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Nixon v. Nationwide Mutual Insurance Co.

United States District Court, N.D. Alabama, Western Division

March 21, 2017



         Plaintiff Crawford Nixon (“Plaintiff”) filed this action against Defendant Nationwide Mutual Insurance Company (“Nationwide”), alleging that Nationwide breached its flood insurance contract with Plaintiff by denying Plaintiff's claim for benefits under the policy. Before this Court is Nationwide's Motion for Summary Judgment (Doc. 62), which has been fully briefed by the parties and is ripe for review. As explained more fully herein, Nationwide's motion is due to be granted.

         I. Background[1]

         The federal government developed the National Flood Insurance Program (“NFIP”) to establish a nationwide partnership with private insurance companies to provide flood insurance. See generally 42 U.S.C. § 4001 (outlining the congressional findings and declaration of purpose for the NFIP). The program is administered by the Federal Emergency Management Agency (“FEMA”). Id. § 4011(a). Each policy issued under the NFIP contains identical language, as the policy is a codified federal regulation. 44 C.F.R. pt. 61 app. A(2). The policy is also subject “[t]o the [National Flood Insurance Act of 1968], the Amendments thereto, and the Regulations issued under the Act.” Id. § 61.4.

         Nationwide issued a flood insurance policy to Plaintiff and his father under the NFIP for a single-family home located in Tuscaloosa, Alabama. The home is situated several hundred feet from the Black Warrior River, and the structure is elevated by pilings. Around April 14, 2014, heavy rain caused the Black Warrior River to rise and flood the surrounding area. The floodwater came within several feet of Plaintiff's home.

         Although the flood event did not cause physical water damage to the house, as the water receded, Plaintiff discovered that it had caused changes to the earth between the house and the river. Specifically, the flood created an eight-to-ten-foot vertical drop along the river side of Plaintiff's property. The remainder of the embankment between the vertical drop and the river sloped toward the river. The flood event also resulted in a large crack in the ground on the east side of the house, which continued under the slab. Plaintiff noticed that the piling supporting the northeast corner of the structure had shifted, the slab had cracks running through it, and the deck had begun to separate from the house.

         After the flood, Plaintiff's father contacted their local agent, who visited the property and notified Nationwide of the loss on April 15, 2014. An independent engineer retained by Nationwide inspected the property on April 21, 2014. His initial report concluded that the embankment had saturated with water from the flood and had sloughed down the hill, which caused the displacement of the foundation piling and the void beneath the slab. Relying on this report, Nationwide denied Plaintiff's claim on May 8, 2014, on the basis that earth movement, a peril that is excluded from coverage under the policy, caused the damage to the home.

         Plaintiff's father retained Forest J. Wilson (“Wilson”), a local geotechnical engineer, to evaluate the property and to suggest a course of action to stabilize the embankment and prevent it from failing under the house. Wilson disagreed with the conclusions made by Nationwide's engineer about the cause of the soil displacement around Plaintiff's home. Wilson opined that “the flood water penetrated sand seams in the river bank and created weak zones, ” which caused the embankment to collapse as the river returned to normal levels. (Doc. 64-8 at 6.) He further observed that “[t]he collapsed river bank directly north of the house has resulted in movement of the embankment beneath the residence” and recommended that Plaintiff stabilize the embankment by excavating loose soil and “constructing a rock buttress.” (Id. at 6, 7.)

         Plaintiff's father employed JFJ Excavating, LLC (“JFJ Excavating”) to stabilize the embankment, at a cost of $57, 050. JFJ Excavating estimated that another $119, 000 of work would be necessary to complete the stabilization. As a result, Plaintiff and his father considered relocating the home further back from the river because it would be “safer in the long run” and “more cost efficient.” JFJ Excavating prepared a new “home pad” on the property for a total cost of $44, 191.55. Plaintiff's father also obtained two bids to move the structure to the new pad, but the house has not been relocated. Plaintiff hired a carpenter to repair the deck, but no other work has been performed on the home. Plaintiff continues to reside there.

         Believing that the damage to the home was covered under the policy, Plaintiff appealed Nationwide's denial of his claim for benefits to FEMA on July 7, 2014. As part of his appeal, Plaintiff submitted Wilson's report and photographs of the property. Plaintiff also included a proof of loss form, which the local agent had prepared and sent to Plaintiff's father for his signature. Plaintiff's father signed the form and returned it to the agency, but another individual dated the form July 3, 2014. The proof of loss claimed damages in the amount of $129, 000.

         FEMA affirmed Nationwide's denial of Plaintiff's claim on August 6, 2014, determining that the reports from Wilson and the independent engineer hired by Nationwide demonstrated that earth movement, rather than floodwaters, directly caused the damage. Nationwide informed Plaintiff in a letter dated January 9, 2015, that it would “stand[] by [its] previous claim denial letter of May 8, 2014, ” and “den[ied] further payment” because the proof of loss was submitted to FEMA, rather than to Nationwide, and was received more than sixty days after the loss. Plaintiff then filed the instant action on January 29, 2015.

         II. Standard of Review

         Summary judgment is appropriate upon a showing “that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). A genuine issue of material fact exists if the record contains sufficient evidence for a reasonable jury to return a verdict in favor of the nonmoving party. McCormick v. City of Fort Lauderdale, 333 F.3d 1234, 1243 (11th Cir. 2003) (quoting Chapman v. AI Transp., 229 F.3d 1012, 1023 (11th Cir. 2000)). A fact is material if, under the substantive law of the claim, the fact's existence “affect[s] the outcome of the case.” Chapman, 229 F.3d at 1023. However, the interpretation of the terms of an insurance policy is a question of law for this Court to decide. Carneiro Da Cunha v. Standard Fire Ins. Co./Aetna Flood Ins. Program, 129 F.3d 581, 584 (11th Cir. 1997).

         III. ...

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