This paper is intended to update for 2008 the compilation of case summaries prepared by Jacalyn D. Scott of Wilshire Scott & Dyer P.C. for the National Flood Determination Association 2007 Annual Meeting. It compiles court decisions involving a claim for damages resulting from an erroneous flood determination. A brief description of the facts, the issues and the result of each case is provided. For additional reference, each case is included in four reference groupings: subject matter, jurisdiction, alphabetical and chronologically.
These summaries are by necessity the authors’ interpretations
and are no substitute for a thorough reading of the case if relied on for any business purpose or legal argument. The summaries are only current through the date of this paper, March 25, 2008. The reader should determine whether there has been any further activity in the cases cited.
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TABLE OF CONTENTS I. NEW CASE REPORTS FOR 2008 .....................................................................................1
Audler v. CBC Innovis, et al.; Civil Action No. 06-6525 (E.D. La. 2006) (Prior Decision) ..............................................................................................................................1
Audler v. CBC Innovis, Inc., et al.; 2008 U.S. App. LEXIS (5th Cir. 2008) (2008 Update) .................................................................................................................................2
Barras v. Community Home Loan, LLC, et al.; 2007 U.S. Dist. LEXIS 3648 (Prior Decision) ....................................................................................................................3
Barras v. Community Home Loan, LLC, et al.; 2007 WL 1805681 (2008 Update) ...........3
Barras v. Community Home Loan, LLC, et al.; 2007 WL 2156558 (2008 Update) ...........4
Duhon v. Trustmark National Bank and Fidelity National Financial, Inc. d/b/a LSI Flood Services; Civil Action No. 2006-000169 (Cir. Ct., Miss.) ........................................5
Ellis v. Countrywide Home Loans, Inc. and X, Y, Z Corps.; Civil Action No. 1:07cv118-HS ......................................................................................................................7
Kearney v. First Horizon Home Loan Corp.; 2007 WL 4302963 (S.D. Miss.) ...................7
Lee v. Landsafe Flood Determination, Inc. and Countrywide Home Loans, Inc.; Civil Action No. 1:06-cv-108LG-JMR (S.D. Miss.) ...........................................................8
Lusins v. First American Real Estate Solutions of Texas; 2007 WL 1745625 (S.D. Miss.) ..........................................................................................................................9
Paul v Countrywide Home Loans, Inc. and Landsafe Flood Determination, Inc.; Civil Action No. 1:06cv432LG-RHW (S.D. Miss.) ..........................................................10
Rebekah Scondras v. LSI Flood Services, et al., No. 2007-00998 (Pa. D. & C. 2007); Docket No. 2007-00998 (Wyoming Co., Pa.) ........................................................11
Workman v. First American Flood Data Services, et al.; No. 2:07-cv-0636 (S.D., WV)....................................................................................................................................12
Brill v. Northern California Savings & Loan Ass’n, et al., 555 F. Supp. (N.D. Cal. 1982) ..................................................................................................................................14
Callahan v. Countrywide Home Loans, Inc., et al., 2006 U.S. Dist. LEXIS 51217 (N.D. Fla. 2006) .................................................................................................................15
Callahan v. Countrywide Home Loans, Inc., et al., 2006 U.S. Dist. LEXIS 76372 (N.D. Fla.): .........................................................................................................................16
Clark v. AmSouth Mortgage Company, et al., 2007 U.S. Dist. LEXIS 689 (M.D. Ala. 2007) ..........................................................................................................................16
Cruey v. First American Flood Data Services, Inc., 174 F.Supp.2d 525 (E.D. Ky. 2001) ..................................................................................................................................17
Dollar v. Nationsbank of Georgia, N.A., 534 S.E.2d 851 (Ct. App. Ga. 2000) ................18
Doss v. Cuevas, et al., 2006 U.S. Dist. LEXIS 45802 (E.D. La., July 5, 2006) ................18
Ford v. First American Flood Data Services, Inc., 2006 U.S. Dist. LEXIS 74350 (M.D. N.C. 2006) ...............................................................................................................19
Hanson Business Park, L.P. v. First National Title Insurance Co., 209 S.W.3d 867 ........20
Hofbauer v. Northwestern Nat. Bank of Rochester, 700 F.2d 1197 (U.S. App. 8th Cir.) ....................................................................................................................................21
Hulbert v. Wells Fargo Bank, N.A., et al., 2005 U.S. Dist. LEXIS 42778 (N.D. Fla. 2005) ...........................................................................................................................21
Jack v. City of Wichita, et al., 933 P.2d 787 (Kan. Ct. App. 1997)...................................22
Laurent v. Flood Data Services, Inc., 766 N.E.2d 221 (Ohio App. 2001) .........................22
Lehman v. Arnold, et al., 484 N.E. 2d 473 (Ill. App. Ct. 1985) ........................................23
Lukosus v. First Tennessee Bank National Association, et al., 2003 U.S. Dist. LEXIS 11941 (W.D. Va. July 9, 2003, unpublished opinion) aff’d 89 Fed. Appx. 412 (4th Cir. 2004) .............................................................................................................23
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Marble v. First American Flood Data Services, Inc., et al., 852A.2d 641 (Vt. 2004) ..................................................................................................................................24
McKinley, et al, v. Northern Associates, et al., 1997 Mass. Super. LEXIS 113 (Mass. Sup. Ct. 1997) ........................................................................................................24
Mid-America Nat’l Bank v. First Savs. & Loan Ass’n, et al., 737 F.2d 638 (7th Cir. 1984) cert. denied, 469 U.S. 1160 (1985) ...................................................................25
Mid-America Nat’l Bank v. First Savs. & Loan Ass’n, et al., 515 N.E.2d 176 (Ill. App. 3d 1987) ....................................................................................................................25
Peal v. N.C. Farm Bureau Mut. Ins. Co., 212 F.Supp.2d 508 (E.D. N.C. 2002) ...............26
Pippin v. Burkhalter, et al., 279 S.E.3d 603 (S.C. 1981) ...................................................26
RBJ Apartments, Inc. v. Gate City Savings & Loan Association, 315 N.W.2d 284 (N.D. 1982) ........................................................................................................................27
Sutton v. Citimortgage, Inc., et al., 2006 U.S. Dist. LEXIS 82997 (Nov. 14, 2006 S.D. Miss.) .........................................................................................................................27
Till v. Unifirst Federal Sav. and Loan Ass’n, et al., 653 F.2d 152 (5th Cir. 1981) ...........28
Wentwood Woodside I LP v. GMAC Commercial Mortgage Corporation, 419 F.3d 310 (5th Cir. 2005) ....................................................................................................28
III. CASE COMPILATION SUBJECT MATTER INDEX ....................................................29
A. CLASS ACTIONS CASES ...................................................................................29
B. CASES INVOLVING FEDERAL LAW CLAIMS ..............................................29
C. CASES INVOLVING STATE LAW CLAIMS ....................................................30 NO RECOVERY ...................................................................................................30 YES/MAYBE ........................................................................................................32
D. CASES INVOLVING FLOOD DETERMINATION COMPANY AS DEFENDANT........................................................................................................32
E. CASES INVOLVING LENDER AS DEFENDANT ............................................33
F. CASES INVOLVING PREEMPTION..................................................................35
G. CASES INVOLVING REMOVAL/ REMAND ...................................................35
IV. CASE COMPILATION BY JURISDICTION ..................................................................36 A. FEDERAL COURT CASES .................................................................................36
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B. STATE LAW CASES............................................................................................37 CONNECTICUT ...................................................................................................37 GEORGIA..............................................................................................................38 ILLINOIS ...............................................................................................................38 KANSAS................................................................................................................38 MASSACHUSETTS..............................................................................................38 MISSISSIPPI .........................................................................................................38 NORTH DAKOTA ................................................................................................38 OHIO......................................................................................................................38 PENNSYLVANIA .................................................................................................38 SOUTH CAROLINA .............................................................................................38 VERMONT ............................................................................................................39 WEST VIRGINIA .................................................................................................39
V. LEGAL GLOSSARY ........................................................................................................40
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I. NEW CASE REPORTS FOR 2008 The following section will summarize cases of interest that were decided following the preparation of the 2007 Case Summary that was presented at the NFDA Annual Meeting in 2007. By far, the most significant decision of the year was the latest chapter in the matter of Audler v. CBC Innovis, et al. in early 2008. This decision, as well as other highlights for 2008, are discussed below. 1. Audler v. CBC Innovis, et al. (Prior Decision)
Date of Decision: January 24, 2007 Jurisdiction: United States District Court for the Eastern District of Louisiana Citation: Docket No. 06-6525
By way of background, in or about 2006, Audler, a resident of St. Bernard Parish,
filed this class action in Louisiana state court in New Orleans, on behalf of himself and all others similarly situated, including all homeowners and business owners that: (1) sustained flood damage from Hurricanes Katrina and Rita in the State of Louisiana; (2) had no flood insurance; and (3) had a flood determination that incorrectly determined their property to be outside of a SFHA. Thirty-one defendants - supposedly all flood determination companies - were actually named, but a putative defendant class was also alleged to include ALL entities that made flood determinations in Louisiana in connection with the financing of real property prior to the landfall of Hurricanes Katrina and Rita. The case was removed to federal court under the Class Action Fairness Act. Removal was also based on diversity of citizenship premised on the allegations that because all defendants, other than CBC Innovis (the company that performed the Audler’s flood determination), were fraudulently or improperly joined, they should not be considered for the purposes of diversity, and diversity existed between Audler and CBC. Removal was further grounded on the argument that the claims required a construction of a federal statute, the National Flood Insurance Act, and that because plaintiff argued defendants owed a duty under the federal act, a federal claim was alleged. Plaintiff did not contest the removal to federal court.
Two motions to dismiss were filed, one on behalf of all defendants unrelated to
the actual Audler determination and one on behalf of CBC Innovis. The “other” defendants’ motion argued that Audler had no standing to bring any claims against them because nothing they did or failed to do caused him any loss and that their joinder in the case was improper.
CBC’s motion argued that a flood determination company owes no duty to a
borrower, only its customer, the lender. CBC Innovis’ SFHD form in this case stated:
THIS FLOOD DETERMINATION IS PROVIDED TO THE LENDER PURSUANT TO THE FLOOD
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DISASTER PROTECTION ACT AND FOR NO OTHER PURPOSE. IT DOES NOT CREATE ANY PRIVATE CAUSE OR ACTION ON BEHALF OF THE BORROWERS AGAINST THE LENDER OR THE FLOOD DETERMINATION PROVIDER.
