Harbour Light Towers Ass'n, Inc. v. Ameriflood, LLC, Case No.: 8:10-cv-2183-T-33EAJ

HARBOUR LIGHT TOWERS ASSOCIATION, Inc. Plaintiff, v. AMERIFLOOD, LLC, WILLIS OF FLORIDA, Inc. AMERICAN BANKERS INSURANCE COMPANY OF FLORIDA RESOURCE PROPERTY MANAGEMENT, Inc. and JEFF BAJZA, Individually, Defendants.

Case No.: 8:10-cv-2183-T-33EAJ

UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA TAMPA DIVISION

Dated: June 23, 2011

ORDER

This cause is before the Court pursuant to Plaintiff Harbour Light Towers Association's Motion for Remand (Doc. # 11), filed on October 28, 2010. On November 24, 2010, Defendant American Bankers Insurance Company of Florida filed its Opposition to the Motion for Remand. (Doc. # 18). For the reasons that follow, the Motion for Remand is GRANTED.

I. Background and Procedural History

Harbour Light Towers is a condominium association incorporated in Florida. (Doc. # 2 at ¶ 2). Harbour maintained a flood insurance policy with BB&T from 2002 until February 2008, with annual premiums of $7,000. (Id. at ¶ 9). Harbour was charged this low premium because its policy had been written under old flood underwriter rating guidelines. (Id.).Harbour did not realize that it would lose its "grandfathered" status under the old guidelines if it changed flood insurance carriers. (Id. at ¶ 10).

In November 2007, Ameriflood and Willis promoted a Flood Insurance Rebate Program (FIRP) through Resource, Harbour's property management company. (Id. at ¶ 11). The FIRP proposal guaranteed to maintain Harbour's annual flood insurance premiums at around $7,000, with annual rebates of around $500. (Id. at ¶¶ 13-14). Harbour agreed to change flood insurance carriers based upon the proposal. (Id. at ¶ 13).

Harbour alleges that, during the transfer process, Resource, Ameriflood, Willis and Bajza learned that Harbour's flood insurance premiums would increase substantially if it changed carriers. (Id. at ¶ 14). These Defendants also became aware of the fact that Harbour did not have a Flood Elevation Certificate because of its "grandfathered" status; the lack of the Certificate would further increase Harbour's flood insurance premiums. (Id. at ¶ 18). These Defendants failed to inform Harbour that its premiums would increase to more than $43,000 under the new policy. (Id. at ¶¶ 15-18).

On or about February 25, 2008, Ameriflood and Willis accepted Harbour's premium payment of $7,054, (Id. at ¶ 19). Bajza, Ameriflood and Willis then submitted an incorrect floodinsurance application to Bankers. (Id. at ¶ 20). Bankers participates in the "Write Your Own" (WYO) policy program under the National Flood Insurance Program (NFIP). (Doc. # 1 at ¶¶ 5-6). Bankers is authorized to issue Standard Flood Insurance Policies (SFIPs) under the NFIP. (Id. at ¶ 6).

On or about February 27, 2008, Bajza, as an agent of Ameriflood and Willis, inspected and photographed Harbour's property and documented characteristics that would cause Harbour's premiums to increase substantially. (Doc. # 2 at ¶ 21). Bajza did not correct the flood insurance application, however, or inform Harbour of those characteristics. (Id. at ¶ 22). Resource, Ameriflood, Willis and Bajza did inform Bankers' underwriter of the characteristics, and Bankers promised to "push through" Harbour's policy under the old guidelines. (Id. at ¶¶ 23-24).

On or about April 7, 2008, Bankers issued a policy to Harbour with an annual premium of $7,054 in accordance with the FIRP proposal. (Id. at ¶ 25). On or about December 31, 2008, Bankers notified Harbour that its premium would increase to $43,782. (Id. at ¶ 28). On March 30, 2009, Bankers notified Harbour that its premium would be $43,852, an amount that Harbour continues to pay annually for flood insurance. (Id.).

Harbour filed suit in the Circuit Court for the Sixth Judicial Circuit in and for Pinellas County, Florida, on August 23, 2010. (Doc. # 2). Harbour asserts a claim of fraudulent inducement against Ameriflood, Willis and Bajza (Count I) for failing to inform Harbour that the proposed $7,054 annual flood insurance premiums would be impossible to obtain. (Id. at ¶ 33). Harbour further asserts claims of professional negligence against Ameriflood, Willis and Bajza (Count II) and Bankers (Count III) for failing to use reasonable skill and diligence in procuring flood insurance on behalf of Harbour. (Id. at ¶¶ 38-39, 44-45).

Harbour alleges that it depended upon Resource for advice concerning insurance, and that relationship imposed a fiduciary duty upon Resource. (Id. at ¶¶ 49-50). Harbour asserts a claim of breach of fiduciary duty against Resource (Count IV) for advising Harbour to accept the FIRP proposal and change flood insurance carriers, to Harbour's detriment. (Id. at ¶ 51). Finally, Harbour asserts a claim of vicarious liability against Ameriflood and Willis for the actions of their agent, Bajza (Count V). (Id. at ¶ 54-57).

