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Evanicky v. Federal Emergency Management Agency

United States District Court, S.D. Texas, Houston Division

August 21, 2019

FEDERAL EMERGENCY MANAGEMENT AGENCY and PETER T. GAYNOR, Administrator of the Federal Emergency Management Agency, Defendants.



         Plaintiffs Lonnie and Susan Evanicky ("Plaintiffs") sued the Federal Emergency Management Agency ("FEMA") and Peter T. Gaynor, FEMA's Acting Administrator[1] (collectively, "Defendants") for breach of a flood insurance contract under the National Flood Insurance Act of 1968 ("NFIA"), 42 U.S.C. §§ 4001, et seq. Plaintiffs allege that insurance proceeds are being wrongfully withheld by Defendants.[2] Pending before the court is Defendants' Motion to Dismiss (Docket Entry No. 25). For the reasons explained below, Defendants' Motion to Dismiss will be granted in part and denied in part.

         I. Factual and Procedural Background

          This action involves a dispute between an insurer (Defendants) and its insured (Plaintiffs) involving payment of claims for flood damage caused by Hurricane Harvey. FEMA operates the National Flood Insurance Program ("NFIP") under which Standard Flood Insurance Policies ("SFIPs") are issued.[3] At all times relevant to this action Plaintiffs were policyholders of an SFIP administered by FEMA that provided coverage for their residence located at 213 Maude Street, Wharton, Texas 77488.[4] Plaintiffs' SFIP provided for $87, 500 in coverage less a $5, 000 deductible.[5] On August 30, 2017, Plaintiffs' SFIP-insured residence sustained flood damages.[6] On September 1, 2017, FEMA received Plaintiffs' proof of loss, and on September 22, 2017, FEMA paid Plaintiffs an advance payment of $15, 000.[7] On December 9, 2017, FEMA received the final report of an independent adjuster, which recommended that Plaintiffs be paid an additional $34, 651.66. FEMA approved payment of that amount on December 9, 2017.[8]

         On August 24, 2018, Plaintiffs submitted another proof of loss to FEMA for the August 30, 2017, flood damage (the "Supplemental Proof of Loss") in the amount of $87, 500 -- the policy limit.[9]FEMA has not allowed or disallowed Plaintiffs' Supplemental Proof of Loss .[10]Plaintiffs filed this action on October 19, 2018, alleging a claim for breach of contract for Defendants' failure to issue payent on the Supplemental Proof of Loss.[11]On May 8, 2019, Defendants moved to dismiss for lack of subject matter jurisdiction under Rule 12(b) (1), for failure to effect timely service under Rule 12 (b) (5), and for failure to state a claim under Rule 12(b) (6) .[12] Plaintiffs responded to Defendants' Motion to Dismiss on June 7, 2019.[13] Defendants did not file a reply.

         II. Defendants' Rule 12(b) (1) Motion to Dismiss

         Defendants argue that the court lacks subject matter jurisdiction over this action for two reasons. First, Defendants argue that they are immune from suit on sovereign immunity grounds.[14] Second, Defendants argue that this dispute is not ripe for adjudication because FEMA has yet to disallow Plaintiffs' Supplemental Proof of Loss.[15]

         A. Standard of Review

          Federal Rule of Civil Procedure 12(b) (1) governs challenges to the court's subject matter jurisdiction. "A case is properly dismissed for lack of subject matter jurisdiction when the court lacks the statutory or constitutional power to adjudicate the case." Hore Builders Association of Mississippi, Inc. v. City of Madison, Mississippi, 143 F.3d 1006, 1010 (5th Cir. 1998). "Courts may dismiss for lack of subject matter jurisdiction on any one of three different bases: (1) the complaint alone; (2) the complaint supplemented by undisputed facts in the record; or (3) the complaint supplemented by undisputed facts plus the court's resolution of disputed facts." Clark v. Tarrant County, Texas, 798 F.2d 736, 741 (5th Cir. 1986).

         Rule 12(b) (1) challenges to subject matter jurisdiction come in two forms: "facial" attacks and "factual" attacks. See Paterson v. Weinberger, 644 F.2d 521, 523 (5th Cir. 1981). A facial attack consists of a Rule 12(b) (1) motion unaccompanied by supporting evidence that challenges the court's jurisdiction based solely on the pleadings. Id. A factual attack challenges the existence of subject matter jurisdiction in fact, and matters outside the pleadings may be considered. Id. Because Defendants have cited evidence outside the pleadings in support of their Rule 12(b) (1) motion to dismiss (specifically, the Truitt Declaration), the motion is a factual attack, and the court's review is not limited to whether the complaint sufficiently alleges jurisdiction. Plaintiffs, as the party asserting federal jurisdiction, bear the burden of showing that the jurisdictional requirements have been met. Alabama-Coushatta Tribe of Texas v. United States, 757 F.3d 484, 487 (5th Cir. 2014).

