Williams v. Standard Fire Insurance
2012 U.S. Dist. LEXIS 123507
M.D. Penn.2012Background
- Plaintiffs Ellen Williams and Ellen Malone own property in Harvey's Lake, PA.
- CoreLogic Flood Services, LLC (CoreLogic) determines flood zone designations for lenders.
- Citizens Bank financed plaintiffs’ purchase, relying on CoreLogic’s determination that the property was in flood zone C.
- Standard Fire Insurance issued flood coverage based on CoreLogic’s determination; policy later revoked after inspection showed otherwise.
- Property flooded on Sept. 7, 2011; Standard Fire refused to insure after uncovering the misdesignation.
- Plaintiffs allege they would not have purchased the property and suffered loss; suit removed to federal court on diversity grounds.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Act precludes state-law claims. | Act does not preclude state claims because they are not based on the Act itself. | Act does not create a federal private right and precludes state claims that derive from it. | Act does not preclude state-law claims |
| Whether detrimental-reliance claim is viable against CoreLogic. | Plaintiffs reasonably relied on CoreLogic’s determinations and suffered injury. | No contractual/fiduciary duty existed; reliance cannot be based on CoreLogic. | Prima facie detrimental-reliance claim stated |
| Whether a duty of care exists in the negligence claim against CoreLogic. | Duty arises because flood zone determinations affect homeowners and are foreseeable harms. | No duty to plaintiffs since CoreLogic was hired by Citizens; Act defines duties for lenders. | Duty exists; negligence claim survives |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (U.S. 2009) (pleading must contain plausible claims)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (plausibility standard for Rule 12(b)(6))
- Phillips v. Cnty. of Allegheny, 515 F.3d 224 (3d Cir. 2008) (enough facts to raise reasonable expectation of evidence)
- In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410 (3d Cir. 1997) (reviewing exhibits and public records on motion to dismiss)
- Althaus v. Cohen, 562 Pa. 547 (Pa. 2000) (duty factors in Pennsylvania negligence analysis)
- Thatcher's Drug Store of W. Goshen, Inc. v. Consol. Supermarkets, 535 Pa. 469 (Pa. 1994) (Restatement §90 as standard for detrimental reliance)
- Kaplan v. Central Storage & Transfer Co., 487 Pa. 485 (Pa. 1979) (Restatement-based detriment and reliance framework)
- Crouse v. Cyclops Indus., 560 Pa. 394 (Pa. 2000) (Restatement §90 elements for detrimental reliance)
- Hofbauer v. The Nw. Nat’l Bank of Rochester, 700 F.2d 1197 (8th Cir. 1983) (federal duty considerations in negligence claims)