United States District Court, M.D. Tennessee, Nashville Division
MICHAEL H. HARRIS and BEVERLY D. HARRIS, Plaintiffs,
NATIONWIDE MUTUAL FIRE INS. CO., DAVID W. VANDENBERGH, FIRST AMERICAN FLOOD DATA SERVICES, FIRST AMERICAN CORPORATION, FIRST AMERICAN CORELOGIC, INC., REGIONS BANK, AMSOUTH BANK, N.A., GEORGE V. LOGAN and DOROTHY A. LOGAN, Defendants.
MEMORANDUM AND ORDER
A. TRAUGER, United States District Judge
before the court is a Motion for Leave to Amend (Docket No.
168), filed by the plaintiffs, Michael and Beverly Harris.
Defendants Regions Financial Corporation and Regions Bank, as
successor by merger to AmSouth Bank, N.A. (collectively
“Regions”) have filed a Response in opposition
(Docket No. 169), to which the plaintiffs have filed a Reply
(Docket No. 173). Defendants CoreLogic Flood Services, LLC
f/k/a First American Flood Data Services, First American
Corporation, and First American CoreLogic, Inc.
also filed a Response in opposition (Docket No. 170), to
which the plaintiffs have filed a Reply (Docket No. 174). For
the reasons discussed herein, the motion will be granted in
part and denied in part.
& PROCEDURAL HISTORY
August 21, 2006, Michael and Beverly Harris purchased from
George and Dorothy Logan a house on the Cumberland River.
Pursuant to the National Flood Insurance Act of 1968, 42
U.S.C. 4001 et seq. (“NFIA”), buyers
securing loans for houses in flood zones are required by
lenders to purchase flood insurance. Flood zones are
determined by the Federal Emergency Management Agency
(“FEMA”) and demarcated on Flood Insurance Rate
Maps (“FIRMs”). The Harrises had obtained a
mortgage through Regions, and, prior to the closing on August
21, 2006, Regions contracted with CoreLogic, a flood
certification company, to provide a flood zone determination
for the house. The 1981 FIRM in place at the time showed that
the house was in a flood zone. But CoreLogic incorrectly
determined that the house was not in a flood zone and that
flood insurance was thus not required. The Harrises did not
purchase flood insurance.
September 20, 2006, a month after the closing, FEMA issued a
revised FIRM. Regions informed the plaintiffs that, pursuant
to the revised FIRM, their house was located in a flood zone
and that they had forty-five days to secure flood insurance.
The plaintiffs hired David Vandenbergh, an insurance agent,
to obtain a policy, which he procured from Nationwide Mutual
Fire Insurance Company (“Nationwide”). The
Harrises were told that their house was a
“pre-FIRM” property because it was built before
the 1981 FIRM. The practical effect of this determination
was that the Harrises were not required, as a precondition to
purchasing the policy, to obtain an elevation certificate
showing that the house was sufficiently elevated above the
base flood zone. In fact, the Harrises' house was built
in 1984, making it a “post-FIRM” property that
did require an elevation certificate, although the Harrises
had no knowledge of this fact at the time of purchasing the
2010, a 1000-year flood struck Tennessee. The Harrises'
house was filled with sixteen inches of water. The Harrises
filed a claim under their policy with Nationwide but were
told that their rating information was incomplete, because
their house required an elevation certificate. An elevation
analysis was conducted, and a flood adjuster determined that
the bottom floor of the Harrises' home was not insured
under the policy because it was situated below the base
flood-zone elevation. As a result, Nationwide did not cover
damages sustained to the bottom floor of the house, including
damage to the Harrises' personal property therein.
2, 2011, the plaintiffs filed a Complaint in this court.
(Docket No. 1.) CoreLogic filed a Motion to Dismiss (Docket
No. 25), which was granted (Docket No. 54). The court held
that the common law negligence claims against CoreLogic were
precluded by the NFIA. Regions then filed its own Motion to
Dismiss (Docket No. Docket No. 60), which also was granted.
(Docket No. 80.) On appeal, the Sixth Circuit reversed,
issuing a narrow holding that the NFIA did not foreclose
state common law claims, without ruling on the merits of the
Harrises' claims. (Docket No. 174-1.) Upon remand, the
case was assigned to the undersigned judge. On March 22,
2018, the Harrises filed a Motion for Leave to Amend
Complaint, which is presently before the court. (Docket No.
Rule of Civil Procedure 15(a) governs amending pleadings
before trial. A party may amend a pleading once as a matter
of course within (a) twenty-one days after serving it, or (b)
if the pleading is one to which a responsive pleading is
required, twenty-one days after service of a responsive
pleading or twenty-one days after service of a motion under
Rule 12(b), (e) or (f), whichever is earlier. Fed.R.Civ.P.
15(a)(1). In all other cases, a party may only amend a
pleading by obtaining the opposing party's written
consent or receiving leave of the court. Fed.R.Civ.P.
15(a)(2). Where it is requested, “[t]he court should
freely give leave when justice so requires.”
district court has broad discretion to determine “when
justice so requires.” Martin v. Assoc. Truck Lines,
Inc., 801 F.2d 246, 248 (6th Cir. 1986). A motion to
amend may be denied where there is “undue delay, bad
faith or dilatory motive on the part of the movant, repeated
failure to cure deficiencies by amendments previously
allowed, undue prejudice to the opposing party by virtue of
allowance of the amendment, futility of amendment,
etc.” Riverview Health Inst. LLC v. Med. Mut. of
Ohio, 601 F.3d 505, 520 (6th Cir. 2010) (quoting
Foman v. Davis, 371 U.S. 178, 182 (1962)). A
proposed amendment is futile if the amendment could not
withstand a Rule 12(b)(6) motion to dismiss or a Rule 12(c)
motion for judgment on the pleadings. Rose v. Hartford
Underwriters Ins. Co., 203 F.3d 417, 420 (6th Cir. 2000)
(citing Thiokol Corp. v. Dept. of Treasury, State of
Mich., Revenue Div., 987 F.2d 376, 382-83 (6th Cir.
1993)); see also Kottmyer v. Maas, 436 F.3d 684, 689
(6th Cir. 2006) (“A Rule 12(c) motion for judgment on
the pleadings for failure to state a claim upon which relief
can be granted is nearly identical to that employed under a
Rule 12(b)(6) motion to dismiss.”). Stated differently,
allowing an amendment that would subsequently be dismissed
under a Rule 12(b)(6) motion or a Rule 12(c) motion for
judgment on the pleadings does not serve the interests of
1. Claims against CoreLogic
plaintiffs bring a claim of negligent misrepresentation under
Tennessee law against CoreLogic. The thrust of their claim is
that CoreLogic was negligent in its initial determination
that the house was not in a flood zone, where flood insurance
was required, and that they were damaged by CoreLogic's
negligent determination because they would not have purchased
the house, had they known it was in a flood zone.
has adopted Section 552 of the Restatement (Second) of
Torts “as the guiding principle in negligent
misrepresentation actions against other professionals and
business persons.” Bethlehem Steel Corp. v. Ernst
& Whinney, 822 S.W.2d 592, 595 (Tenn. 1991). The
Tennessee Supreme Court, in discussing the requirements for
recovery under Section 552, has held that liability for