92 F. Supp. 3d 736
M.D. Tenn.2015Background
- Plaintiffs Michael and Beverly Harris bought a Gallatin, TN house in 2006; seller disclosures and a First American flood certification allegedly indicated the property was not in a flood zone, so they declined flood insurance at closing.
- Regions Bank later informed them (late 2006) the property was in a flood zone and they had 45 days to obtain flood insurance; they retained agent David Vandenbergh who procured a Nationwide pre-FIRM SFIP without contents coverage.
- The Harris house was actually built in 1984 and, under the applicable FIRM (effective 1981), is a post‑FIRM structure; post‑FIRM status limits coverage for items below the lowest elevated floor.
- The home flooded in May 2010; FEMA confirmed Nationwide adjusted the Harris claim using post‑FIRM rules. Plaintiffs claim they were promised contents coverage and/or proper classification and seek damages for (1) negligent failure to procure requested contents coverage and (2) excess premiums paid due to the pre‑FIRM designation.
- Key undisputed facts: plaintiffs received declaration pages showing no contents coverage (including a 2/21/2010 dec. page), paid premiums for years before the flood, and Nationwide adjusted the claim on a post‑FIRM basis.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did Vandenbergh’s mis‑designation (pre‑FIRM vs post‑FIRM) cause compensable damages? | Misdesignation led to reduced available coverage and increased premiums; plaintiffs seek damages. | Nationwide ultimately adjusted claim as post‑FIRM, so plaintiffs received the coverage they would have had. | No damages from misdesignation; adjustment was post‑FIRM so no coverage shortfall. |
| Did Vandenbergh negligently fail to procure contents coverage as requested? | Harris told agent to obtain maximum house and contents coverage; lack of contents caused uncovered personal property losses. | Plaintiffs repeatedly received declaration pages showing no contents coverage and never requested changes; payment of premiums gives rebuttable presumption of acceptance. | Plaintiffs failed to rebut presumption of acceptance; summary judgment for defendant on contents claim. |
| Are plaintiffs entitled to damages for excess premiums paid due to the pre‑FIRM designation? | Plaintiffs point to higher pre‑flood premiums labeled pre‑FIRM and seek the difference. | Defendant argues plaintiffs received the coverage they could collect and speculative remedies (e.g., berm) are not recoverable. | Genuine factual dispute remains about excess premiums; summary judgment denied as to this claim. |
| Are speculative remediation measures or private insurance availability recoverable as damages for failure to procure insurance? | Plaintiffs suggest elevation certificate, berm, or private coverage could have produced better results. | Such measures are speculative and not measures of damages for failure to procure an insurance policy. | Court rejects speculative damages (e.g., berm, unproven private coverage). |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (Sup. Ct. 1986) (summary judgment burden shifting principles)
- Anderson v. Liberty Lobby, 477 U.S. 242 (Sup. Ct. 1986) (standard for genuine issue of material fact on summary judgment)
- Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574 (Sup. Ct. 1986) (objective standard for genuine factual dispute)
- Street v. J.C. Bradford & Co., 886 F.2d 1472 (6th Cir. 1989) (summary judgment principles and "scintilla" rule)
- Morrison v. Allen, 338 S.W.3d 417 (Tenn. 2011) (agent liability for failure to procure insurance)
- Glisson v. Stone, 4 Tenn. App. 71 (Tenn. Ct. App. 1926) (measure of damages for failure to procure insurance)
- Maple Manor Hotel, Inc. v. Metropolitan Gov't, 543 S.W.2d 593 (Tenn. Ct. App. 1975) (no recovery for speculative damages)