This paper compiles court decisions involving aclaim for damages resulting from an erroneous flooddetermination. A brief description of the facts, theissues and the result of each case is provided. Foradditional reference, each case is included in threereference groupings: subject matter, jurisdiction,and alphabetical.
These summaries are by necessity the authors’interpretations and are no substitute for a thoroughreading of the case if relied on for any businesspurpose or legal argument. The summaries are onlycurrent through the date of this paper, March 15,2007. The reader should determine whether therehas been any further activity in the cases cited.
To update or provide comments regarding thispaper, please contact:
Jacalyn D ScottWilshire Scott & Dyer P.C.1221 McKinney, Suite 3000Houston, Texas 77010713-651-1221713-651-0020 (facsimile)[email protected]
Audler, on his own behalf and on behalf of all others similarlysituated v. Flood Zone Determination Services et al, on their own behalf and on behalf of all others similarly situated
Civil Action No. 06-6525; In the United States District Court for the Eastern District of Louisiana . . . . . . . . . 1
Barras v. Community Home Loan, LLC, et al2007 U.S. Dist. LEXIS 3648 (Jan. 18, 2007 W.D. La.) . . . . . . 2
Arvai v. First Federal Savings & Loan Association, 698 F.2d 683 (4th Cir. 1983)
The court held there was no cause of action by the borrowers against the lenderfor an erroneous flood determination. The lender failed to notify the homeowners thattheir property was in a flood zone and they did not purchase flood insurance. Theplaintiffs asserted a federal claim only, arguing that the notification and flood insurancerequirements under the federal act gave them a private right of action for damages. The4th Circuit affirmed the trial court’s granting of the lender’s motion to dismiss for failureto state a claim agreeing that the federal statutes do not recognize a private right of action.
Audler, on his own behalf and on behalf of all others similarly situated v. Flood ZoneDetermination Services et al, on their own behalf and on behalf of all others similarlysituated, Civil Action No. 06-6525; In the United States District Court for theEastern District of Louisiana.
Audler, a resident of St. Bernard Parish, filed this class action in Louisiana statecourt in New Orleans, on behalf of himself and all others similarly situated, including allhomeowners and business owners that: (1) sustained flood damage from HurricanesKatrina and Rita in the State of Louisiana losses; (2) had no flood insurance; and (3) hada flood determination that incorrectly determined their property to be outside of a SFHA.Thirty-one Defendants - supposedly all flood determination companies - were actuallynamed, but a putative defendant class was also alleged to include ALL entities that madeflood determinations in Louisiana in connection with the financing of real property priorto the landfall of Katrina and Rita. The case was removed to federal court under the ClassAction Fairness Act. Removal was also based on diversity of citizenship premised on theallegations that because all Defendants, other than CBC Innovis (the company thatperformed the Audler’s flood determination), were fraudulently or improperly joined theyshould not be considered for the purposes of diversity, and diversity existed betweenAudler and CBC. Removal was further grounded on the argument that the claims requireda construction of a federal statute, the National Flood Insurance Act, and that becausePlaintiff argued Defendants owed a duty under the federal act, a federal claim wasalleged. The Plaintiff did not seek a remand.
Two motions to dismiss were filed, one on behalf of all Defendants unrelated tothe actual Audler determination and one on behalf of CBC Innovis. The other Defendantsmotion argued that Audler had no standing to bring any claims against them, nothing theydid or failed to do caused him any loss, their joinder in this case was improper and theyincorporated the arguments in the CBC Innovis motion to dismiss.
CBC’s motion argued that the flood determination company owes no duty to theborrower, only its customer, the lender. CBC Innovis’ SFHD form in this case stated:
THIS FLOOD DETERMINATION IS PROVIDED TO THE LENDER
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PURSUANT TO THE FLOOD DISASTER PROTECTION ACT AND FOR NOOTHER PURPOSE. IT DOES NOT CREATE ANY PRIVATE CAUSE ORACTION ON BEHALF OF THE BORROWERS AGAINST THE LENDER ORTHE FLOOD DETERMINATION PROVIDER.
CBC cited the court to decisions around the country that hold the act does notcreate a private right of action for borrowers against regulated lenders or flooddetermination companies. The motion further argued that the state common law claimsfailed because CBC owed no duty to the plaintiff. Finally, the contract-based claim failedbecause there is no contractual relationship between CBC and Audler. In response,Audler argued that he was not making a federal claim under the act. He further statedthat the simple fact that there was no implied remedy under the act did not mean that hisstate common law claims of negligence, negligent misrepresentation, failure to warn anddetrimental reliance were preempted. Audler argued that his - and by implication theclass members - Louisiana state law claims survived under a duty risk analysis. Theduty-risk analysis requires that conduct conform to certain standards rather than just thosethat are in privity, including, for example, intended users.
On January 24, 2007, the district court conducted a short hearing on the motionsto dismiss. The court asked the parties if it were to grant CBC’s motion would that endthe litigation. The defendants jointly responded yes. On that day the court signed aJudgment in favor of all Defendants dismissing Audler’s complaint with prejudice. OnFebruary 21, 2007, Audler filed a timely Notice of Appeal to the Fifth Circuit.
Barras v. Community Home Loan, LLC, et al, 2007 U.S. Dist. LEXIS 3648 (Jan. 18,2007 W.D. La.)
Summary: Court granted motion to dismiss filed by flood determinationcompany agreeing that borrowers have no claims under federalor state law.
Borrowers’ property suffered flood damage and was destroyed by Rita. Theinitial loan was made by Community Home Loan. An allegedly erroneous flooddetermination was provided by Stewart Lender Services Inc. Community sold the loanChase Home Finance and Chase contracted with Defendant Quantrix, LLC to performanother flood determination of the property. Quantrix also determined the property wasnot in a SFHA. A subsequent survey determined the property was in Zone AE. Theborrowers sued in state court naming their insurance agent, Stewart, Community, Chaseand Quantrix as Defendants. The case was removed to federal court on the basis ofdiversity. Stewart’s motion to dismiss argued it owed no duty to the plaintiffs under stateor federal law. The court’s opinion emphasizes the contractual clause in Stewart’s SFHDform that states the determination is provided solely for the use and benefit of the lenderand “may not be used or relied on by any other entity or individual for any purpose,including but not limited to, deciding whether to purchase a property or determining thevalue of a property.” The court also noted the fact that the act does not prevent borrowersfrom purchasing flood determination regardless of the determination. The court cited
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with approval the cases cited by Stewart that borrowers have no federal or state law claimfor an erroneous flood determination and granted the motion to dismiss.
Note: The borrowers subsequently voluntarily dismissed Community and Chase.At “press” time, Quantrix and the insurance agent remained as defendant.
Borrower sued the lender for uninsured flood damages alleging the lender hadneglected to inform the borrower he was in a flood zone. The court struck the plaintiff’sclaims for negligence, misrepresentation and fraud finding that borrowers are not withinthe class of persons to be protected from the notice determinations required under theprovisions of the act.
While this case does not involve a flood determination it addresses similar issuesregarding a lender’s duty to borrowers under other federal regulations. The borrowersappealed a summary judgment granted to their lender, North American MortgageCompany. The Plaintiffs had purchased homes in Slidell, La., financed by NorthAmerican. The loans were FHA insured. The borrowers suffered flood damage andalleged that the lender failed to ensure that the building sites were suitable and metminimum building standards as required for participants in federal mortgage programs.On appeal the borrowers alleged that the mortgage company had a legal duty to close theloans in accordance with FHA underwriting and inspection guidelines. The appeals courtaffirmed finding that the mortgage company had only an arms-length relationship withthe borrowers and did not owe them the additional duty of protecting them from theirunfortunate purchases.
Brill v. Northern California Savings & Loan Ass’n., 555 F. Supp. (N.D. Cal. 1982).
