawkins retained a structural engineer to

inspect the Insured Property and prepare a report for

submission to the NFIP.

Thirdly, there is plenary evidence in the record that

Petitioners were ignorant of the true facts. Petitioners were

never told, either orally or in writing, that they could obtain

a proof of loss form directly from the NFIP upon request.

Instead, the letter from the NFIP only stated that "[y]our

adjuster can provide this form to you and help you

complete it." This, along with the fact that a form had been

provided by the NFIP adjuster in December, reasonably led

Petitioners to believe that this was the manner in which such

a form was received.

Petitioners acknowledge that they had a copy of the

Flood Policy and that they may be charged with legal notice

of the Code of Federal Regulations. Knewledge of these

items, however, still did not inform Petitioners of the

alleged "true facts" - that failure to file a proof of loss within

60 days after the date of loss would result in a denial of their

claim. It should be noted that immediately after the Policy

details the requirements for filing a proof of loss, it states

that this requirement can be waived. In Section J.7. of

Article 9, the NFIP states that:

We may, at our option, waive the

requirement for the completion and filing of a

proof of loss in certain cases, in which you

will be required to sign and, at our option,

swear to an adjuster's report of the loss and

the damages sustained, which is needed by

us in order to adjust your claim.

[App. 27]. In light of this express provision, and the manner

in which the NFIP had handled Petitioners' December proof

of loss, including the representations that the NFIP's

adjuster made to Dr. Dawkins - that if additional flood

damage was found, the NFIP would reopen the claim - it

cannot be said as a matter of law that Petitioners were not

ignorant of the "true facts.". To the contrary, the evidence

viewed in the light most favorable to Petitioners fully

supports their contention.

Finally, as to the fourth element of estoppel, there is

no doubt that Petitioners have relied upon Respondent's

actions and misrepresentations to their detriment.

Accordingly, they have met their burden of proving all of

the elements of traditional estoppel.

This Court has held that the private litigant also

must show that the government agent who allegedly made

the misrepresentation had the authority to make such a

misrepresentation, and must show affirmative misconduct

by the government official. Office of Personnel

Management v. Richmond, 496 U.S. 414, 421, 110 S. Ct. 2465,

2470, 110 L. Ed. 2d 387, 397 (1990); Humphrey v. Nat'l Flood

Ins. Program, 885 F. Supp. 133, 137 (D. Md. 1995). Because

the Fourth Circuit erroneously held that the allegations and

facts of this case demonstrate that Respondent did not

engage in any affirmative misconduct, its decision should be

reversed.

Several cases are instructive on this issue. For

example, in Montana v. Kennedy, 366 U.S. 308, 81 S. Ct.

1336, 6 L. Ed. 2d 313 (1961), the petitioner brought a

declaratory judgment action seeking to establish American

citizenship. The petitioner claimed that a consular official

gave his mother erroneous advice that she could not return

to the United States while pregnant. Because of that advice,

the petitioner was not born in the United States and, thus,

was deprived of United States citizenship. This Court

determined that "what may have been only the consular

official's well-meant advice - 'I am sorry, Mrs., you cannot

[return to the United States] in that condition’ - falls far

short of misconduct such as might prevent the United States

from relying on petitioner's foreign birth." Id. at 314-15, 81

S. Ct. at 1340-41, 6 L. Ed. 2d at 317.

In another case, Schweiker v. Hansen, 450 U.S. 785,

101 S. Ct. 1468, 67 L. Ed. 2d 685 (1981), the petitioner, the

Department of Health and Human Services, sought review

of a judgment that estopped it from denying the respondent

"mother's insurance benefits" under the Social Security Act.

A field representative of the Social Security Administration

met with the respondent and, during a 15-minute

conversation, told the respondent that she was ineligible for

such benefits and disregarded provisions of the

Department's Claims Manual by failing to recommend that

she file a written application. The respondent eventually —

filed a written application after learning 11 months later that

in fact she was eligible. Pursuant to the Act, she also

received retroactive benefits for the 12 months preceding

her application, which was the maximum retroactive

benefits allowed by the Act. The respondent contended,

however, that she should receive retroactive benefits for the

12 months preceding her interview with the field

representative. The United States Supreme Court held that

the conduct of the field representative did not rise to the

level of “affirmative misconduct." "But at worst, [his]

conduct did not cause respondent to take action . . . or fail to

take action . . . that respondent could not correct at any

time." Id. at 789, 101 S. Ct. at 1471, 67 L. Ed. 2d at 690

(citations omitted). Thus, because the field representative's

errors "[fell] far short of conduct which would raise a

serious question whether petitioner is estopped from

insisting upon compliance with the valid regulation," this

Court declined to apply equitable estoppel against the

Government.

Meister Bros., Inc. v. Macy, 674 F.2d 1174 (7th Cir.

1982), is an example of a situation where the court found

enough evidence on which to apply estoppel against the

Government. In Meister Bros., the plaintiff's property was

damaged by flood on July 8, 1978. The General Adjustment

Bureau investigated and assessed the loss for the NFIP.

From July to September, and thereafter until December 22,

1978, the adjuster made several visits to the site to

investigate the loss, to arrange a salvage sale, and to

negotiate the amount of the loss to be submitted for

reimbursement. At no time during this period did the

adjuster ever tender to the plaintiff a proof of loss form to

indicate that anything other than the Notice of Loss had to

be filed by the plaintiff within the 60 days. On December 22,

1978, over three months after the deadline for filing, the

adjuster prepared and submitted to the plaintiff a proof of

_loss form. The plaintiff subsequently was reimbursed

$50,000 for damage to the contents of the building, and an

additional sum of approximately $2000 from the salvage

sale. The adjuster, however, continued to investigate and

negotiate with the plaintiff for the remaining costs of

damage to the building and debris removal. No settlement

was reached, so the plaintiff filed suit. For the first time, the

defendant argued that the plaintiff failed to file a sworn

proof of loss within 60 days from the alleged loss, as

required by the insurance contract. The Seventh Circuit

reversed the entry of summary judgment on behalf of the

defendant agency and stated "on the quite unique facts of

this case . . . a government agency will not be permitted

belatedly to assert a technical defense to a law suit which

admittedly, if it had been in a state court against a private

insurance carrier, would not have prevailed. ... The actions

of paying a part of the claim under a policy which the

insurer had treated as being fully applicable to the entire

claim, over many months of time, does not permit a

withdrawal thereafter from the position clearly and

unambiguously taken." Id. at 1177.

The instant case provides a proper basis of applying

estoppel against Respondent due to the improper conduct

by the NFIP and its "direct" representatives and adjuster:

° Mr. Hughes, the adjuster for the NFIP, failed

to inspect any part of the Insured Property,

other than the first floor.

° Mr. Hughes made _ several gross

misstatements to Dr. Dawkins regarding the

proof of loss requirement and the process for

reopening a claim, including telling Dr.

Dawkins that in major disasters, the 60-day

time period was of no concern to the NFIP,

and that as additional flood damage was

discovered, the claim could be reopened.

