Alex Darouiche v. JP Morgan Chase Bank, N.A. ( 2011 )

Case: 10-30554 Document: 00511403203 Page: 1 Date Filed: 03/07/2011
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
March 7, 2011
No. 10-30554 Lyle W. Cayce
Summary Calendar Clerk
ALEX DAROUICHE,
Plaintiff - Appellant
v.
FIDELITY NATIONAL INSURANCE COMPANY,
Defendant - Appellee
Appeal from the United States District Court
for the Eastern District of Louisiana
USDC No. 2:07-CV-09209
Before JOLLY, GARZA, and STEWART, Circuit Judges.
PER CURIAM:*
After discovering that Hurricane Katrina had caused flood damage to his
property, Alex Darouiche sought payment for the damage under his flood
insurance policy with Fidelity National Insurance Company (“Fidelity”).
Darouiche was informed, however, that an individual purporting to be him had
already received and cashed the proceeds due under the policy. Darouiche then
*
Pursuant to 5TH CIR . R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR .
R. 47.5.4.
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sued Fidelity, among others, for negligence. The district court, concluding that
Darouiche had not met the prerequisites for bringing suit under the flood policy,
granted Fidelity’s motion for summary judgment. We affirm.
I.
Darouiche purchased the residential property at issue, located in Metairie,
Louisiana, in 1999. Three years later, he entered a bond for deed to the property
with Santos G. Zelaya, and moved out.1 Under the terms of his agreement with
Zelaya, Darouiche agreed to transfer title to the property upon Zelaya’s
completion of specified payments. The property’s flood insurance policy was
purchased from Fidelity by Darouiche’s mortgage lender, Teche Federal Bank
(“Teche”). This policy, a Standard Flood Insurance Policy under the National
Flood Insurance Program, was in effect when Hurricane Katrina struck in
August 2005.
Darouiche, being away, was unaware for months that Hurricane Katrina
had caused flood damage to the property. During Darouiche’s absence, and
unbeknownst to him, Fidelity opened an automatic claim under the property’s
flood policy. The flood claim was assigned to an independent adjuster who
determined that the amount due was $91,087.21. In March 2006, Fidelity issued
a check for that amount, made out to Darouiche and Teche, and mailed it to the
Metairie address it had on file for the property. Fidelity then closed the claim,
having received no other documentation or claim for further benefits under the
property’s flood policy.
Approximately five weeks later, an individual purporting to be Darouiche
or Darouiche’s agent contacted Fidelity and complained that he had not yet
received payment for the flood claim. The impersonator, whom Darouiche
1
A “bond for deed” is a “contract to sell real property, in which the purchase price is to
be paid by the buyer to the seller in installments and in which the seller after payment of a
stipulated sum agrees to deliver title to the buyer.” LA . REV . STAT . § 9:2941.
2
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alleges was Zelaya, requested that Fidelity stop payment on the check, issue a
duplicate, and mail the new check to an address in New Jersey. Fidelity
promptly complied with these requests. Around the same time, in May 2006,
Teche sent a letter to Fidelity asking that Fidelity take certain precautions in
paying the flood claim. Teche informed Fidelity that Darouiche’s mortgage
account was presently in arrears, and that a bond for deed existed between
Darouiche and Zelaya. The bank requested that, for these reasons, Fidelity
notify Teche and verify the endorsements on the check before it released funds.
In June 2006, Fidelity’s reissued check was endorsed by forgery and
presented to JP Morgan Chase Bank, N.A., where it was cashed. JP Morgan
Chase Bank in turn presented the check to Wachovia Bank, N.A., where Fidelity
kept an account. Wachovia, too, accepted the check. By the time Darouiche
returned to Louisiana and discovered the flood damage to his property, Fidelity
had already paid out the insurance proceeds on his flood claim.
The underlying suit followed. Darouiche sued Fidelity, among others,
alleging that the insurer had negligently handled the payment of his flood
claim.2 Specifically, Darouiche alleged that Fidelity was negligent when it
reissued the flood claim check without first verifying that Darouiche had made
the request. Darouiche also alleged that Fidelity was negligent for not verifying
the check’s endorsements before releasing funds, as Teche had requested.
Fidelity moved for summary judgment. It argued that because Darouiche
had failed to comply with certain prerequisites to filing suit under the flood
policy, the suit was barred as a matter of law.3 The district court granted the
2
Darouiche appeals only the district court’s judgment in favor of Fidelity.
3
Fidelity later sought to amend its summary judgment motion to include a federal
preemption argument. The district court, however, denied Fidelity leave to file the amended
motion. Because the issue was not properly raised in the district court, we do not consider
whether Darouiche’s tort claims against Fidelity are federally preempted.