Borrower sued lender for uninsured flood damage alleging violation of the act.Plaintiffs asserted a federal claim under the federal act and a state law claim of negligentmisrepresentation. Borrowers alleged implied rights of action under the act’srequirements that the lender require flood insurance and notify purchasers that theproperty they propose to buy is in a flood zone. The court analyzed the federal claimunder the Supreme Court decision in Cort v. Ash, 422 U.S. 66 (1975) (whether there is animplied right of action under a statute requires analysis of four factors: (1) is the plaintiffin the class of persons for whose benefit the law was enacted; (2) did the legislatureindicate an intent to create or deny such a remedy; (3) is the remedy consistent with thepurpose of the legislative scheme; (4) is the cause of action one that is traditionallyrelegated to state law?).
Under the first factor the court found that the act was designed primarily to benefitlenders and reduce risks to the federal treasury for mounting flood relief costs. Forexample, the statute requires flood insurance only in the amount of the loan. As to the
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second factor, the statute is silent, but does provide for regulatory enforcement of itsprovisions. Accordingly, the intent must be construed to deny such a private remedy.The court found the third factor was also not met and ended the discussion. It dismissedthe pendent state law claim without prejudice.
Callahan v. Countrywide Home Loans, Inc.:
Summary: In the first opinion, the court ruled that the borrower does nothave a federal claim against the mortgage company for anerroneous flood determination. The borrower amendedalleging only state law claims against the mortgage companyand adding the flood determination company as a defendant.In the second opinion, the court found that the borrowercannot sue based on an erroneous flood determinationprovided under the act. And, no matter how the allegations arephrased that was the claim the borrower was making. Theclaims against the lender and the flood company weredismissed.
Opinion dated July 26, 2006 - 2006 U.S. Dist. LEXIS 51217 (N.D. Fla. 2006).
Borrower sued Countrywide in Florida state court alleging state law claims ofnegligence and negligent misrepresentation in connection with an erroneous “not in”flood determination provided in connection with a purchase money mortgage. Propertydamaged by Hurricane Ivan’s storm surge; no flood insurance. Countrywide removed tofederal court on the basis of diversity and filed a motion to dismiss. The Borrower arguedshe was not alleging a federal cause of action for damages under the act, only that underthe act Countrywide had the duty to ensure she had flood insurance if the property was ina SFHA and its failure to do so was negligent. Under Florida law the violation of afederal or state statute may constitute negligence but plaintiff must still establish theelements, such as duty. Court found that the borrower was not within the protected classof persons that the act was designed to protect, finding it well established that lenders -not borrowers - are the intended beneficiaries. Court found that Countrywide owed noduty to the borrower under the act. Accordingly, the borrower failed to state a claimagainst Countrywide for negligence. Court recognized that most courts have held thatallowing a state claim under a federal statute that does not provide for a private right ofaction raised federalism concerns and the court believes the Florida Supreme Court wouldagree with those cases. The motion to dismiss was granted and the borrower given 14days to file an amended complaint.
Opinion dated October 26, 2006 - 2006 U.S. Dist. LEXIS 76372 (N.D. Fla. 2006)
The Borrower’s amended complaint joined flood determination company -Landsafe Determination Inc. - as a defendant and deleted any reference to federal act.Landsafe and Countrywide filed motions to dismiss. Borrower attempted to plead arounda finding of no duty under the act by alleging only state common law claims that arise out
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of contractual duties. Court reiterated that most courts have found that federalismconcerns “preclude any state common law action based on violation of the NFIA.”(emphasis in original). Court rejected borrower’s argument that claims could survivemerely because the complaint made no reference to or reliance on the act. The Courtadopted the reasoning in Ford v. First American Flood Data Services, 2006 U.S. Dist.LEXIS 74350 (M.D. N.C. Oct. 11, 2006). The borrower’s claims arise out of Landsafe’sfailure to correctly determine that the property was in a SFHA. The act provides for andregulates third-party flood zone determinations to ensure that lenders comply with theflood insurance provisions. Any duty from Landsafe to the borrower must therefore ariseunder the act and could only be based on an alleged violation of the act. The Courtgranted the motion to dismiss both the lender and the flood determination company.
Clark v. AmSouth Mortgage Company, et. al, 2007 U.S. Dist. LEXIS 689 (M.D. Ala. 2007)
Summary: Action for damages arising out of erroneous determination(three times) that property was in a SHFA. The damages werenot property related but resulted from a mortgage defaultwhen borrower refused to pay increased mortgage paymentscaused by forced place flood insurance. The court held that thelender and its servicer were immune from liability under theact. But, the court remanded the case to allow the state courtto determine whether the claims could proceed against flooddetermination company.
Borrowers filed suit in state court alleging federal claims under the act and statelaw claims of breach of contract, unjust enrichment, conversion, negligence, breach ofduty to third party beneficiary and fraud. Also alleged were federal claims under FCRAand FDCPA. The case was removed to federal court. Plaintiffs sued AmSouth, theassignee of the mortgage, Dovenmuehle Mortgage, the loan servicer, and Geotrac, whichhad an agreement with Dovenmuehle to provide flood determinations under the NFIA.Geotrac determined that the Clarks’ property was in a SHFA. AmSouth andDovenmuehle required the Clarks to purchase flood insurance. The Clarks, althoughdoubting their property was in a flood zone, attempted to purchase flood insurance butwere told by the agent he needed additional information. AmSouth and Dovenmuehle didnot provide the information and the Clarks could not obtain the insurance. Geotracperformed a second determination which again stated the property was in a SFHA. Afterthat, AmSouth and Dovenmuehle forced place flood insurance. The Clarks refused to paythe increased mortgage payment. Geotrac performed a third determination with the sameresult. The loan went into default because the Clarks were making only their originalpayment amount. Clark learned that Geotrac had provided the determination andcontacted it to discuss. Clark recognized and advised Geotrac that it had made a mistakein comparing the FEMA and county maps. Geotrac then issued a corrected determinationthat property was not in a flood zone. AmSouth and Dovenmuehle removed floodinsurance requirement, credited account for flood premiums, waived all late fees andother charges and requested that credit reporting agencies correct any negative reporting.
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The Court agreed with AmSouth and Dovenmuehle that all of Clarks’ federal andstate law claims against the lender were barred by the act. The Court observed that theact allows the lender to delegate the responsibility of a flood determination to a thirdparty provided that party guarantees the accuracy of the information. The act alsoprovides that the lender may rely on a previous determination and shall not be liable forany error in such determination provided it was done within 7 years. Here, Geotrac washired by the lender’s servicer. Geotrac guaranteed its results. Based on Geotrac’sdeterminations, AmSouth demanded the purchase of flood insurance. The Court foundthat the lender and its servicers were released from any liability under the act.
A somewhat different result obtained, however, with respect to the claims againstGeotrac. The Clarks conceded that summary judgment should be granted Geotrac on thefederal claims leaving only the state law claims for breach of contract, negligence, breachof duty to third party beneficiary and fraud. The court rejected Geotrac’s argument that ittoo was shielded from liability by the act, finding nothing in the act to support a claimfor immunity from state law claims to third parties. The court stated that whilefederal law may not prevent a state court from recognizing state law claims for a violationof a federal statute, there is still the question of whether the state court will recognizesuch claims, and if so, whether they are preempted by federal law. The court found thatAlabama state courts had not addressed whether these state law claims would berecognized under these circumstances. Because all of the federal claims had beendismissed, and this question is best answered by the Alabama state courts, the courtremanded the case to state court.
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Cruey v. First American Flood Data Services, Inc., 174 F.Supp.2d 525 (E.D. Ky.2001).
Summary: Court found that flood determination company had no liabilitywhen providing services under the act.
First American was sued for an alleged erroneous determination that a certaindevelopment property was not in a flood zone. There had been no flooding, however, theborrowers alleged they had expended significant amounts of money due to the erroneousdetermination. The court commented that it was not quite clear what claims the borrowerwas making, but the thrust of the complaint was a claim that plaintiffs relied on the flooddetermination pursuant to the act. The question therefore, according to the court, waswhether there is an implied right of action under the act. This was a question of firstimpression in the Sixth Circuit. First American filed a motion for summary judgmentasserting that it enjoyed immunity under the act because neither an express nor impliedright of action existed for violations of the act. The court provided a detailed analysis ofthe underpinnings and legislative intent of the act. The court determined conclusivelythat when Congress drafted and enacted the act, Congress did not intend to create orrecognize an implied private cause of action against flood zone determination companieswho act on behalf of lenders to ensure compliance with the act.
