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Migliaro v. Fidelity National Indemnity Insurance Company
United States Court of Appeals for the Third Circuit
2018 WL 577704
Anthony Migliaro purchased an SFIP from WYO carrier Fidelity for his New Jersey Property. In 2012, Hurricane Sandy damaged the property with flooding. The independent adjuster assessed the damage at $90,499.11 and Fidelity adopted the recommended amount. Five months later, Migliaro submitted a proof of loss for an additional $236,702.57. Fidelity sent a letter on July 15, 2013 titled “Rejection of Proof of Loss” which, in part, contained the language “this is not a denial of your claim.”
Migliaro brought suit in federal court on December 13, 2013, which was voluntarily dismissed without prejudice in September of 2014. He filed a second action on July 22, 2015. The District Court granted summary judgement for fidelity on the grounds that the claim was barred by the statute of limitations—which began to run one year after the denial of the claim. Migliaro appealed.
The question before the Third Circuit Court of Appeals was whether or not the July 2013 “Rejection of Proof of Loss” letter constituted “a written denial of all or part of the claim, thereby triggering the one-year statute of limitations that is set forth in every Standard Flood Insurance Policy (‘SFIP’).”
II. Legal Reasoning and Decision
The Third Circuit Court of Appeals ultimately affirmed the District Court’s grant of summary judgement, holding that the written rejection of proof of loss did constitute a denial of the claim. The Court’s decision rested on two grounds: (1) the language of SFIP’s Loss Payment provision and (2) the restrictions placed on a policyholder’s private right of actions against a WYO carrier.
The Loss Payment provision gives the policyholder three options in the event the insurer rejects their proof of loss: (a) accept our denial of your claim, (b) exercise your rights under this policy or (c) File and amended proof of loss. The Plaintiff contends that he picked option (b), which necessarily admits that he viewed the July 2013 letter as a denial of his claim. This is because a private right of action against a WYO carrier is limited to a suit challenging the complete or partial denial of a claim. Therefore, the very act of bringing this suit signaled that he understood his claim to be denied. Accordingly, the Court found that “written rejection of a proof of loss constitutes a denial of the claim if, based on it, the policy holder files suit against the WYO carrier, thereby accepting the written rejection of a proof of loss as a written denial of a claim.”
Further, the Plaintiff contended that the language contained in the letter that it was “not a denial of [the] claim,” proved that the letter could not constitute a denial of the claim. The Court rejected this argument because although that statement was “technically true at the time it was made,” given that “the door to additional compensation for his claim remained open,” Plaintiff “closed the door by failing to seek an appraisal, file an amended proof of loss within sixty days, or submit additional documentation” to support his initial proof of loss.
Thus, the Third Circuit affirmed the District Court order granting summary judgment.
Jackson v. The Standard Fire Insurance Company
United States District Court for the District of Maryland
2018 WL 348148
Traveler’s policyholder, William Jackson, suffered water and subsequent mold damage to his home and personal property in October of 2014. The damage was caused by a toilet that continued to overflow while he was out of town. Under the terms of his policy, Jackson had a $5,000 limit for mold damage. Travelers paid for the damage to the house and some of the personal property that was damaged by the water. Travelers refused to pay for the personal property over $5,000 that was strictly damaged from the mold resulting from the water damage because of the policy limit. Jackson filed a complaint with the MIA, which ultimately determined that Travelers’ decision was not arbitrary or capricious and that it met its obligation of good faith. Jackson did not exercise his right to appeal the MIA’s decision within the 30 day window, and ultimately filed an action in Prince George’s County in April of 2017. Travelers removed the case to federal court two months later. Travelers moved to dismiss.
II. Legal Reasoning and Decision
Travelers’ motion to dismiss alleged that Jackson failed to comply with Md. Code Ann., Cts. & Jud. Proc. § 3-1701, which required that he exhaust his administrative remedies before filing this action. Travelers sought dismissal under the theory that a failure to exhaust administrative remedies is a jurisdictional matter under Fed. R. Civ. P. 12(b)(1), or in the alternative, is a defect in Jackson’s pleadings under 12(b)(6). The Court initially found that “an allegation that a plaintiff has failed to exhaust administrative remedies is…a challenge to the court’s subject matter jurisdiction,” and therefore analyzed Travelers’ motion under its jurisdictional argument.
Next, the Court turned to the heart of the dispute– whether or not Jackson had actually exhausted his administrative remedies. The decision notes that on the face of the statute, Jackson had exhausted his administrative remedy because he filed a complaint with the MIA and received a final decision prior to filing the action. Travelers contended that Jackson had in fact filed the complaint too early, since Travelers had not yet fully decided Jackson’s claim, and that he failed to include relevant documents and a form cover sheet in his administrative complaint. The Court ultimately found this argument unpersuasive, relying on the plain language of the statute that allows for the filing of an action after a final administrative decision and finding that a strict adherence to all technical requirements would be fundamentally unfair. The Court therefore denied the motion to dismiss.
Patricia McHugh Lambert has over 35 years of experience in handling complex commercial litigation and insurance matters. Ms. Lambert has worked on national class actions, significant litigation and regulatory matters for Fortune 500 companies. She has also assisted small and mid-sized companies and business executives with contract, real estate and commercial disputes that needed to be resolved quickly and efficiently. Ms. Lambert is best known as an attorney who knows the field of insurance. She has represented insurers, policyholders, and insurance producers in disputes both in court and before the Maryland Insurance Administration. Ms. Lambert can be contacted at 410-339-6759 and firstname.lastname@example.org.