CBC cited the court to decisions around the country that hold the Act does not
create a private right of action for borrowers against regulated lenders or flood determination companies. The motion further argued that the state common law claims failed because CBC owed no duty to the plaintiff. Finally, the contract-based claim failed because there was no contractual relationship between CBC and Audler. In response, Audler argued that he was not making a federal claim under the Act. He further stated that the simple fact that there was no implied remedy under the Act did not mean that his state common law claims of negligence, negligent misrepresentation, failure to warn and detrimental reliance were preempted. Audler argued that his Louisiana state law claims and those of his class members, survived under a duty-risk analysis. The duty-risk analysis requires that conduct conform to certain standards rather than just those that are in privity, including for example intended users.
On January 24, 2007, the district court granted CBC’s motion and the other
pending motions were dismissed as moot following oral argument. On February 21, 2007, Audler filed a timely Notice of Appeal to the United States Court of Appeals for the Fifth Circuit. 2. Audler v. CBC Innovis, Inc., et al. (2008 Update)
Date of Decision: February 26, 2008 Jurisdiction: United States Court of Appeals for the Fifth Circuit Citation: 2008 U.S. App. LEXIS (5th Cir. 2008)
At issue on appeal was the decision of the United States District Court for the Eastern District of Louisiana grant of defendants’ Motion to Dismiss. The district court’s decision was based on the litany of federal and state law cases holding that the Act does not give rise to a private cause of action against lenders or flood zone determination companies under federal or state law. Plaintiff conceded that his complaint did not state a claim against defendant, CBC Innovis, Inc., arising under federal law. Instead, plaintiff relied strictly on Louisiana state law to state his cause of action.
It is worth noting that in the district court, plaintiff sought certification of a class action against a number of federally regulated lending companies and flood zone determination companies. The proposed class action defendants had no connection whatsoever to the mortgage loan transaction that gave rise to Audler’s claims against defendant, CBC Innovis, Inc. The class action claim was dismissed by the district court and affirmed by the Fifth Circuit on appeal.
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The court determined as a matter of law that CBC did not owe a duty to Audler because he was not an intended beneficiary of the Act. As a result, the Fifth Circuit affirmed the district court’s dismissal of Audler’s claims for negligence, negligent misrepresentation, failure to warn, detrimental reliance and breach of warranty.
3. Barras v. Community Home Loan, LLC, et al. (Prior Decision)
Date of Decision: January 18, 2007 Jurisdiction: United States District Court, Western District of Louisiana Citation: 2007 U.S. Dist. LEXIS 3648
Plaintiffs’ property suffered flood damage and was destroyed by Hurricane Rita.
The initial loan was made by Community Home Loan, LLC. An allegedly erroneous flood determination was provided by Stewart Lender Services Inc. Community sold the loan to Chase Home Finance and Chase contracted with defendant Quantrix, LLC to perform another flood determination of the property. Quantrix also determined the property was not in a SFHA. A subsequent survey determined the property was in Zone AE. The borrowers sued in state court naming their insurance agent, Stewart, Community, Chase and Quantrix as defendants. The case was removed to federal court on the basis of diversity. Stewart’s motion to dismiss argued it owed no duty to the plaintiffs under state or federal law. The court’s opinion emphasizes the contractual clause in Stewart’s SFHD form that states the determination is provided solely for the use and benefit of the lender and “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 the value of a property.” The court also noted the fact that the Flood Disaster Protection Act (the “Act”) does not prevent borrowers from purchasing flood determination regardless of the determination. The court cited with approval the cases cited by Stewart that borrowers have no federal or state law claim for an erroneous flood determination and granted the motion to dismiss. 4. Barras v. Community Home Loan, LLC, et al. (2008 Update)
Date of Decision: June 21, 2007 Jurisdiction: United States District Court, Western District of Louisiana Citation: 2007 WL 1805681
As part of their claims, plaintiffs allege that through their agent and attorney-in-
fact, Lynda Ellis d/b/a Woodlands Property Management, they executed a mortgage in favor of defendant, Community Home Loan. Plaintiffs allege that Woodlands was negligent in representing plaintiffs’ interests in anticipation of the loan closing, that it was
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Woodland’s responsibility to obtain the necessary insurance coverage for the property and that Woodlands had information indicating that the property was in a SFHA before and after the loan closing, but never told plaintiffs. Woodlands filed a motion for summary judgment arguing that there was no genuine issue of material fact and that it was entitled to judgment as a matter of law. This time, the court focused on the fact that Woodlands was not authorized or obligated to obtain flood insurance on plaintiffs’ behalf. Furthermore, as plaintiffs declined to purchase flood insurance, the court found that Woodlands had no knowledge or reason to know that the property was located in a SFHA. The court granted Woodlands’ motion for summary judgment, dismissing with prejudice all claims against Woodlands. 5. Barras v. Community Home Loan, LLC, et al. (2008 Update)
Date of Decision: July 24, 2007 Jurisdiction: United States District Court, Western District of Louisiana Citation: 2007 WL 2156558
Defendants, Karla K. Hunt and Shelter Insurance Company also filed a motion for
summary judgment in response to plaintiffs’ claims. Plaintiffs maintained that defendants had information that their property was in an SFHA prior and subsequent to their 2004 loan closing, failed to advise Plaintiffs of this fact and failed to ensure that plaintiffs had flood insurance in force. Defendants argued that plaintiffs had allowed an earlier flood insurance policy to lapse through non-payment in 1999 and had been notified of same by defendants. Following the cancellation of the policy in 1999, defendants took no further efforts to procure flood insurance on the property. In light of the facts presented by defendants, the court held that the claims against Hunt and Shelter Insurance Company should be dismissed because plaintiffs were unable to establish a necessary element of their claim – causation. 6. Cress v. Geotrac, Inc.
Date of Decision: 2008 Jurisdiction: Circuit Court, Wood County, West Virginia Citation: Docket No. 07-C-40
Following damage to plaintiff’s property from a flood, plaintiff asserted a claim
for negligence solely against Geotrac for its alleged failure to properly certify whether plaintiff’s property was in an SFHA. Neither the mortgage lender nor any other parties were named as defendants. The negligence claim was based upon an alleged duty from Geotrac to the Cresses to properly certify whether the property was located in a SFHA.
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Geotrac filed a motion to dismiss which was heard in early 2008. While the court has not issued final findings of fact or conclusions of law, at the conclusion of oral argument on the motion, the court stated that it would rule in favor of Geotrac because it found that the federal law preempted any state law tort claims by aggrieved homeowner against those companies performing flood certifications.
7. Duhon v. Trustmark National Bank and Fidelity National Financial, Inc. d/b/a LSI Flood Services
Date of Decision: September 27, 2007 Jurisdiction: Circuit Court for Jackson County, Mississippi Citation: Civil Action No. 2006-000169
In Duhon, plaintiffs alleged that their mortgage lender and/or its designated
determination company were responsible to them for erroneously determining that the Duhons’ home was not in a SFHA. The factual allegations of the Duhons’ complaint were no different from those of plaintiffs before them. Essentially, the material allegations related to the lender and flood zone determination company’s obligations under the Act in connection with the mortgage transaction associated with the purchase of plaintiffs’ home. Plaintiffs alleged that the lender and determination company breached these obligations to them and were, therefore, liable to them for state law claims of breach of contract, (Trustmark only) negligence and detrimental reliance.
Trustmark and LSI filed separate motions, Motion for Judgment on the Pleadings
and Motion to Dismiss, respectively, regarding the legal basis of plaintiffs’ claims. Both motions relied on Lusins and Lee and the unanimous body of federal and state case law denying private causes of action against lenders or determination companies for claims arising under the Act.
The Circuit Court for Jackson County, Mississippi granted the motions on two
grounds: 1) concerns of federalism regarding application of the Act; and 2) the lack of factual support for plaintiffs’ detrimental reliance claim. The Court’s earlier decision was based upon District Court opinions in Callahan v. Countrywide Home Loans, Inc., 2006 WL 2993178 (N.D. Fla. 2006) and Ford v. First American Flood Data Svcs., Inc., 2006 WL 2921432 (M.D.N.C. 2006). The Circuit Court, just like the District Court in Lusins, held that if presented to it, the Mississippi Supreme Court would adopt the “unanimous body of case law” and determine that plaintiffs cannot maintain private causes of action against lenders or flood zone determination companies under Mississippi law. Simply put, the court found that plaintiffs were not the intended beneficiaries of the Act, thus their claims, arising under such Act were barred. The detrimental reliance claim was summarily dismissed on the basis of the language on the SFHD provided to the Duhons at closing for their mortgage loan. That language clearly (in bold and capitalized
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typeface) stated that the SFHD was performed for and provided to Trustmark only and could not be used or relied upon by any other person or party.
Duhon appears to be the only Mississippi state court case addressing claims based
on alleged erroneous flood zone determinations. 8. Duong v. Allstate Insurance Company, et al.
Date of Decision: July 31, 2007 Jurisdiction: United States District Court, Eastern District of Louisiana Citation: 499 F.Supp.2d 700
Plaintiff financed the purchase of his New Orleans residence through a mortgage with Countrywide Home Loans, Inc. In connection with such mortgage transaction, plaintiff alleges that Countrywide, or its designee, performed a flood hazard determination and erroneously advised plaintiff that his home was not located within a SFHA. Despite the SFHD indicating that his home was not located within a SFHA, plaintiff nevertheless purchased flood insurance. However, unbeknownst to plaintiff, his flood insurance policy had lapsed prior to Hurricane Katrina.
Countrywide filed a Motion for Judgment on the Pleadings arguing that the Act does not give rise to a private right of action against it in favor of plaintiff under federal or state law. Plaintiff conceded that the Act does not give rise to such claims; however, he claimed that Louisiana state law supports his claims against Countywide for: 1) negligently performing the flood zone determination; and 2) failing to notify that his property was located in a SFHA. Countrywide argued that plaintiff’s state law claims were preempted by the Act.
The issue before the court was whether Louisiana state law recognized a claim on account of an alleged erroneous flood zone determination. The Court’s decision was grounded on two principles that have been discussed in detail herein. First, the Court denied plaintiff’s claims holding that the Louisiana Supreme Court would not recognize a state law cause of action because of concerns of federalism, i.e. not wanting to disrupt the federal regulatory scheme under the Act. This decision was based in large part on the decisions in Lukosus v. First Tennessee Bank Nat’l Ass’n, 2003 WL 21658263 (W.D. Va. 2003) and Callahan v. Countrywide Home Loans, Inc., 2006 WL 2993178 (N.D. Fla. 2006). Second, the Court granted defendant’s motion since the duty imposed upon lenders under the Act was not intended to benefit plaintiffs, or mortgagors. In other words, since defendant did not owe a legal duty to plaintiff/mortgagor in connection with the flood zone determination, there was no legal basis upon which plaintiff could base his state law claims against the lender.
