Faire Feaz v. Wells Fargo Bank, N.A.
2014 U.S. App. LEXIS 2452
| 11th Cir. | 2014Background
- Feaz obtained an FHA-insured mortgage in a designated special flood hazard area; HUD requires flood insurance to HUD’s minimums, while the standard FHA Uniform Covenant requires flood insurance to the extent required by the Secretary; Wells Fargo later demanded flood coverage up to replacement value; Feaz was force-placed flood insurance at replacement-value level after she failed to respond to notices; district court dismissedFeaz’s contract and extracontractual claims; the issue is whether Covenant 4 unambiguously allows lender-imposed insurance beyond HUD minimums; the court concludes Covenant 4 unambiguously permits higher insurance amounts and affirms dismissal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Covenant 4 unambiguously allows higher flood insurance | Feaz: HUD minimums cap lender demand | Wells Fargo: covenant permits higher amounts | Covenant 4 unambiguously permits higher amounts |
| Role of federal regulatory context in interpreting uniform covenant | Uniform form limits interpretation to HUD minimum | Uniform covenant must reflect HUD/FEMA regulatory scheme | Regulations support reading as minimums with lender-free discretion for higher amounts |
| Extracontractual duties and fiduciary claims viability | Claims flow from covenant breach and bad faith | Contractual interpretation defeats extracontractual claims | Claims fail as a matter of law; district court’s dismissal affirmed |
Key Cases Cited
- Kolbe v. BAC Home Loans Servicing LP, 695 F.3d 111 (1st Cir. 2012) (en banc discussion on contract interpretation of uniform covenants)
- Akanthos Capital Mgmt., LLC v. CompuCredit Holdings Corp., 677 F.3d 1286 (11th Cir. 2012) (importance of uniform boilerplate language interpretation)
- Sharon Steel Corp. v. Chase Manhattan Bank, N.A., 691 F.2d 1039 (2d Cir. 1982) (boilerplate provisions are not the result of private negotiations)
- Ill. Steel Co. v. Baltimore & Ohio R.R. Co., 320 U.S. 508 (1944) (interpretation of regulations and purpose behind regulatory requirements)
- Saavedra v. Donovan, 700 F.2d 496 (9th Cir. 1983) (agency interpretations given deference in contract-like schemes)
- Honeywell v. United States, 228 Ct. Cl. 591 (1981) (agency-driven uniform covenants interpreted to implement policy)