bars a subsequent action . . . .") with Conrad v. Omaha Property & Cas. Ins. Co., 1995 U.S. Dist. LEXIS 7907, *3, No. CIV. A. 94-4087, 1995 WL 350418, *4 (E.D. Pa. June 7, 1995) (concluding that failure to comply strictly with proof of loss requirement does not bar claim). Most recently, this court considered this issue in Gagliardi v. Omaha Property & Ins. Co., 952 F. Supp. 212 (D.N.J. 1997), concluding inter alia that the lack of a formal proof of loss statement barred the plaintiffs' action in light of repeated notifications regarding same by the defendant-insurer.
Indeed, Aetna argues that this court's rationale in Gagliardi applies with equal force to the case at bar. While the court agrees that the legal principles in Gagliardi also guide the court's decision in this matter, the court acknowledges factual differences between the two cases. For instance, in Gagliardi, the record included evidence of numerous letters from both the defendant-insurer and its adjuster to the plaintiffs--even after the 60-day period had lapsed--advising them of the need to file a sworn proof of loss statement. Moreover, the defendant-insurer in Gagliardi closed the plaintiffs' file and denied their claim for insurance coverage for the sole reason that they had not complied with the provisions in the policy requiring them to submit proof of loss documentation. In this case, Aetna reminded the Kennedys of the obligation to file a formal proof of loss before the 60-day period had expired.
(Stip'd Facts Ex. G.) Later, Aetna advised the Kennedys that their claim had been denied because the policy did not provide coverage for damages caused by fire, but that it would nonetheless still consider a claim for flood-related damages upon receipt of a signed proof of loss form.
The Kennedys contend that Aetna excused them from fulfilling the policy requirement to file a proof of loss by classifying the loss as non-covered and denying coverage on that basis. They argue that, under N.L. Indus., Inc. v. Commercial Union Ins. Co., 926 F. Supp. 446, 455 (D.N.J. 1996) ("N.L. Industries "), Aetna waived the notice requirement of the insurance contract and is now estopped from raising as a defense the failure to file a proof of loss. However, reliance on N.L. Industries and that decision's guidance regarding a private, comprehensive general liability insurance policy is inapposite, since the insurance policy at bar derives from the NFIAand is governed by a discrete line of cases to which N.L. Industries does not belong.
To that end and as a preliminary note, insurance policies issued under federal programs must be strictly construed. See Federal Crop Ins. Corp. v. Merrill, 332 U.S. 380, 92 L. Ed. 10, 68 S. Ct. 1 (1947); Cross Queen, Inc. v. FEMA, 516 F. Supp. 806, 809 (D.V.I. 1980) (noting that non-compliance with requirement of policy issued under federal program almost always bars recovery). Further, general doctrines of waiver and estoppel do not apply when the insurer is an agency of the United States. Continental Imports, Inc. v. Macy, 510 F. Supp. 64, 66 (E.D. Pa. 1981); Schumitzki, 656 F. Supp. at 434 (citations omitted). While the court recognizes that the defendant is not such an agency, cf. 44 C.F.R. § 62.23(g) (1997), it cannot ignore that the flood insurance policy Aetna issued to the Kennedys provides federally sponsored coverage pursuant to federal law. Cf. Stip'd Facts Ex. B at 8 (noting that federal law governs insurance policy at issue). Thus, where that policy and the federal law from which it derives delimit waiver, the court must conclude that doctrines of waiver and estoppel usually applicable in insurance cases are inapposite here.
Here, the Kennedys' policy states clearly "This Standard Flood Insurance Policy cannot be amended nor can any of its provisions be waived without the express written consent of the Federal Insurance Administrator." (Id. Ex. B at 5.) The policy also advises the insured that actions of the insurer will not constitute a waiver of the insurer's rights. (Id.) Moreover, it permits a waiver of the proof of loss requirement only if the insured signs and swears to a detailed adjuster's report of the loss and damages. (Id. at 7.)
This the Kennedys never did. In addition, the letter from Aetna on which the Kennedys rely to assert their waiver-estoppel argument invites the Kennedys to submit a signed proof of loss if they "wish to reopen the file for [their] flood loss." (Id. Ex. I.) Thus, this letter shows clearly that Aetna was not waiving the proof of loss requirement but, rather, was insisting on it.
