In Ferraro v. Liberty Mutual Fire Insurance Co., No. 14-30944, 2015 WL 4666106 (5th Cir. 2015), the Fifth Circuit, considering an issue of first impression, affirmed the order of the United States District Court for the Eastern District of Louisiana granting summary judgment to the insurer upon finding that a second sworn proof of loss is required to support a supplemental claim under the National Flood Insurance Program.
The insureds had purchased a Standard Flood Insurance Policy from Liberty Mutual, which was in place at the time the insureds property sustained damages from Hurricane Isaac in August 2012. Id. at *1. The insureds filed a claim with Liberty Mutual, who sent out an independent adjuster who recommended a payment amount of approximately $100,000 and prepared a proof of loss form. Id. The insureds signed the proof of loss and, in a handwritten annotation, wrote that they would supplement the form later. Id. Liberty Mutual paid the full amount on the form. Id. A public adjuster then evaluated the property damage and valued the damages at approximately $320,000. Id. The insureds submitted the public adjuster’s report to Liberty Mutual without a second signed, sworn proof of loss form. Id. A Liberty Mutual adjuster told the insured that no additional forms were needed to support their claims. Id.
Liberty Mutual did not pay the insureds the supplemental amount, and the insureds sued. Id. Liberty Mutual moved for summary judgment, arguing that the insureds were barred from filing the lawsuit because they had not complied with the prerequisites of the Standard Flood Insurance Policy, which requires policyholders to provide a complete, signed, sworn-to proof of loss within 240 days of the loss. Id. The United States District Court for the Eastern District of Louisiana agreed and granted summary judgment. Id.
On appeal, the Fifth Circuit explained that “[w]hether an insured must submit an additional proof of loss to recover an additional amount on a preexisting claim is a question of first impression in this circuit.” Id. at *3. The court looked to the First and Eighth Circuits, which have previously considered this issue: DeCosta v. AllState Ins. Co., 730 F.3d 76 (1st Cir. 2013), and Gunter v. Farmers Ins. Co., 736 F.3d 768 (8th Cir. 2013). Both courts had found that the requirements of a Standard Flood Insurance Policy are to be construed strictly and that an adjuster’s report does not satisfy the requirements; instead, a signed, sworn proof of loss was required. Ferraro, 2015 WL 4666106, at *3-4. The Fifth Circuit agreed with this position, and found that the insureds’ non-compliance meant that Liberty Mutual had no obligation to pay the claim: “a second proof of loss was necessary for [insureds] to perfect their claim.” Id. at *4.
As an alternative argument, the insureds argued that summary judgment should have been reversed because the insured detrimentally relied on the statement of the Liberty Mutual adjuster who told them they did not need to file any additional forms along with their supplemental claim. Id. The insureds did not raise this argument in opposition to summary judgment, but, instead, raised it as they moved for reconsideration under Rule 59(e) based on newly discovered evidence of the email from the adjuster. Id. The district court had not been convinced that this evidence was unavailable to the insureds at the outset of the litigation. Id. The Fifth Circuit agreed and found that the insureds had not shown that the court’s consideration of the new facts would have altered the outcome of the litigation. Id. at *5.
This case is important because it applied the requirements of the Standard Flood Insurance Policy in a manner consistent with the case law of the First and Eighth Circuits – the court strictly applied the statutory requirements that the insured sign and swear to the amount of loss and held that an adjuster’s assessment of the damages does not meet these requirements. The court upheld these requirements even in the face of facts supporting a statement from the insurer’s adjuster that no additional forms were needed. Ferraro reiterates that an insured ignores statutory claim-submission requirements at its peril even when told that strict compliance is not necessary.