The opinion of the court was delivered by: Ziegler, Chief Judge.
Pending before the court are the parties' cross motions (doc.
nos. 34 and 38) for summary judgment pursuant to Rule 56(c) of
the Federal Rules of Civil Procedure. Plaintiffs, Brookville
Mining Equipment Corporation ("Brookville") and Miller Welding &
Machine Company ("Miller"), sued defendant, Selective Insurance
Company of America ("Selective"), alleging breach of contract,
waiver, estoppel, bad faith and for a declaratory judgment
arising out of Selective's denial of insurance benefits under a
flood insurance contract between the parties. Defendants deny
plaintiffs' allegations and assert that: (1) plaintiffs' claims
are barred because they failed to file a timely signed and sworn
proof of loss; (2) plaintiffs' properties are not in a Standard
Flood Hazard Area ("SFHA"); and (3) the policies are void because
of material misrepresentations. For the reasons discussed below,
we will grant judgment in favor of Selective Insurance Company.
On July 19, 1996, between 6:00 and 7:00 A.M., flood waters
encroached on both Brookville and Miller's properties. Plaintiffs
contacted Becky Matson, an insurance agent with Matson Insurance
Agency, and inquired whether they could procure flood insurance,
explaining that flood waters had already reached the properties.
Matson informed Brookville and Miller that she would attempt to
procure such insurance.
Matson phoned Selective and spoke with Lori Paliana. Matson
informed Paliana that flood waters had reached plaintiffs'
properties earlier that morning. Paliana informed Matson that
flood insurance could be obtained if plaintiffs' lender made a
request that flood insurance be obtained immediately. According
to Paliana, a lender's request would operate as a waiver of the
usual 30 day waiting period for flood insurance. Matson then
phoned plaintiffs' lender and mortgagee, S & T Bank. The lender
agreed to issue a request stating that it required flood
insurance for plaintiffs' loans. Matson again phoned Selective
and informed the insurer that plaintiffs' lender required flood
insurance coverage. Selective informed Matson that it could bind
coverage effective July 19, 1996 at 12:01 A.M.
On July 23, 1996, Selective issued Standard Flood Insurance
Policies ("SFIP") insuring plaintiffs' properties against flood
losses effective July 19, 1996 at 12:01 A.M. On July 22, 1996,
Brookville and Miller filed a notice of claim with Selective
arising out of flood damage to their properties. Selective sent
an adjuster, Simsol, to adjust the loss. On August 1 and 19,
1996, Simsol filed preliminary reports with Selective of the
damage to plaintiffs' properties.
On December 12, 1996, Selective denied coverage for the loss
claiming that the policy was not in effect until the applicable
policy forms were completed and the premiums paid. As the process
was not completed until the losses had occurred, Selective deemed
the loss to be a loss in progress. Plaintiffs filed suit against
Selective claiming that defendant wrongfully denied coverage
under the applicable policies.
A. Summary Judgment Standard
Summary judgment is appropriate when there are no genuine
issues of material fact and the moving party is entitled to
judgment as a matter of law. Celotex Corp. v. Catrett,
477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). In considering a
motion for summary judgment, we must examine the evidence in the
light most favorable to the non-moving party and draw all
reasonable inferences in favor of that party. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91
L.Ed.2d 202 (1986). If the plaintiff fails to make a showing of
the existence of an element essential to its case on which it
bears the burden of proof at trial, summary judgment should be
entered for the defendant. Cleveland v. Policy Mgmt. Sys.
Corp., 526 U.S. 795, 119 S.Ct. 1597, 1603, 143 L.Ed.2d 966
B. Law Governing the Standard Flood Insurance Policy
It is well established that federal common law governs the
interpretation of the SFIP. Linder and Assocs., Inc. v. Aetna
Cas. and Sur. Co., 166 F.3d 547, 550 (3d Cir. 1999) (citations
omitted). "Accordingly, `neither the statutory nor decisional law
of any particular state is applicable to the case at bar.'" Id.
(quoting Sodowski v. National Flood Ins. Program, 834 F.2d 653,
655 (7th Cir. 1987)). Courts should interpret the SFIP utilizing
standard insurance law principles, which instruct that the SFIP
should be given its plain, unambiguous meaning. Id. Ambiguities
should be construed in favor of the insured and against the
insurer. Id. If the SFIP "is susceptible to two constructions,
however, we will adopt the one more favorable to the insured."
Id. (citing Aschenbrenner v. United States Fidelity & Guar.
Co., 292 U.S. 80, 84-85, 54 S.Ct. 590, 78 L.Ed. 1137 (1934)).
A. The National Flood ...