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9. Ellis v. Countrywide Home Loans, Inc. and X, Y, Z Corps.
Date of Decision: March 4, 2008 Jurisdiction: United States District Court, Southern District of Mississippi Citation: Civil Action No. 1:07cv118-HSO-JMR
Plaintiffs alleged in their complaint negligence, negligent misrepresentation and detrimental reliance claims for compensatory and punitive damages. The claims against their mortgage lender were based on the following: 1) representing to and advising plaintiffs that their property was not within a SFHA; 2) erroneously determining that plaintiffs’ property was not in a SFHA; 3) failing to determine that plaintiffs’ property was in a SFHA; 4) failing to inform plaintiffs that their property was within a SFHA; and 5) failing to “keep” flood insurance on plaintiffs’ property.
Countrywide sought dismissal of the claims on the basis that the Act does not give rise to plaintiffs’ claims under either federal or state law. Plaintiffs’ response to the Motion for Summary Judgment, like several other plaintiffs have done before them, attempted to disclaim any reliance on the Act for their state law claims. Instead, plaintiffs relied on the decision McKinnon for purposes of such claims.
The court’s well written and reasoned opinion and Order entered March 4, 2008 granted defendant’s motion. In its order, the court recognized that it was undisputed that plaintiffs had no private right of action under federal law. The court, like the Lusins and Kearney courts, recognized that there was no controlling Mississippi appellate court cases respecting plaintiffs’ state law claims. As a result, the court was forced to make an “Erie guess” as to how the Mississippi Supreme Court would rule in a similar situation. The decision first recognizes that the Mississippi Supreme Court historically has been reluctant to create new causes of action. Against this background, and the district court’s earlier Lusins and Kearney decisions, it followed the unanimous body of federal and state law which holds that there is no private right of action for negligence claims based on duties arising under the Act. As to plaintiffs’ argument that their claims do not relate to duties imposed by the Act, the court held that the Mississippi Supreme Court would not recognize such causes of action based on concerns of federalism. 10. Kearney v. First Horizon Home Loan Corp.
Date of Decision: 2007 Jurisdiction: United States District Court, Southern District of Mississippi Citation: 2007 WL 4302963
The Kearney plaintiffs alleged negligence and negligent misrepresentation against
their mortgage company based on: 1) advising the plaintiffs that their improved property
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was not within a SFHA; 2) erroneously determining that the improved property was not in a SFHA; and 3) failing to “keep flood insurance on the property.” In this case, the defendant mortgage company had purchased the mortgage paper from the original mortgagee. Thus, it argued that they were entitled to further protections under § 4104b of the Act. The plaintiffs had purchased flood insurance for their property at the time they acquired same; however, when defendant acquired their mortgage and ceased collecting flood insurance escrow monies, the plaintiffs allowed their flood insurance to lapse. Plaintiffs argued that this lapse was the result of defendant’s September 29, 2004 correspondence to them in which defendant advised that since their property was not within a SFHA, the defendant would no longer collect flood insurance escrow and pay the flood insurance premium.
Notwithstanding plaintiffs’ argument to disclaim any right to relief arising under
the Act, the court recognized that this case was no different from the situation presented in Lusins. As a result, the Court relied upon Lusins and granted the lender's Motion for Summary Judgment. Specifically, the court wrote, because plaintiffs’ “allegations attempt to use the duties imposed by the Flood Disaster Protection Act to create a standard of care for their negligence claims, the Court finds that, as in Lusins, plaintiffs’ negligence claims must fail.” 11. Lee v. Landsafe Flood Determination, Inc. and Countrywide Home Loans, Inc.
Date of Decision: August 8, 2007 Jurisdiction: United States District Court, Southern District of Mississippi Citation: Civil Action No. 1:06-cv-108LG-JMR
Plaintiffs’ complaint alleged a “garden variety” state law negligence cause of
action. Just like plaintiffs in Lusins, the Lees based their claims upon obligations arising under the Act.
Countrywide’s Motion for Summary Judgment was based on the fact that
plaintiffs had not responded to Countrywide’s Requests for Admissions. As a result, Countrywide argued that the Lees admitted that they were not aware of any wrongful conduct on the part of Countrywide and that they were seeking no damages against Countrywide. The Lees did not respond to Countrywide’s motion. On July 11, 2007, the court entered its Opinion and Order granting Countrywide’s motion. Given the plaintiffs’ lack of response to Countrywide’s motion, the only important element of the Lee (Countrywide) decision is that the court’s opinion expressly extended Lusins to hold that claimants have no private right of action against their lender under federal and state law.
Landsafe subsequently filed a Motion to Dismiss plaintiffs’ claims. This motion
was not opposed by the Lees. In a one page opinion entered August 2, 2007, the court adopted its Lusins decision and granted Landsafe's motion.
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12. Lusins v. First American Real Estate Solutions of Texas
Date of Decision: June 14, 2007 Jurisdiction: United States District Court, Southern District of Mississippi Citation: 2007 WL 1745625
By all accounts, Lusins is the seminal case in Mississippi. It holds that plaintiffs
have no private right of action against flood zone determination companies under federal and state law. Lusins was the first such decision by a Mississippi state or federal court following Hurricane Katrina and has repeatedly been cited with approval in all similar cases.
In Lusins, plaintiffs alleged that in connection with the June 8, 2005 purchase of
their home in Gulfport, Mississippi, First American had erroneously determined that the structure was outside of a SFHA. Plaintiffs claimed that First American was negligent in: 1) advising plaintiffs that their home was outside a SFHA; and 2) preparing the FEMA Form 81-93. In addition, plaintiffs’ complaint also included a claim of detrimental reliance, essentially alleging that they relied on the SFHD in deciding to purchase the home. Despite this, after closing their mortgage loan, plaintiffs purchased the maximum amount of flood insurance available through the NFIP.
Instead of filing an answer, First American filed a Motion to Dismiss plaintiffs’
claims as a matter of law. First American’s brief detailed the history and purpose of the NFIP and the Act. It also discussed earlier federal and state law decisions holding that plaintiffs have no private right of action against federally regulated mortgage lenders or flood zone determination companies for alleged erroneous determinations based on the NFIP and the Act. In response, plaintiffs argued that their claims were based on state law, not federal law. They argued, however, that this federal law, i.e. the Act, provided the duty that First American owed to them. In other words, plaintiffs recognized that the determination was provided solely on account of obligations imposed on regulated lenders under the Act, but that any breach of such obligations could be actionable under state law.
The Court’s decision recognized, notwithstanding plaintiffs’ argument, that any
claims plaintiffs make arise under the Act. As a result, the court agreed with the unanimous body of federal and state law holding that plaintiffs have no private right of action for claims arising under the Act since they are not the intended beneficiaries of the obligations arising under the Act. Its decision that plaintiffs had no private right of action under federal law decisions was based largely on two earlier Fifth Circuit cases, Till v. Unifirst Fed. Sav. & Loan Assoc., 653 F.2d 152 (5th Cir. 1981) and Wentwood Woodside I, LP v. GMAC Commercial Mortgage Corp., 419 F.2d 310 (5th Cir. 2005). As to the state law claims, the Court made an “Erie guess” that the Mississippi Supreme Court
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would not recognize a private right of action since the Mississippi Supreme Court had not decided a case involving state law claims against a flood zone determination company. The Court determined that “the Mississippi Supreme Court would adopt the ‘unanimous conclusion of the federal judiciary’ that mortgagors” have no private right of action against flood zone determination companies based in part on earlier District Court decision in other jurisdictions, including, Callahan v. Countrywide Home Loans, Inc., 2006 WL 2993178 (N.D. Fla. 2006); Ford v. First American Flood Data Svcs., Inc., 2006 WL 2921432 (M.D.N.C. 2006); Cruey, et al. v. First American Flood Data Servs., Inc., 174 F. Supp. 2d 525 (E.D. Ky. 2001). 13. Paul v. Countrywide Home Loans, Inc. and Landsafe Flood Determination,
Inc.
Date of Decision: 2007 Jurisdiction: United States District Court, Southern District of Mississippi Citation: Civil Action No. 1:06cv432LG-RHW
As discussed in more detail below, the Paul matter is now positioned to be the most important Mississippi case to the flood zone determination industry since Lusins. In drafting the complaint, the plaintiffs’ attorney took great care to disclaim the Act as the basis of his clients’ claims in order to avoid the appearance that his clients’ claims arose under the Act. For example, plaintiffs allege that the negligent conduct attributed to Landsafe was its failure to “exercise that degree of care to skillfully discharge its obligation to perform the flood zone determination with such skill and prudence that a surveyor should exercise.” In addition, the Pauls also asserted negligent misrepresentation and gross negligence claims. Notwithstanding their artful pleading, the Pauls’ complaint, as they admit, still comes back to the fact that its claims hinge on the defendants’ obligation to provide a SFHD in connection with their mortgage transaction arising under the Act.
Landsafe and Countrywide filed separate Motions for Summary Judgment seeking dismissal of plaintiffs’ claims on the following grounds, among others: 1) there is no private right of action under federal or state law in favor of mortgagees against mortgagors or determinations companies for claims arising under the Act; 2) that Landsafe owed no duty to plaintiffs; 3) that the language on the SFHD prepared by Landsafe clearly notified plaintiffs that the SFHD was performed for and provided to Countrywide only and could not be used or relied upon by any other person or party; and 4) that principles of federalism, i.e. administration of the Act by federal agencies, support the theory that state courts should not allow private rights of action to proceed.
Plaintiffs’ response conceded the defendants’ positions and also maintained that they were not challenging the Court’s Lusins decision. Instead, plaintiffs responded that their claims were grounded in Mississippi law and not the Act. Specifically, plaintiffs cited to one Fifth Circuit decision (Till) and a Mississippi Supreme Court case, McKinnon
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v. Batte, 485 So. 2d 295 (Miss. 1986), to support their position that Mississippi state law recognizes claims for erroneous flood zone determinations.
In response, Landsafe underscored the critical distinction that prohibits plaintiffs’ reliance on McKinnon. In McKinnon, an obligation arising under the Act, i.e. preparing a SFHD for use at closing, was not in issue. Instead the McKinnon plaintiffs entered into transactions with a surveyor themselves for the plaintiffs’ benefit, not for the benefit of a regulated lender, to independently determine if they wanted to buy flood insurance. This distinction is critical, because as the Fifth Circuit recognized in Audler, plaintiffs’ claims in Paul always turned on the fact that the obligations of the defendants arise under the Act. As a result, the law is clear that the Act does not provide any private cause of action under federal or state law.
