Clutter v. William B. Long

DAVID CLUTTER, Plaintiff, v. WILLIAM B. LONG, as Administrator of the Federal Emergency Management Agency, ROY E. WRIGHT,as Deputy Associate Administrator of the Federal Emergency Management Agency, DAVID I.MAURSTAD, as Assistant Administrator of the Federal Emergency Management Agency, MATTHEW BEHNKE,as Director for Sandy Claims for the Federal Emergency Management Agency, FEDERAL EMERGENCYMANAGEMENT AGENCY and WRIGHT NATIONAL FLOOD INSURANCE COMPANY, Defendants.

17-CV-4833 (SJF)(ARL)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK

September 28, 2018

ORDER

FEUERSTEIN, District Judge:

Pending before the Court are the objections of plaintiff David Clutter ("plaintiff") to the Report and Recommendation of the Honorable Arlene R. Lindsay, United States Magistrate Judge, dated August 31, 2018 ("the Report"), recommending: (i) that the branches of the motion of defendants Federal Emergency Management Agency ("FEMA"); William B. Long, as Administrator of FEMA; Roy E. Wright, as Deputy Associate Administrator of FEMA; David I. Maurstad, as Assistant Administrator of FEMA; and Matthew Behnke, as Director for Sandy Claims for FEMA (collectively, the "Federal Defendants"), seeking dismissal of plaintiff's claims against them pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure for lack of subject matter jurisdiction be granted; and (ii) that the motion of defendant Wright National Flood Insurance Company ("Wright") seeking dismissal of plaintiff's claim against it pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure be granted. For the reasons set forth herein, the Report is accepted in its entirety.

I. Standard of Review

Any party may serve and file written objections to a report and recommendation of a magistrate judge on a dispositive matter within fourteen (14) days after being served with a copy thereof. 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b)(2). Any portion of such a report and recommendation to which a timely objection has been made is reviewed de novo. See 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b)(3). Whether or not proper objections have been filed, the district judge may, after review, accept, reject, or modify any of the magistrate judge's findings or recommendations. 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b).

II. Objections

Plaintiff contends, inter alia, that Magistrate Judge Lindsay erroneously: (i) concluded "that 42 U.S.C. § 4072 does not waive the Federal Defendants' sovereign immunity or provide [him] with a cause of action against Administrator Long on the sole stated ground that FEMA did not issue [his] [flood insurance] policy," (Plaintiff's Objections to the Report ["Plf. Obj."] at 2); (ii) held that he "cannot seek review of FEMA's disallowance of his claim under the APA because 42 U.S.C. § 4072 supplies an 'adequate remedy' to address FEMA's conduct," (id. at 4 [citing Report at 16-20]); and (iii) recommended that his claims be dismissed as untimely because he did not file this action within one (1) year of Wright's initial denial of his claim on February 11, 2013. (Id. at 4).

A. Waiver of Sovereign Immunity

Plaintiff contends, inter alia, that Magistrate Judge Lindsay: (i) bases her analysis in the Report "on a false factual finding that 'FEMA did not issue the policy and did not deny the claim,'" (Plf. Obj. at 8 [emphasis omitted] [citing Report at 19]); (ii) erroneously held that the Sandy Claims Review ("SCR") process "is nothing more than an extension of the [administrative] review process set forth in 44 C.F.R. § 62.20(c) (2010)," (id. at 3 [brackets in original] [citing Report at 21]; see also id. at 12); and (iii) "fail[ed] to give significance to the characteristics that make the SCR 'unprecedented,'" i.e., FEMA's purported ability to "set aside adjustments by the WYOs[¹] that had issued the NFIP policies at issue and adjust[] the losses itself." (Id. at 11). Furthermore, plaintiff challenges Magistrate Judge Lindsay's reasoning "that because courts have held that . . . administrative appeals [pursuant to 44 C.F.R. § 62.20(c)] are not subject to judicial challenge, neither is FEMA's conduct in the SCR [process]," on the basis that "there are dispositive differences between [those processes] . . . for purposes of triggering a right to sue under Section 4072." (Plf. Obj. at 12). Specifically, plaintiff contends: (i) that while the administrative appeals are "fundamentally appellate [in] nature," (id. [quotations omitted]), the SCR process is not, insofar as FEMA "did not simply correct errors in [Wright's] analysis; [it] set it aside completely[] . . . [and] made its own disallowances . . . which trigger[ed] a right of judicial review under Section 4072," (id. at 13 [emphasis omitted]); (ii) that while "FEMA required SCR participants to submit new Proofs of Loss as a precondition to payment, . . . [which] is the sine qua non of a policyholder's claim under the NFIA," such arequirement is "completely absent" from the administrative appeals process, (id.); (iii) that "[t]he existence of a JAMS-facilitated neutral review process is another critical element of the SCR [process] that belies its comparison to administrative appeals . . . [since] [t]he fact that FEMA created a process in which its own work was subject to third-party oversight indicates that it was not conducting appellate review[,] . . . but rather making primary and dispositive claim determinations that trigger the NFIA's waiver of sovereign immunity[,]" (id. at 14-15); and (iv) that FEMA "accepted full responsibility for the scope and amounts of SCR payments[,] . . . [whereas] [i]n ordinary administrative appeals, [it] assumes no obligations at all." (Id. at 15 [quotations, alterations and citation omitted]).