° Mr. Hughes was clothed with authority of the

NFIP to investigate, negotiate, and aid in the

processing of claims.

° Respondent accepted Petitioners' initial proof

of loss well after the 60-day deadline and

paid this initial claim.

—— ——

Respondent continued to address Petitioners'

claims after the 60-day deadline.

At the specific request of "direct"

representatives of the NFIP, Petitioners spent

substantial time and incurred additional

expenses in providing the NFIP with the

information requested to process their claim.

Petitioners spent time and money in

preparing and copying _ substantial

documentation, retaining a __ structural

engineer to examine the insured property

and to prepare a report on the cause and the

extent of the damage, and _ attending

meetings.

In May 1998, the NFIP sent its adjuster to

inspect the Insured Property, but then he

made no good faith effort to evaluate the

claim. (Mr. Fickling, an insurance industry

veteran of 28 years and someone who has

qualified at trials as an expert in such

matters, testified by Affidavit that this is "one

of the most disturbing cases of bad faith

adjusting" that he has ever seen.) [App. 60]

As all of this evidence demonstrates, Respondent engaged

in serious affirmative misconduct during its handling of

Petitioners' claims. Unlike the respondent in Schweiker v.

Hansen, supra, the affirmative misconduct by Respondent,

in the instant case caused Petitioners to fail to take action

that Petitioners could not corect at any time - that is, they

failed to timely submit a proof of loss form and failed to

require Mr. Hughes thoroughly to inspect the Insured

Property. As noted by the Seventh Circuit in Meister Bros,

Inc., supra, "[a]lthough it is axiomatic that 'men must turn

square corners when they deal with the Government,’ the

‘public has an interest in seeing its government deal

carefully, honestly and fairly with its citizens." Id. at 1177

(quoting Rock Island, Arkansas & Louisiana R.R. Co. v.

United States, 254 U.S. 141, 143, 41 S. Ct. 55, 56, 65 L. Ed. 2d

188 (1920), and United States v. Wharton, 514 F.2d 406, 412-

13 (9th Cir. 1975)). The Government here did not deal

"carefully, honestly and fairly" when it dealt with

Petitioners, and the import of the Fourth Circuit's decision is

that the Government does not have to.

For all of the reasons stated above, this Court should

grant Petitioners’ Petition for Certiorari.

2. Waiver

By its conduct the Government also waived the 60-

day proof of loss requirement. A waiver occurs when a

party voluntarily and intentionally relinquishes a known

claim or right. United States v. Slaughter, 366 F.2d 833, 840

(4th Cir. 1966). Section J.7. of Article 9 of the Flood Policy

states in pertinent part:

We may, at our option, waive the

requirement for the completion and filing of a

proof of loss in certain cases, in which event

you will be required to sign and, at our

option, swear to an adjuster's report of the

loss which includes information about your

loss and the damages sustained, which is

needed by us in order to adjust your claim.

[App. 27].

The inclusion of a subsequent more specific

provision dealing with waiver in regard to the proof of loss

requirement indicates that the NFIP may waive this

requirement without going to the trouble of getting written

approval from the Federal Insurance Administrator in this

limited situation. Mr. Hughes specifically told Dr. Dawkins

that the 60-day time period was of no concern to the NFIP

during a major disaster and that if additional flood damage

was discovered, the claim could be reopened at a later date.

Also, the NFIP accepted the first proof of loss claiming the

flood damage known at that time, after the 60-day period.

Applying the commonly used definition of waiver, Mr.

Hughes in fact did waive the requirement of filing a proof of

loss. If, as the NFIP suggests, the doctrine of waiver can

never be raised, regardless of the facts and circumstances of

a particular case, this will lead to results that are unfair and

in some cases absurd. If it is the law, an NFIP "direct" agent,

"direct" representative, or "independent adjuster" can make

oral and written misrepresentations concerning the

necessity of filing a proof of loss, thereby luring a

policyholder to rely on the misrepresentations, and once a

policyholder has done so, the NFIP will be able to deny his

or her claim.

This is inherently contrary to the congressional

purpose for establishing the National Flood Insurance

Program, which has been articulated as being:

[T]o alleviate the personal hardship and

economic distress created by flood damage

by making flood insurance coverage available

on "reasonable terms and conditions" to those

persons needing such protection which

private insurers alone could not economically

make available.

Dempsey v. Director, 549 F. Supp. 1334, 1340 (E.D. Ark.

1982) (citing 42 U.S.C. § 4001(a), (b)) (emphasis added).

This position also seems contrary to commonly held

notions of the American public that they do not need to be

as suspicious of the government when dealing with it on a

claim as compared with dealing with a private insurance

adjuster. It is completely normal and understandable for an

insured, when dealing with the Federal Government, to

assume that he or she will be treated fairly and not be

misled. If, as in this case, an adjuster for the Government

says that the 60-day requirement for filing a proof of loss

will not apply in major disasters, the insured should be able

to rely on such statement. If these misrepresentations were

made by an adjuster for an insurance carrier, they would

constitute bad faith and give rise to a claim for unfair and

deceptive trade practices and punitive damages in many

states.

The courts should not draw a line in the sand

regarding the issue of waiver. as it applies to the

Government. Instead, each case needs to be evaluated in

light of the facts and circumstances of that particular case.

Because of the undisputed facts and circumstances in this

case, this Court should grant Petitioner's Petition for

Certiorari to hold that the 60-day proof of loss requirement

has been waived.

B. THIS COURT SHOULD GRANT CERTIORARI

BECAUSE THE REQUIREMENTS FOR FILING A

PROOF OF LOSS ARE AMBIGUOUS AND

SHOULD BE CONSTRUED IN FAVOR OF

PETITIONERS; THEREFORE, THE DECISION BY

THE FOURTH CIRCUIT SHOULD BE REVERSED.

Federal common law controls the interpretation of

insurance policies issued pursuant to the NFIP. Chesapeake

Ship Propeller Co. v. Stickney, 820 F. Supp. 995, 997 (E.D.

Va. 1993). Nonetheless, courts applying federal common

law to flood insurance policies have recognized that

"Congress did not intend to abrogate standard insurance

law principles" by enacting the NFIP. Id. at 997 (citations

omitted). Along those same lines, the Fourth Circuit in

Riverside Bldg. Supply, Inc. v. Fed. Emergency

Management Agency, 723 F.2d 1159, 1161 (4th Cir. 1983),

stated the well-established rule of law that an ambiguity in

an insurance policy should be interpreted in the insured's

favor. Because there are several conflicting and confusing

terms in the Flood Policy at issue here, it should be

construed in favor of Petitioners.