Countrywide was dismissed from the case without opinion from the court; however, plaintiffs continued their case against Landsafe only. The court, in a one page opinion adopted Lusins and determined that plaintiffs could not state a private cause of action against Landsafe under federal or state law.
Plaintiffs have appealed this decision (as to Landsafe only) to the Fifth Circuit where it is currently pending. The parties have filed their initial briefs before the Court of Appeals. Plaintiffs have a last brief to submit before this decision is submitted to the court for decision or is set for oral argument before a panel of three judges. 14. Rebekah Scondras v. LSI Flood Services, et al.
Date of Decision: February 2008 Jurisdiction: Wyoming County, Pennsylvania Citation: Docket No. 2007-00998
After a flood destroyed her home, plaintiff filed a complaint against LSI Flood
Services for: (1) breach of contract, (2) negligent misrepresentation and (3) negligence. Plaintiff stated that she did not purchase flood insurance for her home based on the fact that an SFHA performed by LSI stated that her home was not located in a flood zone. In fact, the property was in an SFHA and plaintiff suffered a loss as a result of the flood. LSI filed preliminary objections in the nature of a demurrer seeking to dismiss the complaint. LSI stated that it performed the flood zone determination pursuant to the Act, which requires flood insurance for loans secured by improved real estate situated within a SFHA. It is well established that the Act mandates that federally regulated lending institutions bear the responsibility of determining whether flood insurance is required and ensuring that it is appropriately obtained. LSI argued that it was not liable to plaintiff because the Act does not recognize a private cause of action by borrowers against lenders or flood zone determination companies for violations of the Act. LSI argued that it performed the flood zone determination solely for plaintiff’s lender in order to ensure the lender's compliance with the Act. LSI further argued that the flood zone determination
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was not performed for the borrower, and thus, the borrower was not entitled to rely on the determination. As such, LSI claimed that it owed no duty, contractual or otherwise, to plaintiff. Pennsylvania courts are generally reluctant to dismiss claims in the context of preliminary objections and often wait until the facts of a case have been more fully developed before determining whether dismissal of the claims is appropriate. Nevertheless, the court found that a dismissal of plaintiff’s claims was appropriate as a matter of law and sustained LSI’s preliminary objections, thereby dismissing plaintiff’s claims against LSI. Plaintiff did not appeal the decision. Plaintiff’s claims against a remaining defendant continue to be litigated.
15. Workman v. First American Flood Data Services, et al.
Date of Decision: December 13, 2007 Jurisdiction: United States District Court for the Southern District of West Virginia, Charleston Division Citation: No. 2:07-cv-0636
Plaintiffs’ complaint filed in Circuit Court of Kanawha County, WV alleged fraud
negligence, breach of contract and, alternatively, that they were the third party-beneficiaries to a contract between First American and plaintiffs’ mortgage lender. Plaintiffs contended that First American’s determination for the lender that plaintiff’s property was not in a flood zone was in error. Plaintiffs further asserted that they relied on this determination when deciding whether to purchase the property and were seeking to recover the cost of future flood insurance, interest on flood insurance premiums, punitive damages and attorney’s fees. First American filed a motion to dismiss on the grounds that plaintiffs had no private right of action and that plaintiffs had failed to state a claim upon which relief could be granted. The Court, examining established case law, specifically Ford, and by performing an Erie analysis, agreed that West Virginia law does not allow for a private right of action by borrowers such as plaintiffs and granted the motion to dismiss on three of four counts. While expressing doubt that a contract existed, the court did not rule on the allegation of express breach of contract. 16. Wright v. Allstate Insurance Co.
Date of Decision: September 11, 2007 Jurisdiction: United States Court of Appeals for the Fifth Circuit Citation: 250 Fed.Appx.1
Wright purchased a Standard Flood Insurance Policy from Allstate to cover his
Houston home. Wright’s home was damaged by Tropical Storm Allison and he was
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unable to reach an agreement with Allstate concerning the compensation for his loss. Wright sued Allstate and its employer, alleging breach of contact and state law claims for fraud and negligent misrepresentation. Wright subsequently sought leave to amend his complaint to include federal common law causes of action for fraud and negligent misrepresentation. The district court dismissed all but Wright’s breach of contract claim, finding that his state law claims were preempted by federal law. The district court also denied Wright’s request to amend his complaint to include federal law cause of action. Ultimately the court awarded Wright damages of $24,029, plus costs and attorney’s fees. Both parties appealed. On appeal, the appellate court held that Wright’s state law claims were preempted by the NFIA, but remanded the case to the district court for issues relating to the denial of the motion for leave to amend. Following the remand, Wright appealed again arguing that the NFIA expressly provides for federal common law causes of action for fraud and negligent misrepresentation. Wright argued that the NFIA expressly provides for such claims and because the SFIP specifies that disputes arising from the handling of an insurance claim are governed by federal common law. The court held that the NFIA does not expressly authorize an insured to bring extra-contractual claims against an insurer and that no federal common law right of action to bring extra-contractual claims can be inferred under the NFIA, thus, again affirming the holding of the district court.
II. PRIOR CASE REPORTS
The following section will summarize cases of interest that were decided prior to early 2007. Many of the decisions discussed below have significant precedential value and are therefore appropriate to revisit in 2008. 1. Avari v. First Federal Savings & Loan Association
Year of Decision: 1983 Jurisdiction: United States Court of Appeals for the Fourth Circuit Citation: 698 F.2d 683
The court held there was no cause of action by the borrowers against the lender
for an erroneous flood determination. The lender failed to notify the homeowners that their property was in a flood zone and they did not purchase flood insurance. The plaintiffs asserted a federal claim only, arguing that the notification and flood insurance requirements under the federal act gave them a private right of action for damages. The United States Court of Appeals for the Fourth Circuit affirmed the trial court’s granting of the lender’s motion to dismiss for failure to state a claim agreeing that the federal statutes do not recognize a private right of action.
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2. Bigler, et al., v. Centerbank Mortgage Co., et al.
Year of Decision: 1994 Jurisdiction: Connecticut Citation: 1994 Conn. Super., LEXIS 3214
Borrower sued the lender for uninsured flood damages alleging the lender had
neglected to inform the borrower that his property was located in an SFHA. The court struck plaintiff’s claims for negligence, misrepresentation and fraud finding that borrowers are not within the class of persons to be protected from the notice determinations required under the provisions of the Act. 3. Bradley v. Prange
Year of Decision: 2004 Jurisdiction: Louisiana Citation: 897 So.2d 717
While this case does not involve a flood determination, it addresses similar issues
regarding a lender’s duty to borrowers under other federal regulations. The borrowers appealed the entry of summary judgment in favor of their lender, North American Mortgage Company. The plaintiffs had purchased homes in Louisiana, financed by North American. The loans were FHA insured. The borrowers suffered flood damage and alleged that the lender failed to ensure that the building sites were suitable and met minimum 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 the loans in accordance with FHA underwriting and inspection guidelines. The appeals court affirmed finding that the mortgage company had only an arms-length relationship with the borrowers and did not owe them the additional duty of protecting them from their unfortunate purchases. 4. Brill v. Northern California Savings & Loan Ass’n, et al.
Year of Decision: 1982 Jurisdiction: United States District Court, Northern District of California Citation: 555 F. Supp. 566
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Borrower sued lender for uninsured flood damage alleging violation of the Act. Plaintiffs asserted a federal claim under the Act and a state law claim of negligent misrepresentation. Borrowers alleged implied rights of action under the Act’s requirements that the lender require flood insurance and notify purchasers that the property they propose to buy is in a flood zone. The court analyzed the federal claim under the Supreme Court decision in Cort v. Ash, 422 U.S. 66 (1975). Under Cort, a court considering whether there is an implied right of action under a statute must analyze four factors: (1) is the plaintiff in the class of persons for whose benefit the law was enacted; (2) did the legislature indicate an intent to create or deny such a remedy?; (3) is the remedy consistent with the purpose of the legislative scheme?; (4) is the cause of action one that is traditionally relegated to state law?
Under the first factor, the court found that the Act was designed primarily to benefit lenders and reduce risks to the federal treasury for mounting flood relief costs. For example, the statute requires flood insurance only in the amount of the loan. As to the second factor, the statute is silent, but does provide for regulatory enforcement of its provisions. 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 dismissed the pendent state law claim without prejudice. 5. Callahan v. Countrywide Home Loans, Inc., et al.
Year of Decision: July 26, 2006 Jurisdiction: United States District Court, Northern District of Florida Citation: 2006 U.S. Dist. LEXIS 51217
Plaintiff sued Countrywide in Florida state court alleging state law claims of
negligence and negligent misrepresentation in connection with an erroneous SFHA which was provided in connection with a purchase money mortgage. The property was damaged by Hurricane Ivan’s storm surge. Countrywide removed the case to federal court on the basis of diversity and filed a motion to dismiss. Plaintiff argued she was not alleging a federal cause of action for damages under the Act, only that under the Act, Countrywide had a duty to ensure she had flood insurance if the property was in a SFHA and that its failure to do so was negligent. Under Florida law, the violation of a federal or state statute may constitute negligence but plaintiff must still establish the elements, such as duty. The court found that the plaintiff was not within the protected class of persons that the act was designed to protect, finding it well established that lenders - not borrowers - are the intended beneficiaries. The court also found that Countrywide owed no duty to a borrower under the Act. Accordingly, plaintiff failed to state a claim against Countrywide for negligence. The court recognized that most courts have held that allowing a state claim under a federal statute that does not provide for a private right of action raised federalism concerns and the court believes the Florida Supreme Court would agree with those cases. The motion to dismiss was granted.
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6. Callahan v. Countrywide Home Loans, Inc., et al.
Date of Decision: October 20, 2006 Jurisdiction: United States District Court, Northern District of Florida Citation: 2006 U.S. Dist. LEXIS 76372
Plaintiff’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. Plaintiff attempted to plead around a finding of no duty under the Act by alleging only state common law claims that arise out of contractual duties. The court reiterated that most courts have found that federalism concerns “preclude any state common law action based on violation of the NFIA.” (emphasis in original). Court rejected plaintiff’s argument that claims could survive merely because the complaint made no reference to or reliance on the Act. The Court adopted the reasoning in Ford v. First American Flood Data Services, 2006 U.S. Dist. LEXIS 74350 (M.D. N.C. Oct. 11, 2006). Plaintiff’s claims arise out of Landsafe’s failure to correctly determine that the property was in a SFHA. The Act provides for and regulates third-party flood zone determinations to ensure that lenders comply with the flood insurance provisions. Any duty from Landsafe to the borrower must therefore arise under the act and could only be based on an alleged violation of the Act. The court granted the motion to dismiss both the lender and the flood determination company. 7. Clark v. AmSouth Mortgage Company, et al.