Dollar v. Nationsbank of Georgia, N.A., 534 S.E.2d 851 (Ct. App. Ga. 2000)
Here, the borrower had maintained flood insurance on the property but hadallowed it to lapse in 1993, the year prior to the flood damage. She sued NationsBankwho allegedly told her in 1993 when she obtained a second mortgage that she was not in aflood zone and did not require her to maintain flood insurance. The bank did not concedethat the determination was erroneous but the court assumed it was for the purpose ofruling on the bank’s motion for summary judgment. The appeals court affirmed thesummary judgment in favor of the lender stating that, because the purpose of adetermination is to protect the bank’s collateral and not the borrower, it had no duty toprovide accurate flood hazard information to the borrower and the borrower did notjustifiably rely on the bank’s representations.
Doss v. Cuevas, et. al., 2006 U.S. Dist. LEXIS 45802 (E.D. La. July 5, 2006)
Summary: Facially, only the jurisdiction of the federal court was at issue.The court found that because there is no private right of actionagainst the mortgage company or flood determinationcompany under the NFIA, there is no federal subject matterjurisdiction, and the matter was remanded to state court.
Borrower sued their mortgage company, First Horizon Home Loan Corporation,and Federal Flood Certification Corporation, which performed the determination at therequest of the mortgage company. They also sued their insurance agent and the insurancecompany that had issued a flood policy for the prior owners of the property. The
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borrowers suffered uninsured flood damages from Katrina. Against the mortgagecompany they alleged negligence for failing to force place insurance and negligent hiringof Flood Certification. Negligence was also alleged against Flood Certification for failingto identify the property as being in a special flood hazard zone. First Horizon removedthe case to federal court alleging federal question jurisdiction under the NFIA. Theborrowers moved to remand stating they alleged no claim under a federal statute, onlystate law claims. The court found that because there is no private right of action under thefederal act by the borrowers for an erroneous flood determination, the claims are notcognizable under the act and removal cannot be based on the act. The court further foundthat the borrowers’ claims regarding policy procurement were did not present a federalquestion and the case was remanded to state court for lack of subject matter jurisdiction.
Ford v. First American Flood Data, 2006 U.S. Dist. LEXIS 74350 (M.D. N.C. Oct. 11,2006)
Summary: Court finds that any claim by borrower against mortgagecompany and flood determination company for allegederroneous flood determination is barred by the act, includingstate law claims.
First American provided a purchase money mortgage flood determination forUSAA and determined the property was not in a SFHA. A second flood determinationwas conducted for refinancing with the same result. The third determination, provided fora home equity loan, found the property to be in a SFHA. The borrower paid for all threedeterminations and after the third one, was required to purchase flood insurance. Theborrower alleged she would not have purchased the property and alleged state law claimsof negligence and breach of contract. Borrower alleged she was a third party beneficiaryof USAA and First American’s contract. She sought damages for the insurancepremiums. The court recognized that there is no federal right of action by a borrower foran alleged violation of the determination and notification requirements under the act.However, whether the borrower may bring a state law claim for a violation of a federalstatute must be decided pursuant to state law; and most courts have disallowed privateactions under state law as well. The court rejected the borrower’s argument that herclaims were not based on the act, finding that any alleged duty has to arise from the actand therefore any claim would have to based on the act.
The opinion includes an excellent analysis of the act. First, the court found thatthe statutory language addresses only the relationship between the lender and the flooddetermination company, does not mention the borrower, and indicates a lack of intent toprotect the borrower. Under the act, lenders can rely on the determination and areshielded from liability for any error. The act therefore expressly denies a borrower’sclaim against a lender with whom the borrower is in privity. The court commented that itis difficult to believe that Congress would deny an action between parties in privity butallow one between parties who are not, i.e. the flood determination company. Second, theoverall purpose of the act is to reduce the burden on the federal government to fund flooddisaster relief. The concern for federal resources evidences an intent to protect the lenders
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whose deposits are insured by federal agencies - not to protect the borrowers. Moreover,the specific purpose section of the act states that it is to facilitate compliance with theflood insurance purchase requirements; nothing is said about protecting borrowers orresolving private disputes. Finally, the court determined that the structure and focus ofthe act indicated an intent not to allow private remedies. The act’s regulatory scheme isdesigned for federal agencies to implement and enforce flood insurance and flood zonerequirements. There are a myriad of enforcement mechanisms authorized under the act,such as cease and desist orders and administrative remedies. A pervasive regulatoryremedial scheme is an indication that Congress intended not to provide a private claim.The fact that there are some private remedies allowed borrowers under the act, but noneagainst lenders or flood determination companies, provides further evidence that Congressdid not intend an implied right of action under these circumstances.
The court concluded that Congress intended that no private right of action accrueto the borrower under state or federal law for a violation of the flood zone determinationand notification provisions of the act.
Hanson Business Park, L.P. v. First National Title Insurance Co., 209 S.W.3d 867 (Tex. App. - Dallas 2006, no pet.)
This case demonstrates that borrowers and their lawyers: (1) recognize the legalhurdles facing them in attempting to sue a lender or flood determination company forflood losses and (2) will attempt to be creative in finding ways around the impediments.Here the borrowers sued the title insurance company after determining that one of thetracts they purchased was in a flood zone. The borrowers argued that the flood zonedesignation constitutes as title defect that is cover by the title insurance policy. The trialcourt granted the title company a summary judgment. On appeal the title company arguedthat the flood zone designation is not a title issue, but rather, a condition of the land. Theborrowers argued that it was a title issue that affected “marketable title.” The appealscourt agreed with the title company that to trigger coverage under the title policy, theremust be a defect in title - or ownership rights in the property, not a condition of theproperty.
Hofbauer v. Northwestern Nat. Bank of Rochester, 700 F.2d 1197 (8th Cir. 1983)
In connection with the financing of their house purchase, the lending institutiondid not notify the plaintiffs that the property was in a flood zone and did not require floodinsurance. A subsequent flood damaged the house and the plaintiffs brought suit againstthe bank alleging that it had violated its duties to notify and to require flood insuranceunder the act. The borrowers also asserted a negligence claim under Minnesota lawalleging that the federal statutes created a standard of conduct to be adhered to by thelender. The Court rejected the argument that the act created an implied cause of actionand dismissed the federal claim. As to the borrowers’ state law claim for negligence, thecourt stated that Minnesota state courts are free to look at the provisions of a federalstatute and determine whether it creates a standard of conduct which, if broken, wouldgive rise to an action for common-law negligence. The court stated that the purpose of
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the statute is to aid flood victims and lessen federal expenses for flood relief. It did notsee how those goals would be frustrated by allowing state law common law negligencesuits for failure to require flood insurance or notify borrowers they are in a SFHA.Accordingly, the state law claims was remanded to the state court for determination.
Hulbert v. Wells Fargo Bank, N.A., et. al, 2005 U.S. Dist. LEXIS 42778 (N.D. Fla. Nov.10, 2005)
Summary: Only issue was federal court jurisdiction. Court concluded thatbecause there was no federal cause of action under the act, itcould not provide the basis for jurisdiction and remanded thematter to state court.
Flood damage caused by Ivan. Plaintiffs had a purchase money mortgage withDefendant, New Horizon Financial Corp. which assigned the mortgage to DefendantWells Fargo Bank after closing. Wells Fargo Bank contracted with Defendant WellsFargo Insurance to perform a flood determination for which Plaintiffs paid $16. Due to atypo the flood determination incorrectly concluded the property was not in a flood zone(509 North Navy Blvd. rather than 509 South Navy). All of these entities along with theappraiser, who also indicated the property was not in a flood zone, were sued.