For instance, under Section J of Article 9, entitled

"Requirements in Case of Loss," the Policy states that an

insured must: "(1) Notify us in writing as soon as

practicable; (2) As soon as reasonably possible, separate the

damaged and undamaged property, putting it in the best

possible order so that we may examine it; and (3) Within 60

days after the loss send us a proof of loss." [App. 25]. In the

letter from the NFIP to Petitioners, the NFIP "asks" that

Petitioners "submit [their] claim as soon as possible" and

then goes on to say that the Policy requires them to submit a

proof of loss within 60 days of the date of loss. [App. 25]. A

reasonable policyholder is left with the following question

after reading this language - "If it is not possible to submit

the proof of loss within 60 days, then is it okay to submit it

as soon as possible?" The Policy continues that at its option,

the NFIP can waive this requirement and require the

insured to swear to an adjuster's report of the loss ard the

damages sustained. [App. 27]. Interestingly enough, the

Policy does not plainly state that the failure to file a proof of

loss will result in the denial of a claim. Thus, it is apparent

that the Policy is not clear on the issue of the filing of a proof

of loss. Given this ambiguity and the conduct and

representations of the NFIP in handling Petitioners' claim,

Petitioners should be allowed to pursue their claim.

CONCLUSION

This Court should grant the Petition for three

reasons: (1) the misrepresentations and affirmative

misconduct by the agents of the NFIP provide an

opportunity for this Court to apply the doctrine of estoppel

against the Government; (2) through the misrepresentations

of the NFIP agents and its acceptance of the first proof of

loss after expiration of the 60-day deadline, the NFIP

waived the 60-day proof of loss requirement; and (3) the

requirements for filing a proof of loss in the Flood Policy are

ambiguous and, therefore, should be construed in favor of

Petitioners.

Respectfully submitted:

A. Charles Ellis

Counsel of Record

Ward and Smith, P.A.

120 West Fire Tower Road

Post Office Box 8088

Greenville, NC 27835-8088

(252) 215-4000

(252) 215-4077 (fax)

Counsel for Petitioners

TABLE OF CONTENTS

Appendix to Petition

Appendix Page

Opinion of

The United States Court of Appeals

for the Fourth Circuit

entered February 3, 2003.........:csssssecsseererererereeseerssssenees 1

Order of

The Honorable James C. Fox

The United States District Court

for the Eastern District of North Carolina

Re: Granting Defendant's Motion for

Summary Judgment

entered February 26, 1999.........cssscsssseeeseneeessesesseees 12

Excerpts from National Flood Insurance Policy

dated December 21, 1995 ..........ssssssssrssssesseeeeseessesesees 21

Letter from

NFIP Claims Department to

Petitioners

Re: Notice of Claim

dated September 10, 1996 .........:sesessssseseseseseesseseeeneees 28

Proof of Loss

EN i AT TT 30

Flood Claim Payment for

Building Loss for $6,965.20

dated January 14, 1997 .........sssecscscesereseererssssessnssess 34

App. i

Letter from

C.P. Warren Adjusters to

Howard Dawkins, Jr.

Re: Claim #3655

EE PE Ty TOG eritisrcieesssictasionnssineninininaianinsiniyinninesiiaons 36

Letter from

Rhonda J. Edwards to

Freda Copeland, NFIP

Re: Flood Claim

IRE Be, FOE rccssenisnicsionisiiviiomran inaresnpeiisaieaneinsiinesicies 42

Letter from

F.M. Copeland, NFIP, to

Petitioners

Re: Policy Coverage

CDE FR TO, TOF iiss cineinisitnesamntaneiiidudnianepenein 44

Letter from

Sherry B. Edwards to

F.M. Copeland, NFIP

Re: Request to review claim of additional damage

eae Waianae GTI snssiiinininicaniasccvtanincainniinnoenapinies 46

Letter from

NFIP to Petitioners

Re: Dispute about flood damage

a TE By. BI avin sne ers sscsewiniemicsricveitintiniiciiss 49

Letter from

Thomas W. Harwell, Carolina Benchmark, to

Petitioners

Re: Inspection of House

TE TRE Ty Te ei isestitesiniensisicesntseimnsinerbchoensiominiigtenibeciiann 51

App. il

Letter from

Sherry B. Edwards to

Marlin W. Barnett, NFIP

Re: Additional flood damage

IE FE Bay FI sisnisicinnisriscnsenivintitianabaniactaonauall 53

Letter from

Marlin Barnett, NFIP, to

Lynn Welch

Re: Reinspection on May 16, 1998

CORO: TERY BE, EIU sisininsccmeinrariineminnasnictionn nese

Affidavit of W. Kurt Fickling

SUPOUDA CRA FORNEY By TIFF sss ins rnarnnitscnsiivnncabcvcoamsinones 60

App. iii

PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

HOWARD G. DAWKINS, JR., M.D.;

ANNETTE DAWKINS,

Plaintiffs-Appellants,

V. - No. 99-1422

JAMES LEE WITT, Director of the

Federal Emergency Management Agency,

Defendant-A ppellee.

Appeal from the United States District Court

for the Eastern District of North Carolina, at Greenville.

James C. Fox, Senior District Judge.

(CA-98-124-F3-4)

Argued: March 1, 2000

Decided: February 3, 2003

[Entered: February 3, 2003]

Before WILKINSON, Chief Judge,

and WIDENER and TRAXLER, Circuit Judges.

Affirmed by published opinion. Judge Widener wrote the

opinion, in which Chief Judge Wilkinson and Judge Traxler

concurred.

COUNSEL

ARGUED: Albert Charles Ellis; WARD & SMITH, P.A.,

Winterville, North Carolina, for Appeilants. Jerri Ulrica

Dunston, Assistant United States Attorney, Raleigh, North

Carolina, for Appellee. ON BRIEF: Teresa DeLoatch Bryant,

WARD & SMITH, P.A., Winterville, North Carolina, for

Appellants. Jariice McKenzie Cole, United States Attorney,

Anne M. Hayes, Assistant United States Attorney, Raleigh,

North Carolina, for Appellee.

App. 1

OPINION

WIDENER, Circuit Judge:

Plaintiffs, Howard G. Dawkins, Jr., and Annette

Dawkins, appeal the district court’s order granting

summary judgment in favor of defendant James Lee Witt,

the director of the Federal Emergency Management Agency

(FEMA). Dawkins v. Witt, No. 4:98-CV-124-F3 (E.D.N.C. Feb.

26, 1999). The plaintiffs own property insured under the

National Flood Insurance Program that was damaged by

Hurricane Fran. The plaintiffs contested FEMA’s refusal to

reopen their claim after FEMA made an initial payment for

flood damage to the property. The district court granted the

defendant summary judgment after determining that the

plaintiffs could not recover. Because they failed to file a

proof of loss within 60 days of the occurrence of the

damage, as required by their insurance policy, we affirm.

Because this case is before us on a motion for

summary judgment, we view the facts in the light most

favorable to the non-moving party, the plaintiffs. Shaw v.

Stroud, 13 F.3d 791, 798 (4th Cir. 1994). Plaintiffs own a two-

story home elevated above ground by posts on Figure Eight

Island near Wilmington, North Carolina. On September 5,

1996, the plaintiffs‘ insured property was damaged as a

result of Hurricane Fran. At the time of the hurricane, the

plaintiffs’ property was insured against flood damage

through the National Flood Insurance program with a

policy they had purchased through a local agent, Fickling

and Clement Insurance Company (Fickling and Clement).