Year of Decision: 2007 Jurisdiction: United States District Court, Middle District of Alabama Citation: 474 F.Supp.2d 1249
Borrowers filed suit in state court alleging federal claims under the Act and state
law claims of breach of contract, unjust enrichment, conversion, negligence, breach of duty to third party beneficiary and fraud. Also alleged were federal claims under FCRA and FDCPA. The case was removed to federal court. Plaintiffs sued AmSouth, the assignee of the mortgage, Dovenmuehle Mortgage, the loan servicer, and Geotrac, which had an agreement with Dovenmuehle to provide flood determinations under the NFIA. Geotrac determined that the Clarks’ property was in a SFHA. AmSouth and Dovenmuehle required the Clarks to purchase flood insurance. The Clarks, although doubting their property was in a flood zone, attempted to purchase flood insurance but were told by the agent he needed additional information. AmSouth and Dovenmuehle did not provide the information and the Clarks could not obtain the insurance. Geotrac
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performed a second determination which again stated the property was in a SFHA. After that, AmSouth and Dovenmuehle forced place flood insurance. The Clarks refused to pay the increased mortgage payment. Geotrac performed a third determination with the same result. The loan went into default because the Clarks were making only their original payment amount. Clark learned that Geotrac had provided the determination and contacted it to discuss. Clark recognized and advised Geotrac that it had made a mistake in comparing the FEMA and county maps. Geotrac then issued a corrected determination that property was not in a flood zone. AmSouth and Dovenmuehle removed the flood insurance requirement, credited account for flood premiums, waived all late fees and other charges and requested that credit reporting agencies correct any negative reporting.
The court agreed with AmSouth and Dovenmuehle that all of Clarks’ federal and state law claims against the lender were barred by the Act. The court observed that the Act allows a lender to delegate the responsibility of a flood determination to a third party provided that party guarantees the accuracy of the information. The Act also provides that the lender may rely on a previous determination and shall not be liable for any error in such determination provided it was done within 7 years. Here, Geotrac was hired by the lender’s servicer and that Geotrac guaranteed its results. Based on Geotrac’s determinations, AmSouth demanded the purchase of flood insurance. The court found that the lender and its servicers were released from any liability under the Act.
A somewhat different result obtained, however, with respect to the claims against Geotrac. The Clarks conceded that summary judgment should be granted Geotrac on the federal claims leaving only the state law claims for breach of contract, negligence, breach of duty to third party beneficiary and fraud. The court rejected Geotrac’s argument that it too was shielded from liability by the Act, finding nothing in the Act to support a claim for immunity from state law claims to third parties. The court stated that while federal law may not prevent a state court from recognizing state law claims for a violation of a federal statute, there is still the question of whether the state court will recognize such claims, and if so, whether they are preempted by federal law. The court found that Alabama state courts had not addressed whether these state law claims would be recognized under these circumstances. Because all of the federal claims had been dismissed, and this question is best answered by the Alabama state courts, the court remanded the case to state court.
On June 4, 2007, Geotrac's motion for reconsideration was denied.
8. Cruey v. First American Flood Data Services, Inc.
Year of Decision: 2001 Jurisdiction: United States District Court, Eastern District of Kentucky Citation: 174 F.Supp.2d
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First American was sued for an alleged erroneous determination that a certain development property was not in a flood zone. There had been no flooding, however, the borrowers alleged they had expended significant amounts of money due to the erroneous determination. The court commented that it was not quite clear what claims the borrower was making, but the thrust of the complaint was a claim that plaintiffs relied on the flood determination pursuant to the Act. The question therefore, according to the court, was whether there is an implied right of action under the Act. This was a question of first impression in the Sixth Circuit. First American filed a motion for summary judgment asserting that it enjoyed immunity under the Act because neither an express nor implied right of action existed for violations of the Act. The court provided a detailed analysis of the underpinnings and legislative intent of the Act. The court determined conclusively that when Congress drafted and enacted the Act, Congress did not intend to create or recognize an implied private cause of action against flood zone determination companies who act on behalf of lenders to ensure compliance with the Act. 9. Dollar v. Nationsbank of Georgia, N.A.
Year of Decision: 2000 Jurisdiction: Georgia Citation: 534 S.E.2d 851
Here, the borrower had maintained flood insurance on the property but had
allowed it to lapse in 1993, the year prior to the flood damage. The borrower sued NationsBank who allegedly told her in 1993 when she obtained a second mortgage that she was not in a flood zone and did not require her to maintain flood insurance. The bank did not concede that the determination was erroneous but the court assumed it was for the purpose of ruling on the bank’s motion for summary judgment. The appeals court affirmed the summary judgment in favor of the lender stating that, because the purpose of a determination is to protect the bank’s collateral and not the borrower, it had no duty to provide accurate flood hazard information to the borrower and the borrower did not justifiably rely on the bank’s representations. 10. Doss v. Cuevas, et al
Year of Decision: 2006 Jurisdiction: United States District Court, Eastern District of Louisiana Citation: 2006 U.S. Dist. LEXIS 45802
Borrowers sued their mortgage company, First Horizon Home Loan Corporation,
and Federal Flood Certification Corporation, which performed the determination at the
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request of the mortgage company. They also sued their insurance agent and the insurance company that had issued a flood policy for the prior owners of the property. The borrowers suffered uninsured flood damages from Katrina. Against the mortgage company they alleged negligence for failing to force place insurance and negligent hiring of Flood Certification. Negligence was also alleged against Flood Certification for failing to identify the property as being in a SFHA. First Horizon removed the case to federal court alleging federal question jurisdiction under the NFIA. The borrowers moved to remand stating they alleged no claim under a federal statute, only state law claims. The court found that because there is no private right of action under the federal act by the borrowers for an erroneous flood determination, the claims are not cognizable under the act and removal cannot be based on the act. The court further found that the borrowers’ claims regarding policy procurement were did not present a federal question and the case was remanded to state court for lack of subject matter jurisdiction. 11. Ford v. First American Flood Data Services, Inc.
Year of Decision: 2006 Jurisdiction: United States District Court, Middle District of North Carolina Citation: 2006 U.S. Dist. LEXIS 74350
First American provided a purchase money mortgage flood determination for
USAA and determined the property was not in a SFHA. A second flood determination was conducted for refinancing with the same result. The third determination, provided for a home equity loan, found the property to be in a SFHA. The borrower paid for all three determinations and after the third one, was required to purchase flood insurance. The borrower alleged she would not have purchased the property and alleged state law claims of negligence and breach of contract. Borrower alleged she was a third party beneficiary of USAA and First American’s contract. She sought damages for the insurance premiums. The court recognized that there is no federal right of action by a borrower for an 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 federal statute must be decided pursuant to state law; and most courts have disallowed private actions under state law as well. The court rejected the borrower’s argument that her claims were not based on the Act, finding that any alleged duty has to arise from the Act and therefore any claim would have to based on the Act.
The opinion includes an excellent analysis of the Act. First, the court found that
the statutory language addresses only the relationship between the lender and the flood determination company, does not mention the borrower, and indicates a lack of intent to protect the borrower. Under the Act, lenders can rely on the determination and are shielded from liability for any error. The Act therefore expressly denies a borrower’s claim against a lender with whom the borrower is in privity. The court commented that it is difficult to believe that Congress would deny an action between parties in privity, but
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allow one between parties who are not, i.e. the flood determination company. Second, the overall purpose of the Act is to reduce the burden on the federal government to fund flood disaster relief. The concern for federal resources evidences an intent to protect the lenders 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 the flood insurance purchase requirements; nothing is said about protecting borrowers or resolving private disputes. Finally, the court determined that the structure and focus of the act indicated an intent not to allow private remedies. The Act’s regulatory scheme is designed for federal agencies to implement and enforce flood insurance and flood zone requirements. There are a myriad of enforcement mechanisms authorized under the Act, such as cease and desist orders and administrative remedies. A pervasive regulatory remedial 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 none against lenders or flood determination companies, provides further evidence that Congress did not intend an implied right of action under these circumstances.
The court concluded that Congress intended that no private right of action accrue
to the borrower under state or federal law for a violation of the flood zone determination and notification provisions of the Act. 12. Hanson Business Park, L.P. v. First National Title Insurance Co.
Year of Decision: 2006 Jurisdiction: Texas Citation: 209 S.W.3d 867
This case demonstrates that borrowers and their lawyers: (1) recognize the legal
hurdles facing them in attempting to sue a lender or flood determination company for flood 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 the tracts they purchased was in a flood zone. The borrowers argued that the flood zone designation constitutes as title defect that is cover by the title insurance policy. The trial court granted summary judgment in favor of the title company. On appeal, the title company argued that the flood zone designation is not a title issue, but rather, a condition of the land. The borrowers argued that it was a title issue that affected “marketable title.” The appeals court agreed with the title company that to trigger coverage under the title policy, there must be a defect in title - or ownership rights in the property, not a defect in the physical condition of the property.
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13. Hofbauer v. Northwestern Nat. Bank of Rochester
Year of Decision: 1983 Jurisdiction: United States Court of Appeals for the 8th Circuit Citation: 700 F.2d 1197
In connection with the financing of a house purchase, the lender did not notify
plaintiffs that their property was in a flood zone and did not require flood insurance. A subsequent flood damaged the house and plaintiffs brought suit against the lender alleging that it had violated its duties to notify and to require flood insurance under the Act. The borrowers also asserted a negligence claim under Minnesota law alleging that the federal statutes created a standard of conduct to be adhered to by the lender. The court rejected the argument that the Act created an implied cause of action and dismissed the federal claim. As to the borrowers’ state law claim for negligence, the court stated that Minnesota state courts are free to look at the provisions of a federal statute and determine whether it creates a standard of conduct which, if broken, would give rise to an action for common-law negligence. The court stated that the purpose of the statute is to aid flood victims and lessen federal expenses for flood relief. It did not see how those goals would be frustrated by allowing state law common law negligence suits for failure to require flood insurance or notify borrowers they are in a SFHA. Accordingly, the state law claims were remanded to the state court for determination. 14. Hulbert v. Wells Fargo Bank, N.A., et al.