The only issue in the opinion was whether the court had federal jurisdiction. Thecase was removed from state court with the defendants alleging federal jurisdiction ontwo grounds: 1) the plaintiffs’ negligence claims were based on a violation of the act and2) the breach of contract claim sought to challenge the disallowance of a flood damageclaim by the insurance company. The court found that plaintiffs were not alleging a claimunder the federal act itself but merely that the Defendants’ failure to comply with the actwas a basis of their duty to the plaintiffs. The court analyzed the cases that determinedthere is no implied right of action for borrowers under the act and determined the actcould not be a basis for jurisdiction. The court found that there was no federal courtjurisdiction and remanded the matter to state court.
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Jack v. City of Wichita, 933 P.2d 787 (Kan. Ct. App. 1997)
The borrowers purchased property in 1987 not knowing it was in a flood zone.When they refinanced 7 years later, their lender required them to obtain flood insurance.They sued for economic losses only, having sustained no flood damages. Among otherdefendants, the borrowers sued the first mortgage company and its employee thatprovided the certification that the property was not in a flood zone. The trial courtgranted their motion to dismiss finding they owed no duty to advise the borrowersregarding flood insurance or requiring them to obtain flood insurance. On appeal theborrowers argued that they did owe a duty because the certification was provided pursuantto a federal statute. The court agreed with the weight of authority that the federal statutesdo not create a duty that would support a claim for negligence. The court further foundthat the borrower-lender relationship is not the kind of special relationship that wouldimpose or create such a duty.
Laurent v. Flood Data Services, Inc., et al., 766 N.E.2d 221 (Ohio App. 2001).
Summary: Court determined that as a matter of law borrowers have nocontract or negligence claims against flood determinationcompany for erroneous determination.
Plaintiffs asserted breach of contract, negligence and negligent misrepresentationclaims stemming from an alleged faulty flood zone determination performed by FirstAmerican pursuant to the act. Plaintiffs made no reference to or reliance on the act. Thecourt dismissed the plaintiffs’ breach of contract and third-party beneficiary claimsagainst First American, finding no contractual privity between the plaintiffs and FirstAmerican and thus no contractual duty existed and one had not been delegated to FirstAmerican by virtue of the plaintiffs’ relationship with the lender. The court observed thatFirst American performed the determination solely for the lender’s compliance with theact and not as a result of any relationship with the plaintiffs.
The court then addressed the plaintiffs’ negligence and negligent misrepresentation claims and noted that the determination of the existence of a duty is aquestion of law for the court to decide. The court found that there was no relationship andaccordingly no duty owed by First American to the plaintiffs where the plaintiffs allegedonly pecuniary damages. The court observed that due to the lack of privity between FirstAmerican and Plaintiffs, the relationship was indirect, “highly attenuated,” and lacked asufficient nexus which would give rise to any duty necessary for the maintenance of theplaintiffs’ negligence and negligent misrepresentation claims.
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Lehman v. Arnold, 484 N.E.2d 473 (Ill. App. Ct. 1985)
The borrowers sued for damages to their home caused by periodic flooding. Theysued their lender for breach of contract and for negligence in failing to comply with thefederal statutes and regulations. The borrowers were not told that the appraisal the bankobtained for the closing disclosed that the property was in a flood zone. The lendermoved to dismiss arguing that the federal statute did not create any duty on its part to theborrowers. Applying the test announced by the Supreme Court in Cort, the court held thatthere was no implied right of action and that and “federalism concerns” and legislativeintent barred both state law claims for violations of the Act.
Lukosus v. First Tennessee Bank National Association, 2003 U.S. Dist. LEXIS 11941(W.D. Va. July 9, 2003, unpublished opinion), aff’d, 89 Fed. Appx. 412 ( 4th Cir. 2004)
Upon refinancing mortgage with a different lender, the borrower was notified thatthe prior flood determination was incorrect and her property was in a SFHA. Theborrower filed suit in state court of Virginia against the original lender alleging she wouldnot have purchased the property had she known the property was in a SFHA and that theresale value had been diminished due to this determination. She sought damages based onnegligence, constructive fraud, actual fraud and breach of contract - all state law claims.The matter was removed to federal court based on diversity. Defendants then filed amotion to dismiss. The court stated that it was settled law that there is no express orimplied right of action for a buyer who does not received the proper notice under the act.The court acknowledged the state court decisions that reject a common law cause ofaction, based in part on the principles of federalism. The court determined that theVirginia courts would follow these cased and hold that no state law claim can be bases onthe failure to provide proper notice under the act.
Marble v. First American Flood Data Services, Inc., et.al, Dkt. # 87-23-01 (Wash. Sup.Ct. June 2004)
Summary: Defendants won on summary judgment by establishing that theborrowers never had any intention of obtaining flood insuranceand the erroneous determination did not effect their decision.There was no reliance on the determination.
Marbles purchased the subject property in 1980 and obtained 5 mortgages between1985 and 1994; no lender required flood insurance. Borrowers refinanced with DefendantBanknorth Group in 1998 which contracted with First American to provide a flood hazarddetermination. First American found the property was not in a SFHA. As a result,plaintiffs were not required to purchase flood insurance. Plaintiffs signed the form atclosing that the were not required to purchase flood insurance. The property sustainedflood damage twice later that year. Suit was filed against the bank and flooddetermination company, alleging that Plaintiffs decided not to buy flood insurance inreliance on the determination, which was erroneous. Motions for summary judgmentwere filed. The court found that even if the defendants owed a duty to the plaintiffs, and
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assuming the determination was wrong, the evidence conclusively showed that plaintiffsdid not actually rely on the determination as a basis for their decision not to purchaseflood insurance. The court relied on evidence that Plaintiffs had lived in the house on thebank of a river for 20 years and had previously multi-finances of the property without anyattempt to obtain flood insurance. The court found the plaintiffs had no intention ofpurchasing flood insurance and the flood determination did nothing to alter their plan.
Summary: Court dismissed state law claims based on Congress’ refusal inthe act to recognize a private cause of action against lenders orthose performing determinations for them.
In connection with Plaintiff’s purchase of a house and financing the bank
conducted a flood zone certification and mistakenly represented to the plaintiff that thehouse was not in a flood zone. Subsequently, the plaintiff sought to expand the house tomake it wheelchair accessible but its location in the flood zone prevented the plaintifffrom doing so. The plaintiff alleged that the erroneous flood zone determinationdecreased the amount of money they could have expected to realize on any resale. Thecourt refused to recognize a direct cause of action against the lender and determined thatthe act establishes only duties to be carried out by federal agencies in connection withsupervision of lending institutions and does not authorize private borrowers to bring adirect suit for money damages against a defendant for a statutory violation. Rather, as thecourt observed, the goal of the act was to limit or avert financial losses or harm related toproperty damage caused by flooding. The court ultimately dismissed the negligenceclaim as plaintiffs suffered no flooding damages and alleged only loss in market value andrelated emotional distress. In doing so, the court looked to other jurisdictions which haveconsidered this very issue and concluded that no such state law causes of action would lie.
Mid-America Nat’l Bank v. First Savs. & Loan Ass’n, 737 F. 2d 638 (7th Cir. 1984), cert. denied, 469 U.S. 1160 (1985)
This was a putative class action brought by ten named plaintiffs against 27 banksand savings and loans. Six of the defendants extended mortgage loans to the namedplaintiffs, the remaining institutions were alleged to have similar loans to a member of theputative plaintiff class. Plaintiffs alleged that their property was in an area identified byeither HUD or FEMA as being prone to flooding. The borrowers’ suit alleged the lenderfailed to notify them of the flood risk and failed to require flood insurance. The Plaintiffs’property suffered flood damage and they sued for their uninsured losses. Plaintiffsalleged claims under the act and common law claims of fraud and deceptive acts. Thetrial court granted the Defendants’ motion to dismiss holding there was no implied rightof action under the flood program that would allow borrowers to sue their lenders. Thestate law claims were dismissed without prejudice. The basis of the court’s opinion wasan analysis of the Cort factors similar to that set forth in Brill v. Northern CaliforniaSavings & Loan Ass’n., 555 F. Supp. (N.D. Cal. 1982).
