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Cohen v. Allstate Insurance Co.

United States Court of Appeals, Fifth Circuit

May 17, 2019

AL COHEN, Plaintiff-Appellant,
v.
ALLSTATE INSURANCE COMPANY; RACHAEL G. RAY, Defendants-Appellees.

          Appeal from the United States District Court for the Southern District of Texas

          Before SMITH, GRAVES, and WILLETT, Circuit Judges.

          JERRY E. SMITH, CIRCUIT JUDGE:

         Al Cohen sued Allstate Insurance Company ("Allstate") and its agent, Rachael Ray, for breach of contract after Allstate refused to pay a claim for flood damage. Finding no error, we affirm a summary judgment.

         I.

         Congress enacted the National Flood Insurance Act of 1968 ("NFIA")[1] "to make flood insurance available on reasonable terms and to reduce fiscal pressure on federal flood relief efforts." Campo v. Allstate Ins. Co., 562 F.3d 751, 754 (5th Cir. 2009). NFIA established the National Flood Insurance Program ("NFIP"), [2] which permits private insurers, such as Allstate, to issue insurance policies-known as Standard Flood Insurance Policies ("SFIPs")-on behalf of the federal government. Id. at 752, 754. Such insurers are referred to as Write-Your-Own ("WYO") carriers. Id. at 752; see also 44 C.F.R. § 62.23 (2018).

         Under this arrangement, the government underwrites the policies, while WYO carriers act as "fiscal agents of the United States," Gowland v. AETNA, 143 F.3d 951, 953 (5th Cir. 1998), by performing administrative tasks, including adjusting, settling, paying, and defending all claims, Campo, 562 F.3d at 754. Private insurers are required to issue policies employing the precise SFIP terms and conditions outlined in FEMA regulations, which also dictate the way private insurers adjust and pay claims. Id. Despite the central role played by WYO carriers, the claims are paid from the U.S. Treasury. Gallup v. Omaha Prop. & Cas. Ins. Co., 434 F.3d 341, 342 (5th Cir. 2005).

         All SFIP claims are subject to a statute of limitations. 42 U.S.C. § 4072. An individual suing to recover money under an SFIP must initiate the lawsuit "within one year after the date of the written denial of all or part of the claim." 44 C.F.R. pt. 61, app. A(1), art. VII(R) ("article VII(R)"). The limitations provision applies to any claim brought under the policy and to any dispute arising from the handling of such claim. Id.

         II.

         In October 2015, Cohen sought to purchase an SFIP from Allstate to cover his house and his detached garage apartment. Relying on assurances from Ray that he did not need separate flood insurance policies for the house and apartment, Cohen bought a single policy for both. The policy had coverage limits of $150, 000 for building damage and $60, 000 for personal-property damage (damage to contents). After a flood on April 18, 2016, which damaged the house and apartment and their contents, Cohen discovered that his SFIP did not cover the apartment or its contents. He notified Allstate of the damage and initiated two claims: one for building damage and another for personal-property damage. Based on an independent adjuster's report, Allstate determined that the damage under the building policy was $55, 506.28. On May 27, it sent Cohen and John Kubala, Cohen's public insurance adjuster, a proof-of-loss form for that amount.[3]

         On June 3, Cohen responded by sending Allstate his own proof of loss, claiming $93, 871.67 in building damages. He did not provide supporting documentation. Allstate denied Cohen's unsupported proof of loss. On July 19, Cohen executed Allstate's original proof-of-loss form for building damage, and Allstate issued payment two days later.

         Separate from Cohen's execution of the proof-of-loss form for building damage, Allstate mailed Cohen another letter (the "July 19 letter"). It purported, inter alia, to (1) "close the personal property portion of [Cohen's] claim without payment until such time as [Allstate] receive[d] further supporting documentation," (2) "deny coverage for various items that [Cohen] claim[ed] pending documentation of replacement from [his] prior flood loss," and (3) "deny coverage for the damage to [Cohen's] second residence," a detached garage apartment.[4]

         Allstate continued to investigate and process Cohen's personal-property claim, even after it sent the July 19 letter. It dispatched an independent adjuster to evaluate the flood damage; the adjuster made a damage estimate of $3, 852.13. Allstate sent Cohen a proof-of-loss form for that amount on his ...


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