Year of Decision: 2005 Jurisdiction: United States District Court, Northern District of Florida Citation: 2005 U.S. Dist. LEXIS 42778
Property was damaged due to a flood caused by Ivan. Plaintiffs had a purchase
money mortgage with defendant, New Horizon Financial Corp., which assigned the mortgage to defendant Wells Fargo Bank after closing. Wells Fargo Bank contracted with Wells Fargo Insurance to perform a SFHD for which plaintiffs paid $16. Due to a typographical error, the flood determination incorrectly concluded the property was not in a flood zone. All of these entities along with the appraiser, 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. The
case was removed from state court with the defendants alleging federal jurisdiction on two grounds: 1) the plaintiffs’ negligence claims were based on a violation of the Act and 2) the breach of contract claim sought to challenge the disallowance of a flood damage claim by the insurance company. The court found that plaintiffs were not alleging a claim
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under the federal act itself but merely that the defendants’ failure to comply with the Act was a basis of their duty to the plaintiffs. The court analyzed the cases that determined there is no implied right of action for borrowers under the Act and determined the Act could not be a basis for jurisdiction. The court found that there was no federal court jurisdiction and remanded the matter to state court. 15. Jack v. City of Wichita, et al.
Year of Decision: 1997 Jurisdiction: Kansas Citation: 933 P.2d 787
Borrowers purchased property in 1987 not knowing that it was in a flood zone.
When they refinanced their mortgage loan 7 years later, their lender required them to obtain flood insurance. They sued for economic losses only, having sustained no flood damages. Among other defendants, the borrowers sued the first mortgage company and its employee that provided the certification that the property was not in a flood zone. The trial court granted a motion to dismiss filed by those defendants finding that they owed no duty to advise the borrowers regarding flood insurance or requiring them to obtain flood insurance. On appeal, the borrowers argued that they did owe a duty because the certification was provided pursuant to a federal statute. The court agreed with the weight of authority that the federal statutes do not create a duty that would support a claim for negligence. The court further found that the borrower-lender relationship is not the kind of special relationship that would impose or create such a duty. 16. Laurent v. Flood Data Services, Inc.
Year of Decision: 2001 Jurisdiction: Ohio Citation: 766 N.E.2d 211
Plaintiffs asserted breach of contract, negligence and negligent misrepresentation
claims stemming from an alleged faulty flood zone determination performed by First American pursuant to the act. Plaintiffs made no reference to or reliance on the Act. The court dismissed the plaintiffs’ breach of contract and third-party beneficiary claims against First American, finding no contractual privity between the plaintiffs and First American and thus no contractual duty existed and one had not been delegated to First American by virtue of the plaintiffs’ relationship with the lender. The court observed that First American performed the determination solely for the lender’s compliance with the Act and not as a result of any relationship with the plaintiffs.
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The court then addressed the plaintiffs’ negligence and negligent
misrepresentation claims and noted that the determination of the existence of a duty is a question of law for the court to decide. The court found that there was no relationship and accordingly no duty owed by First American to the plaintiffs where the plaintiffs alleged only pecuniary damages. The court observed that due to the lack of privity between First American and plaintiffs, the relationship was indirect, “highly attenuated,” and lacked a sufficient nexus which would give rise to any duty necessary for the maintenance of the plaintiffs’ negligence and negligent misrepresentation claims. 17. Lehman v. Arnold, et al.
Year of Decision: 1985 Jurisdiction: Illinois Citation: 484 N.D.2d 473
The borrowers sued for damages to their home caused by periodic flooding. They
sued their lender for breach of contract and for negligence in failing to comply with the federal statutes and regulations. The borrowers were not told that the appraisal the lender obtained for the closing disclosed that the property was in a flood zone. The lender moved to dismiss arguing that the federal statute did not create any duty on its part to the borrowers. Applying the test enunciated by the Supreme Court in Cort, the court held that there was no implied right of action and that and “federalism concerns” and legislative intent, barred both state law claims for violations of the Act.
18. Lukosus v. First Tennessee Bank National Association, et al.
Year of Decision: 2004 Jurisdiction: United States Court of Appeals for the Fourth Circuit Citation: 2003 U.S. Dist. LEXIS 11941 (W.D. Va. July 9, 2003), aff’d, 89 Fed. Appx. 412 (4th Cir. 2004) Upon refinancing mortgage with a different lender, the borrower was notified that
the prior flood determination was incorrect and her property was in a SFHA. The borrower filed suit in state court of Virginia against the original lender alleging she would not have purchased the property had she known the property was in a SFHA and that the resale value had been diminished due to this determination. She sought damages based on negligence, 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 a motion to dismiss. The court stated that it was settled law that there is no express or
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implied 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 of action, based in part on the principles of federalism. The court determined that the Virginia courts would follow these cased and hold that no state law claim can be bases on the failure to provide proper notice under the Act.
19. Marble v. First American Flood Data Services, Inc., et al.
Year of Decision: 2004 Jurisdiction: Vermont Citation: 852 A.2d 641
Plaintiffs purchased the subject property in 1980 and obtained 5 mortgages
between 1985 and 1994; no lender required flood insurance. Plaintiffs refinanced with defendant, Banknorth Group in 1998 which contracted with First American to provide a SFHD. 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 at closing that the were not required to purchase flood insurance. The property sustained flood damage twice later that year. Suit was filed against the lender and flood determination company, alleging that plaintiffs decided not to buy flood insurance in reliance on the determination, which was erroneous. Motions for summary judgment were filed. The court found that even if the defendants owed a duty to the plaintiffs, and assuming the determination was wrong, the evidence conclusively showed that plaintiffs did not actually rely on the determination as a basis for their decision not to purchase flood insurance. The court relied on evidence that plaintiffs had lived in the house on the bank of a river for 20 years and had previously refinanced the property without any attempt to obtain flood insurance. The court found the plaintiffs had no intention of purchasing flood insurance and the flood determination did nothing to alter their plan. 20. McKinley, et al, v. Northern Associates, et al.
Year of Decision: 1997 Jurisdiction: Superior Court of Massachusetts Citation: 1977 Mass. Super. LEXIS 113
In connection with plaintiff’s purchase of a house and financing the lender
conducted a flood zone certification and mistakenly represented to the plaintiff that the house was not in a flood zone. Subsequently, plaintiff sought to expand the house to make it wheelchair accessible but its location in the flood zone prevented the plaintiff from doing so. The plaintiff alleged that the erroneous flood zone determination
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diminished the resale value of the property. The court refused to recognize a direct cause of action against the lender and determined that the Act establishes only duties to be carried out by federal agencies in connection with supervision of lending institutions and does not authorize private borrowers to bring a direct suit for money damages against a defendant for a statutory violation. Rather, as the court observed, the goal of the Act was to limit or avert financial losses or harm related to property damage caused by flooding. The court ultimately dismissed the negligence claim as plaintiffs suffered no flooding damages and alleged only loss in market value and related emotional distress. In doing so, the court looked to other jurisdictions which have considered this very issue and concluded that no such state law causes of action would lie. 21. Mid-America Nat’l Bank v. First Savs. & Loan Ass’n, et al.
Year of Decision: 1984 Jurisdiction: United States Court of Appeals for the Seventh Circuit Citation: 737 F.2d 638
This was a putative class action brought by ten named plaintiffs against 27
lenders. Six of the defendants extended mortgage loans to the named plaintiffs, the remaining institutions were alleged to have similar loans to a member of the putative plaintiff class. Plaintiffs alleged that their property was in an area identified by either HUD or FEMA as being prone to flooding. The plaintiffs’ suit alleged the lender failed to notify them of the flood risk and failed to require flood insurance. Plaintiffs’ property suffered flood damage and they sued for their uninsured losses. Plaintiffs alleged claims under the Act and common law claims of fraud and deceptive acts. The trial court granted defendants’ motion to dismiss holding there was no implied right of action under the flood program that would allow borrowers to sue their lenders. The 14 state law claims were dismissed without prejudice. The basis of the court’s opinion was an analysis of the Cort factors similar to that set forth in Brill v. Northern California Savings & Loan Ass’n, et al., 555 F. Supp. 566 (N.D. Cal. 1982). 22. Mid-America Nat’l Bank v. First Savs. & Loan Ass’n, et al.
Year of Decision: 1987 Jurisdiction: Illinois Citation: 515 N.E.2d 176
In this class action suit, borrowers in the federal case above filed in state court
after the federal court dismissed their pendent state law claims without prejudice. The state law claims alleged were negligent misrepresentation, breach of a special or fiduciary
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obligation, that the lenders had violated certain practices they had adopted under the Act and violation of the Illinois consumer fraud act. The underlying premise of each claim was that under the Act or as a result of the borrower-lender relationship, the defendant lenders had a duty to notify the purchasers that their property was in a flood zone and also had the duty to notify them of the availability of flood insurance. The claims were dismissed at the pleading stage, which required the court to assume the properly pleaded facts were true. The court adopted all of the rationale as to why there is no implied federal right of action under the Act and held that under its plain wording the Act cannot be relied upon to create a duty under a common law action for negligent misrepresentation. The court also noted that its decision is buttressed by the principles of federalism and the separation of powers doctrine, which basically state that if the federal courts do not recognize a claim under a federal statute, the state courts should respect that determination. The fiduciary claim was rejected because there is no special relationship as a matter of law between the borrowers and the lenders. The remaining claims - that the lenders violated their own business practices and the consumer fraud act - failed for the same reasons as the negligent misrepresentation claim. The appeals court upheld the dismissal of all claims with prejudice. 23. Peal v. N.C. Farm Bureau Mut. Ins. Co.
Year of Decision: 2002 Jurisdiction: United States District Court, Eastern District of North Carolina Citation: 212 F. Supp.2d 508
Court held that because they conflict with the Act and its regulations, plaintiff’s
state law extra-contractual claims regarding a coverage dispute under a flood insurance policy were preempted by the Act. The court concluded this despite finding that the “principal aim of the NFIA is to protect property owners in flood zone areas from uninsured losses...”
24. Pippin v. Burkhalter, et al.
Year of Decision: 1981 Jurisdiction: South Carolina Citation: 279 S.E.3d 603 Court found there is no implied private right of action in favor of purchaser
against a lender for failing to provide notice that property was in a flood zone, because the Act was designed and intended to protect lenders not purchasers. The borrowers suffered no flood damage but claimed they would not have purchased the property had
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they known that it was located in a SFHA. The court determined that enforcement of any violations of the Act rested on the appropriate federal regulatory agency, not the courts. 25. RBJ Apartments, Inc. v. Gate City Savings & Loan Association
Year of Decision: 1982 Jurisdiction: North Dakota Citation: 315 N.W.2d 284
The Supreme Court of North Dakota concluded the borrowers had no statutory
implied right of action or common law claims against a lender for failing to provide an accurate flood determination. Borrowers alleged that lender was liable for uninsured damages sustained by apartment complex in flood because lender failed to notify borrowers that the property was in a flood zone. The court stated that the Act is not intended to benefit borrowers, rather the notice requirement was intended to discourage flood zone development. The court refused to recognize a state law causes of action under the act stating that comprehensive legislative schemes should not be amended by judicial decree. 26. Sutton v. Citimortgage, Inc., et al.