FEMA oversees and implements the National Flood

Insurance Program. See West Augusta Dev. Corp. v. Giuffrida,

717 F.2d 139, 140 n.1 (4th Cir. 1983) (quoting Meister Bros.,

Inc. v. Macy, 674 F.2d 1174, 1175 n.1 (7th Cir. 1982)). The

plaintiffs' policy contained several clauses relevant in this

App. 2

appeal. First, Article 9, Paragraph J(3) of the policy required

that the plaintiffs file a proof of loss for any claim within 60

days of the flood daxage or loss.2 A proof of loss is a

document that provides FEMA with a statement of the

amount of the claim and specific details concerning the loss,

its cause, and ownership of the damaged property. FEMA

has the option to waive the 60 day requirement under

Article 9, Paragraph J(7), and if it does, the claimant must

sign an adjuster's report.3 The policy, pursuant to the federal

regulations governing the National Flood Insurance

Program, also contained a provision in Article 9, Paragraph

D stating that none of the provisions of the policy could be

waived absent express writtea consent by the Federal

Insurance Administrator.‘ See 44 C.F.R. § 61.13(d). The

plaintiffs had also insured their property against wind

damage with a policy issued by Lloyds of London.

. FEMA advises that the policy issued to the plaintiffs was that

which was in effect at the time of purchase in 1995. See 44 C.F.R., Pt. 61,

App. A(1) (Oct. 1995). The standard flood insurance policy that is

presently in effect pursuant to the current C.F.R. contains terms that may

have been changed, but none of which are material here.

2 "Should a flood loss occur to your insured property, you must:

... [w]ithin 60 days after the loss, send us a proof of loss, which is your

statement as to the amount you are claiming under the policy signed and

sworn to by you... ." -

3 "We may, at our option, waive the requirement for the

completion and filing of a proof of loss in certain cases, in which event

you will be required to sign, and, at our option, swear to an adjuster's

report of the loss which includes information about your loss and the

damages sustained, which is needed by us in order to adjust your claim."

‘ "This policy cannot be amended nor can any of its provisions be

waived without the express written consent of the Federal Insurance

Administrator. No action we take under the terms of this policy can

constitute a waiver of any of our rights."

App. 3

The plaintiffs contacted Fickling and Clement: on

September 6, 1996 to inform them of the damage from the

hurricane. Fickling and Clement then notified FEMA, who

responded with a letter on September 10, 1996 indicating

that it had received the notice of claim and had assigned it

to Bellmon Adjusters, Inc. The letter also advised the

plaintiffs that "[yJour policy requires you to submit a proof

of loss to the Flood Center within sixty (60) days of the loss."

An adjuster from Bellmon Adjusters, Bob Hughes,

met with the plaintiffs on their property on September 13,

1996. The parties do not dispute that at that time, Hughes

would not acknowledge that the hurricane was

accompanied by waves and, therefore, only inspected the

first level of the home for damage. While Hughes informed

the plaintiffs that they could only make claims for losses

that were verified by a proof of loss, he also told them that

with major disasters, FEMA was not concerned with the 60

day deadline required by the policy and that it would

reopen the claim if the plaintiffs found any further verifiable

flood damage after that time.

Hughes sent an initial proof of loss to the plaintiffs,

which they rejected because they did not believe it was

reasonable. Hughes then sent a second proof of loss to the

plaintiffs, which they signed and returned to FEMA in

December 1996. The 60 day period for filing a proof of loss

had expired November 4, 1996. The plaintiffs acknowledged

that they sent in the proof of loss well past the 60 day

deadline required by their policy. Despite the late

filing, FEMA paid the claim amount indicated on the

second proof of loss of $6965.28 in January 1997.5

5 So that there may be no mistake, the proof of loss, which was

paid in full by FEMA, claimed for damages by "FLOOD." The argument

here is about the extent of the flood loss. That is to say, the failure to file a

claim for the damage now sought within the time required by the policy

with the concurring refusal of FEMA to re-open the claim to claim

additional damage claimed for storm surge.

App. 4

—

The plaintiffs also had an adjuster, C.P. Warren, assess the

home for wind damage pursuant to their policy with Lloyds

of London.

The plaintiffs then hired a contractor who proceeded

to repair the property beginning in December 1996. The

repairs continued until September 1997. During the repair

process on July 16, 1997, the adjuster from Lloyds of London

issued a report explaining that during his examination of

the property, he determined that damage to the window

frames in the upper floors of the home had occurred as a

result of the flood waters twisting and uplifting the home

and its decks. Thus, Lloyds of London would not pay the

plaintiffs for those losses because its policy only covered

wind damage.

After learning of this additional loss, Fickling and

Clement contacted FEMA on July 24, 1997 asking it to

reopen the plaintiffs' claim. FEMA initially refused to

reopen the claim on the basis that the areas the plaintiffs

claimed were flood damaged were not covered by their

policy. After this response, the plaintiffs and Fickling and

Clement repeatedly contacted FEMA in an attempt to have

the claim reopened. Finally, on January 21, 1998, FEMA sent

a letter to the plaintiffs indicating that it did not believe that

the damage the plaintiffs complained of was due to direct

physical loss by flood, but advising the plaintiffs that if they

wished to pursue the claim, they should secure a report

from a structural engineer, at their own expense, stating

how the flood waters caused the damage for review by

FEMA. Accordingly, the plaintiffs hired Thomas Harwell, a

structural engineer, to assess the damage to the home from

the hurricane-induced flood. Harwell examined the

property on March 3, 1998 and determined that, in his

opinion, the flood had indeed caused structural damage to

the home.

App. 5

On May 16, 1988 a representative from FEMA,

Marlin Barnett, met with the plaintiffs, Harwell, Warren,

and an agent from Fickling and Clement. In a May 28, 1998

letter, Barnett stated his finding that he could not assess any

damages to the house because it had already been fixed and

that he could not understand how Harwell could confirm

any damage due to flooding for the same reason. Therefore,

Barnett stated that he could not justify any payments for

damages repaired before inspection. On June 18, 1998,

FEMA sent the plaintiffs a final letter denying their claim

because the repairs to the property had compromised its

ability to investigate.

On August 24, 1998, the plaintiffs filed a complaint

in the Eastern District of North Carolina claiming that the

defendant breached their contract of insurance resulting in

damages in excess of $10,000 to the plaintiffs. After filing an

answer, the defendant made a motion to dismiss or, in the

alternative, for summary judgment based on the fact that the

plaintiffs had not filed a proof of loss within the required 60

day period, precluding them from any recovery from the

defendant as a matter of law. At no time prior to the

commencement of this suit did the defendant assert that the

plaintiffs were not entitled to coveraga because they failed

to file their proof of loss within the 60 day period required

under the policy.