3
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motion, and then entered judgment in favor of Fidelity. Darouiche moved for a
new trial, arguing that the district court incorrectly determined that he was
precluded from suing Fidelity under the flood policy. The district court
summarily denied the motion, citing the reasons stated in its grant of summary
judgment for Fidelity. This appeal followed.
II.
As an initial matter, we consider whether Darouiche’s notice of appeal in
the district court was timely filed. “The filing of a timely notice of appeal, within
thirty days after entry of the court’s judgment, is mandatory and jurisdictional.”
Kinsley v. Lakeview Reg’l Med. Ctr. LLC, 570 F.3d 586, 588 (5th Cir. 2009)
(citing Bowles v. Russell, 551 U.S. 205, 214 (2007)). Given the mandatory nature
of this inquiry, we directed the parties to brief this question as a special issue.
Darouiche had 30 days “after the judgment or order appealed from [wa]s
entered” to file his notice of appeal in the district court. F ED. R. A PP. P.
4(a)(1)(A). The district court entered judgment for Fidelity on January 13, 2010,4
and entered the order denying Darouiche’s motion for new trial on May 14, 2010.
When a party timely files a Rule 59 motion for new trial under the Federal Rules
of Civil Procedure, the time to file an appeal is tolled until the district court’s
disposition of that motion.5 F ED. R. A PP. P. 4(a)(4)(A)(v). Thus, if Darouiche’s
motion for new trial was timely filed, he had 30 days from May 14, 2010, to file
his notice of appeal. He filed his notice of appeal within those 30 days, on June
11, 2010. But if Darouiche’s motion for new trial was untimely, it “d[id] not toll
the running of the thirty-day clock to appeal to this Court.” Vincent v. Consol.
4
The district court granted Fidelity’s motion in an order that was entered on the docket
on January 12, 2010. The district court’s judgment in favor of Fidelity, however, though
signed on January 12, 2010, was not entered on the docket until January 13, 2010.
5
Although Darouiche did not specifically invoke Rule 59 in his motion for new trial, we
conclude that Rule 59 was the appropriate vehicle for his motion.
4
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Operating Co., 17 F.3d 782, 785 (5th Cir. 1994). Whether the notice of appeal
was timely—and whether we have appellate jurisdiction—therefore depends on
whether Darouiche’s motion for new trial was timely filed.
Under the amended version of Rule 59, Darouiche had “no later than 28
days after the entry of judgment” to file his motion for new trial.6 F ED. R. C IV.
P. 59(b).7 The district court having entered judgment for Fidelity on January 13,
2010, Darouiche had until February 10, 2010—28 days later—to file his motion.
He electronically filed the motion on February 10, 2010, the last permissible day.
The district clerk docketed the motion, but deemed it “deficient” because the
proposed order that accompanied the motion—required by the local rules for
certain motions—appeared in the motion document itself and not as a separate
attachment. On February 12, 2010, Darouiche filed a corrected motion that was
identical in all respects to the earlier version except for the placement of the
proposed order, which was filed as a separate attachment. This corrected motion
was filed out-of-time under Rule 59(b). The district court, denying Darouiche’s
motion “for the reasons enumerated in” its prior order granting summary
judgment for Fidelity, did not address whether Darouiche’s motion was timely.
We conclude that Darouiche’s Rule 59 motion for new trial was timely
filed. Although the February 10 motion was deemed “deficient,” the complained-
of error was based solely on a local rule that requires a proposed order to be
electronically filed as a separate attachment.8 This local rule applies only to ex
6
The 2009 amendments to the Federal Rules of Civil Procedure became effective on
December 1, 2009.
7
This time constraint is strict: a court “must not extend the time to act under Rule[]
. . . 59(b).” FED . R. CIV . P. 6(b)(2). Moreover, it is jurisdictional, and may not be extended by
a waiver of the parties. U.S. Leather, Inc. v. H&W P’ship, 60 F.3d 222, 225 (5th Cir. 1995).
8
The “Unique Procedures and Practices for Electronic Filing,” which were established
by the Eastern District of Louisiana and are part of the “procedures” mandated in Local Rule
5.7, provide that “[p]roposed orders must be submitted in PDF format as a separate
attachment to an ex parte/consent motion.”
5
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parte and consent motions, which Darouiche’s motion for new trial was not.
Under these circumstances, a conclusion that the minor formatting error in
Darouiche’s February 10 motion rendered that motion too insufficient to be
considered would unjustifiably elevate form over substance.
