Plaintiff sued her adjuster in state court after Hurricane Sandy caused flood damage to her home. Plaintiff alleged her insurance company paid her too much money based upon the adjusters' fradulent conduct. After defendants removed the case to federal court, the court granted plaintiff's motion to remand to state court. Brooks v. Foglio, 2013 U.S. Dist. LEXIS 93242 (D. N.J. July 2, 2103).
Plaintiff had a Standard Flood Insurance Policy under the National Flood Insurance Program ("NFIP"). After Hurricane Sandy passed, plaintiff made a flood loss claim with her insurer. Plaintiff hired a public adjuster, Dennis Molette, to handle the details of the flood damage claim. Colonial Claims was hired by the insurer to also adjust Plaintiff's claim. The adjusters valued the damage to plaintiff's house at $80,000.
Plaintiff then hired Foglio Handyman and Carpentry Services to handle the repairs to her home. Foglio workers eventually walked off the job, leaving debris both inside and outside plaintiff's home, as well as an extensive amount of work to be completed.
Plaintiff sued Colonial, Molette and Foglio in state court for causes of action sounding in contract, fraud, and negligence. As to Molette and Colonial, plaintiff alleged an overpayment of her claim by fraud. She felt the damage to her home only amounted to $5000.
Colonial removed the action to federal court. Colonial did not receive consent for removal from Foglio and Molette, however. Colonial then filed a motion to dismiss plaintiff's compalint. In response, plaintiff filed a motion to remand.
A federal statute, 42 U.S.C. 4072, stated that upon disallowance of a claim by FEMA, the claimant could institute an action in U.S. District Court against FEMA, and original exclusive jurisdiction was conferred upon the District Court. Federal regulations provided that all disputes arising from the handling of any claim were governed exclusively by the flood insurance regulations issued by FEMA, the National Flood Insurance Act and Federal common law. Some courts had held that NFIA preempted state law claims against insurance companies issuing flood policies and the adjuster they hired.
Here, however, the court held that removal by Colonial was improper. The case involved only causes of action sounding in state law and there was no diversity of citizenship. Colonial argued that state law claims brought against an adjuster were preempted by federal law.
Colonial confused the difference between preemption and jurisdiction. Preemption meant that any state law which conflicted with or interfered with federal law was invalid. Jurisdiction, on the other hand, referred to the court's power to hear a case. Therefore, that state law claims against adjuster are preempted by the National Flood Insurance Act did not mean that section 4072 vested district courts with original jurisdiction over those claims. Instead, any court confronting such a claim must dismiss it as preempted.
Further, section 4072 granted jurisdiction to the federal court in cases involving the "disallowance" of a claim. The case here did not involve the disallowance of a claim, but rather overpayment.
Finally, removal was improper because Colonial failed to get the consent of the other two defendants, Molette and Foglio.
Therefore, plaintiffs motion to remand was granted and Colonial's motion to dismiss was denied.
