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D&S Remodelers, Inc. v. Colonial Claims Corp.

United States District Court, M.D. Tennessee, Nashville Division

April 12, 2017

D&S REMODELERS, INC., Plaintiff,


          ALETA A. TRAUGER United States District Judge

         Pending before the court is a Motion for Judgment on the Pleadings (Docket No. 143) filed by the defendant, Colonial Claims Corporation (“Colonial”), to which the plaintiff, D&S Remodelers, Inc. (“D&S”), has filed a Response in opposition (Docket No. 145), and Colonial has filed a Reply (Docket No. 146). For the reasons discussed herein, the Motion will be granted.


         This breach of contract action is based on allegations that D&S performed repair and remediation work for the Foundry at Hunters Point Condominiums (the “Foundry”) following damage to the Foundry during Hurricane Sandy in 2012, and that D&S was never compensated for that work. According to the Amended Complaint, filed on November 24, 2015, D&S and the Foundry entered into an agreement whereby, in exchange for D&S's repair and remediation work, the Foundry “assigned to D&S the right to recover all monies received from any insurance company related to D&S's services and materials provided to the Foundry.” (Docket No. 48, ¶ 41.) The Amended Complaint further alleges that the Wright National Flood Insurance Company f/k/a Fidelity National Insurance Services, LLC (“Fidelity”) provided flood insurance to the Foundry through the National Flood Insurance Program (the “NFIP”) and that Colonial acted as Fidelity's adjuster for any claims related to this policy. The Amended Complaint specifically states that “D&S reasonably believed that Colonial was acting as the agent for Fidelity because Colonial represented itself as the adjuster acting on behalf of Fidelity.” (Id. ¶ 57.) The Amended Complaint names as defendants in this action the following parties: the Foundry, the Board of Managers of the Foundry, Jennie M. McCarthy, Amanda L. Fung, Ronald L. Losby, Amber Barth, Julie M. Heller, Eric Malinowski, Timothy Chen, Robert J. Swiderski, the New Bedford Management Corporation, Fidelity, and Colonial. The Amended Complaint brings claims against all defendants for breach of contract, unjust enrichment, fraudulent inducement, intentional misrepresentation, and negligent misrepresentation.

         With respect to Colonial, the section of the Amended Complaint outlining the factual allegations specifically states as follows:

Additionally, in all communications before D&S completed the Foundry Project, D&S dealt exclusively with representatives of Colonial in connection to the involvement of any insurance companies. In that regard, Colonial made oral agreements with D&S which gave D&S the reasonable belief that Colonial would be bound, individually, by such agreements. Ultimately, D&S was assured that it would be paid by someone for all of the services and materials it provided to complete the Foundry Project. By making such representations and assurances to D&S, Colonial represented that any insurance claim submitted to the Foundry's insurer, or available disaster relief fund, would be accepted and full payment would be made to D&S.

(Docket No. 48, ¶¶ 59-60.) The section of the Amended Complaint that outlines the claims being brought in this action then contains the following allegations regarding the breach of contract claim against Colonial:

Colonial individually agreed with D&S that should D&S complete the Foundry Project, it would compensate D&S for the same. Colonial agreed to be individually bound by its agreement with D&S. Alternatively, D&S reasonably believed that Colonial would be individually bound by the agreement. Therefore, the agreement between Colonial and D&S constituted a valid contract. D&S performed its obligations pursuant to its contract with Colonial in full.

(Id. at ¶ 81.)

         On September 20, 2016, the court issued an Order granting a Motion to Dismiss filed by Fidelity and dismissing all claims against Fidelity with prejudice. (Docket No. 118.) In the accompanying Memorandum, the court explained that, under the National Flood Insurance Act, 42 U.S.C. § 4001 et seq. (the “NFIA”), claims arising under an NFIP policy are limited to federal law claims brought by the policy's insured or an assignee of rights to the insured property. (Docket No. 117 (the “Prior Opinion:”).) Because D&S is neither the insured under the Foundry's NFIP policy with Fidelity nor an assignee of the Foundry's property that is covered by the Fidelity policy, the court held that D&S's claims against Fidelity could not survive as a matter of law.

         The court further held - in keeping with federal courts of appeal that have ruled on this issue - that the claims against Fidelity were precluded because it is unreasonable, as a matter of law, for an insured to rely on an adjuster's statement that a claim under an NFIP will be approved when the Standard Flood Insurance Policy (the “SFIP”), which governs all NFIPs, expressly states that an adjuster is not authorized to approve or disapprove claims or to tell an insured whether claims will be approved. (Docket No. 117, p. 6 (citing Richmond Printing LLC v. Dir. Fed. Emergency Mgmt. Agency, 72 F. App'x 92, 97-98 (5th Cir. 2003) and Kerr v. FEMA, 113 F.3d 884 (8th Cir. 1997)). Finally, the court rejected D&S's argument that its claims in this action arising from representations made by Colonial arose, at least in part, outside of the handling of a NFIP insurance claim. Specifically, the court held that there is no way to read D&S's claims as arising outside of the NFIP claim adjustment process when the Amended Complaint clearly states that the alleged representations made by Colonial were made in the course of adjusting the NFIP claims. (Docket No. 117, pp. 7-8.)

         On December 27, 2016, the court entered the parties' Joint Stipulation and Order of Dismissal, indicating that a Confidential Settlement Agreement was reached between D&S and the following Defendants: the Foundry, the Foundry's Board of Managers, Jennie McCarthy, Amanda L. Fung, Ronald L. Losby, Amber Barth, Eric Malinowski, Timothy Chen, Robert J. Swiderski, and the New Bedford Management Corporation. (Docket No. 130.) The parties also stipulated to the voluntary dismissal with prejudice of defendant Julie M. Heller. (Docket No. 127.) Accordingly, the only remaining defendant in the action at this time is Colonial.

         On January 3, 2017, D&S filed a Motion to Dismiss, seeking to voluntarily dismiss the claims against Colonial without prejudice so that D&S could pursue an appeal of the court's Order dismissing the claims against Fidelity. (Docket No. 134.) The Motion was denied by the court on January 5, 2017. (Docket No. 137.)

         On March 1, 2017, Colonial filed a Motion for Judgment on the Pleadings (Docket No. 143), along with a Brief in support (Docket No. 144), arguing that the claims against Colonial should be dismissed on the same grounds as the court dismissed the claims against Fidelity. On March 14, 2017, D&S filed a Response in ...

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