Moreover, such a conclusion would run afoul of Federal Rule of Civil
Procedure 83. Local rules generally have the force of law “as long as they do not
conflict with a rule prescribed by the Supreme Court, Congress, or the
Constitution.” Kinsley, 570 F.3d at 589 (quoting Contino v. United States, 535
F.3d 124, 126 (2d Cir. 2008)). Rule 83 states: “A local rule imposing a
requirement of form must not be enforced in a way that causes a party to lose
any right because of a nonwillful failure to comply.” F ED. R. C IV. P. 83(a)(2). The
local rule implicated here is a requirement of form only. There is no indication
that Darouiche’s failure to file his proposed order as a separate attachment was
willful, and if the local rule is strictly enforced, Darouiche will lose his right to
appeal. In accordance with Rule 83, we therefore conclude that Darouiche’s
February 10 motion was a sufficient and timely motion for a new trial under
Rule 59.
Having confirmed our jurisdiction to consider this case, we now turn to the
merits of Darouiche’s appeal.
III.
A.
We review de novo a district court’s grant of summary judgment. Nunez
v. Allstate Ins. Co., 604 F.3d 840, 844 (5th Cir. 2010). Summary judgment
should be granted “if the movant shows that there is no genuine dispute as to
any material fact and the movant is entitled to judgment as a matter of law.”
F ED. R. C IV. P. 56(a). When reviewing a grant of summary judgment, we view
all facts and evidence in the light most favorable to the non-moving party.
Nunez, 604 F.3d at 844. We may affirm a grant of summary judgment on any
6
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legal ground raised in the district court, even if that ground was not the basis for
the decision below. Bayle v. Allstate Ins. Co., 615 F.3d 350, 355 (5th Cir. 2010).
B.
1.
Darouiche’s flood policy was issued by Fidelity as a participant in the
National Flood Insurance Program (“the Program”). Congress created the
Program to provide flood insurance at rates that were uneconomical for private
companies.9 Dwyer v. Fidelity Nat’l Prop. and Cas. Ins. Co., 565 F.3d 284, 285
(5th Cir. 2009). The Federal Emergency Management Agency (“FEMA”)
administers the Program, and that agency has established, by regulation, a
Standard Flood Insurance Policy (“SFIP”) under the Program. See 44 C.F.R.
§ 61.13. Although the terms and conditions of SFIPs are fixed by FEMA
regulations, the policies may be issued by private insurers known as Write Your
Own (“WYO”) companies. Dwyer, 565 F.3d at 285. Fidelity issued the flood
policy to Darouiche in its capacity as a WYO company.
Darouiche’s flood policy is a Dwelling Form SFIP, and its terms and
conditions are codified in 44 C.F.R. pt. 61, app. A(1) (“Dwelling SFIP”). No
provision in the policy may be changed or waived “without the express written
consent of the Federal Insurance Administrator.” Dwelling SFIP, art. VII.D.
In relevant part, the SFIP states that a policyholder may not sue his
insurer “to recover money under this policy unless [he] ha[s] complied with all
the requirements of the policy.” Id. art. VII.R. The same provision continues:
“This requirement applies to . . . any dispute that you may have arising out of
the handling of any claim under the policy.” Id. The district court concluded
that Darouiche’s allegations against Fidelity arose out of Fidelity’s handling of
the flood claim, and that Darouiche was therefore subject to the pre-suit
9
Congress established the Program by enacting the National Flood Insurance Act of
1968, 42 U.S.C. § 4001 et seq. Gowland v. Aetna, 143 F.3d 951, 953 (5th Cir. 1998).
7
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prerequisites in Article VII.R. We agree. We must thus consider whether
Darouiche complied with all of the requirements in the flood policy. If he did
not, then he is barred as a matter of law from suing Fidelity to recover money
under the policy.
2.
The SFIP, in a section titled “Requirements in Case of Loss,” lists a
policyholder’s duties in instances of flood damage to the insured property.
Dwelling SFIP, art. VII.J. Where a policyholder has incurred such flood damage,
for instance, he is required to “give prompt written notice” to the insurer. Id.art. VII.J(1).
The SFIP also states that a policyholder must send “proof of loss” within
60 days after the loss. Id. art. VII.J(4). The proof of loss requirement was
altered shortly after Hurricane Katrina, however. On August 31, 2005, the
Acting Federal Insurance Administrator, David Maurstad, issued a
memorandum (“Maurstad memorandum”) that waived the proof of loss
requirement for uncontested claims. Monistere v. State Farm Fire and Cas. Co.,
559 F.3d 390, 395 (5th Cir. 2009). The memorandum stated that a policyholder
no longer needed to file a proof of loss before receiving insurance proceeds. Id.If, however, the policyholder “disagree[d] with the insurer’s adjustment,
settlement, or payment of the claim,” the policyholder was required to “submit
to the insurer a proof of loss within one year from the date of loss.” Id.10
10
The Maurstad memorandum also stated that where the insurer rejects the
policyholder’s proof of loss, “the policyholder may file a lawsuit against the insurer within one
year of the date of the written denial of all or part of the claim as provided in VII.R.”