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Mid-America Nat’l Bank v. First Savs. & Loan Ass’n, 515 N.E.2d 176 (Ill. App. 3d1987)
In this class action suit, the borrowers in the federal case above filed in state courtafter the federal court dismissed their pendent state law claims without prejudice. Thestate law claims alleged were negligent misrepresentation, breach of a special or fiduciaryobligation, that the lenders had violated certain practices they had adopted under the actand violation of the Illinois consumer fraud act. The underlying premise of each claimwas that under the act or as a result of the borrower-lender relationship, the defendantlenders had a duty to notify the purchasers the land was in a flood zone and also had theduty to notify them of the availability of flood insurance. The claims were dismissed atthe pleading stage, which required the court to assume the properly pleaded facts weretrue. The court adopted all of the rationale as to why there is no implied federal right ofaction under the act and held that under its plain wording the act cannot be relied upon tocreate a duty under a common law action for negligent misrepresentation. The court alsonoted that its decision is buttressed by the principles of federalism and the separation ofpowers doctrine, which basically state that if the federal courts do not recognize a claimunder a federal statute, the state courts should respect that determination. The fiduciaryclaim was rejected because there is no special relationship as a matter of law between theborrowers and the lenders. The remaining claims - that the lenders violated their ownbusiness practices and the consumer fraud act - failed for the same reasons as thenegligent misrepresentation claim. The appeals court upheld the dismissal of all claimswith prejudice.
Peal v. N.C. Farm Bureau Mut. Ins. Co., 212 F. Supp.2d 508 (E.D. N.C. 2002)
Court held that because they conflict with the act and its regulations, plaintiff’sstate law extra-contractual claims regarding a coverage dispute under a flood insurancepolicy were preempted by the act. Court concluded this despite finding that the “principalaim of the NFIA is to protect property owners in flood zone areas from uninsuredlosses...”
15
Pippin v. Burkhalter, 279 S.E.2d 603 (S.C. 1981)
Court found there is no implied private right of action in favor of purchaser againstthe lender for failing to provide notice that property was in a flood zone, because the actwas designed and intended to protect loans not purchasers. The borrowers suffered noflood damage but claimed they would not have purchased the property had they known.The court determined that enforcement of any violations of the Act rested on theappropriate federal regulatory agency, not the courts.
RBJ Apartments, Inc. v. Gate City Savings & Loan Association., 315 N. W.2d 284 (N.D.1982)
The Supreme Court of North Dakota concluded the borrowers had no statutoryimplied right of action or common law claims against the lender for failing to provide anaccurate flood determination. Borrowers alleged that lender was liable for uninsureddamages sustained by apartment complex in flood because lender failed to notifyborrowers the property was in a flood zone. The court stated that the act is not intended tobenefit borrowers, rather the notice requirement was intended to discourage flood zonedevelopment. The court refused to recognize a state court action under the act stating thatcomprehensive legislative schemes should not be amended by judicial decree.
Sutton v. Citimortgage, Inc., et. al, 2006 U.S. Dist. LEXIS 82997 (Nov. 14, 2006 S.D.Miss.)
Summary: Court denied motions to dismiss by mortgage company andflood determination company stating that the claims could notbe dismissed under the review standards required. Suggestedthat summary judgment motions might be proper andMississippi state law would be discussed at that time.
Borrowers’ purchase money mortgage was assigned to Citimortgage. Plaintiffshad signed an authorization allowing the lienholder to purchase flood insurance if adetermination was made subsequent to closing that flood insurance was necessary.Borrowers sustained flood damage from Katrina. Flood determination by First Americanstated that the structure was not in a SFHA, but noted the property was partially in. InOctober 2005, Citimortgage issued a determination that the structure was in Zone A-9.Citimortgage and First American filed motions to dismiss alleging no private right ofaction. First American further argued that the determination was provided solely for thelender could not be the basis of any action against it by the borrower. Court discussedstandards applicable to motions to dismiss. The court must assume all allegations are trueand allow all inferences favorable to the Plaintiffs. The court acknowledged the authoritycited by Defendants where other courts held in similar situations that the state would notrecognize a private right of action. Court did not discuss Mississippi law and refused tohold that Plaintiffs’ claims failed under the motion to dismiss standard. The motions todismiss were denied.
16
Till v. Unifirst Federal Sav. and Loan Ass’n, 653 F.2d 152 (5th Cir. 1981)
Plaintiff/borrowers sued lender for failing to require flood insurance and providenotice that property was located in a SFHA. The Fifth Circuit, citing the Cort factorsdiscussed previously, affirmed the lower court’s findings that the act did not create aprivate cause of action in favor of plaintiffs against their lender.
Wentwood Woodside I LP v. GMAC Commercial Mortgage Corporation, 419 F.3d 310(5th Cir. 2005)
Court found that borrowers are not a protected class and have no private right ofaction under the act under Texas law for negligence per se claim against a lender forfailing to determine property in a flood zone. The borrowers alleged that the mortgagecompany had a duty under federal law to notify the borrowers if the property was in aSFHA and to ensure that properties in a SFHA were adequately covered by floodinsurance. The borrower also alleged a state law claim for negligence per se in failing tocomply with its duties under the federal law. The lender was granted summary judgmentby the trial court. The appellate court made an “Erie” guess that Texas state courts wouldagree with all prior decisions and hold that borrowers were not a protected class under thefederal statutory scheme, therefore no private right of action exists under the law and itcould not give rise to a claim for negligence per se.
17
CASE COMPILATION SUBJECT MATTER INDEX
CLASS ACTION
Audler, v. Flood Zone Determination Services et al, Civil Action No. 06-6525; Inthe United States District Court for the Eastern District of Louisiana.
Mid-America Nat’l Bank v. First Savs. & Loan Ass’n, 737 F. 2d 638 (7th Cir.1984), cert. denied (1985)
Mid-America Nat’l Bank v. First Savs. & Loan Ass’n,515 N.E.2d 176 (Ill. App. 3d1987)
CONTRACTUAL EXCLUSION - NO THIRD PARTY BENEFICIARY
Audler, v. Flood Zone Determination Services et al,Civil Action No. 06-6525; Inthe United States District Court for the Eastern District of Louisiana
Barras v. Community Home Loan, LLC, et al, 2007 U.S. Dist. LEXIS 3648 (Jan.18, 2007 W.D. La.)
FEDERAL JURISDICTION
Doss v. Cuevas, et. al., 2006 U.S. Dist. LEXIS 45802 (E.D. La. July 5, 2006)(nofederal jurisdiction under act for claims against lender or flood determination company)
Hulbert v. Wells Fargo Bank, N.A., et. al, 2005 U.S. Dist. LEXIS 42778 (N.D.Fla. Nov. 10, 2005)(no federal jurisdiction under act against lender or flood determinationcompany)
FEDERAL LAW CLAIMS -
MAYBE
Sutton v. Citimortgage, Inc., et. al, 2006 U.S. Dist. LEXIS 82997 (Nov. 14, 2006S.D. Miss.)(court denied motions to dismiss by lender and flood determination companyon both federal and state claims)
NO
Arvai v. First Federal Savings & Loan Association, 698 F.2d 683 (4th Cir. 1983)
Barras v. Community Home Loan, LLC, et al, 2007 U.S. Dist. LEXIS 3648 (Jan.18, 2007 W.D. La.)
Brill v. Northern California Savings & Loan Ass’n., 555 F. Supp. (N.D. Cal. 1982)Callahan v. Countrywide Home Loans, Inc. 2006 U.S. Dist. LEXIS 51217 (N.D.
