Nielsen & Treas, LLC, Represents Fidelity in Successful Appellate Suit

Upholding the highest standards within courts of law, Nielsen & Treas, LLC, is based in the Gulf Coast region and regularly represents cases that require navigating the National Flood Insurance Program. Among the successfully represented cases of Nielsen & Treas, LLC was Spong v. Fidelity National Property and Casualty Co., a U.S. Fifth Circuit appellate ruling that affirmed a previous district court ruling.

The plaintiffs in the case had a Galveston, Texas, vacation residence that was destroyed in 2008 by Hurricane Ike. When a proof-of-loss claim was submitted to Fidelity, the flood insurance company found that the home’s location made the policy "void" because the property was located in a Coastal Barrier Resources System (CBRS). 

With the Federal Tort Claims Act and state law in play, a case was filed against the Government and Fidelity that claimed alleged misrepresentations on the part of the insurance company and the Government. These resulted in “detrimental reliance” by the Spongs when purchasing the insurance coverage.

Nielsen & Treas argued that the Spongs' claims of alleged misrepresentations and detrimental reliance fail as a matter of law. The U.S. Fifth Circuit Spong Court followed a similar case of Lobeck v. Fidelity, and held that plaintiffs cannot rely on any alleged misrepresentations as those who deal with the Government are expected to know the law and may not rely on the conduct of Government agents contrary to law citing the U.S. Supreme Court cases of Heckler and Merrill. Therefore, the Spongs were charged with knowledge that their property was located in a CBRS. In addition, the Spongs did not take action for two years after receiving a Fidelity denial letter and the claims were determined by district court to be untimely and without subject-matter jurisdiction as to the Government. This led to a dismissal of the case that was subsequently affirmed by the appellate court.