782 F.3d 56
1st Cir.2015Background
- Plaintiff Jacob Matusevich owned a two-level house whose lower level has finished rooms; three sides are subgrade and the rear side opens to a concrete apron sloping from an in-ground pool to the rear door.
- Matusevich held a Standard Flood Insurance Policy (SFIP) issued by Middlesex Mutual under the NFIP; the SFIP excludes coverage for losses in a "basement," defined as any area with its floor below ground level (subgrade) on all sides.
- After flooding on October 4, 2011, Matusevich submitted claims totaling roughly $148,748; Middlesex paid a small enumerated-coverage portion but denied the larger claim based on the basement exclusion; FEMA upheld the denial.
- Measurement evidence showed the lower-level floor is 3.49 inches higher than the soil beneath the concrete apron but 0.76 inches lower than the apron surface immediately outside the door.
- District court granted Middlesex’s summary judgment, holding the relevant ground-level measure is the adjacent concrete apron surface (so the room is subgrade on all sides); Matusevich appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Proper measuring point for "ground level (subgrade)" under SFIP basement exclusion | Measure from the natural soil/undisturbed ground beneath the apron, so the lower level is not a basement | Measure from the actual adjacent surface (concrete apron) that was flooded, so the lower level is a basement | Measure from the adjacent surface (concrete apron); lower level is a basement and exclusion applies |
| Effect of a small step up/height difference on basement determination | A 0.76" step up is trivial and should not convert the space into a basement | Any step up when exiting indicates the interior is below adjacent ground level and qualifies as a basement | Any step up (even an inch) is dispositive; step up supports basement classification |
| Relevance of reasonable expectations/doctrine of reliance on insurer statements | Matusevich relied on an insurer representative saying the space was not a basement; this creates an issue of fact or controls | SFIP terms are strictly prescribed; oral statements cannot alter or waive policy terms without written consent of Federal Insurance Administrator | Oral statements do not create reasonable expectations sufficient to override the SFIP or defeat summary judgment; written waiver required |
| Policy interpretation standard in NFIP/WYO context | — | SFIP must be strictly construed and enforced because WYO insurers act as federal fiscal agents and coverage is charged to U.S. Treasury | SFIP language is strictly applied under federal common law; enforcement of the explicit basement definition is required |
Key Cases Cited
- McGair v. Am. Bankers Ins. Co. of Fla., 693 F.3d 94 (1st Cir. 2012) (WYO insurers act as fiscal agents; SFIP must be strictly applied)
- DeCosta v. Allstate Ins. Co., 730 F.3d 76 (1st Cir. 2013) (SFIP terms strictly construed; written waiver requirement enforced)
- Linder & Associates, Inc. v. Aetna Cas. & Sur. Co., 166 F.3d 547 (3d Cir. 1999) (measure ground level as the surface actually flooded; step-up rule applies)
- Jacobson v. Metro. Prop. & Cas. Ins. Co., 672 F.3d 171 (2d Cir. 2012) (SFIP waiver and alteration principles; policy strictness)
- Atlas Pallet, Inc. v. Gallagher, 725 F.2d 131 (1st Cir. 1984) (federal common law governs NFIP policy interpretation)
- Nelson v. Becton, 929 F.2d 1287 (8th Cir. 1991) (depth below adjacent ground is dispositive regardless of inches)