80 F. Supp. 3d 386
E.D.N.Y2015Background
- Plaintiffs Stephen and Karen Fletcher owned a Massapequa, NY residence insured under a Standard Flood Insurance Policy (SFIP) issued by Standard Fire Insurance Company through the NFIP/WYO program; policy effective 9/2/2002.
- SFIP required renewal premium payment within 30 days of policy expiration (policy expired 9/2/2010) and included a provision for a second bill if the insured notified insurer within one year of nonreceipt of a renewal notice.
- Defendant mailed automated renewal/final notices (7/19/2010, 9/1/2010) and a 9/17/2010 notice to the mortgagee stating the policy had cancelled for nonpayment.
- Plaintiffs admit they did not personally pay the renewal premium and produced no evidence that the mortgagee paid; defendant’s custodian of records declared no payment was received.
- Plaintiffs’ home was damaged by Superstorm Sandy on 10/29/2012; Plaintiffs sued under 42 U.S.C. § 4072 seeking coverage.
- District Court granted defendant’s summary judgment motion, holding the SFIP had lapsed for nonpayment before the storm and therefore no coverage existed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether SFIP coverage was in force at time of Sandy | Policy did not validly terminate because renewal notice/termination procedures were not followed | No renewal premium received; SFIP expired 9/2/2010 under its terms | Policy expired 9/2/2010 for nonpayment; no coverage at time of loss |
| Whether insurer was required to mail renewal notice within 45 days (state law) | NY Ins. Law §3425 required 45-day pre-expiration notice; insurer failed to prove mailing to insured | SFIP controls and federal law/regulations govern; insurer shows automated notices were sent | SFIP and federal law govern; state statute irrelevant/preempted; insurer’s evidence sufficed to show mailing |
| Whether insured can rely on lack of receipt of notice to obtain relief | Plaintiffs never notified insurer within SFIP’s one-year window that they did not receive renewal notice | SFIP requires insured to notify insurer of nonreceipt within one year to trigger second-bill procedure; no such notice was given | Plaintiffs’ failure to notify precludes reliance on SFIP’s second-bill protection |
| Whether equitable doctrines (estoppel/substantial compliance) apply | Equitable relief should prevent forfeiture given hardship | WYO insurers act as fiscal agents and SFIPs must be strictly enforced; equitable doctrines are inapplicable | Court enforces strict compliance; equitable doctrines do not save claim against SFIP requirements |
Key Cases Cited
- McGair v. Am. Bankers Ins. Co. of Fla., 693 F.3d 94 (1st Cir. 2012) (WYO companies act as fiscal agents of federal government)
- Jacobson v. Metro. Prop. & Cas. Ins. Co., 672 F.3d 171 (2d Cir. 2012) (SFIP terms must be strictly construed and enforced)
- Palmieri v. Allstate Ins. Co., 445 F.3d 179 (2d Cir. 2006) (WYO company may be sued in place of FEMA director)
- Evanoff v. Standard Fire Ins. Co., 534 F.3d 516 (6th Cir. 2008) (strict interpretation of SFIP required)
- Shuford v. Fid. Nat. Prop. & Cas. Ins. Co., 508 F.3d 1337 (11th Cir. 2007) (payments from federal treasury justify strict compliance)
- Gowland v. Aetna, 143 F.3d 951 (5th Cir. 1998) (equitable doctrines inapplicable to NFIP/SFIP enforcement)
- 84 Albany Ave. Realty Corp. v. Standard Fire Ins. Co., 13 F.3d 241 (E.D.N.Y. 2014) (SFIP provision requires insured to notify insurer of nonreceipt to trigger second billing)