Year of Decision: 2006 Jurisdiction: United States District Court, Southern District of Mississippi Citation: 2006 U.S. Dist. LEXIS 82997
Borrowers’ purchase money mortgage was assigned to Citimortgage. Plaintiffs
had signed an authorization allowing the lender to purchase flood insurance if a determination was made subsequent to closing that flood insurance was necessary. Borrowers sustained flood damage from Hurricane Katrina. A SFHD performed by First American stated that the structure was not in a SFHA, but noted the property was partially in. In October 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 of action. First American further argued that the determination was provided solely for the lender could not be the basis of any action against it by the borrower. The court discussed standards applicable to motions to dismiss finding that a court must assume all allegations are true and allow all inferences favorable to the plaintiffs. The court acknowledged the authority cited by defendants where other courts held in similar situations that the state would not recognize a private right of action. The Court did not discuss Mississippi law and refused to hold that plaintiffs’ claims failed under the motion to dismiss standard. The motions to dismiss were denied.
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27. Till v. Unifirst Federal Sav. and Loan Ass’n, et al.
Year of Decision: 1981 Jurisdiction: United States Court of Appeals for the Fifth Circuit Citation: 653 F.2d 152
Plaintiff/borrowers sued lender for failing to require flood insurance and provide
notice that property was located in a SFHA. The Fifth Circuit, citing the Cort factors discussed previously, affirmed the lower court’s findings that the Act did not create a private cause of action in favor of plaintiffs against their lender.
28. Wentwood Woodside I LP v. GMAC Commercial Mortgage Corporation
Year of Decision: 2005 Jurisdiction: United States Court of Appeals for the Fifth Circuit Citation: 419 F.3d 310
Court found that borrowers are not a protected class and have no private right of
action under the Act for a negligence per se claim against a lender for failing to determine whether a property was in an SFHA. The borrowers alleged that the mortgage company had a duty under federal law to notify the borrowers if the property was in a SFHA and to ensure that properties in a SFHA were adequately covered by flood insurance. The borrower also alleged a state law claim for negligence per se claiming that the lender failed to comply with its duties under the federal law. The lender was granted summary judgment by the trial court. The appellate court made an “Erie guess” that Texas state courts would agree with all prior decisions and hold that borrowers were not a protected class under the federal statutory scheme, and that therefore no private right of action exists under which a claim for negligence per se can arise.
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III. CASE COMPILATION SUBJECT MATTER INDEX A. CLASS ACTIONS CASES
Audler v. CBC Innovis, Inc., et al., Civil Action No. 06-6525 (E.D. La. 2006) Mid-America Nat’l Bank v. First Savs. & Loan Ass’n, et al., 737 F. 2d 638 (7th Cir. 1984), cert. denied (1985) Mid-America Nat’l Bank v. First Savs. & Loan Ass’n, et al., 515 N.E.2d 176 (Ill. App. 3d 1987)
B. CASES INVOLVING FEDERAL LAW CLAIMS
Avari 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 Bigler, et al., v. Centerbank Mortgage Co., et al., 1994 Conn. Super. LEXIS 3214 (Conn. Ct. 1994) Bradley v. Prange, 897 So.2d 717 (La. App. 1st Cir. 2004), writ denied ( 2005) Brill v. Northern California Savings & Loan Ass’n, et al., 555 F. Supp. 566 (N.D. Cal. 1982) Duhon v. Trustmark Bank, et al., 2007 WL 627889 (S.D.Miss. Feb. 25, 2007) Duong v. Allstate Insurance Company, et. al., 499 F.Supp.2d 700 (E.D.La. 2007) Callahan v. Countrywide Home Loans, Inc., et al., 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)
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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, et al., 933 P.2d 787 (Kan. Ct. App. 1997) Lehman v. Arnold, et al., 484 N.E.2d 473 (Ill. App. Ct. 1985) Lukosus v. First Tennessee Bank National Association, et al., 2003 U.S. Dist. LEXIS 11941 (W.D. Va. July 9, 2003, unpublished opinion), aff’d, 89 Fed. Appx. 412 (4th Cir. 2004) McKinley, et al., v. Northern Associates, et al., 1997 Mass. Super. LEXIS 113 (Mass. Sup. Ct. 1997) Mid-America Nat’l Bank v. First Savs. & Loan Ass’n, et al., 737 F. 2d 638 (7th Cir. 1984), cert. denied (1985) Pippin v. Burkhalter, et al., 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) Till v. Unifirst Federal Sav. and Loan Ass’n, et al., 653 F.2d 152 (5th Cir. 1981) Wentwood Woodside I LP v. GMAC Commercial Mortgage Corporation, 419 F.3d 310 (5th Cir. 2005) Wright v. Allstate Insurance Co., 250 Fed.Appx.1 (5th Cir. Sept. 11, 2007)
C. CASES INVOLVING STATE LAW CLAIMS
NO RECOVERY Audler v. CBC Innovis, Inc., et al., Civil Action No. 06-6525 (E.D. La. 2006) (flood determination companies) Barras v. Community Home Loan, LLC, et al, 2007 U.S. Dist. LEXIS 3648 (Jan. 18, 2007 W.D. La.) (flood determination company) (insurer) (servicer) Bigler, et al., v. Centerbank Mortgage Co., et al., 1994 Conn. Super. LEXIS 3214 (Conn. Ct. 1994) (lender) Callahan v. Countrywide Home Loans, Inc., et al., 2006 U.S. Dist. LEXIS 51217 (N.D. Fla. 2006) (lender)
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Callahan v. Countrywide Home Loans, Inc., et al., 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) Duong v. Allstate Insurance Company, et. al, 499 F.Supp.2d 700 (E.D.La. 2007) (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) Lee v. Landsafe Flood Determination, Inc., et al., No. 1:06CV00108 (S.D.Miss. 2007) Lehman v. Arnold, et al., 484 N.E.2d 473 (Ill. App. Ct. 1985)(lender) Lukosus v. First Tennessee Bank National Association, et al., 2003 U.S. Dist. LEXIS 11941 (W.D. Va. July 9, 2003, unpublished opinion), aff’d, 89 Fed. Appx. 412 (4th Cir. 2004) (lender) Lusins v. First American Real Estate Solutions of Texas, 2007 WL 1745625 (S.D.Miss. 2007) (servicer) Marble v. First American Flood Data Services, Inc., et.al, 852 A.2d 641 (Vt. 2004) (lender and flood determination company) McKinley, et al., v. Northern Associates, et al., 1997 Mass. Super. LEXIS 113 (Mass. Sup. Ct. 1997)(lender) Mid-America Nat’l Bank v. First Savs. & Loan Ass’n, et al., 515 N.E.2d 176 (Ill. App. 3d 1987) (lender) RBJ Apartments, Inc. v. Gate City Savings & Loan Association., 315 N.W.2d 284 (N.D. 1982)(lender) Rebekah Scondras v. LSI Flood Services, et al., No. 2007-00998 (Pa. D. & C. 2007)
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Wentwood Woodside I LP v. GMAC Commercial Mortgage Corporation, 419 F.3d 310 (5th Cir. 2005)(lender) YES/MAYBE Brill v. Northern California Savings & Loan Ass’n, et al., 555 F. Supp. 566 (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) Duhon v. Trustmark Bank, et. al, 2007 WL 627889 (S.D.Miss. Feb. 25, 2007) (lender) 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, et al., 737 F. 2d 638 (7th Cir. 1984), cert. denied (1985) (federal claims against lender barred, state claims dismissed without prejudice) Sutton v. Citimortgage, Inc., et al., 2006 U.S. Dist. LEXIS 82997 (Nov. 14, 2006 S.D. Miss.)(court denied motions to dismiss by lender and flood determination company on both federal and state claims)
D. CASES INVOLVING FLOOD DETERMINATION COMPANY AS
DEFENDANT
Audler v. CBC Innovis, Inc., et al., Civil Action No. 06-6525 (E.D. La. 2006) Callahan v. Countrywide Home Loans, Inc., et al., 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) Duhon v. Trustmark Bank, et. al., 2007 WL 627889 (S.D.Miss. Feb. 25, 2007)
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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) Lee v. Landsafe Flood Determination, Inc., et al., No. 1:06CV00108 (S.D.Miss. 2007) Lusins v. First American Real Estate Solutions of Texas, 2007 WL 1745625 (S.D.Miss. 2007) Marble v. First American Flood Data Services, Inc., et al., 852 A.2d 641 (Vt. 2004) Rebekah Scondras v. LSI Flood Services, et al., No. 2007- 00998 (Pa.D. & C. 2007) Sutton v. Citimortgage, Inc., et al., 2006 U.S. Dist. LEXIS 82997 (Nov. 14, 2006 S.D. Miss.)
