Argued
November 15, 2017
On
Appeal from the United States District Court for the District
of New Jersey (District Court No.: 1-15-cv-05688) District
Judge: Honorable Robert B. Kugler
Steven
C. Feinstein (Argued) Daniel W. Ballard Zenstein Ballard
Counsel for Appellant
Francis X. Manning (Argued) Stradley Ronon Stevens &
Young Adam J. Petitt Brandon M. Riley Stradley Ronon Stevens
& Young Counsel for Appellee
Before: AMBRO, KRAUSE and RENDELL, Circuit Judges
OPINION
RENDELL, CIRCUIT JUDGE
The
issue in this case is whether the rejection of a
policyholder's proof of loss constituted a "written
denial of all or part of the claim, " thereby triggering
the one-year statute of limitations that is set forth in
every Standard Flood Insurance Policy ("SFIP").
After receiving a payment from Fidelity National Indemnity
Insurance Company, based on an adjuster's assessment of
the damage to his property caused by Hurricane Sandy, Anthony
Migliaro submitted a sworn proof of loss seeking additional
compensation. Fidelity sent Migliaro a letter rejecting his
proof of loss, and he filed suit. The District Court found
that the letter rejecting Migliaro's proof of loss was a
"written denial of all or part of the claim." Since
Migliaro filed his complaint almost two years after he
received the letter, the District Court dismissed the suit as
time-barred. We affirm the District Court's order.
Although the rejection of a proof of loss is not per
se a denial of the claim in whole or in part, it does
constitute a denial of the claim if, as here, the
policyholder treats it as such by filing suit against the
carrier.
I.
Background[1]
A.
The National Flood Insurance Program
Congress
authorized the creation of the National Flood Insurance
Program ("NFIP") to "enable interested persons
to purchase insurance against loss resulting from physical
damage to or loss of . . . property . . . arising from any
flood occurring in the United States." 42 U.S.C. §
4011(a). The NFIP is administered by the Federal Emergency
Management Agency ("FEMA"). Id. Under
FEMA's Write Your Own program, individuals may purchase
SFIPs from private insurance carriers ("WYO
carriers"). 44 C.F.R. § 62.23.
The
national flood insurance system is an unusual hybrid of
government and private insurance, but it is essentially a
government program. WYO carriers are "fiscal
agents" of the United States. 42 U.S.C. §
4071(a)(1). SFIP policyholders pay premiums to WYO carriers
and WYO carriers service the policies. 44 C.F.R. §
62.23(d). However, the United States government ultimately
pays all SFIP claims. Van Holt v. Liberty Mut. Fire Ins.
Co., 163 F.3d 161, 166 (3d Cir. 1998) ("[A]n
insured's flood insurance claims are ultimately paid by
FEMA.").[2] In addition, although WYO carriers are
also responsible for defending lawsuits arising under SFIPs,
the United States government reimburses the cost of defending
such claims. 44 C.F.R. §62.23(i)(6); Van Holt,
163 F.3d at 165 ("Although WYO companies have the
responsibility of defending against claims, FEMA reimburses
the WYO companies for their defense costs."). Because
SFIP claims are ultimately paid by the United States
government, all SFIPs must be identical to the form codified
at 44 C.F.R. pt. 61, app. A(1).[3] Every SFIP contains the following
statute-of-limitations provision:
You may not sue us to recover money under this policy unless
you have complied with all the requirements of the policy. If
you do sue, you must start the suit within one year after
the date of the written denial of all or part of the
claim[.] . . . This requirement applies to any claim
that you may have under this policy and to any dispute that
you may have arising out of the handling of any claim under
the policy.
44 C.F.R. pt. 61, app. A(1), art VII(R) (emphasis added).
The
SFIP and corresponding FEMA bulletins describe the SFIP
claims process. After an SFIP policyholder suffers a loss,
the WYO carrier sends an insurance adjuster to assess the
damages. FEMA Bulletin W-12092a (Nov. 9, 2012). The adjuster
then makes a recommendation as to the amount of money the
policyholder is entitled to recover under the policy.
Id. The WYO carrier typically adopts the
adjuster's recommendation and pays the policyholder the
recommended amount. Id. If the policyholder's
coverage limits have not been exhausted and he believes he is
entitled to recover more, he must send the carrier a proof of
loss no later than a year and a half from the date of the
loss. FEMA Bulletin W-13060a (Oct. 1, 2013).[4] A proof of loss
is the policyholder's signed and sworn estimate of the
additional covered damages. 44 C.F.R. pt. 61, app. A(1), art.
VII(J)(4). The SFIP's Loss Payment provision sets forth
the options available to the policyholder if the proof of
loss is rejected. See 44 C.F.R. pt. 61, app. A(1),
art. VII(M)(2).
B.
Factual Background
Migliaro
purchased an SFIP from WYO carrier Fidelity for his New
Jersey property. The property sustained flood damage in
October 2012 as a result of Hurricane Sandy. Fidelity sent an
independent adjuster to assess the damage. The adjuster
recommended a payment of $90, 499.11. Fidelity adopted the
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