Similarly, the Kennedys cannot, in light of notice (i.e. from the insurance contract itself) and at least two reminders regarding the proof of loss requirement, establish that Aetna engaged in affirmative misconduct on which they reasonably relied to their detriment. See Diamond v. FEMA, 689 F. Supp. 163, 169 (E.D.N.Y. 1988) (citing Heckler v. Community Health Servs., 467 U.S. 51, 81 L. Ed. 2d 42, 104 S. Ct. 2218 (1984)) (stating requirements to make estoppel argument). Again, the language in the coverage denial letter indicating Aetna's insistence on the proof of loss requirement prevents the Kennedys from demonstrating that Aetna intended that they would rely on and act upon any representation implying that a proof of loss was not required. Thus, the court must reject plaintiffs' suggestion that principles of waiver and estoppel apply to this case.
In light of the foregoing, the court finds that the Kennedys' failure to submit a sworn proof of loss to Aetna bars their present claim for damages. This is so despite the differences between this case and Gagliardi, in which the plaintiff-insureds were even more remiss than the Kennedys in failing to respond to the insurer's multiple requests for the requisite proof of loss forms. The fact that, unlike the Gagliardi defendant, Aetna denied coverage for a reason separate from the failure to file a sworn proof of loss also does not alter the court's conclusion, because the denial letter did include (another) reference to the required proof of loss statement and afforded the Kennedys (another) opportunity to correct their error and recover damages allowed by the policy. Contra O'Connor v. Perry, 1997 U.S. Dist. LEXIS 2878, *5, Civil Action No. 96-2781, 1997 WL 115404, at *2 (E.D. La. March 12, 1997) (denial letter's absolute silence regarding proof of loss statement fatal to insurer's technical defense because substantially prejudicial to insured).
As this court noted in Gagliardi, Congress established the National Flood Insurance Program to help alleviate the kind of economic hardship caused by flood damage suffered by plaintiffs. By involving the private insurance industry in the implementation of a federal insurance program, Congress made available insurance coverage that potential insureds otherwise could not obtain easily from private carriers. See 42 U.S.C.A. § 4001(b) (West 1994) ("many factors have made it uneconomic for the private insurance industry alone to make flood insurance available to those in need of such protection on reasonable terms and conditions) (emphasis added). One of these reasonable conditions requires an insured to submit to the insurer a proof of loss--a signed and sworn statement as to the amount the insured claims under the policy--detailing certain items as set forth plainly in the insurance policy. (See Stip'd Facts Ex. B at 6-7, P I.3.a-h.) By upholding defendant's policy-based defense in this instance, the court does not violate the purpose of the NFIP; rather it enforces the reasonable terms and conditions of a federal insurance program made available to parties such as the plaintiffs who, but for their failure to submit the necessary documentation pursuant to the clear provisions of their policy, may well have benefited from the NFIP as envisioned by Congress.
For the reasons set forth above, the court finds that the plaintiffs' failure to comply with the insurance policy's requirements regarding proof of loss bars the present action as a matter of law. The court finds further that the Kennedys cannot assert claims of waiver or estoppel against Aetna. Having so found, the court need not construe the policy at issue to address the parties' substantive contentions about the extent of the policy's coverage for the fire damage incurred by the plaintiffs.
The court will enter an appropriate order.
Dated: July 15th, 1997
STANLEY S. BROTMAN
UNITED STATES DISTRICT JUDGE
THIS MATTER having come before the court on cross-motions for judgment as a matter of law;
It appearing that this case was called for trial before this Court on May 19, 1997, on which date counsel reported the matter settled as to all defendants except Aetna Insurance Company;
It appearing further that the remaining parties, William and Phyllis Kennedy and Aetna Insurance Company, have stipulated to all facts in the case as set forth in a joint submission to the court;
The court having reviewed the record and the submissions of the parties;
For the reasons set forth in the court's opinion of this date;
IT IS this 15th day of July, 1997 HEREBY
ORDERED AND ADJUDGED that judgment be entered in favor of Defendant Aetna Insurance Company and against Plaintiffs William Kennedy and Phyllis Kennedy.
STANLEY S. BROTMAN
UNITED STATES DISTRICT JUDGE