         "When a Rule 12 (b) (1) motion is filed in conjunction with other Rule 12 motions, the court should consider the Rule 12(b) (1) jurisdictional attack before addressing any attack on the merits." Morris v. Livingston, 739 F.3d 740, 745 (5th Cir. 2014) (internal quotation marks omitted). If a complaint could be dismissed for both lack of jurisdiction and for failure to state a claim, "'the court should dismiss only on the jurisdictional ground under [Rule] 12(b) (1), without reaching the question of failure to state a claim under [Rule] 12 (b) (6) . '" Crenshaw-Legal v. City of Abilene, Texas, 436 Fed.Appx. 306, 308 (5th Cir. 2011).

         B. Analysis

         Suits against federal defendants (i.e., federal agencies and federal officials acting in their official capacities) are suits against the United States. "' [T]he United States, as sovereign, "is immune from suit save as it consents to be sued . . . and the terms of its consent to be sued in any court define that court's jurisdiction to entertain the suit."'" Lehman v. Nakshian, 101 s. Ct. 2698, 2701 (1981) (quoting United States v. Testan, 96 S.Ct. 948, 953 (1976)) . "The basic rule of federal sovereign immunity is that the United States cannot be sued at all without the consent of Congress." St. Tammany Parish, ex rel. Davis v. Federal Emergency Management Agency, 556 F.3d 307, 316 (5th Cir. 2009) (quoting Block v. North Dakota ex rel. Board of University and School Lands, 103 S.Ct. 1811, 1819 (1983)); see also Williamson v. United States Department of Agriculture, 815 F.2d 368, 373 (5th Cir. 1987) ("The doctrine of sovereign immunity is inherent in our constitutional structure and . . . renders the United States, it departments, and its employees in their official capacities as agents of the United States immune from suit except as the United States has consented to be sued.") . "A waiver of the Federal Government's sovereign immunity must be unequivocally expressed in statutory text . . . and will not be implied." Lane v. Pena, 116 s. Ct. 2092, 2096 (1996); see also Petterway v. Veterans Administration Hospital, Houston. Texas, 495 F.2d 1223, 1225 n.3 (5th Cir. 1974) ("It is well settled . . . that a waiver of sovereign immunity must be specific and explicit and cannot be implied by construction of an ambiguous statute.").

         Section 4072 of the NFIA contains a limited waiver of sovereign immunity:

In the event the program is carried out as provided in section 4071 of this title, the Administrator shall be authorized to adjust and make payment of any claims for proved and approved losses covered by flood insurance, and upon the disallowance by the Administrator of any such claim, or upon the refusal of the claimant to accept the amount allowed upon any such claim, the claimant, within one year after the date of mailing of notice of disallowance or partial disallowance by the Administrator, may institute an action against the Administrator on such claim in the United States district court for the district in which the insured property or the major part thereof shall have been situated, and original exclusive jurisdiction is hereby conferred upon such court to hear and determine such action without regard to the amount in controversy.

42 U.S.C. § 4072 (emphasis added); In re Estate of Lee, 812 F.2d 253, 256 (5th Cir. 1987) (recognizing that 42 U.S.C. § 4072 contains "a limited waiver of sovereign immunity that permits a claimant to sue the Director of FEMA in federal district court"). The "Administrator" referred to in § 4072 is identified in 42 u.s.c. § 40ll(a) as the Administrator of FEMA.

         Section 4072 waives sovereign immunity for claims against FEMA's Administrator only when (1) FEMA's Administrator disallows a party's flood insurance claim or (2) a party refuses to accept the amount FEMA's Administrator has allowed. See Downey v. State Farm Fire & Casualty Co., 276 F.3d 243, 344-45 (7th Cir. 2001) (stating that § 4072 waives sovereign immunity "only when the Director has disallowed a claim"). Section 4 072' s statute of limitations requires claimants to file suit within one year from the time notice of disallowance is mailed. The statute explicitly contemplates that the claimant will receive written notice that his or her claim has been disallowed in whole or in part before filing suit against FEMA's Administrator in a federal district court.

         Plaintiffs allege that the court has jurisdiction over Defendants pursuant to § 4072.[16] Defendants argue that the court lacks subject matter jurisdiction because FEMA's Administrator has not disallowed Plaintiffs' Supplemental Proof of Loss, rendering the waiver of sovereign immunity in § 4072 inapplicable.[17]Plaintiffs disagree, arguing that while FEMA has not mailed a written disallowance of Plaintiffs' Supplemental ...

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