Grissom v. Liberty Mutual Fire Insurance
2012 U.S. App. LEXIS 8164
| 5th Cir. | 2012Background
- Grissom purchased NFIP flood insurance through the WYO program with Liberty Mutual; he may have been eligible for a preferred risk policy but was not informed.
- In 2004, Grissom renewed with coverage up to $121,200 for a $531 premium; a preferred policy would have provided $350,000 coverage for $317.
- Hurricane Katrina destroyed Grissom's home in August 2005; Liberty Mutual paid the $121,200 claim.
- Grissom sued in state court for negligent misrepresentation to recover the difference between actual coverage and what could have been under the preferred risk policy; Liberty Mutual removed the case to district court.
- The district court held the claim was not preempted and submitted the case to a jury, which awarded $212,900 in compensatory damages.
- The Fifth Circuit reversed, holding the claim is preempted as a claims-handling dispute under Campo and dismissed the claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the claim is preempted as claims handling or procurement | Grissom (preemption applies to claims handling). | Grissom's claim concerns renewal/eligibility and procurement, not handling. | Preemption applies; claim is claims handling and thus preempted. |
| Whether federal funds considerations require jury trial suppression | FEMA presumes to pay costs and damages; jury trial permissible absent explicit denial. | NFIP funds mandate no jury trial for government-funded claims. | Because FEMA is presumed to pay, the district court erred in sending to a jury. |
| Whether Mississippi recognizes negligent misrepresentation by insurer in first-party insurance | Grissom argues insurer had duty to disclose eligibility for coverage options. | No fiduciary duty; no duty to advise on coverage needs; misrepresentation not cognizable. | Mississippi law does not recognize such negligent misrepresentation; claim is meritless. |
Key Cases Cited
- Campo v. Allstate Ins. Co., 562 F.3d 751 (5th Cir.2009) (distinguishes claims handling from procurement; lapse converts renewal to procurement)
- Wright v. Allstate Ins. Co., 415 F.3d 384 (5th Cir.2005) (claims handling includes interactions during claim/renegotiation with insured)
- Borden v. Allstate Ins. Co., 589 F.3d 168 (5th Cir.2009) (renewal notices treated as claims handling)