E. CASES INVOLVING LENDER AS DEFENDANT
Avari v. First Federal Savings & Loan Association, 698 F.2d 683 (4th Cir. 1983) Barras v. Community Home Loan, LLC, et al, 2007 WL 2156558 (W.D.La. 2007) Bigler, et al., v. Centerbank Mortgage Co., et al., 1994 Conn. Super. LEXIS 3214 (Conn. Ct. 1994) Bradley v. Prange, 897 So.2d 717 (La. App. 1st Cir. 2004) writ denied ( 2005) Brill v. Northern California Savings & Loan Ass’n, et al., 555 F. Supp. 566 (N.D. Cal. 1982) Callahan v. Countrywide Home Loans, Inc., et al., 2006 U.S. Dist. LEXIS 51217 (N.D. Fla. 2006) Callahan v. Countrywide Home Loans, Inc., et al., 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)
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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) Duhon v. Trustmark Bank, 2007 WL 627889 (S.D.Miss. Feb. 25, 2007) Duong v. Allstate Insurance Company, et. al., 499 F.Supp.2d 700 (E.D.La. 2007) 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, et al., 933 P.2d 787 (Kan. Ct. App. 1997) Lee v. Landsafe Flood Determination, Inc., et al., No. 1:06CV00108 (S.D.Miss. 2007) Lehman v. Arnold, et al., 484 N.E.2d 473 (Ill. App. Ct. 1985) Lukosus v. First Tennessee Bank National Association, et al., 2003 U.S. Dist. LEXIS 11941 (W.D. Va. July 9, 2003, unpublished opinion), aff’d, 89 Fed. Appx. 412 ( 4th Cir. 2004) Lusins v. First American Real Estate Solutions of Texas, 2007 WL 1745625 (S.D.Miss. 2007) Marble v. First American Flood Data Services, Inc., et al., 852 A.2d 641 (Vt. 2004) McKinley, et al., v. Northern Associates, et al., 1997 Mass. Super. LEXIS 113 (Mass. Sup. Ct. 1997) Mid-America Nat’l Bank v. First Savs. & Loan Ass’n, et al., 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, et al., 515 N.E.2d 176 (Ill. App. 3d 1987) Pippin v. Burkhalter, et al., 279 S.E.2d 603 (S.C. 1981)
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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, 2006 S.D. Miss.) Till v. Unifirst Federal Sav. and Loan Ass’n, et al., 653 F.2d 152 (5th Cir. 1981) Wentwood Woodside I LP v. GMAC Commercial Mortgage Corporation, 419 F.3d 310 (5th Cir. 2005)
Clark v. AmSouth Mortgage Company, et al., 2007 U.S. Dist. LEXIS 689 (M.D. Ala. 2007) Wright v. Allstate Insurance Co., 250 Fed.Appx.1 (5th Cir. Sept. 11, 2007)
G. CASES INVOLVING 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) (no federal jurisdiction under Act for claims against lender or flood determination company) Duhon v. Trustmark Bank, et. al, 2007 WL 627889 (S.D.Miss. Feb. 25, 2007) (remanding claims of negligence per se against non-diverse defendant) 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 determination company, state law claims remanded)
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IV. CASE COMPILATION BY JURISDICTION A. FEDERAL COURT CASES
Audler v. CBC Innovis, Inc., et al., Civil Action No. 06-6525 (E.D. La. 2006) Audler v. CBC Innovis, Inc., et al., 2008 U.S. App. LEXIS (5th Cir. 2008) Avari 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 (W.D. La. 2007) Barras v. Community Home Loan, LLC, et al., 2007 WL 1805681 (W.D. La. 2007) Barras v. Community Home Loan, LLC, et al., 2007 WL 2156558 (W.D. La. 2007) Bigler, et al., v. Centerbank Mortgage Co., et al., 1994 Conn. Super. LEXIS 3214 (Conn. Ct. 1994) Bradley v. Prange, 897 So.2d 717 (La. App. 1st Cir. 2004) writ denied ( 2005) Brill v. Northern California Savings & Loan Ass’n, et al., 555 F. Supp. 566 (N.D. Cal. 1982) Callahan v. Countrywide Home Loans, Inc., et al., 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)(no federal jurisdiction under act for claims against lender or flood determination company) Duong v. Allstate Insurance Company, et al., 499 F.Supp.2d 700 (E.D.La. 2007) Ellis v. Countrywide Home Loans, Inc. and X, Y, Z Corps., No. 1:07cv118-HSO-JMR (S.D. Miss. 2008)
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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 determination company, state law claims remanded) Jack v. City of Wichita, et al., 933 P.2d 787 (Kan. Ct. App. 1997)(lender) Keaney v. First Horizon Home Loan Corp., 2007 WL 4302963 (S.D. Miss. 2007) Lehman v. Arnold, et al., 484 N.E.2d 473 (Ill. App. Ct. 1985)(lender) Lee v. Landsafe Flood Determination, Inc., et al., No. 1:06CV00108 (S.D.Miss. 2007) (servicer) Lukosus v. First Tennessee Bank National Association, et al., 2003 U.S. Dist. LEXIS 11941 (W.D. Va. July 9, 2003, unpublished opinion), aff’d, 89 Fed. Appx. 412 ( 4th Cir. 2004) (lender) Lusins v. First American Real Estate Solutions of Texas, 2007 WL 1745625 (S.D.Miss. 2007) (servicer) McKinley, et al., v. Northern Associates, et al., 1997 Mass. Super. LEXIS 113 (Mass. Sup. Ct. 1997)(lender) Mid-America Nat’l Bank v. First Savs. & Loan Ass’n, et al., 737 F. 2d 638 (7th Cir. 1984), cert. denied, 469 U.S. 1160 (1985) Paul v. Countrywide Home Loans, Inc. and Landsafe Flood Determination, Inc., No. 1:06cv432LG-RHW (S.D. Miss. 2007) Pippin v. Burkhalter, et al., 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, 2006 S.D. Miss.)(court denied motions to dismiss by lender and flood determination company on both federal and state claims) Till v. Unifirst Federal Sav. and Loan Ass’n, et al., 653 F.2d 152 (5th Cir. 1981)(lender)
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Wentwood Woodside I LP v. GMAC Commercial Mortgage Corporation, 419 F.3d 310 (5th Cir. 2005)(lender) Workman v. First American Flood Data Services, et al., No. 2:07-cv-0636 (S.D. W.V. 2007) Wright v. Allstate Insurance Co., 250 Fed.Appx.1 (5th Cir. Sept. 11, 2007)
B. STATE LAW CASES CONNECTICUT
Bigler, et al., v. Centerbank Mortgage Co., et al., 1994 Conn. Super. LEXIS 3214 (Conn. Ct. 1994) (lender)
GEORGIA
Dollar v. Nationsbank of Georgia, N.A., 534 S.E.2d 851 (Ct. App. Ga. 2000) (lender)
ILLINOIS
Lehman v. Arnold, et al., 484 N.E.2d 473 (Ill. App. Ct. 1985)(lender) Mid-America Nat’l Bank v. First Savs. & Loan Ass’n, et al., 515 N.E.2d 176 (Ill. App. 3d 1987) (lender)
KANSAS
Jack v. City of Wichita, et al., 933 P.2d 787 (Kan. Ct. App. 1997)(lender) MASSACHUSETTS
McKinley, et al., v. Northern Associates, et al., 1997 Mass. Super. LEXIS 113 (Mass. Sup. Ct. 1997)(lender)
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MISSISSIPPI
Duhon v. Trustmark Bank, et al., No. 2006-000169 (Miss. Cir. Ct. 2007) 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)
PENNSYLVANIA
Rebekah Scondras v. LSI Flood Services, et al., No. 2007-00998 (Pa. D. & C. 2007)
SOUTH CAROLINA
Pippin v. Burkhalter, et al., 279 S.E.2d 603 (S.C. 1981)(lender) VERMONT
Marble v. First American Flood Data Services, Inc., et al, 852 A.2d 641 (Vt. 2004)
WEST VIRGINIA
Cress v. Geotrac, Inc., Docket No. 07-C-40 (W.V. 2008)
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V. LEGAL GLOSSARY Affirmative defense - A defense raised in a responsive pleading (answer) asserting a new matter as a defense to 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 - 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 before the others. Binding precedent - The decisions of higher courts that set the legal standards for similar cases in lower courts 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 in dispute on an issue raised between the parties in a lawsuit. The responsibility of proving a point (the burden of 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, if proved, 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 criminal proceedings. Civil procedure - The rules and process by which a civil case is tried and appealed, including the preparations 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 are diminished in proportion to the amount of negligence attributable to the person seeking recovery.
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Complainant - The party who complains or sues; one who applies to the court for legal redress. (plaintiff) Complaint - The legal document that usually begins a civil lawsuit. It states the facts and identifies the action the court is asked to take. Contract - An agreement between two or more persons which creates an obligation to do or not to do a particular thing. A legally enforceable agreement between two or more competent parties made either orally or in writing. Contributory negligence - The rule of law under which an act or omission of plaintiff is a contributing cause of injury and a bar to recovery. Counterclaim - A claim made by the defendant in a civil lawsuit against the plaintiff; in essence, a counter lawsuit within a lawsuit. Cross-Claim - A claim by co-defendants or co-plaintiffs in a civil case against each other and not against persons on the opposite side of the lawsuit. Damages - Money awarded by a court to a person injured by the unlawful actor. Decision - The opinion of the court in concluding a case at law. Decree - An order of the court. A final decree is one that fully and finally disposes of the litigation. (See interlocutory.) Deposition - Testimony of a witness or a party taken under oath outside the courtroom, the transcript of which 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 proper evidence for jury consideration, the trial judge may order the entry of a verdict without allowing the jury to consider it. Dismissal - The termination of a lawsuit. Dismissal with Prejudice – Manner of dismissing a case in which the complaintant is prevented from bringing an identical lawsuit later. Dismissal without Prejudice – Manner of dismissing a case which permits complaintant to reassert claims at a later time. Court action that allows the later filing.
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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 own previous 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 one inferred 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 having information 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 an injury, 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 to an 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 similar circumstances. Nonfeasance - Nonperformance of an act which should be performed; omission to perform a required duty or 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 enacted legislation on a subject matter, it shall be controlling over state laws and/or preclude the state from enacting laws on the same subject if Congress has specifically stated it has "occupied the field." If Congress has not clearly claimed preemption, a federal or state court may decide the issue on the basis 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 to continue in the judicial process.
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Private right of action - The ability of a private citizen to sue for breach of a law or regulation. Sometimes laws expressly permit private citizens to sue to enforce statutes. If the law is silent, a court may permit citizens to sue under an "implied private right of action." Sometimes the courts do not let citizens sue, unless the law expressly permits it. Privity - contact, connection or mutual interest between parties. The term is particularly important in the law of contracts, which requires that there be "privity" if one party to a contract can enforce the 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 if an injury was proximately caused by his or her action or by his or her failure to act when he or she had a duty 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 synonymous with the words "real estate." Remand - To send a dispute back to the court where it was originally heard. Usually it is an appellate court that 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 from different states; in criminal and some civil cases, because there is a significant possibility that there could not be a fair trial in state court. Standing - The right to file a lawsuit or file a petition under the circumstances. A plaintiff will have standing to sue in federal court if a) there is an actual controversy and b) a federal statute gives the federal court jurisdiction or c) the parties are residents of different states or otherwise fit the constitutional requirements for federal court jurisdiction. Summary judgment - A judgment given on the basis of pleadings, affidavits, and exhibits presented for the record without any need for a trial. It is used when there is no dispute as to the facts of the case and one party is 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 enforce the contract or share in proceeds because the contract was made for the third party's benefit.
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Third-party complaint - A petition filed by a defendant against a third party (not presently a party to the suit) which alleges that the third party is liable for all or part of the damages plaintiff may win from defendant. Tort - A private or civil wrong or injury for which the court provides a remedy through an action for damages. Trial brief - A written document prepared for and used by an attorney at trial. It contains the issues to be tried, synopsis of evidence to be presented and case and statutory authority to substantiate the attorney's position at trial. Vacate - To set aside.
