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October 30, 2000


The opinion of the court was delivered by: Simandle, District Judge.


The National Flood Insurance Program uses private insurers acting as fiscal agents of the United States Treasury to adjust and pay flood insurance claims for covered losses. The defendant in this case, Omaha Property & Casualty Insurance Company ("Omaha" or "Defendant"), is such a private insurer and issued a Standard Flood Insurance Policy ("SFIP") to plaintiffs Joseph L. Messa, Jr., and John and Carol McDonald ("Plaintiffs"). Plaintiffs are citizens and residents of Pennsylvania and co-own a condominium unit located at 47 West 18th Street in Ocean City, New Jersey ("the insured property"). The other plaintiff, 47 West 18th Street Condominium Association ("Association"), is an organization located in Pennsylvania, but which serves the interests of the owners of the insured property. Defendant Omaha is organized and exists under the laws of the State of Nebraska and has its principal place of business in Omaha, Nebraska, and it does continuous and systematic business in the State of New Jersey. This Court has diversity jurisdiction pursuant to 28 U.S.C. § 1332. This Court also has federal question jurisdiction because the case involves the alleged breach of a SFIP issued pursuant to the National Flood Insurance Program ("NFIP"). Van Holt v. Liberty Mutual Fire Ins. Co., 163 F.3d 161, 166 (3d Cir. 1998).

On March 8, 2000, this Court granted defendant's motion to dismiss all state lawbased, extra-contractual claims in the Complaint, leaving only the Plaintiffs' contract claims under their SFIP. Presently before this Court is Defendant Omaha's motion for summary judgment on those remaining contractual claims. For the reasons herein expressed, this Court finds that there are no genuine issues of material fact to be decided by a jury and that plaintiff's contractual claims fail as a matter of law. Defendant's motion for summary judgment will be granted and the complaint will be dismissed.

I. Background

On June 3, 1995, plaintiffs entered into a contract (Residential Condominium Building Association Policy No. 3006469286) with defendant for insurance for direct physical loss by or from flood for a period of one year and renewable thereafter at yearly intervals. The policy was renewed for several years, and was renewed again for the term of June 3, 1997 to June 3, 1998. The policy limit is $250,000.00.

On February 5, 1998, a violent storm struck the south-eastern coast of New Jersey, producing high winds, rain, and dangerously high levels of water and tidal flooding, leading to a Presidential emergency declaration, under FEMA 1206 DRNJ. As a direct result of this storm, plaintiffs claim that the insured property sustained severe and extensive flood damage which will require a substantial expenditure for repair and replacement costs and costs associated with preventing against additional deterioration. Plaintiffs provided prompt notice to the defendant, who sent an adjustor, Paul Scull, to conduct an inspection of the insured property on March 11, 1998. In a report dated March 12, 1998, Scull set the total claim payable at $6,664.73.

Upon receipt of defendant's loss report from Scull, plaintiffs immediately notified defendant of plaintiffs' disagreement with the estimate and informed defendant of their intention to secure the opinion of an independent engineer. On April 5, 1998, plaintiffs retained the services of F.A. Vinciguerra, P.E., an independent structural engineer, to inspect the property. On June 3, 1998, plaintiff Messa forwarded to defendant a copy of Mr. Vinciguerra's three page report, in which he described extensive wind and flood damage to the property and projected the total repair cost to be $71,500.00.

On June 17, 1998, after the sixty-day period for filing a sworn Proof of Loss under the SFIP had passed, defendant wrote to the Plaintiffs and informed them that their claim would be closed for failure to file a sworn Proof of Loss statement unless same was received by June 30, 1998. In their letter, Omaha clearly stated that they "d[id] not intend to waive or relinquish any of [their] rights or defense [sic], either listed or unlisted, under this policy of insurance." (Def.'s Mot. for Summ. J., Ex. C.) On August 1, 1998, Defendant retained its own engineer, Paul Hartzell, P.E., from National Forensic Consultants, Inc., to evaluate the flood damage to the insured property. Hartzell's six-page report, which had forty-five pictures attached, attributed most of the property damage to causes other than the flood, such as dry rot, roof leakage, and pre-existing structural imperfections. Hartzell indicated that he could not substantiate any of Mr. Vinciguerra's findings regarding severe damage allegedly caused by the February 5, 1998 storm.

