United States District Court, M.D. Tennessee, Nashville Division
MICHAEL H. HARRIS and BEVERLY D. HARRIS, Plaintiffs,
NATIONWIDE MUTUAL FIRE INS. CO., et. al., Defendants
For Michael H. Harris, Beverly D. Harris, Plaintiffs: David A. Binegar, Tiffany R. Christian, Binegar Christian, LLC, New Orleans, LA; William Caldwell Hancock, The Hancock Law Firm, Nashville, TN.
For David W. Vandenbergh, Defendant: Sabin R. Thompson, LEAD ATTORNEY, Prochaska Thompson Quinn & Ferraro, P.C., Nashville, TN; Drew H. Campbell, Bricker & Eckler, Columbus, OH; Todd H. Hancock, Prochaska Thompson Quinn & Ferraro, P.C., Nashville, TN.
WILLIAM J. HAYNES, JR., Senior United States District Judge.
Plaintiffs, Michael H. Harris and Beverly D. Harris, Tennessee citizens, filed this action under the National Flood Insurance Act of 1968, Title 42 U.S.C. § 4001, et. seq. (" NFIA" ) against the Defendants: First American Flood Data Services (" First American" ), First American Corporation (" FAC" ), First American CoreLogic, Inc. (" FACI" ), Nationwide Mutual Fire Insurance Co., David Vandenbergh, Regions Financial Corporation, Regions Bank (" Regions" ), AmSouth Bank, George Logan, and Dorothy Logan (collectively, the " Logans" ). Plaintiffs' claims arise out of the Nashville area flood that damaged Plaintiffs' residence. Plaintiffs assert federal law claims under the NFIA for breach of the flood insurance contract, improper handling of their flood insurance claims,
and underpayment of insurance proceeds. Plaintiffs also assert state law professional negligence claims against Defendant David Vandenbergh.
Before the Court is Defendant Vandenbergh's motion for summary judgment (Docket Entry Nos. 126 and 131) contending that, under Tennessee insurance law, Plaintiffs received compensation based on the insurance policy that Plaintiffs assert Defendant Vandenbergh should have provided, and Plaintiffs are not entitled to damages for excess premiums or contents coverage. Plaintiffs filed a response in opposition (Docket Entry No. 134) contending that they are entitled to damages for Defendant's negligent failure to procure insurance.
A. Findings of Fact
On August 21, 2006, Plaintiffs purchased their residence from Defendants George and Dorothy Logan. The Logans executed a disclosure stating that the property was not in a flood zone, The NFIP Flood Insurance Rate Map (" FIRM" ) of the area, however, reflects that the property was in a flood zone at the time of Plaintiffs' purchase. According to Plaintiffs, First American provided flood certification information to Regions, their mortgage company, at the closing on their purchase of their residence. (Docket Entry No. 1, Complaint at ¶ 24). Based on the Defendants' flood zone certification, Plaintiffs determined not to buy flood insurance.
On September 20, 2006, the Federal Emergency Management Agency (" FEMA" ) issued a revised FIRM. Between September 2006 and October 2006, Regions informed Plaintiffs that the residence was now in a flood zone and Plaintiffs had forty-five days to secure flood insurance. After Regions Bank's letter, Plaintiff Michael Harris contacted Defendant Vandenbergh to discuss flood insurance and he asked Defendant Vandenbergh for the " maximum [flood insurance] to cover the house and contents." (Docket Entry No. 131-1, Deposition of Michael Harris at 26). According to Plaintiff Michael Harris, he told Defendant Vandenbergh that it was " critically important" to obtain both home and contents flood coverage. Id at 26-27, 29. Plaintiffs hired Vandenbergh to procure flood insurance for them from Nationwide. Vandenbergh sold Plaintiffs a Nationwide pre-FIRM policy.
Under this policy, Plaintiffs were not required to obtain an elevation certificate to purchase this flood insurance. Due to the Nashville Flood of May 1-2, 2010, Plaintiffs' home flooded and was damaged. The flood adjuster informed Plaintiffs their residence's bottom floor was not covered as a post-FIRM structure. Plaintiffs seek to recover losses they experienced.
Plaintiffs assert that they never received the contents flood coverage they requested Defendant Vandenbergh to provide. Defendant Vandenbergh states that Plaintiffs were fully aware that they did not have contents coverage for years before the flood, and never instructed him to alter their coverage.
Plaintiff Michael Harris acknowledges that he did not receive or review a flood policy or declaration page until 2008 and that he never asked for copies of his policies or declaration pages prior to 2008. Id. at 30, 32-35. After receiving the flood insurance declaration page, Plaintiff Michael Harris knew that he had an opportunity to change the amount of contents coverage, but " chose not to change coverage." Id. at 86-87. Plaintiff Michael Harris received other declaration of value coverage before the May 2010 flood. (Docket Entry No. 131-2, Exhibits to Deposition of Michael Harris, Exhibits 11-16). After approximately 16 inches of water flooded the lower level of their home, Plaintiffs were informed that their home had less flood insurance than they thought.
