Borden v. American Bankers Insurance Company of Florida

Background

James Borden sought leave to amend his complaint in an insurance dispute involving flooding in the crawlspace beneath his cabin. Earlier claims that he submitted to American Bankers Insurance Company of Florida were paid and were not at issue. Borden submitted an April 2018 claim and reported another claim in June 2018, which the insurer combined with the April claim. The proposed complaint did not allege that either claim was accompanied by the proof of loss required by the policy.

Borden had originally filed the case without a lawyer. After the case was removed to federal court, volunteer attorneys entered an appearance for him. The insurer had already filed a summary-judgment motion, which remained pending, but Borden moved to amend instead of responding to that motion.

Analysis

Under Federal Rule of Civil Procedure 15(a)(2), courts generally should allow amendments when justice requires. But an amendment is futile when the proposed complaint would not survive a motion to dismiss for failure to state a legally sufficient claim.

Proof of loss

The court held that the Standard Flood Insurance Policy required Borden to submit a proof of loss within 60 days after the loss. The court explained that strict compliance with this requirement is mandatory and is a condition that must be satisfied before a policyholder can recover under the policy.

Borden argued that no proof of loss was required because his alleged losses resulted from continuous lake flooding rather than a single event. The court rejected that argument, finding that the proof-of-loss requirement applied to continuous lake flooding. It reasoned that the policy’s additional requirements for continuous lake flooding did not waive the general proof-of-loss requirements.

Because Borden had not alleged that he submitted proofs of loss for the April and June 2018 claims, the court concluded that further recovery on those claims was barred as a matter of law. The court therefore did not address the insurer’s separate argument that the property did not experience continuous lake flooding as the policy defined it.

Negligent misrepresentation

The court also rejected Borden’s proposed negligent-misrepresentation claim. The policy stated that disputes arising from handling a claim were governed exclusively by federal flood-insurance regulations, the National Flood Insurance Act, and federal common law. Relying on Eighth Circuit precedent, the court held that the policy preempted tort and other extra-contractual claims related to the policy. It therefore concluded that adding negligent misrepresentation would also be futile.

Ruling

Judge Menendez denied Borden’s motion to amend. The order did not rule on the separately pending motion for summary judgment.