Appellate Decision Against Homeowners in Flood Damage Case

Nielsen & Treas, LLC, is a respected Metairie, Louisiana, law firm offering representation in cases involving civil litigation, insurance disputes and civil rights matters. Recently, after the U.S. Fifth Circuit Court of Appeals remanded Spong v. Fidelity Nat. Prop. and Cas. Ins. Co., 787 F.3d 296 (5th Cir. 2015), to district court, Plaintiffs filed their Third Amended Complaint alleging a litany of extra-contractual claims, including but not limited to purported misrepresentations and Texas Insurance Code violations, against the Write-Your-Own (WYO) National Flood Insurance Program (NFIP) carrier, Fidelity National, and other claims against United States of America. Defendants filed motions for summary judgment. Claiming ignorance of federal regulations, the Plaintiffs relied on the fact that Fidelity had issued a federal flood insurance policy but the Plaintiffs’ property was situated within a Coastal Barrier Resources System (CBRS). Nevertheless, the district court held, based upon U.S. Supreme Court cases that charge insureds with knowledge and a duty of self-investigation in the context of federal benefit programs, that when the Spongs acquired the property and applied for the federal flood insurance policy they were aware that their property within a CBRS is not insurable. In addition, the court found that Fidelity, as WYO carrier, had a duty to protect against improper expenditures of federal funds. Accordingly, the court granted the summary judgment dismissing all claims with prejudice.