Argued: March 24, 2017
from the United States District Court for the Eastern
District of North Carolina, at Elizabeth City. Terrence W.
Boyle, District Judge. (2:13-cv-00021-BO)
Joseph Nielsen, Nielsen, Carter & Treas, LLC, Metairie,
Louisiana, for Appellant.
Bradley Evans, Ward and Smith, P.A., Greenville, North
Carolina, for Appellees.
Nicolas Y. Riley, United states Department of Justice,
Washington, D.C., for Amicus United States of America.
M. Detweiler, John D. Carter, Nielsen, Carter & Treas,
LLC, Metairie, Louisiana; Eric P. Stevens, POYNER SPRUILL,
LLP, Raleigh, North Carolina, for Appellant.
Michael J. Parrish, Ward and Smith, P.A., Greenville, North
Carolina, for Appellees.
Benjamin C. Mizer, Principal Deputy Assistant Attorney
General, Michael S. Raab, Civil Division, United States
Department of Justice, Washington, D.C.; Adrian Sevier, Chief
Counsel, Razeyeh Jafarzadeh, Office of Chief Counsel, FEDERAL
Emergency Management Agency, Washington, D.C.; John Stuart
Bruce, Acting United States Attorney, Raleigh, North
Carolina, for Amicus United States of America.
M. Ackerman, ROBINSON & COLE LLP, Hartford, Connecticut,
for Amicus Property Casualty Insurers Association of America.
Douglas J. Pepe, Amicus Pro Se.
NIEMEYER, MOTZ, and DIAZ, Circuit Judges.
by published opinion.
Niemeyer wrote the opinion, in which Judge Motz and Judge
NIEMEYER, Circuit Judge:
Irene, characterized as a Category 1 hurricane when it hit
the North Carolina coast on August 27, 2011, passed near the
waterfront house of Gary and Rebecca Woodson on the Albemarle
Sound in Jarvisburg, North Carolina, flooding their property
and, for several hours, subjecting the foundation of their
house to wave action, allegedly causing substantial damage to
the house. Shortly after the storm, the Woodsons made a claim
under the flood insurance policy issued to them by Allstate
Insurance Company under the National Flood Insurance Program.
inspections of the property by engineers hired by both
parties and exchanges relating to the appropriate
documentation for a proof of loss, Allstate denied the major
portion of the Woodsons' claim by letter dated February
28, 2012, and the Federal Emergency Management Agency
("FEMA") affirmed the decision. The Woodsons
commenced this action against Allstate in state court on
February 27, 2013, alleging (1) that, in denying the major
portion of their claim, Allstate breached its contract of
insurance, and (2) that Allstate did not act in good faith in
handling the Woodsons' claim, in violation of the North
Carolina Unfair and Deceptive Trade Practices Act.
April 1, 2013, Allstate removed the case to federal court
and, in its answer filed thereafter, asserted that the
Woodsons' suit was barred by the applicable statute of
limitations. Allstate raised the limitations defense again in
the pretrial order entered in the case, in the proposed
findings of fact and conclusions of law presented by the
parties to the court one week before trial, and in the
examination of witnesses at trial. The district court,
however, did not address the limitations issue in its
findings of fact and conclusions of law and entered judgment
for the Woodsons in the amount of $233, 398 on their breach
of contract claim and trebled those for a total of $700, 194
on their bad-faith-handling claim under the North Carolina
Unfair and Deceptive Trade Practices Act. The court also
awarded the Woodsons $63, 962.50 in attorneys fees on the
appeal, Allstate raises, as its first issue, its statute of
limitations defense. It also raises the issue of whether the
Woodsons' bad-faith-handling claim was preempted by the
National Flood Insurance Act of 1968.
federal law exclusively governs claims made on policies
issued under the National Flood Insurance Program and to
disputes arising out of the handling of those claims, thus
preempting state law, and imposes a one-year statute of
limitations for all such claims, we reverse the district
to the fact that flood disasters were creating personal
hardships and economic distress that was "increasing
[the] burden on the Nation's resources" and that the
exposure to flood losses was "growing, " Congress
enacted the National Flood Insurance Act of 1968
("NFIA"). 42 U.S.C. § 4001(a). The NFIA
creates the National Flood Insurance Program under the
administration of FEMA to "mak[e] flood insurance
coverage available on reasonable terms and conditions."
Id.; see also id. § 4011. Under the
Program, flood insurance is sold to qualified applicants
either directly by FEMA or by private insurance companies
known as "write-your-own" (sometimes,
"WYO") companies. 44 C.F.R. § 62.23. These
companies enter into a standardized agreement with FEMA that
authorizes the private company to issue flood insurance in
its own name and assigns the company responsibility for the
"the adjustment, settlement, payment and defense of all
claims arising from policies of flood insurance it issues
under the Program." Id. § 62.23(d). The
ultimate responsibility for paying all claims and related
expenses, however, rests with FEMA. See 42 U.S.C.
§ 4017(a). The NFIA imposes a $250, 000 cap in coverage
for residential properties. Id. § 4013(b)(2).
terms and conditions of a National Flood Insurance Policy are
specified by regulation. The "Standard Form Insurance
Policy" begins with advice to the insured that FEMA is
providing insurance "under the terms of the National
Flood Insurance Act of 1968 and its Amendments, and Title 44
of the Code of Federal Regulations." 44 C.F.R. pt. 61
app. A(1), art. I. The Policy then sets forth the scope of
coverage, the exclusions, the deductions, ...