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Oliver v. U.S. Department of Homeland Security

United States District Court, E.D. Pennsylvania

August 26, 2014





Plaintiffs, Rena and Timothy Oliver, have brought suit against Defendant, the United States Department of Homeland Security, seeking payments pursuant to a flood insurance policy purchased through the Federal Emergency Management Agency's National Flood Insurance Program. Presently before the Court are four motions filed by Defendant: a motion for summary judgment, two motions in limine, and a second motion to compel. For the reasons discussed below, the motion for summary judgment will be granted and the remaining motions denied as moot.


The following facts are undisputed unless otherwise indicated:

Plaintiffs own a house at 500 South Warminster Road in Hatboro, Pennsylvania. (Def.'s Stat. of Facts ¶ 1.) Hatboro participates in the Federal Emergency Management Agency's ("FEMA") National Flood Insurance Program ("NFIP"), which is administered pursuant to the National Flood Insurance Act of 1968, 42 U.S.C. § 4001, et seq. (Def.'s Stat. of Facts ¶ 3.) FEMA is an agency of Defendant Department of Homeland Security. The NFIP was established to allow homeowners to purchase flood insurance on reasonable terms and conditions, either directly from FEMA in the form of a Standard Flood Insurance Policy ("SFIP") or from a private insurer as part of the NFIP's Write Your Own ("WYO") program. 42 U.S.C. § 4001(a); 44 C.F.R. § 59, et seq.; 44 C.F.R. § 61, App. A(1).

Communities wishing to participate in the NFIP must adopt local flood regulations that comport with federal regulations. 44 C.F.R. § 59.22; 44 C.F.R. § 60.3. To that end, FEMA issues a Flood Insurance Rate Map ("FIRM") for each participating community identifying local flood hazards. 44 C.F.R. § 59.1. Once a FIRM is issued for a particular area, new construction in hazardous flood zones must meet minimum flood plain construction standards requiring, among other things, that the living area of a home be elevated above base flood level.[1] 44 C.F.R. § 60.3(c)(2). Any part of the home below that elevation must be non-living space, used for storage, parking, or building access. 44 C.F.R. § 60.3(c)(5).

For elevated buildings in flood zones built after a FIRM is issued, coverage for damage to the first floor is strictly limited to the items listed in in SFIP Section III A(8) and B(3), which include fixtures such as electrical outlets, fuel tanks, water cisterns and similarly essential equipment. 44 C.F.R § 61, App. A(1). These coverage limits do not apply to non-elevated buildings built before a FIRM is issued. However, if a non-elevated building constructed pre-FIRM is substantially damaged by flood or substantially improved after a FIRM is in place, the building must be repaired or improved consistent with the FIRM's flood plain construction standards, such that the living area is elevated above base flood level. 44 C.F.R. § 60.3(c)(2). Following the repairs or improvements, the post-FIRM elevated coverage limits apply. 44 C.F.R. § 61, App. A(1)(II)(B)(23).

Plaintiffs applied for an SFIP in June 2011 through FEMA. Their application describes their house as pre-FIRM, non-elevated and located in a special flood hazard zone designated "Zone AE." (Def.'s Stat. of Facts ¶ 2; Def.'s Mot., Ex. 6, p. 6-7.) The application was approved and Plaintiffs purchased coverage in the amount of $95, 800 for the house, and $47, 900 for its contents. (Def.'s Mot., Ex. 7)

In late August and again in early September of 2011, Plaintiffs' house flooded due to heavy rains and sustained substantial damage. (Def.'s Br. 3; Pls.' Resp. 1.) Plaintiffs submitted a claim to FEMA, which sent an independent adjuster to assess the property. Upon inspecting the property, the adjuster was unsure whether the building was pre-FIRM and non-elevated as described in Plaintiffs' SFIP, or whether it was in fact post-FIRM and elevated. (Def.'s Mot., Ex. 11, bates no. 103.) Because of this uncertainty, the adjuster provided FEMA with two estimates - one for the policy limits of $143, 700 in the event that the house was non-elevated, and one for $44, 132.69, accounting for the SFIP's post-FIRM elevated coverage limits. (Def.'s Mot., Ex. 11, bates nos. 106-07.) FEMA advanced Plaintiffs $35, 000 and Plaintiffs signed a "non-waiver agreement" acknowledging that FEMA would continue to investigate Plaintiffs' claim. (Id. at bates no. 116.)

FEMA's investigation ultimately determined that the house was post-FIRM elevated and thus subject to the SFIP coverage limitations. (Def.'s Mot., Ex. 24.) According to FEMA, the house was originally non-elevated and insured as such through the NFIP by its previous owners, the Munns. Following a flood in 2001, Hatboro declared the property damaged and in need of substantial repairs. Because a FIRM had been issued for Hatboro by that time, the repairs were required to meet local flood plain construction standards, which meant that the living area had to be elevated above base flood level. Using their SFIP benefits and an additional FEMA grant, the Munns elevated the house on a concrete-block wall foundation, such that the entire house was above base flood level. Thus, the new lowest level - enclosed by the concrete-block wall - was only permitted to be used as storage, parking, or building access. As required by the SFIP, the concrete walls were equipped with flood vents, which are openings in the wall that serve to equalize water pressure in the event of a flood. (Def.'s Mot., Exs. 12-23.) The construction changed the status of the house from pre-FIRM non-elevated to post-FIRM elevated. The lowest level, however, was finished and turned into a living area at a later, unknown date. Plaintiffs deny having known at the time they purchased the house or when they sought an SFIP that the house had been elevated by the Munns.

Based on the above information, FEMA partially denied Plaintiffs' claim, applying the coverage limits pertaining to post-FIRM elevated buildings. (Def.'s Mot., Ex. 24.) FEMA ultimately paid Plaintiffs $40, 627.69 for building damages and $3, 505.00 for contents from the first flood, and an additional $8, 429.57 in building damages from the second flood. (Def.'s Mot, Exs. 1, 9, 10, 30, 31.) Plaintiffs unsuccessfully appealed the partial denial to FEMA on the basis that the house was non-elevated. (Def.'s Exs. 25, 27.) Plaintiffs no longer maintain this position and concede that the house is elevated. (Pls.' Stat. of Facts ¶¶ 3-5.) Instead, Plaintiffs argue that Defendant is estopped from denying coverage as a result of having agreed to insure the home as non-elevated, which Plaintiffs claim is evidenced by the "declarations page" of their policy. (Def.'s Mot., Ex. 7.)

Plaintiffs filed their complaint on August 14, 2012, seeking the full amount available under the policy for the August flood, plus $26, 000 for the September flood, for a total of $169, 700. Defendant filed its motion for summary judgment on November 22, 2013, arguing that the status of the house as ...

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