855 F.3d 628
4th Cir.2017Background
- Gary and Rebecca Woodson owned a waterfront house insured under the Standard Flood Insurance Policy (SFIP) issued by Allstate as a FEMA "write-your-own" (WYO) carrier; Hurricane Irene (Aug 27, 2011) caused alleged foundation damage.
- Allstate inspected, retained Rimkus (engineer) and denied coverage for foundation damage by letter dated Feb 28, 2012; Woodsons appealed to FEMA and FEMA affirmed Allstate’s denial.
- Woodsons filed suit in North Carolina state court on Feb 27, 2013 (breach of contract and bad-faith handling under N.C. UDTPA); Allstate removed to federal court on Apr 1, 2013.
- District court found for Woodsons on breach and UDTPA bad-faith claim, trebled damages and awarded attorney’s fees; Allstate appealed.
- Fourth Circuit reversed, holding federal law (NFIA, FEMA regulations, and SFIP) governs SFIP claims exclusively, imposes a one-year limitation to file in federal court, and preempts state-law bad-faith claims against WYO insurers.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Woodsons’ breach claim was time-barred under the NFIA one-year rule | Filing in NC state court within one year tolled/was sufficient | NFIA requires filing in U.S. District Court within one year of written denial; state filing does not satisfy or toll | Held: Claim time-barred — SFIP/NFIA require federal filing within one year; state filing in a forum without jurisdiction does not toll (Shofer controlling) |
| Whether Allstate waived or forfeited its statute-of-limitations defense by not pressing it earlier | Woodsons: Allstate failed to present the defense sufficiently to district court | Allstate: raised the defense in answer, pretrial order, trial exhibits, proposed findings; issue was litigated at trial | Held: Defense preserved; no deliberate waiver — limitations issue was tried and is reviewable on appeal |
| Whether North Carolina bad-faith/UDTPA claim is preempted by federal law governing SFIP and WYO handling | Woodsons: FEMA regulations and WYO autonomy permit state-law tort claims against WYO insurers | Allstate: SFIP and FEMA regulations expressly make federal law and federal common law exclusive for SFIP claims and disputes over claim handling | Held: State-law bad-faith claim preempted; disputes under SFIP governed exclusively by federal law and SFIP limitations apply |
| Whether attorney’s-fee award premised on state law survives | Woodsons: award appropriate under state UDTPA result | Allstate: underlying state-law claim preempted, so fee award invalid | Held: Fee award vacated because the UDTPA claim is preempted and cannot support fees |
Key Cases Cited
- Shofer v. Hack Co., 970 F.2d 1316 (4th Cir. 1992) (filing in an improper forum that clearly lacks jurisdiction does not toll a federal statute of limitations)
- Gibson v. American Bankers Ins. Co., 289 F.3d 943 (6th Cir.) (removal does not cure a state-court filing’s inability to toll a federal limitations period)
- C.E.R. 1988, Inc. v. Aetna Casualty & Surety Co., 386 F.3d 263 (3d Cir. 2004) (state-law claims against WYO insurers preempted by federal law governing SFIP)
- Wright v. Allstate Ins. Co., 415 F.3d 384 (5th Cir. 2005) (federal law governs SFIP claims and preempts state-law remedies against WYO carriers)
- Cliff v. Payco Gen. Am. Credits, Inc., 363 F.3d 1113 (11th Cir. 2004) (federal regime preempts state-law claims related to federally regulated insurance program)