The district court granted the defendant's motion on

February 1, 1999. The court found without merit the

plaintiffs' arguments that the defendant could not use the 60

day period as a defense under the doctrines of waiver and

equitable estoppel. The plaintiffs appeal, claiming the

district court erred because it should have precluded FEMA

from raising the 60 day limitation as a defense under the

doctrines of waiver and equitable estoppel, because it was

impossible for them to comply with the 60 day requirement,

and because the proof of loss requirements in the policy

were ambiguous.

App. 6 /

RL PRE Oe Sr ae a Poe ve < ee ee ow

7. + oe

a eR tN TE

Il.

We review a decision granting summary judgment

de novo. Shaw, 13 F.3d at 798. A party is entitled to

summary judgment only if we find no genuine issues

of material fact and we determine that the moving party

is entitled to judgment as a matter of law. Shaw, 13 F.3d at

798.

Ill.

The plaintiffs' primary argument is that FEMA could

not raise as a defense the plaintiffs' failure to file their proof

of loss within 60 days under the doctrines of waiver and

equitable estoppel. We are of opinion that both of these

arguments are without merit.

It is undisputed that FEMA accepted the plaintiffs’

first proof of loss after the 60 day period expired, that

Hughes stated that the 60 day requirement would not be

enforced, that FEMA continued to address the claim well

after the 60 day period expired, and that the Federal

Insurance Administrator did not provide an express

written waiver of the 60 day requirement. Absent an

express written waiver, the plaintiffs relied on FEMA's

conduct as set forth above as a waiver of the 60 day

requirement. However, the plaintiffs' insurance policy

specifically provides in Article 9, Paragraph D that "[n]Jo

action we take under the terms of this policy can constitute

a waiver of any of our rights."

The policy did provide two means for FEMA to

waive the 60 day requirement: the general waiver

provision requiring express written consent of the Federal

Insurance Administrator of Article 9, Paragraph D and the

specific waiver provision for the 60 day proof of loss

requirement in Article 9, Paragraph J(7). However, the

App. 7

plaintiffs have produced no express written wavier

from the Federal Insurance Administrator nor _any

indication that FEMA exercised its option to waive

specifically the 60 day requirement, either through

documentation or an adjuster's report. Absent such

evidence, we are left with the express terms of the

policy, and pursuant to those terms, the above conduct

does not constitute either a general wavier or an exercise of

FEMA's option to exercise the specific waiver of the 60

day requirement. See Gowland v. Aetna, 143 F.3d 951, 954

(5th Cir. 1998); Phelps v. Federal Emergency Management

Agency, 785 F.2d 13, 19 (Ist Cir. 1986); McCrary v. Federal

Emergency Management Agency, 642 F. Supp. 544, 546

(E.D.N.C. 1986).

The plaintiffs argue that FEMA is equitably estopped

from raising the defense that the plaintiffs failed to provide

a proof of loss within the requisite time period. The

Supreme Court has consistently denied efforts by litigants to

estop the government from raising defenses based on

claimants' failures to comply with governmental procedures

due to misinformation from government agents. See Office of

Personnel Management v. Richmond, 496 U.S. 414, 434 (1990).

("As far as monetary claims, it is enough to say that this

Court has never upheld an assertion of estoppel against the

Government by a claimant seeking public funds.") (holding

that plaintiff who was misinformed about his qualification

to collect disability benefits could not estop government

from collecting overpayments caused by the erroneous

advice of a government employee); Schweiker v. Hansen, 450

U.S. 785, 786 (1981) (holding that government agent's advice

that misinformed plaintiff that she was not eligible for social

security benefits did not rise to level of affirmative

misconduct that might reach a serious question as to

whether the government might be estopped from insisting

on compliance with a valid regulation required to receive

App. 8

benefits); Federal Crop Ins. Corp. v. Merrill, 332 U.S. 380, 384-

85 (1947) (finding that farmer could not recover under crop

insurance on a lost crop even though the government

agency misinformed the farmer that his re-seeded wheat

crop was covered by government-provided insurance when,

in fact, a statute forbade such coverage). It is true that the

Court has left for another day a decision that the

government may never be estopped. Richmond, 496 U.S. at

423. However, the Court's decisions indicate that estoppel

may only be justified, if ever, in the presence of affirmative

misconduct by government agents. See INS v. Hibi, 414 US.

9, 8 (1973) (citing Montana v. Kennedy, 366 U.S. 308, 314-15

(1961)); Schweiker, 450 U.S. at 788-89. Thus, in order to show

they even may be entitled to equitably estop FEMA, the

plaintiffs must not only satisfy the traditional requirements

for equitable estoppel,® but also they must show affirmative

misconduct by FEMA that exceeds conduct the Court has

already deemed acceptable.

The behavior the plaintiffs must rely on in this case

to demonstrate affirmative misconduct consists of the

following: Hughes representing to the plaintiffs that FEMA

was not concerned about the 60 day requirement with major

disasters, FEMA accepting the plaintiffs' initial proof of loss

well after the 60 day deadline, and FEMA proceeding to

continue to address their claim after the 60 day deadline. We

agree with the district court that while the plaintiffs may

have shown "unprofessional and misleading conduct by

. For purposes of this opinion, we have assumed that the plaintiffs

established the four traditional requirements for estoppel as follows: "(1)

the party to be estopped knew the true facts; (2) the party to be estopped

intended for his conduct to be acted upon or acted in such a way that the

party asserting estoppel had a right to believe that it was intended; (3) the

party claiming estoppel was ignorant of the true facts; and (4) the

misconduct was relied upon to the detriment of the parties seeking

estoppel." McCrary, 642 F. Supp. at 547 (citing United States v. 18.16 Acres

of Land, 598 F. Supp. 282, 286 (E.D.N.C. 1984)).

App. 9

Hughes," this conduct is no worse than that the Supreme

Court has determined does not rise to a level to justify

estoppel against the government.”

IV.

The plaintiffs also argue that due to the devastation

and circumstances surrounding Hurricane Fran it was

impossible for them to comply with the 60 day proof of loss

requirement, and therefore, the district court should not

have granted the defendant summary judgment. While we

may agree that the circumstances surrounding a major

natural disaster may make it extremely difficult for insured

parties to comply with the 60 day time limit, we agree with

the district court that this argument fails. The insurance

policy specifically requires a claimant to file a proof of loss

within 60 days to receive coverage regardless of the

circumstances Of the claim. As explained above, FEMA did

not waive this requirement. While compiling the required

information in 60 days under stressful circumstances may be

difficult, it is exactly what the policy requires.

Finally, the plaintiffs argue that the provisions in

their insurance policy regarding the proof of loss

requirement are ambiguous and that if we construe the

ambiguity in the insured's favor, the defendant is not

entitled to summary judgment. The plaintiffs contend that

the language of the policy is ambiguous because in addition

to the 60 day requirement of Article 9, Paragraph J(3),

Article 9 in Paragraph J(1) asks claimants to notify FEMA of

the loss in writing "as soon as practicable" and in Paragraph

7 We decline to follow the two cases cited by the plaintiffs in

which courts have estopped the government from asserting the defense

that claimants failed to file a proof of loss in the 60 day period. See Meister

Bros., 674 F.2d at 1177; Dempsey v. Director, 549 F. Supp. 1334, 1340-41

(E.D. Ark. 1982). We find that the Supreme Court's decisions in this area

determine the outcome of this case.

