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Hesse v. Nationwide Mutual Fire Ins. Co.

December 2, 2009

SCOTT HESSE AND VICKI HESSE, PLAINTIFFS
v.
NATIONWIDE MUTUAL FIRE INS. CO., DEFENDANT



The opinion of the court was delivered by: James M. Munley United States District Court

(Judge Munley)

MEMORANDUM

Before the court is Defendant Nationwide Mutual Fire Insurance Company's motion for summary judgment (Doc. 20). Having been fully briefed, the matter is ripe for disposition.

BACKGROUND

Plaintiffs Scott and Vicki Hesse own a property at 54 South Coal Street in Port Carbon, Pennsylvania. (SMF at ¶ 11). Plaintiffs insured their property against flooding under a Standard Flood Insurance Policy ("SFIP") with Defendant Nationwide Mutual Fire Insurance Company ("Nationwide"). (Id.) Nationwide is a "Write-Your-Own" insurance carrier under the National Flood Insurance Program. (SMF at ¶ 8); see also 44 C.F.R. Pt. 61, App. A(1). Under this program, Nationwide issues SFIPs to qualified properties on behalf of the Federal Emergency Management Agency ("FEMA"). (Id. at ¶ 9). The terms of an SFIP can only be changed by the Federal Insurance Administrator, not by participating insurance carriers, and all claims under an SFIP are paid by the United States Treasury. (Id. at ¶¶ 10, 3).

Plaintiffs' policy had a building coverage limit of $80,000 with a $5,000 deductible. (SMF at ¶ 12). The policy did not cover building contents. (Id.) The SFIP only covers certain basement items. See 44 C.F.R. Pt. 61, App. A(1), Art. III(A)(8). The SFIP, by federal law, excludes coverage for earth-movement, including movement of land resulting from accumulation of water in the subsurface land area. See 44 C.F.R. Part 61, App. A(1), Art. V (C). Finally, the SFIP excludes coverage for structural damage caused by flood unless the damage was due to the pressure or weight of the water. Id. at Art. V(D).

On June 27 and 28, 2006, the property was flooded. (Id. at ¶ 13). Plaintiffs' policy was in effect at this time. (Id. at 12). Adjuster Duane Simmons ("Simmons") of GPS Claim Services inspected the damage to the property for Nationwide and issued an estimate, dated August 19, 2008. (SMF at ¶¶ 21, 22; Def. Ex. 4 (Doc. 20-5)). Simmons estimated $15,582.76 in flood damage minus the $5,000 deductible and $1,142.43 in depreciation. (SMF at ¶¶ 23 to 26). Plaintiffs signed a proof of loss for $9,440.33 and were paid this amount by Nationwide. (Id. at ¶ 27).

Structural Engineer Sinan Jawad, P.E. ("Jawad") also inspected the property for Nationwide to determine the extent of any structural damage caused by the flood. (SMF at ¶ 30; Def. Ex. 8 (Doc. 20-9)). His August 8, 2006 report concluded that most of the damage to the property was caused by long-term settlement, not by the flood, and that only the structural damage to the basement walls under the front porch ("basement front room") was caused by the flood. (SMF at ¶ 31; Def. Ex. 8). Based on this structural report, Simmons estimated an additional $7,441.81 in flood damage, minus $721.24 for depreciation. (SMF at ¶¶ 34 to 36). Plaintiffs signed an additional proof of loss for $6,720.57 and were paid this amount by Nationwide. (Id. at ¶ 37). Plaintiffs have thus received a net payment of $16,160.90.

On August 15, 2006, Scott Hesse signed a proof of loss prepared by plaintiffs' adjuster Scott Luscavage ("Luscavage") of Schuylkill Public Adjusting Co., Inc., totaling $101,273.31, which plaintiffs admit does not discount for depreciation or the deductible. (SMF at ¶¶ 18, 19; Def. Ex. 12 (Doc. 20-13)). In summary, Luscavage estimates plaintiffs' damage as: $10,023.07 for the garage; $2,312.23 for the porch; $14,764.50 for the right-side exterior; $2,662.82 for the rear exterior; $2,121.05 for the kitchen; $7,570.50 for the dining room; $5,677.02 for the basement front room; $25,528.54 for the main basement room; and general hauling, cleanup and debris costs of $9,083.00. (Def. Ex. 12). On top of this subtotal of $79,742.73 are estimated overhead costs of $7,974.29; profits of $8,771.73, and taxes of $4,784.56. (Id.) Plaintiffs acknowledge that this estimate includes items for which they have been compensated, but argue that much of their loss remains uncompensated.

Plaintiffs filed suit in Schuylkill County Court asserting a breach of contract, on June 13, 2008. (Compl. (Doc. 1-6)). On July 7, 2008, Nationwide removed to this court based on federal question jurisdiction. See 42 U.S.C. § 4072; 28 U.S.C. §§ 1331, 1441. Nationwide then moved for summary judgment on March 31, 2009. (Doc. 20).

JURISDICTION

Because the National Flood Insurance Program confers United States District Courts with original exclusive jurisdiction over disputed SFIP claims, the court has removal jurisdiction over this case. See 42 U.S.C. § 4072. See also 28 U.S.C. §§ 1331 ("The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States."), 1441 (A defendant can generally remove a state court civil action to federal court if the federal court would have had original jurisdiction to address the matter.).

LEGAL STANDARD

Before the court is Defendant Nationwide's motion for summary judgment. Summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. See Knabe v. Boury, 114 F.3d 407, 410 n.4 (3d Cir. 1997) (citing FED. R. CIV. P. 56(c)). "[T]his standard provides that the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary ...


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