On September 30, 2010, Bankers removed the case to this Court pursuant to 42 U.S.C. § 4072, 44 C.F.R. Pt. 61, App. A(3), Art. X and 28 U.S.C. §§ 1331 and 1337. (Doc. # 1). Inits Notice of Removal, Bankers explains that 42 U.S.C. § 4072 conveys exclusive jurisdiction over matters involving the administration and handling of a SFIP. (Id. at ¶ 15). Bankers further contends that state courts do not have concurrent jurisdiction. (Id. at ¶ 16). Although Harbour's complaint asserts only state-law causes of action, Bankers argues that those claims present a significant federal question because federal law must be interpreted and federal funds are at stake. (Id. at ¶ 21-23).

On October 28, 2010, Harbour filed its motion seeking remand pursuant to 28 U.S.C. § 1447(c). (Doc. # 11). Bankers filed its response in opposition to remand on November 24, 2010. (Doc. # 18). The Motion is ripe for the Court's review.

II. Legal Standard

Under 28 U.S.C. § 1441, a defendant may remove an action brought in state court to federal court if "the district courts of the United States have original jurisdiction." 28 U.S.C. § 1441(a). A removing defendant bears the burden of proving proper federal jurisdiction. Adventure Outdoors, Inc. v. Bloomberg, 552 F.3d 1290, 1294 (11th Cir. 2008) (citations and quotations omitted).

"Federal courts are directed to construe removal statutes strictly, resolve all doubts about jurisdiction in favor ofremand, and employ a presumption in favor of remand to state courts." Total Fleet Solutions, Inc. v. Nat'l Crime Ins. Bureau, 612 F. Supp. 2d 1232, 1234 (M.D. Fla. 2009). Furthermore, a plaintiff's right to choose his forum carries more weight than a defendant's right to remove. Burns v. Windsor Ins. Co., 31 F.3d 1092, 1095 (11th Cir. 1994). A defendant's burden of proof is therefore a heavy one. Id.

Generally, the district courts have jurisdiction over cases "arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. "[T]he question of whether a claim arises under federal law must be determined by reference to the well-pleaded complaint." Merrell Dow Pharm., Inc. v. Thompson, 478 U.S. 804, 808 (1986). The Supreme Court has explained that "[u]nder the longstanding well-pleaded complaint rule, . . . a suit arises under federal law only when the plaintiff's statement of his own cause of action shows that it is based upon federal law." Vaden v. Discover Bank, 129 S. Ct. 1262, 1272 (2009) (internal citations omitted). That the defendant may rely upon a federal defense is insufficient. Aetna Health, Inc. v. Davila, 542 U.S. 200, 207 (2008).

However, removal is proper if "the complaint has been 'artfully pled' in order to avoid reference to any federallaw." Southpointe Villas Homeowners Assoc., Inc. v. Scottish Ins. Agency, 213 F. Supp. 2d 586, 590 (D.S.C. 2002). The district court may assume jurisdiction if a federal statute completely preempts the state-law cause of action, or if the state-law claim implicates a substantial question of federal law. Id.

III. Analysis

Harbour contends that this Court lacks federal jurisdiction because the complaint alleges only state-law tort claims related to policy procurement. (Doc. # 11). Harbour asserts that there is no need for the Court to interpret any law or regulation governing the NFIP, and that federal funds are not at stake because Harbour does not seek a refund of premiums paid. (Id. at ¶¶ 3-5). Specifically, Harbour argues that matters involving policy procurement are not preempted by federal law. (Id. at 5). Finally, Harbour contends that removal was improper because Bankers failed to obtain the consent of all other defendants under the so-called "rule of unanimity." (Id. at 12).

Bankers counters that federal funds are indeed at stake, and federal law must be analyzed. (Doc. # 18 at 3). Even if Harbour is not seeking reimbursement of premiums paid, the Arrangement between the Federal Emergency Management Agency(FEMA) and WYO insurers stipulates that FEMA may reimburse expenses resulting from litigation arising under the scope of the Arrangement. (Id. at 10). FEMA alone determines what matters fall within the scope of the Arrangement. (Id.) Bankers further argues that matters related to policy procurement are preempted by federal law under current FEMA regulations. (Id. at 16). Finally, Bankers asserts that the consent of all defendants was not required for removal because of an exception to the unanimity requirement found at 28 U.S.C. § 1441(c). (Id. at 17).

A. The National Flood Insurance Program

The National Flood Insurance Act (NFIA) of 1968 established the NFIP as a vehicle for providing property owners with affordable flood insurance subsidized by the federal government. 42 U.S.C. §§ 4001 et seq. In 1983, FEMA promulgated regulations enabling private insurers to provide flood insurance under the WYO program. 44 C.F.R. § 61.13(f). WYO insurers issue SFIPs, whose terms, rate structures and premium costs are regulated by FEMA. Southpointe Villas, 213 F. Supp. 2d at 588. WYO insurers deposit flood insurance premiums with the U.S. Treasury after deducting their fees and administrative costs, and draw on FEMA...