App. 10

J(2) requests that claimants separate damaged and

undamaged property "[a]s soon as reasonably possible."

Additionally, plaintiffs' first letter from FEMA, in addition

to notifying them that they must file a proof of loss within

60 days, asked the plaintiffs to submit their claim "as soon as

possible." We are of opinion that the language in the policy

and in the FEMA letter is not ambiguous. While the policy

and letter request that claimants act as soon as possible, they

also place a 60 day limit on the time claimants have

available to make their claims, absent a waiver.

The order of the district court dismissing the case is

accordingly

AFFIRMED.

App. 11 -

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NORTH CAROLINA

EASTERN DIVISION

NO. 4:98-CV-124-F3

HOWARD G. DAWKINS, JR., M.D.,

and ANNETTE DAWKINS,

Plaintiffs,

Vv. ORDER

JAMES LEE WITT, Director of the

Federal Emergency Management Agency,

Defendant.

)

[Entered: February 26, 1999]

This matter is before the court on the defendant's

Motion for Summary Judgment. In light of the court’s

allowing the Defendant’s Motion for Leave to File Revised

Reply Memorandum, the plaintiffs’ Motion tc Strike

Defendant's Reply Memorandum is DENIED.

FACTUAL BACKGROUND

The facts material to the disposition of the pending

motion are undisputed. The plaintiffs, Dr. Howard

Dawkins, Jr., and Annette Dawkins allegedly suffered

damages to their beach home located in the private island

community of Figure Eight Island near Wilmington, North

Carolina, as a result of Hurricane Fran on or about

September 5, 1996. At all pertinent times, the home was

insured against flood damage by a Standard Flood

Insurance Policy (“SFIP”) issued pursuant to the National

Flood Insurance program (“NFIP”’), and against wind

damage by Lloyd’s of London. The plaintiffs immediately

notified Fickling & Clement, the insurance agency through

which plaintiffs had obtained the NFIP flood policy, and the

App. 12

agency, in turn, notified NFIP. By letter dated September

10, 1996, the Federal Emergency Management Agency

(“FEMA”)! notified the plaintiffs that their claim had been

assigned to Bellmon Adjusters, Inc., for investigation. See 44

C.F.R. Pt. 61, App. A(1), Art. 9, J J(6) (upon receipt of proper

notice of claim, an independent insurance adjuster is

retained to investigate the claim). The letter “ask[ed] that

you submit your claim as soon as possible,” and, referencing

Article VIII - - General Conditions and Provisions,

Paragraph 1.4, - - “Requirements in Case of Loss” of the

plaintiffs’ SFIP policy, and Article VII - - General Conditions

and Provisions, Paragraph P of the General Policy, the

September 10, 1996, letter alerted the plaintiffs that, “Your

policy requires you to submit a proof of loss to the Flood

Center within sixty days of the loss.” See Exhibit 3 to

defendant's Memorandum in Support of Summary

Judgment; 44 C.F.R. Pt. 61, App. A(1), 7 J(3), (6).

On September 13, 1996, Bob Hughes, an independent

adjuster employed by Bellmon Adjusters, Inc., met with the

plaintiffs at their beach property. According to the plaintiffs

(and not disputed by the defendant), Hughes refused to

even acknowledge that Hurricane Fran was accompanied by

waves, and adamantly refused to inspect any portion of the

house above the first level. Hughes was told by the

plaintiffs that they only could claim items as losses that had

been verified on the proof of loss form. However, Hughes

assured them that in major disasters, the sixty-day time

period was of no concern to the NFIP, and that if more

verifiable flood damage was discovered, the NFIP would

reopen the claim. The plaintiffs believed and relied on

Hughes’s alleged statements.

The plaintiffs did not agree with Hughes’s initial

“proof of loss” statement because they did not feel the net

amount offered was reasonable. Hughes’s second proof of

1 FEMA administers the NFIP.

App. 13

loss statement offered a net amount of $6,965.20. The

plaintiffs executed this second proof of loss statement on

December 12, 1996,2 and acknowledged the accuracy of the

amount under oath. On December 19, 1996, the plaintiffs

received and later negotiated a FEMA check in the amount

of $6,965.20 for “flood claim payment for building loss”

under the NFIP policy.

The wind damage policy adjuster who inspected the

property for Lloyd’s of London also happened to be a

certified flood adjuster. During his examination of the

property for wind damage, he made observations leading

him to believe that the home had sustained additional flood

damage above the ground level by virtue of the action of the

storm surge flowing under and around the home, twisting

the foundations and causing structural damage which

required the replacement of windows. Plaintiffs and their

insurance agent repeatedly contacted FEMA in an attempt

to have the claim reopened to consider this additional

alleged storm surge damage.

In January 1998, F.B. Norman, Claims Examiner and

NFIP Servicing Agent, wrote plaintiffs and invited them to

retain the services of a structural engineer - - at their own

expense - - to prepare and to submit a report substantiating

their additional claim if they wished to pursue it. The

plaintiffs did so and, in May, 1998, their insurance agent

arranged a meeting among himself, Marlin Barnett from

NFIP, plaintiffs’ structural engineer, and the Lloyd's

adjuster who first noticed the alleged storm surge damage.

According to affidavits supplied in support of plaintiffs’

position, Barnett was very rude and displayed an attitude of

disdain in response to the information provided to him at

the meeting.

2 It is undisputed that this date is beyond the sixty-day deadline

for submitting the proof of loss.

App. 14

In June, 1998, the NFIP again denied the plaintiffs’

request to reopen the claim, stating that its right to

investigate had been compromised by the plaintiffs having

repaired the subject structure. The letter notified the

plaintiffs of their right to file suit before August 26, 1998.

Although the plaintiffs did not file their only proof

of loss within the required sixty-day period from the date of

the loss, the NFIP accepted it and paid the net amount

requested. The basis for this lawsuit is NFIP’s refusal to re-

open the claim to consider the additional flood damages

allegedly caused by the storm surge. The plaintiffs never

have submitted any supplemental proof of loss for

additional sums allegedly due under the policy for flood

camage.

Plaintifis filed this action on August 24, 1998,

pursuant to 42 U.S.C. § 4072, alleging that the defendant

breached its contract of insurance with them. Not until he

filed his Answer on November 9, 1998, did the defendant

first raise the affirmative defense that the plaintiffs had not

filed their proof of loss in a timely fashion.

ANALYSIS

In support of his Motion for Summary Judgment, the

defendant relies primarily on the weight of authority

holding that an insured seeking to recover on a claim

against an SFIP must comply strictly with the terms,

conditions and requirements of the policy. See, e.g., Heckler

v. Community Health Services, 467 U.S.-51, 63 (1984)

(“Protection of the public fisc requires that those who seek

public funds act with scrupulous regard for the

requirements of law; respondent could expect no less than

to be held to the most demanding standards in its quest for

public funds.”); Federal Crop Ins. Corp. v. Merrill, 332 US.