Fla. 2006)
Clark v. AmSouth Mortgage Company, et. al, 2007 U.S. Dist. LEXIS 689 (M.D.Ala. 2007)
Cruey v. First American Flood Data Services, Inc., 174 F.Supp.2d 525 (E.D. Ky.2001)
Ford v. First American Flood Data, 2006 U.S. Dist. LEXIS 74350 (M.D. N.C.Oct. 11, 2006)
Hofbauer v. Northwestern Nat. Bank of Rochester, 700 F.2d 1197 (8th Cir. 1983)
Hulbert v. Wells Fargo Bank, N.A., et. al, 2005 U.S. Dist. LEXIS 42778 (N.D. Fla.Nov. 10, 2005)(no federal jurisdiction under act against lender or flood determinationcompany, state law claims remanded)
Jack v. City of Wichita, 933 P.2d 787 (Kan. Ct. App. 1997)(lender)
Lehman v. Arnold, 484 N.E.2d 473 (Ill. App. Ct. 1985)(lender)
Lukosus v. First Tennessee Bank National Association, 2003 U.S. Dist. LEXIS11941 (W.D. Va. July 9, 2003, unpublished opinion), aff’d, 89 Fed. Appx. 412 ( 4th Cir.2004) (lender)
Mid-America Nat’l Bank v. First Savs. & Loan Ass’n, 737 F. 2d 638 (7th Cir.1984), cert. denied (1985) (lender)
Pippin v. Burkhalter, 279 S.E.2d 603 (S.C. 1981)(lender)
RBJ Apartments, Inc. v. Gate City Savings & Loan Association., 315 N. W.2d 284(N.D. 1982)(lender)
Till v. Unifirst Federal Sav. and Loan Ass’n, 653 F.2d 152 (5th Cir. 1981)(lender)
19
Wentwood Woodside I LP v. GMAC Commercial Mortgage Corporation, 419 F.3d310 (5th Cir. 2005)(lender)
Flood Determination Company as Defendant
Audler, v. Flood Zone Determination Services et al, Civil Action No. 06-6525; Inthe United States District Court for the Eastern District of Louisiana.
Callahan v. Countrywide Home Loans, Inc. 2006 U.S. Dist. LEXIS 76372 (N.D.Fla. 2006)
Clark v. AmSouth Mortgage Company, et. al, 2007 U.S. Dist. LEXIS 689 (M.D.Ala. 2007)
Cruey v. First American Flood Data Services, Inc.,174 F.Supp.2d 525 (E.D. Ky.2001)
Doss v. Cuevas, et. al., 2006 U.S. Dist. LEXIS 45802 (E.D. La. July 5, 2006)
Ford v. First American Flood Data, 2006 U.S. Dist. LEXIS 74350 (M.D. N.C.Oct. 11, 2006)
Hulbert v. Wells Fargo Bank, N.A., et. al, 2005 U.S. Dist. LEXIS 42778 (N.D. Fla.Nov. 10, 2005)
Laurent v. Flood Data Services, Inc., et al., 766 N.E.2d 221 (Ohio App. 2001)
Marble v. First American Flood Data Services, Inc., et.al, Dkt. # 87-23-01 (Wash.Sup. Ct. June 2004)
Sutton v. Citimortgage, Inc., et. al, 2006 U.S. Dist. LEXIS 82997 (Nov. 14, 2006S.D. Miss.)
20
Lender as Defendant
Arvai v. First Federal Savings & Loan Association, 698 F.2d 683 (4th Cir. 1983)
Brill v. Northern California Savings & Loan Ass’n., 555 F. Supp. (N.D. Cal. 1982)
Callahan v. Countrywide Home Loans, Inc. 2006 U.S. Dist. LEXIS 51217 (N.D.Fla. 2006)
Callahan v. Countrywide Home Loans, Inc. 2006 U.S. Dist. LEXIS 76372 (N.D.Fla. 2006)
Clark v. AmSouth Mortgage Company, et. al, 2007 U.S. Dist. LEXIS 689 (M.D.Ala. 2007)
Dollar v. Nationsbank of Georgia, N.A., 534 S.E.2d 851 (Ct. App. Ga. 2000)
Doss v. Cuevas, et. al., 2006 U.S. Dist. LEXIS 45802 (E.D. La. July 5, 2006)
Ford v. First American Flood Data, 2006 U.S. Dist. LEXIS 74350 (M.D. N.C.Oct. 11, 2006)
Hofbauer v. Northwestern Nat. Bank of Rochester, 700 F.2d 1197 (8th Cir. 1983)
Hulbert v. Wells Fargo Bank, N.A., et. al, 2005 U.S. Dist. LEXIS 42778 (N.D. Fla.Nov. 10, 2005)
Jack v. City of Wichita, 933 P.2d 787 (Kan. Ct. App. 1997)
Lehman v. Arnold, 484 N.E.2d 473 (Ill. App. Ct. 1985)
Lukosus v. First Tennessee Bank National Association, 2003 U.S. Dist. LEXIS11941 (W.D. Va. July 9, 2003, unpublished opinion), aff’d, 89 Fed. Appx. 412 ( 4th Cir.2004)
Marble v. First American Flood Data Services, Inc., et.al, Dkt. # 87-23-01 (Wash.Sup. Ct. June 2004)
Mid-America Nat’l Bank v. First Savs. & Loan Ass’n, 737 F. 2d 638 (7th Cir.1984), cert. denied, 469 U.S. 1160 (1985)
Mid-America Nat’l Bank v. First Savs. & Loan Ass’n, 515 N.E.2d 176 (Ill. App.3d 1987)
Pippin v. Burkhalter, 279 S.E.2d 603 (S.C. 1981)
RBJ Apartments, Inc. v. Gate City Savings & Loan Association, 315 N. W.2d 284(N.D. 1982)
Sutton v. Citimortgage, Inc., et. al, 2006 U.S. Dist. LEXIS 82997 (Nov. 14, 2006S.D. Miss.)
Till v. Unifirst Federal Sav. and Loan Ass’n, 653 F.2d 152 (5th Cir. 1981)
Wentwood Woodside I LP v. GMAC Commercial Mortgage Corporation, 419 F.3d310 (5th Cir. 2005)
Preemption
Clark v. AmSouth Mortgage Company, et. al, 2007 U.S. Dist. LEXIS 689 (M.D.Ala. 2007)
Removal/ Remand
Clark v. AmSouth Mortgage Company, et. al, 2007 U.S. Dist. LEXIS 689 (M.D.Ala. 2007) (state law claims against flood determination company remanded)
Doss v. Cuevas, et. al., 2006 U.S. Dist. LEXIS 45802 (E.D. La. July 5, 2006) (nofederal jurisdiction under act for claims against lender or flood determination company)
Hofbauer v. Northwestern Nat. Bank of Rochester,700 F.2d 1197 (8th Cir. 1983)(remanded state law claims against lender)
Hulbert v. Wells Fargo Bank, N.A., et. al, 2005 U.S. Dist. LEXIS 42778 (N.D. Fla.Nov. 10, 2005)(no federal jurisdiction under act against lender or flood determinationcompany, state law claims remanded)
22
State Law Claims -
No
Audler, v. Flood Zone Determination Services et al, Civil Action No. 06-6525; Inthe United States District Court for the Eastern District of Louisiana (flood determinationcompanies)
Barras v. Community Home Loan, LLC, et al,2007 U.S. Dist. LEXIS 3648 (Jan.18, 2007 W.D. La.) (flood determination company)
Callahan v. Countrywide Home Loans, Inc., 2006 U.S. Dist. LEXIS 51217 (N.D.Fla. 2006) (lender)
Callahan v. Countrywide Home Loans, Inc., 2006 U.S. Dist. LEXIS 76372 (N.D.Fla. 2006) (lender and flood determination company)
Clark v. AmSouth Mortgage Company, et. al, 2007 U.S. Dist. LEXIS 689 (M.D.Ala. 2007) (lender and servicers)
Dollar v. Nationsbank of Georgia, N.A.,534 S.E.2d 851 (Ct. App. Ga. 2000) (lender)
Ford v. First American Flood Data, 2006 U.S. Dist. LEXIS 74350 (M.D. N.C.Oct. 11, 2006) (lender and flood determination company)
Laurent v. Flood Data Services, Inc., et al.,766 N.E.2d 221 (Ohio App. 2001)(flood determination company)
Lehman v. Arnold, 484 N.E.2d 473 (Ill. App. Ct. 1985)(lender)
Lukosus v. First Tennessee Bank National Association,2003 U.S. Dist. LEXIS 11941 (W.D. Va. July 9, 2003, unpublished opinion), aff’d, 89 Fed. Appx. 412 (4th Cir.2004) (lender)
Marble v. First American Flood Data Services, Inc., et.al, Dkt. # 87-23-01 (Wash.Sup. Ct. June 2004)(lender and flood determination company)
Mid-America Nat’l Bank v. First Savs. & Loan Ass’n, 515 N.E.2d 176 (Ill. App. 3d 1987) (lender)
23
RBJ Apartments, Inc. v. Gate City Savings & Loan Association, 315 N. W.2d 284 (N.D. 1982)(lender)
Wentwood Woodside I LP v. GMAC Commercial Mortgage Corporation, 419 F.3d310 (5th Cir. 2005)(lender)
Yes/Maybe
Brill v. Northern California Savings & Loan Ass’n., 555 F. Supp. (N.D. Cal.1982)(lender)
Clark v. AmSouth Mortgage Company, et. al, 2007 U.S. Dist. LEXIS 689 (M.D.Ala. 2007) (flood determination company)
Hofbauer v. Northwestern Nat. Bank of Rochester,700 F.2d 1197 (8th Cir.1983)(lender)
Mid-America Nat’l Bank v. First Savs. & Loan Ass’n, 737 F. 2d 638 (7th Cir.1984), cert. denied (1985) (federal claims against lender barred, state claims dismissedwithout prejudice)
Sutton v. Citimortgage, Inc., et. al, 2006 U.S. Dist. LEXIS 82997 (Nov. 14, 2006S.D. Miss.)(court denied motions to dismiss by lender and flood determination companyon both federal and state claims)
Statutory Immunity
Lender?