Monistere, 559 F.3d at 395.
8
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3.
The district court determined that Darouiche’s suit against Fidelity was
barred because Darouiche had failed to comply with the notice requirement in
Article VII.J(1). Although it agreed with Darouiche that the Maurstad
memorandum had waived the proof of loss requirement, it concluded that the
waiver did not extend to the requirement for “prompt written notice.” Dwelling
SFIP, art. VII.J(1). Finding that Darouiche failed to provide any notice of his
claim to Fidelity, the district court concluded that Darouiche was precluded as
a matter of law from suing Fidelity.
On appeal, Darouiche raises two arguments that he presented in his
motion for new trial. First, he contends that he complied with Article VII.J(1)’s
requirement of “prompt written notice” because Teche, an additional insured
under the flood policy, provided Fidelity with written notice of the loss.
Specifically, Darouiche asserts that Teche’s May 2006 letter to
Fidelity—requesting certain precautions in the payment of the flood
claim—fulfilled the notice requirement. In essence, Darouiche argues that
because Teche fulfilled the notice requirement, he has complied with all of the
policy’s requirements for purposes of Article VII.R. Notably, Darouiche does not
argue that he himself provided written notice of the loss to Fidelity. Second,
Darouiche argues in the alternative that the Maurstad memorandum effectively
waived the requirement of “prompt written notice” in Article VII.J(1).
We find Darouiche’s extra-textual arguments to lack merit. As we
explained in Gowland v. Aetna, “the provisions of an insurance policy issued
pursuant to a federal program must be strictly construed and enforced.” 143
F.3d 951, 954 (5th Cir. 1998). See also Marseilles Homeowners Condo. Ass’n v.
Fidelity Nat’l Ins. Co., 542 F.3d 1053, 1057 (5th Cir. 2008) (“Under FEMA
regulations, strict adherence is required to all terms of the SFIP.”). We must
9
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therefore, where possible, resolve this appeal on the plain text of the Dwelling
SFIP.
The text of Article VII.R reads: “You may not sue us to recover money
under this policy unless you have complied with all the requirements of the
policy.” The most sensible reading of this provision is that the plaintiff is
required to comply with the SFIP provisions as a prerequisite to suit. Teche,
having never been a party to this suit, cannot furnish the requisite compliance.
The proper inquiry is whether Darouiche provided Fidelity with prompt written
notice of his loss. It is undisputed that he did not.
Additionally, Article VII.D states that the Dwelling SFIP “cannot be
changed nor can any of its provisions be waived without the express written
consent of the Federal Insurance Administrator.” The Maurstad memorandum
explicitly waived only the proof of loss requirement; it did not purport to waive
any other requirement in the Dwelling SFIP. Article VII.D thus mandates the
conclusion that the Maurstad memorandum neither changed nor waived the
policy’s requirement for “prompt written notice.” Darouiche was therefore
required to show that, prior to suit, he had fulfilled this requirement, and his
inability to do so warranted summary judgment for Fidelity.11
11
We note that Darouiche’s failure to send Fidelity a proof of loss may also support
affirmance in this case. The Maurstad memorandum waived the proof of loss requirement for
uncontested claims only. We have previously held that a policyholder cannot file a lawsuit
seeking further federal benefits under a SFIP unless he can show that he sent the insurer
proof of loss within the specified one-year period. See Marseilles Homeowners Condo. Ass’n,
542 F.3d at 1055–56 (citing Richardson v. Am. Bankers Ins. Co., 279 F. App’x 295 (5th Cir.
2008)). Unlike the policyholders in those cases, Darouiche does not seek additional insurance
payments under his policy—instead, he seeks to hold his insurer liable for its handling of his
insurance claim. We have not previously addressed whether the proof of loss requirement
applies to a plaintiff like Darouiche. But we have stated that a sworn proof of loss is a
“condition precedent” to any suit against an insurer under a SFIP. Marseilles Homeowners
Condo. Ass’n, 542 F.3d at 1055. The application of this broad statement to Darouiche would
have required him to file a proof of loss prior to filing this suit.
10
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IV.
For the reasons stated above, we AFFIRM the district court’s judgment.
11