380, 385 (1947) (insurance policies issued pursuant to federal

programs must be strictly construed). The proof of loss

requirement is an integral part of the SFIP, which is

App. 15

promulgated through the regulations implementing ‘the

NFIP. See 42 U.S.C. § 4013; 44 C.F.R. Pt. 61, App. A(1), Art.

9, 1 J(3), (6). The SFIP provides that the insured may not

sue on the policy unless all the requirements of the policy

have been met. See id. at {R. The defendant explains that,

because the plaintiffs did not meet the requirement that the

proof of loss be filed within sixty days of the loss, they have

failed to satisfy express conditions precedent to filing this

action, as well as to payment on their claim, according to the

terms of the SFIP. See Nabhan v. National Con-Serv, Inc., 2 F.

Supp. 91 (D. Mass 1998) (allowing summary judgment for

defendant which paid pursuant to untimely SFIP proof of

loss, but refused to pay additional sums for repairs to

pilings of home where no proof of loss ever submitted to

support additional amounts).

As sovereign, the United States is immune from suit

except as it consents to be sued. See Lehman v. Nakshian, 453

U.S. 156, 160 (1981). Absent waiver, sovereign immunity

protects the government from suit; in that manner,

therefore, sovereign. immunity is jurisdictional in nature.

See Federal Deposit Insurance Comm’n v. Meyer, 510 U.S. 471,

475 (1994); Wagner v. Federal Emergency Management Agency,

847 F.2d 515, 518 (9 Cir. 1988) (procedural requirements in

the SFIP “constitute conditions precedent to a waiver by the

federal government of its sovereign immunity” and “define

[a court’s] jurisdiction”). Accordingly, the defendant

contends this court is without subject matter jurisdiction to

hear this action because failure of the condition precedent

results in the federal government's non-waiver of its

sovereign immunity to allow the suit.

Plaintiffs argue at length the unfairness of holding

them to the “impossible” task of assembling, verifying and

submitting accurate proof of their entire flood-related loss

within sixty days of undergoing a major natural disaster.

However, that is precisely what the terms of their flood

policy requires.

App. 16

The plaintiffs further explain that they relied on the

representations of Mr. Hughes, who was the insurance

adjuster dispatched by the NFIP, and assumed based on

their conversations with him that they could supplement

their loss claim at some later date. They contend that the

defendant should not be allowed to raise the untimeliness of

the proof of loss as a defense on the equitable doctrines of

estoppel and waiver. This argument has oft been raised and

nearly always rejected on facts virtually identical to these.

The doctrine of equitable estoppel is not available

against the Government here. Even if this court were to find

that the plaintiffs had demonstrated they could present

competent evidence of each element of traditional estoppel,3

in order to fall into the “rather narrow possible range of

circumstances” in which estoppel may be had against the

Government, the plaintiffs also would have to prove that a

government agent engaged in serious “affirmative

misconduct.” See Immigration & Naturalization Service v. Hibi,

414 US. 5, 8-9 (1973) (dictum); Gagliardi, 952 F. Supp. 163 at

217; Diamond v. Federal Emergency Management Agency, 689 F.

Supp., 169 (E.D.N.Y. 1988). The court has been unable to

3 These elements are: “(1) the party to be estopped knew the true

facts; (2) the party to be estopped intended for his conduct to be acted

upon or acted in such a way that the party asserting estoppel had a right

to believe that it was intended; (3) the party claiming estoppel was

ignorant of the true facts; and (4) the misconduct was relied upon to the

detriment of the parties seeking estoppel.” McCrary v. Federal Emergency

Management Agency, 642 F. Supp. 544 (E.D.N.C. 1986) (quoting United

States v. 18.16 acres of land, 598 F. Supp 282, 286 (E.D.N.C. 1984)). The

undersigned found in McCrary that the plaintiffs could not meet the third

element on facts essentially the same as these because the plaintiffs were

not ignorant of the true facts; the McCrary plaintiffs’ insurance policy

contained a notice of the sixty-day proof of loss requirement, and they

were deemed to have knowledge of the same provision contained in the

Code of Federal Regulations. Additionally, in McCrary, as here, the

NFIP’s letter to the plaintiffs and their insurance agent reiterated the

sixty-day requirement. Id. at 548. See also Gagliardi v. Omaha Property and

Ins. Co., 952 F. Supp. 212, 217 (D.N.J. 1997).

App. 17

locate any defensible reported case* in which the NFIP has

been estopped to assert a defense to flood insurance

coverage based on representations by a government agent,

much less by an independent insurance adjuster. In fact, as

noted by the Fourth Circuit Court of Appeals,

The Supreme Court has never explicitly held

that the federal government may be equitably

estopped ... and it is doubtful that the Court

would recognize an estoppel where

affirmative misconduct by the government

was not even alleged ... With one narrow

exception not applicable here ..., this court

has repeatedly declined to find equitable

estoppel against the federal government

absent a showing of affirmative misconduct.

Maryland Dept. of Human Resources v. Department of

Agriculture, 976 F.2d 1462, 1484, n.24 (4% Cir. 1992) (citations

omitted); see also West Augusta Development Corp. v. Giuffrida,

717 F.2d 139, 141 (4% Cir. 1983) (government agency is not

estopped merely because its actions, if taken by a private

party, would have worked an estoppel). In the instant case,

although the plaintiffs have alleged unprofessional and

misleading conduct by Hughes, they not only have not

alleged “serious affirmative misconduct,” but also have

alleged neither that Hughes was or should be deemed to be

an agent of the Government, nor any facts which would

support such a legal conclusion. Furthermore, the court is

satisfied that an amendment to the pleadings could not cure

this deficiency, as the law appears to be settled that estoppel

cannot be had against the government on these facts.

4 The cases relied upon by the plaintiffs in support of their

estoppel argument are not persuasive. For the reasons cogently set forth

in the defendant's Reply Memorandum at § II (A)(2)(d), the court declines

to follow the rationale of either Meister Bros., Inc. v. Macy, 674 F.2d 1174

(7% Cir. 1982), or Dempsey v. Director, FEMA, 549 F. Supp. 1334 (E.D. Ark.

1982) . See also Phelps, 785 F.2d at 17.

App. 18

Likewise, the plaintiffs’ waiver argument must fail.

Their SFIP policy reiterates the requirement that the “policy

cannot be amended nor can any of its provisions be waived

without express written consent of the Federal Insurance

Administrator. No action we take under the terms of this

policy can constitute a waiver of any of our rights” Exhibit

to Complaint, SFIP, Art. 9, § D; see also Phelps, 785 F.2d at 19;

Diamond, 689 F. Supp. at 169; McCrary, 642 F. Supp. at 546.

