The opinion of the court was delivered by: Rodriguez, District Judge.
This matter is before the court on motion of defendant South
Carolina Insurance Company to dismiss paragraph 6 of plaintiff
3608 Sounds Avenue Condominium Association's complaint pursuant
to Rule 12(b)(6) of the Federal Rules of Civil Procedure for
failure to state a claim for which relief can be granted. For
reasons stated herein, defendant's motion will be granted.
Facts and Procedural History
Plaintiff is 3608 Sounds Condominium Association located in Sea
Isle City, New Jersey, and consists of two units owned by Mr. and
Mrs. John Mullen and Mr. and Mrs. Ronald Williams. Defendant is
an insurance company which issued a flood insurance policy to
plaintiff covering the Sea Isle property for loss due to flood.
On January 28, 1998, while the policy was in effect, plaintiff
alleges that its Sea Isle property sustained extensive loss and
damage in the amount of $26,600 due to a flood, and thereafter
the owners made a claim against the insurance policy to recover
the loss. The insurance company refused to cover the loss.
When considering a motion to dismiss a complaint for failure to
state a claim upon which relief can be granted pursuant to
Fed.R.Civ.P. 12(b)(6), the court must accept all well pleaded
allegations in the complaint as true and view them in the light
most favorable to the plaintiff. Schrob v. Catterson,
948 F.2d 1402 (3d Cir. 1991); Rogin v. Bensalem Twp., 616 F.2d 680, 685
(3d Cir. 1980), cert. denied, 450 U.S. 1029, 101 S.Ct. 1737, 68
L.Ed.2d 223 (1981). A court may not dismiss the complaint for
failure to state a claim "unless it appears beyond doubt that the
plaintiff can prove no set of facts in support of his claim which
would entitle him to relief." Conley v. Gibson,
355 U.S. 41,45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957) (citations omitted);
D.P. Enterprises, Inc. v. Bucks County Community College,
725 F.2d 943, 944 (3d Cir. 1984).
It is well-settled that a pleading is sufficient if it contains
"a short and plain statement of the claim showing that the
pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). Under the
liberal federal pleading rules, a complaint need not spell out
the theory of liability under which the plaintiff hopes to
recover. See Evans Products Co. v. West Am. Ins. Co.,
736 F.2d 920, 923 (3d Cir. 1984). It is not necessary to plead evidence,
and it is not necessary to plead all the facts that serve as a
basis for the claim. Bogosian v. Gulf Oil Corp., 561 F.2d 434,
446 (3d Cir. 1977), cert. denied, 434 U.S. 1086, 98 S.Ct. 1280,
55 L.Ed.2d 791 (1978).
However, as stated above, the Federal Rules of Civil Procedure
do require that a complaint set forth "a short and plain
statement of the claim showing that the pleader is entitled to
relief." Fed.R.Civ.P. 8(a). See also Baldwin County Welcome
Center v. Brown, 466 U.S. 147, 149-50 n. 3, 104 S.Ct. 1723, 80
L.Ed.2d 196 (1984) ("Although the Federal Rules of Civil
Procedure do not require a claimant to set forth an intricately
detailed description of the asserted basis for relief, they do
require that the pleadings `give defendant fair notice of what
the plaintiff's claim is and the grounds upon which it rests.'")
(quoting Conley, 355 U.S. at 47, 78 S.Ct. 99).
History of the National Flood Insurance Program
The National Flood Insurance Act (NFIA) of 1968 was created to
make flood insurance available through a program in which both
the national government and the private insurance industry play a
large role. 42 U.S.C.A. § 4001(b), (d). This program was
instituted because insurance companies could not afford to offer
flood insurance at competitive or affordable rates due to the
high cost of covering flood losses. Gowland v. Aetna,
143 F.3d 951 (5th Cir. 1998). Thus, the National Flood Insurance Program
(NFIP) was instituted to provide a unified national program to
reduce and avoid future losses due to floods by creating a
reasonable method to share the risk of flood losses. 42 U.S.C.A.
§§ 4001(a), (c), 4002(b). As a result, the NFIP provides low cost
flood insurance to homeowners and small businesses that may
suffer losses through damage to real and personal property from
flooding. Hidenfelter v. Director, Federal Emergency Management
Agency, 603 F. Supp. 434 (D.C.Mich. 1985).
Originally, the NFIP was supervised by the Department of
Housing and Urban Development, but it was run by a pool of
private insurance companies that shared the underwriting risks,
with federal financial participation. West v. Harris, 573
502 F.2d 873, 875 n. 1(5th Cir. 1978), cert. denied, 440 U.S. 946,
99 S.Ct. 1424, 59 L.Ed.2d 635 (1979); 42 U.S.C. § 4011(c)(1).
However, in 1978 the federal government took control of all
operational responsibilities of the program. Sodowski v.
National Flood Ins. Program of Federal Emergency Management
Agency, 834 F.2d 653, 657 (7th Cir. 1987), cert. denied,
486 U.S. 1043, 108 S.Ct. 2035, 100 L.Ed.2d 619 (1988). As a result,
the NFIP is currently administered by the Federal Emergency
Management Agency (FEMA) and is operated financially through the
National Flood Insurance Fund established by the Director of FEMA
in the Treasury of the United States. 42 U.S.C.A. § 4017(a).
In 1983, Congress created the "Write Your Own" ("WYO") program,
which allows private insurance companies like South Carolina
Insurance Company to write their own insurance policies, and then
submit them to the Flood Insurance Administration. See
44 C.F.R. § 62.23.24. After depleting their net premium income,
"WYO" companies then draw money from FEMA through letters of
credit to disburse claims. Id. Therefore, regardless of whether
FEMA or a "WYO" company issued a flood insurance policy, the
United States Treasury funds pay the insureds' claims. Van Holt
v. Liberty Mutual Fire Ins. Co., 163 F.3d 161, 165 (3d ...