The Third Circuit affirmed the district court's dismissal of the insured's lawsuit for denial of flood coverage after the complaint was filed more than one year after the insurer rejected the proof of loss. Migliaro v. Fidelity Nat'l Indem. Ins. Co., 2018 U.S. App. LEXIS 2097 (3d Cir. Jan. 29, 2018).
Migliaro purchased a flood policy from Fidelity. His home suffered flood damage in October 2012 after Hurricane Sandy hit. Fidelity paid $90,499.11 on Migliaro's claim.
Five months later Migliaro submitted a proof of loss, claiming an additional $236,702.57 in damages. On July 15, 2013, Fidelity sent Migliaro a letter titled "Rejection of Proof of Loss." The letter stated it was not a denial of the claim, and asked for additional documentation if there were other damages incurred. Migliaro did not provide additional documentation or otherwise attempt to submit a second proof of loss. He instead filed suit against Fidelity on December 13, 2013.
The first complaint was dismissed without prejudice at Migliaro's request. He filed a second complaint against Fidelity on July 22, 2015, alleging that Fidelity had failed and refused to pay benefits owed under the policy. Fidelity moved for summary judgment, arguing that the suit was barred by the Standard Flood Insurance Policy's (SFIP) one year statute of limitations. Fidelity urged that the July 15, 2013 letter rejecting Migliaro's proof of loss was a "written denial of all or part of the claim," which triggered the statute of limitations. Since Migliaro's second complaint was filed almost two years after he received the letter, Fidelity argued that his claim was time-barred.
Migliaro argued that the letter rejecting his proof of loss was not a "written denial of all or part of the claim" because it explicitly said it was not a denial of his claim. The district court granted summary judgment to Fidelity and the appeal followed.
The Third Circuit noted that no other federal court had defined what qualified as a written denial of a claim seeking benefits under the SFIP. The Third Circuit determined that the written rejection of a proof of loss constituted a denial of the claim if, based on it, the policyholder filed suit against the carrier.
Here, the very act of bringing suit signaled that, to Migliaro's mind, his claim had been denied. By filing suit, Migliaro himself held out the July 15, 2013 letter rejecting his proof of loss as a denial of his claim. Because the only suit a policyholder could bring against a flood carrier was one challenging the denial of a claim, by bringing suit on December 13, 2013, Migliaro acknowledged that Fidelity had denied his claim.
The statement in the rejection letter that it was "not a denial of the claim" was technically true at the time it was made. At that time the door to additional compensation for the claim remained open. In the July 15 letter, Fidelity invited the submission of additional information. But Migliaro closed the door by failing to file an amended proof of loss within sixty days, or submit additional documents. Instead, he sued, acknowledged that, by virtue of the letter rejecting his proof of loss, his claim had been denied.
