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Harris v. Nationwide Mutual Fire Ins. Co.

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

May 7, 2019

MICHAEL H. HARRIS and BEVERLY D. HARRIS, Plaintiffs,
v.
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

          ALETA A. TRAUGER UNITED STATES DISTRICT JUDGE

         Pending before the court is a Motion for Summary Judgment (Docket No. 211), filed by defendants CoreLogic Flood Services, LLC f/k/a First American Flood Data Services, First American Corporation, and First American CoreLogic, Inc. (collectively, “CoreLogic”). The plaintiffs, Michael and Beverly Harris, have filed a Response in opposition (Docket No. 217), to which CoreLogic has filed a Reply (Docket No. 221). For the reasons discussed herein, the motion will be denied.

         BACKGROUND & PROCEDURAL HISTORY

         In 2006, Michael and Beverly Harris were in the market for a new home. Their previous house having been destroyed by a tornado, the plaintiffs were looking for a safe investment. (Docket No. 211-3 at 14-15 (Deposition of Michael Harris).) On June 13, 2006, the plaintiffs executed a purchase agreement for a two-story house on the Cumberland River. (Docket No. 211-4.) The purchase agreement included the following language:

Survey Work and Flood Certifications are the best means of identifying boundary lines and/or encroachments and easements or flood zone classifications. Buyer may obtain a Mortgage Loan Inspection or Boundary Line Survey and Flood Zone Certifications. If these matters are of concern to the Buyer, Buyer should address these concerns in the Special Stipulations Section of this Agreement.

(Id. at 6.) In the agreement's Special Stipulations section, the plaintiffs listed the ability to use the dock lift on the lake and details regarding inspection of the house, but did not address flood zone determinations. They paid an undisclosed sum of earnest money and obtained a mortgage through Regions Bank (“Regions”).

         Prior to the August 21, 2006 closing date, Regions contracted with CoreLogic, a flood certification company, to provide a flood zone determination for the house. Buyers securing loans for houses in flood zones are required by lenders to purchase flood insurance pursuant to the National Flood Insurance Act of 1968, 42 U.S.C. 4001 et seq. (“NFIA”). Flood zones-known as Special Flood Hazard Areas (“SFHA”)-are determined by the Federal Emergency Management Agency (“FEMA”) and demarcated on Flood Insurance Rate Maps (“FIRMs”). The FIRM in place at the time (the “1981 FIRM”) showed that the house was in a SFHA.

         CoreLogic incorrectly determined that the house was not in a flood zone and that flood insurance was thus not required. CoreLogic made its determination on July 3, 2006, via a Standard Flood Hazard Determination Form (“SFHDF”). (Docket No. 211-5.) The plaintiffs received the SFHDF prepared by CoreLogic at the August 21, 2006 closing on their house. (Docket No. 211-3 at 4, 6 (Deposition of Michael Harris).) In the section immediately following CoreLogic's determination that the plaintiffs' house was not in a flood zone, the SFHDF included the following language:

However, your home may be near a SFHA. As such you, or your lender, may want to consider the advisability of obtaining flood insurance at reduced rates. You should check with your insurance agent or company as to coverage types and amounts available to you and make your own determination as to whether you desire any such coverage.

         (Docket No. 211-5 at 1.) On the next page, the SFHDF included the following disclaimer:

THIS FLOOD DETERMINATION IS PROVIDED TO THE LENDER PURSUANT TO THE FLOOD DISASTER PROTECTION ACT. IT SHOULD NOT BE USED FOR ANY OTHER PURPOSE.

(Id. at 2.) The plaintiffs cannot remember whether they read the full SFHDF upon receiving it; however, they understood that it stated CoreLogic's determination that the house was not in a flood zone. (Docket No. 211-7 at 3.) The plaintiffs closed on the house and, subsequently, did not purchase flood insurance.

         In his deposition, Michael Harris stated unequivocally that the plaintiffs would not have purchased the house, had they known it was in a flood zone:

Q. Dr. Harris, do you believe you had the ability to walk away from this purchase agreement?
A. I could have and lost my earnest money, yes.
Q. Okay. You could have walked out that day?
A. Yes.
Q. And you're saying that that's what you would have done?
A. I probably would have.
Q. I need to know more than probably, Doctor.
A. Yes, I would have.
Q. Would you probably would have or you certainly would have?
A. I would have walked away and left my earnest money on the table.
Q. You definitely would have done ...

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