On August 24, 1998, Defendant again wrote to Plaintiffs and informed them that their file would be closed unless a Proof of Loss was received within ten days. After the reports of both plaintiffs' and defendant's engineers were complete, each estimating the damage to the insured property, Scull assisted plaintiffs with their completion of a Proof of Loss form for $4,804.56. This form was not signed or returned to Defendant. On September 16, 1998, Defendant again corresponded with Plaintiffs and informed them that their claim was being closed due to failure to submit a sworn Proof of Loss. (See Def.'s Mot. for Summ. J., Ex. C.) On October 9, 1998, in response to Defendant's repeated warnings, Plaintiff Messa, an attorney admitted to practice in Pennsylvania and the attorney in this case, corresponded with Omaha and advised, "I was never provided with a `Proof of Loss Form,' and I don't even know what you are referring to." (Def.'s Mot. for Summ. J., Ex. D.)*fn1 On April 15, 1999, approximately fifteen months after the original sixty-day period had lapsed, plaintiff Messa submitted a sworn proof of loss to Omaha with a total net claim of $4,804.56. (See Def.'s Mot. for Summ. J., Ex. F.) In a letter accompanying the Proof of Loss, Messa purported that he did not "waive or relinquish any of [his] rights to pursue claims for the full amount of damages of $71,500.00." (See Pls.' Opp. to Mot. for Summ. J., Ex. E.) On May 6, 1999, defendant issued a check to plaintiffs for $4,804.56 in full satisfaction of their claimed amount of loss. (See Def.'s Mot. for Summ. J., Ex. G.) No other Proof of Loss statement for more than $4,804.56 was ever submitted to Omaha by Plaintiffs.

II. Standards

A. Summary Judgment Standard

A court may grant summary judgment when the materials of record "show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); see Hersh v. Allen Prods. Co., 789 F.2d 230, 232 (3d Cir. 1986); Lang v. New York Life Ins. Co., 721 F.2d 118, 119 (3d Cir. 1983). A dispute is "genuine" if "the evidence is such that a reasonable jury could return a verdict for the non-moving party." See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A fact is "material" only if it might affect the outcome of the suit under the applicable rule of law. Id. Disputes over irrelevant or unnecessary facts will not preclude a grant of summary judgment. Id.

In deciding whether there is a disputed issue of material fact, the court must view the evidence in favor of the non-moving party by extending any reasonable favorable inference to that party. See Aman v. Cort Furniture Rental Corp., 85 F.3d 1074, 1080-81 (3d Cir. 1996); Kowalski v. L & F Prods., 82 F.3d 1283, 1288 (3d Cir. 1996); Meyer v. Riegel Products Corp., 720 F.2d 303, 307 n. 2 (3d Cir. 1983), cert. dismissed, 465 U.S. 1091, 104 S.Ct. 2144, 79 L.Ed.2d 910 (1984). The threshold inquiry is whether there are "any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Anderson, 477 U.S. at 250, 106 S.Ct. 2505; Brewer v. Quaker State Oil Ref. Corp., 72 F.3d 326, 329-30 (3d Cir. 1995) (citing Anderson, 477 U.S. at 248, 106 S.Ct. 2505) ("[T]he nonmoving party creates a genuine issue of material fact if it provides sufficient evidence to allow a reasonable jury to find for him at trial.").

The moving party always bears the initial burden of showing that no genuine issue of material fact exists, regardless of which party ultimately would have the burden of persuasion at trial. See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Jalil v. Avdel Corp., 873 F.2d 701, 706 (3d Cir. 1989), cert. denied, 493 U.S. 1023, 110 S.Ct. 725, 107 L.Ed.2d 745 (1990). However,

the plain language of Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial. In such a situation, there can be `no genuine issue as to any material fact,' since a complete failure of ...

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