Yes - Clark v. AmSouth Mortgage Company, et. al, 2007 U.S. Dist. LEXIS 689 (M.D. Ala. 2007)
Flood Determination Company?
No - Clark v. AmSouth Mortgage Company, et. al, 2007 U.S. Dist. LEXIS 689(M.D. Ala. 2007)
24
Case Compilation by Jurisdiction
Federal
Arvai v. First Federal Savings & Loan Association, 698 F.2d 683 (4th Cir. 1983)
Audler, v. Flood Zone Determination Services et al, Civil Action No. 06-6525; Inthe United States District Court for the Eastern District of Louisiana.
Barras v. Community Home Loan, LLC, et al, 2007 U.S. Dist. LEXIS 3648 (Jan.18, 2007 W.D. La.)
Brill v. Northern California Savings & Loan Ass’n., 555 F. Supp. (N.D. Cal. 1982)
Callahan v. Countrywide Home Loans, Inc. 2006 U.S. Dist. LEXIS 51217 (N.D.Fla. 2006)
Clark v. AmSouth Mortgage Company, et. al, 2007 U.S. Dist. LEXIS 689 (M.D.Ala. 2007)
Cruey v. First American Flood Data Services, Inc., 174 F.Supp.2d 525 (E.D. Ky.2001)
Doss v. Cuevas, et. al., 2006 U.S. Dist. LEXIS 45802 (E.D. La. July 5, 2006)(nofederal jurisdiction under act for claims against lender or flood determination company)
Ford v. First American Flood Data, 2006 U.S. Dist. LEXIS 74350 (M.D. N.C.Oct. 11, 2006)
Hofbauer v. Northwestern Nat. Bank of Rochester, 700 F.2d 1197 (8th Cir. 1983)
Hulbert v. Wells Fargo Bank, N.A., et. al, 2005 U.S. Dist. LEXIS 42778 (N.D. Fla.Nov. 10, 2005)(no federal jurisdiction under act against lender or flood determinationcompany, state law claims remanded)
Jack v. City of Wichita, 933 P.2d 787 (Kan. Ct. App. 1997)(lender)
Lehman v. Arnold, 484 N.E.2d 473 (Ill. App. Ct. 1985)(lender)
25
Lukosus v. First Tennessee Bank National Association, 2003 U.S. Dist. LEXIS11941 (W.D. Va. July 9, 2003, unpublished opinion), aff’d, 89 Fed. Appx. 412 ( 4th Cir.2004) (lender)
Mid-America Nat’l Bank v. First Savs. & Loan Ass’n, 737 F. 2d 638 (7th Cir.1984), cert. denied, 469 U.S. 1160 (1985)
Pippin v. Burkhalter, 279 S.E.2d 603 (S.C. 1981)(lender)
RBJ Apartments, Inc. v. Gate City Savings & Loan Association., 315 N. W.2d 284(N.D. 1982)(lender)
Sutton v. Citimortgage, Inc., et. al, 2006 U.S. Dist. LEXIS 82997 (Nov. 14, 2006S.D. Miss.)(court denied motions to dismiss by lender and flood determination companyon both federal and state claims)
Till v. Unifirst Federal Sav. and Loan Ass’n, 653 F.2d 152 (5th Cir. 1981)(lender)
Wentwood Woodside I LP v. GMAC Commercial Mortgage Corporation, 419 F.3d310 (5th Cir. 2005)(lender)
State Law
Alabama
Clark v. AmSouth Mortgage Company, et. al, 2007 U.S. Dist. LEXIS 689 (M.D.Ala. 2007) (lender and servicers)
California
Brill v. Northern California Savings & Loan Ass’n., 555 F. Supp. (N.D. Cal. 1982)(lender)
Callahan v. Countrywide Home Loans, Inc. 2006 U.S. Dist. LEXIS 51217 (N.D.Fla. 2006) (lender)
Callahan v. Countrywide Home Loans, Inc. 2006 U.S. Dist. LEXIS 76372 (N.D.Fla. 2006) (lender and flood determination company)
Hulbert v. Wells Fargo Bank, N.A., et. al, 2005 U.S. Dist. LEXIS 42778 (N.D. Fla. Nov. 10, 2005)(no federal jurisdiction under act against lender or flood determinationcompany, state law claims remanded)
Georgia
Dollar v. Nationsbank of Georgia, N.A., 534 S.E.2d 851 (Ct. App. Ga. 2000)(lender)
Illinois
Lehman v. Arnold, 484 N.E.2d 473 (Ill. App. Ct. 1985)(lender)
Mid-America Nat’l Bank v. First Savs. & Loan Ass’n, 515 N.E.2d 176 (Ill. App.3d 1987) (lender)
Kansas
Jack v. City of Wichita, 933 P.2d 787 (Kan. Ct. App. 1997)(lender)
Louisiana
Audler, v. Flood Zone Determination Services et al, Civil Action No. 06-6525; Inthe United States District Court for the Eastern District of Louisiana (flood determinationcompanies)
Barras v. Community Home Loan, LLC, et al, 2007 U.S. Dist. LEXIS 3648 (Jan.18, 2007 W.D. La.) (flood determination company)
Hofbauer v. Northwestern Nat. Bank of Rochester,700 F.2d 1197 (8th Cir.1983)(lender)
Mississippi
Sutton v. Citimortgage, Inc., et. al, 2006 U.S. Dist. LEXIS 82997 (Nov. 14, 2006S.D. Miss.)(court denied motions to dismiss by lender and flood determination companyon both federal and state claims)
North Carolina
Ford v. First American Flood Data, 2006 U.S. Dist. LEXIS 74350 (M.D. N.C.Oct. 11, 2006) (lender and flood determination company)
North Dakota
RBJ Apartments, Inc. v. Gate City Savings & Loan Association., 315 N. W.2d 284(N.D. 1982)(lender)
Ohio
Laurent v. Flood Data Services, Inc., et al.,766 N.E.2d 221 (Ohio App. 2001)(flood determination company)
South Carolina
Pippin v. Burkhalter, 279 S.E.2d 603 (S.C. 1981)(lender)
South Dakota
Sutton v. Citimortgage, Inc., et. al, 2006 U.S. Dist. LEXIS 82997 (Nov. 14, 2006S.D. Miss.)(court denied motions to dismiss by lender and flood determination companyon both federal and state claims)
Tennessee
Lukosus v. First Tennessee Bank National Association,2003 U.S. Dist. LEXIS11941 (W.D. Va. July 9, 2003, unpublished opinion), aff’d, 89 Fed. Appx. 412 ( 4th Cir.2004) (lender)
28
Texas
Wentwood Woodside I LP v. GMAC Commercial Mortgage Corporation, 419 F.3d310 (5th Cir. 2005)(lender)
Virginia
Lukosus v. First Tennessee Bank National Association, 2003 U.S. Dist. LEXIS11941 (W.D. Va. July 9, 2003, unpublished opinion), aff’d, 89 Fed. Appx. 412 ( 4th Cir.2004) (lender)
Washington
Marble v. First American Flood Data Services, Inc., et.al, Dkt. # 87-23-01 (Wash.Sup. Ct. June 2004)(lender and flood determination company)
LLEGAL GLOSSARY
29
Affirmative defense - A defense raised in a responsive pleading (answer) relating a new matter as a defenseto the complaint.