Upon de novo review of the Report and all motion papers, and consideration of plaintiff's objections to the Report and the Federal Defendants' responses thereto, plaintiff's objections are overruled and so much of the Report as recommends granting the branch of the Federal Defendants' motion seeking dismissal of plaintiff's breach of contract claim against them pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure for lack of subject matter jurisdiction is accepted in its entirety. "Under settled principles of sovereign immunity, the 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." United States v. Dalm, 494 U.S. 596, 608, 110 S. Ct. 1361, 108 L. Ed. 2d 548 (1990) (quotations, alterations and citations omitted). "Absent a waiver, sovereign immunity shields the Federal Government and its agencies from suit[,]" F.D.I.C. v. Meyer, 510 U.S. 471, 475, 114 S. Ct. 996, 127 L. Ed. 2d 308 (1994); see also U.S. v. Navajo Nation, 556 U.S. 287, 289, 129 S. Ct. 1547, 173 L. Ed. 2d 429 (2009) ("The Federal Government cannot be sued without its consent"), aswell as its officers acting in their official capacities. See Dotson v. Griesa, 398 F.3d 156, 177 (2d Cir. 2005). "A waiver of the Federal Government's sovereign immunity must be unequivocally expressed in statutory text . . . and will not be implied." Lane v. Pena, 518 U.S. 187, 192, 116 S. Ct. 2092, 135 L. Ed. 2d 486 (1996). "Moreover, a waiver of the Government's sovereign immunity will be strictly construed, in terms of its scope, in favor of the sovereign." Id.

"Strictly construed, 42 U.S.C. § 4072 provides a limited right to sue upon the disallowance of all or part of a claim, i.e. the complete or partial denial of a claim." Migliaro v. Fidelity Nat'l Indem. Ins. Co., 880 F.3d 660, 666 (3d Cir. 2018); see also Foster v. Federal Emergency Mgmt. Agency, 128 F. Supp. 3d 717, 723 (E.D.N.Y. 2015). "When FEMA denies claims under an SFIP that it has issued, the injured policyholder may sue FEMA under a limited waiver of sovereign immunity." Remy v. Hartford Fire Ins. Co., No. 13-cv-5666, 2014 WL 6390862, at *1 (E.D. La. Nov. 10, 2014); accord Kronenberg v. Fidelity Nat'l Ins. Co., No. 07-cv-4877, 2008 WL 631277, at * 1 (E.D. La. Mar. 5, 2008). "However, when a WYO issues an SFIP, federal regulations provide that a WYO insurer 'shall act as a fiscal agent of the Federal Government, but not as its general agent. WYO Companies are solely responsible for their obligations to their insured under any flood insurance policies issued under agreements entered into with the Administrator, such that the Federal Government is not a proper party defendant in any lawsuit arising out of such policies.'" Remy, 2014 WL 6390862, at *1 (quoting 44 C.F.R. 62.23(g)); accord Kronenberg, 2008 WL 631277, at * 1; see also Mertz v. FEMA, Dep't of Homeland Sec., No. 3:10-cv-0260, 2011 WL 3563113, at * 3 (D. Or. Feb. 14, 2011), report and recommendation adopted, 2011 WL 3563130 (D. Or. Aug. 10, 2011) ("The private insurers areresponsible for 'the adjustment, settlement, payment and defense of all claims arising from polices of flood insurance it issues under the [WYO] Program, based upon the terms and conditions of the Standard Flood Insurance Policy.' 44 C .F.R. § 62.23(d) (2010). The regulations make it clear that in carrying out its functions under the WYO Program, the private insurer 'shall use its own customary standards, staff and independent contractor resources, as it would in the ordinary and necessary conduct of its own business affairs, subject to the Act and [these] regulations,' and that private insurers are not considered agents of the federal government but are 'solely responsible for their obligations to their insurers under any flood insurance policies issued pursuant to arrangements entered into with the Administrator.' 44 C.F.R. § 62.23(f) and (g) (2010). The federal government merely acts as a guarantor of the insurer and pays claims allowed by the insurers, or otherwise found to be due under the policy, from the National Insurance Fund, which is located in the United States Treasury." (...