Plaintiffs cite their policy, which lists their residence as " pre-FIRM" construction, but assert that the proper designation is " post-FIRM" construction, requiring an elevation certificate that would enable them to purchase supplemental insurance or make the property more easily insurable. Id. at Exhibit 2; Docket Entry No. 131-5, Plaintiffs' Answers to Defendant Vandenbergh's Interrogatory No. 13. Plaintiffs also seek to recover the increased premiums paid based upon the wrong construction date of the home.
Additionally, Plaintiffs assert Defendant Vandenbergh's negligence resulted " in non-covered damage to [their] personal property," yielding uncovered losses due to the lack of contents coverage.
In assessing flood risk, the Federal Insurance Administrator issues a Flood Insurance Rate Map (" FIRM" ), that " delineate[s] both the special hazard areas and the risk premium zones applicable to the community." 44 C.F.R. § 59.1. A building is designated " pre-FIRM" or " post-FIRM" based upon when the building was constructed or substantially improved. 44 C.F.R. Part 61, App. A(1), ¶ B23. Pre-FIRM structures include buildings constructed or improved prior to the effective date of the local FIRM for a particular community, and post-FIRM structures were built or improved after the effective date of the local FIRM. The FIRM for Gallatin, Tennessee was issued on August 3, 1981, and the Harris's home was built in 1984. Thus, the Harris' home is a " post-FIRM" structure under the express terms of the Standard Flood Insurance Policy (" SFIP" ). Id.
Pre- and post-FIRM designation affects the scope of coverage. For post-FIRM structures, items " below the lowest elevated floor" are generally not covered losses. Pre-FIRM structures are eligible for more extensive coverage for the first, non-elevated floor of the structure. 44 C.F.R. Part 61, App. A(1).
In the fall of 2010, FEMA confirmed that the Plaintiffs' home " is classified as post-FIRM," and that " damaged building and property items are subject to the coverage limitations outlined in the SFIP, Section III, Coverage A -- Building Property, 8a and b, and Section III, Coverage B - Personal Property, 3a through c." (Docket Entry No. 131-7, FEMA Letter at 1).
It is undisputed that Plaintiffs' residence is a post-FIRM structure and that Plaintiffs' flood claim was adjusted according to post-FIRM SFIP criteria. (Docket Entry No. 131-1, Deposition of Michael at 48-49, 149; Docket Entry No. 131-7, FEMA Letter).
Plaintiff Michael Harris admitted that he suffered no coverage-related loss as a result of any misidentification of the house as pre-FIRM:
Q: Assuming somebody had done their homework and had identified your home on the insurance policy as a post-FIRM structure, I take it that you would have gotten the post-FIRM
coverage that you're entitled to, correct?
Q: And, in fact, my understanding is that when Nationwide adjusted your claim, they adjusted it as a post-FIRM structure, right?
Q: So this pre-FIRM/post-FIRM . . . distinction or that error that you talked about was sort of no harm, no foul?
A: Well, the house was going to be covered as it was. I understand that.
Docket Entry No. 131-1, Deposition of Michael at 48-49).
As to his additional steps after the flood to protect his home against the risks of flood, Plaintiff Michael Harris testified:
" I will continue to have flood insurance. . . and explore the possibilities, if we can, of being able to insure the whole building [which includes] the lower level, which is not covered on the post-FIRM [policy]."
Id. at 111-12.
Plaintiff Michael Harris also did not identify any " private" or " supplemental" insurance secured after the flood. Id. at 51-53, 94-95. Plaintiffs were told that " the only coverage available was through the normal FEMA coverage," and Plaintiffs could not find a policy different from the government policy. Id. at 51-52.
Don C. Kotter, Plaintiffs' expert adjuster/estimator, opines that " the plaintiffs could have procured private flood insurance to insure the risk at issue." (Docket Entry No. 131-9, November 8, 2013 Independent Adjuster/Estimator Expert Report). The Chubb Personal Flood Insurance material cited in Kotter's Report reflects that " [a]ctual coverage is subject to the language of the policies as issued. Coverage may not be available in all jurisdictions." Id. at 18. Kotter did not specify whether Plaintiffs could have been covered under these particular circumstances.
As to the flood policy declaration on February 21, 2010, three months before the flood, Plaintiff testified:
Q: And as you're looking at [Ex. 16], I'll direct your attention to the date under " Insured Copy," which is 2/21/2010. Do you see that?
Q: Can you tell me what this is?
A: That's the declaration page from 12/29/2009 ...