Appeal - A proceeding brought to a higher court to review a lower court decision.
Appellate court - A court having jurisdiction to hear appeals and review a trial court's procedure.
Bench trial - (Also known as court trial.) Trial without a jury in which a judge decides the facts.
Bifurcate - To separate the issues in a case so that one issue or set of issues can be tried and resolved beforethe others.
Binding precedent - The decisions of higher courts that set the legal standards for similar cases in lowercourts within the same jurisdiction.
Breach of contract - An unjustified failure to perform when performance is due.
Brief - A written argument by counsel arguing a case, which contains a summary of the facts of the case,pertinent laws, and an argument of how the law applies to the fact situation.
Burden of proof - In the law of evidence, the necessity or duty of affirmatively proving a fact or facts indispute on an issue raised between the parties in a lawsuit. The responsibility of proving a point (the burdenof proof). It deals with which side must establish a point or points.
Cause of action - The basis of a lawsuit founded on legal grounds and alleged facts which, ifproved, would constitute all the "elements" required by statute or common law.
Civil - Relating to private rights and remedies sought by civil actions as contrasted with criminalproceedings.
Civil procedure - The rules and process by which a civil case is tried and appealed, including thepreparations for trial, the rules of evidence and trial conduct, and the procedure for pursuing appeals.
Class action - A lawsuit brought by one or more persons on behalf of a larger group.
Comparative negligence - The rule under which negligence is measured by percentage, and damages arediminished in proportion to the amount of negligence attributable to the person seeking recovery.
Complainant - The party who complains or sues; one who applies to the court for legal redress. (syn. ofplaintiff.)
Complaint - The legal document that usually begins a civil lawsuit. It states the facts and identifies theaction the court is asked to take.
Contract - An agreement between two or more persons which creates an obligation to do or not to do aparticular thing. A legally enforceable agreement between two or more competent parties made either orallyor in writing.
Contributory negligence - The rule of law under which an act or omission of plaintiff is a contributingcause of injury and a bar to recovery.
Counterclaim - A claim made by the defendant in a civil lawsuit against the plaintiff; in essence, a counterlawsuit within a lawsuit.
Cross-Claim - A claim by codefendants or coplaintiffs in a civil case against each other and not againstpersons on the opposite side of the lawsuit.
Damages - Money awarded by a court to a person injured by the unlawful actor negligence of anotherperson.
Decision - The opinion of the court in concluding a case at law.
LLEGAL GLOSSARY
30
Decree - An order of the court. A final decree is one that fully and finally disposes of the litigation. (Seeinterlocutory.)
Deposition - Testimony of a witness or a party taken under oath outside the courtroom, the transcript ofwhich becomes a part of the court's file.
Dismissal Motion - Motion that alleges the petition or complaint fails to state a cause of action on its face,either because it is barred as a matter of law or the alleged facts do not constitute a legal cause of action.
Direct evidence - Proof of facts by witnesses who saw acts done or heard words spoken.
Directed verdict - In a case in which the plaintiff has failed to present on the facts of his case properevidence for jury consideration, the trial judge may order the entry of a verdict without allowing the jury toconsider it.
Dismissal - The termination of a lawsuit.
Dismissal with Prejudice – Court action that prevents an identical lawsuit from being filed later.
Dismissal without Prejudice – Court action that allows the later filing.
Diversity of citizenship - The condition when the party on one side of a lawsuit is a citizen of one state and the opposite party is a citizen of another state.
Estoppel - An impediment that prevents a person from asserting or doing something contrary to his ownprevious assertion or act.
Fraud - A false representation of a matter of fact which is intended to deceive another.
Implied contract - A contract not created or evidenced by the explicit agreement of the parties but oneinferred by law; as the use of electric power in your home implies a contract with the light company.
Interrogatories - A set or series of written questions propounded to a party, witness, or other person havinginformation or interest in a case; a discovery device.
Joint and several liability - A legal doctrine that makes each of the parties who are responsible for aninjury, liable for all the damages awarded in a lawsuit if the other parties responsible cannot pay.
Judgment - The official and authentic decision of a court of justice upon the rights and claims of parties toan action or suit submitted to the court for determination. (See also summary judgment.)
Motion - An application made to a court or judge which requests a ruling or order in favor of the applicant.
Negligence - Failure to use care which a reasonable and prudent person would use under similarcircumstances.
Nonfeasance - Nonperformance of an act which should be performed; omission to perform a required dutyor total neglect of duty.
Personal property - Anything a person owns other than real estate.
Preemption - The rule of law that if the federal government through Congress has enactedlegislation on a subject matter it shall be controlling over state laws and/or preclude the state fromenacting laws on the same subject if Congress has specifically stated it has "occupied the field." IfCongress has not clearly claimed preemption, a federal or state court may decide the issue on thebasis of history of the legislation (debate in Congress) and practice
Prima facie case - A case that is sufficient and has the minimum amount of evidence necessary to allow it tocontinue in the judicial process.
Private right of action - The ability of a private citizen to sue for breach of a law or regulation. Sometimeslaws expressly permit private citizens to sue to enforce statutes. If the law is silent, a court may permit
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citizens to sue under an "implied private right of action." Sometimes the courts do not let citizens sue, unlessthe law expressly permits it.
Privity - contact, connection or mutual interest between parties. The term is particularly importantin the law of contracts, which requires that there be "privity" if one party to a contract can enforcethe contract by a lawsuit against the other party.
Promissory estoppel - A promise which estops the promisee from asserting or taking certain action.
Proximate cause - The last negligent act which contributes to an injury. A person generally is liable only ifan injury was proximately caused by his or her action or by his or her failure to act when he or she had aduty to act.
Punitive damages - Money award given to punish the defendant or wrongdoer.
Putative - Alleged; supposed; reputed.
Real property - Land, buildings, and whatever is attached or affixed to the land. Generally synonymouswith the words "real estate."
Remand - To send a dispute back to the court where it was originally heard. Usually it is an appellate courtthat remands a case for proceedings in the trial court consistent with the appellate court's ruling.
Removal - The transfer of a state case to federal court for trial; in civil cases, because the parties are fromdifferent states; in criminal and some civil cases, because there is a significant possibility that there could notbe a fair trial in state court.
Standing - The right to file a lawsuit or file a petition under the circumstances. A plaintiff will havestanding to sue in federal court if a) there is an actual controversy and b) a federal statute gives thefederal court jurisdiction or c) the parties are residents of different states or otherwise fit theconstitutional requirements for federal court jurisdiction.
Summary judgment - A judgment given on the basis of pleadings, affidavits, and exhibits presented for therecord without any need for a trial. It is used when there is no dispute as to the facts of the case and one partyis entitled to a judgment as a matter of law.
Third-party beneficiary - A person who is not a party to a contract but has legal rights to enforcethe contract or share in proceeds because the contract was made for the third party's benefit.
Third-party complaint - A petition filed by a defendant against a third party (not presently a party to thesuit) which alleges that the third party is liable for all or part of the damages plaintiff may win fromdefendant.
Tort - A private or civil wrong or injury for which the court provides a remedy through an action fordamages.
Trial brief - A written document prepared for and used by an attorney at trial. It contains the issues to betried, synopsis of evidence to be presented and case and statutory authority to substantiate the attorney'sposition at trial.