SUMMARY

The result dictated by the applicable law is harsh

and its effect on unwary insured property owners is

unfortunate indeed. However,

justification for this refusal [to apply

equitable estoppel doctrine against the

Government] rests primarily upon

considerations of sovereign immunity and

constitutional grounds - the potential for

interference with the separation of

governmental powers between the legislative

and executive ... There is also a vital concern

for public policy. In a complex government

with thousands of agencies and departments,

and innumerable employees, there is a very

real need to protect the Government against

binding commitments by improper conduct

of its agents, which might promote fraud or

collusion. “Fear of uncontrollable liability

and crippling losses to the public treasury

have also played a role in sustaining the

rule.”

App. 19

Phelps, 785 F. Supp. at 17 (citations omitted); accord

McCreary, 642 F. Supp. at 548-49. Fifty years ago, the

Supreme Court cautioned:

Whatever the form in which the Government

functions, anyone’ entering into an

arrangement with the Government takes the

risk of having accurately ascertained that he

who purports to act for the Government stays

within the bounds of his authority. The scope

of this authority may be explicitly defined by

Congress or be limited by delegated

legislation, properly exercised through the

rule-making power ... The oft-quoted

observation ... that “Men must turn square

corners when they’ deal with the

Government,” does not reflect a callous

outlook. It merely expresses the duty of all

courts to observe the conditions defined by

Congress for charging the public treasury.

Merrill, 332 U.S. at 34 (citation omitted).

CONCLUSION

For the foregoing reasons, therefore, the defendant's

Motion for Summary Judgment is ALLOWED and this

action is DISMISSED.

SO ORDERED.

This the 26 day of February, 1999.

/s/James C. Fox

JAMES C. FOX

United States District Judge

App. 20

FEDERAL EMERGENCY MANAGEMENT AGENCY

FEDERAL INSURANCE ADMINISTRATION

DWELLING

~ POLICY

NATIONAL FLOOD

INSURANCE PROGRAM

STANDARD FLOOD INSURANCE POLICY

[Issued Pursuant to the National Flood Insurance Act of

1968, or Any Acts Amendatory Thereof (Hereinafter Called

the Act), and Applicable Federal Regulations in Title 44 of

the Code of Federal Regulations, Subchapter B]

App. 21

NOTICE: This policy provides only LIMITED COVERAGE

in basements and for the enclosed areas below elevated

Post-FIRM building, as set forth below. (See Article 6,

Paragraph F.)

SCOPE OF BASEMENT AND ELEVATED BUILDING

ENCLOSURE COVERAGE

BUILDING AND CONTENTS ELEMENTS COVERED:

FOUNDATION ELEMENTS

REQUIRED UTILITY CONNECTIONS

SUMP PUMPS

WELL WATER TANKS AND PUMPS

OIL TANKS AND THE OIL IN THEM

CISTERNS AND THE WATER IN THEM

NATURAL GAS TANKS AND THE GAS IN THEM

PUMPS AND/OR TANKS USED IN

CONJUNCTION WITH SOLAR ENERGY

FURNACES

HOT WATER HEATERS

CLOTHES WASHERS AND DRYERS

FOOD FREEZERS AND THE FOOD IN THEM

AIR CONDITIONERS

HEAT PUMPS

ELECTRICAL JUNCTION AND CIRCUIT

BREAKER BOXES

° CLEAN-UP

° ELEVATORS, DUMBWAITERS, AND EQUIPMENT,

EXCEPT FOR SUCH EQUIPMENT LOCATED

BELOW THE BASE FLOOD LEVEL, IF SUCH

EQUIPMENT WAS INSTALLED ON OR AFTER

OCTOBER 1, 1987

App. 22

ELEMENTS COVERED IN BASEMENTS ONLY:

° UNPAINTED DRYWALLS AND SHEETROCK

WALLS, INCLUDING FIBERGLASS INSULATION,

AND CEILINGS (REPLACE, AND IN

SUBSTITUTION FOR FINISHED WALLS)

ELEMENTS NOT COVERED IN BASEMENTS AND

ELEVATED BUILDING ENCLOSURES (SEE NOTE):

. CONTENTS

. IMPROVEMENTS SUCH AS FINISHED WALLS,

FLOORS, AND CEILINGS

. BUILDING EQUIPMENT AND FIXTURES NOT

SPECIFICALLY COVERED

NOTE: IN THE CASE OF ELEVATED BUILDINGS,

COVERAGE LIMITATION APPLIES ONLY TO POSTFIRM

ELEVATED BUILDINGS IN SPECIAL HAZARD AREAS

DESIGNATED AS ZONES A1-30 (AE), AH AND V1-30

(VE).

FEDERAL EMERGENCY MANAGEMENT AGENCY

FEDERAL INSURANCE ADMINISTRATION

STANDARD FLOOD INSURANCE POLICY

+ + +

ARTICLE 2 - DEFINITIONS

AS USED IN THIS POLICY - -

+ + +

"Flood" means:

A. A general and temporary condition of partial

or complete inundation of normally dry land area from:

1. The overflow of inland or tidal waters.

rs The unusual and rapid accumulation or

runoff of surface waters from any source

+ + +

ARTICLE 9 - GENERAL CONDITIONS AND

PROVISIONS

D. Amendments, Waivers, Assignment: This policy cannot

be amended nor can any of its provisions be waived without

the express written consent of the Federal Insurance

Administrator. No action we take under the terms of this

policy can constitute a waiver of any of our rights. Except in

the case of 1. a contents only policy, and 2. a policy issued to

cover a building in the course of construction, assignment of

this policy, in writing, is allowed upon transfer of title.

k*e*

App. 24

I. Alterations and Repairs: You may, at any time and at

your own expense, make alterations, additions and repairs

to the insured property, and complete structures in the

course of construction.

J. Requirements in Case of Loss: Should a flood loss occur

to your insured property, you must:

:. Notify us in writing as soon as practicable;

4. As soon as reasonably possible, separate the

damaged and undamaged property, putting

it in the best possible order so that we may

examine it; and

3. Within 60 days after the loss, send us a proof

of loss, which is your statement as to the

amount you are claiming under the policy

signed and sworn to by you and furnishing

us with the following information:

The date and time of the loss;

A brief explanation of how the loss

happened;

Your interest in_ the property

damaged (for example, "owner") and

the interest, if any, of others in the

damaged property;

The actual cash value or replacement

cost, whichever is appropriate, of each

damaged item of insured property

and the amount of damages

sustained;

Names of mortgagees or anyone else

having a lien, charge or claim against

the insured property;

App. 25

f. Details as to any other contracts of

insurance covering the property,

whether valid or not;

g. Details of any changes in ownership,

use, occupancy, location or possession

of the insured property since the

policy was issued;

h. Details as to who occupied any

insured building at the time of loss

and for what purpose; and

i. The amount you claim is due under

this policy to cover the loss, including

statements concerning:

(1) The limits of coverage stated

in the policy; and

(2) The cost to repair or replace

the damaged property

(whichever costs less).

Cooperate with our adjuster or representative

in the investigation of the claim;

Document the loss with all bills, receipts, and