United States District Court, W.D. North Carolina
C. Mullen United States District Judge
matter is before the Court upon the Plaintiffs' Motion to
Remand to State Court. This motion is ripe for disposition.
case arises out of a flood insurance policy issued by
Defendant Nationwide Mutual Fire Insurance Company
(“Nationwide”) for a storage building owned by
Plaintiffs. The Complaint alleges that in 2010, the
Plaintiffs communicated with an agent of the Defendant about
the possibility of obtaining flood insurance for the storage
building which is located near a small creek in the back of
their lot. (Compl. ¶ 3). The Plaintiffs wanted coverage
for the building because they stored valuable antiques and
other items in the shed. (Id. at ¶ 6). Prior to
the issuance of the insurance policy, an agent of Nationwide
came to the Plaintiffs' home and inspected and
photographed the storage building. (Id. at ¶
subsequently issued a flood insurance policy on the building
which provided coverage of $30, 000 for a premium of $150.00.
(Id. at ¶ 8). In 2011, Nationwide contacted the
Plaintiffs and suggested that they increase their policy
limits to $50, 000 and pay an additional premium.
(Id. at ¶ 9). The Plaintiffs accepted the
recommendation of the Defendant and paid the increased
2012, Nationwide again approached the Plaintiffs and
recommended that their coverage be increased to $75, 000 with
another increase in their premium. (Id. at ¶
10). The Plaintiffs accepted the recommendation of the
Defendant and paid the increased premium. (Id.)
in 2013, the Defendant approached the Plaintiffs and
recommended that their coverage be increased to $100, 000
with an increase in premium to $310.00. (Id. at
¶ 11). The Plaintiffs accepted the recommendation of
Nationwide and purchased the additional coverage.
(Id.) In 2015, the Plaintiffs renewed the policy on
the building at $100, 000 at a slight increase in premium to
$312.00. (Id. at ¶ 12).
August of 2015 a flood damaged the building and destroyed its
contents. (Id. at ¶ 15). On October 19, 2015,
the Defendant advised the Plaintiffs that there was no
coverage for the building under the policy they had sold
Plaintiffs. (Id. at ¶ 18). Plaintiffs filed a
complaint in state court alleging breach of contract and
unfair and deceptive trade practices. Defendant removed the
case to this Court. Plaintiff subsequently filed a Motion to
Remand, which the Court denied. Plaintiffs thereafter
voluntarily dismissed their complaint.
then filed the instant complaint in state court, again
alleging breach of contract and unfair and deceptive trade
practice claims against Nationwide. Nationwide timely removed
the case to this Court once again. Plaintiffs have now filed
a Motion to Remand their latest Complaint.
Order denying remand in Case No. 3:16CV419, this Court
recognized that courts have generally distinguished between
claims involving claims handling, which are preempted by
federal law,  and those arising out of policy
procurement. See Houck v. State Farm Fire & Cas.
Co., 194 F.Supp.2d 452, 455-56 (D.S.C. 2002). The Court
went on to deny the Motion to Remand because despite the
Plaintiffs' argument that the case was a simple
procurement claim, the Complaint contained allegations as to
claims handling, claims payment, and claims premiums, all of
which implicated federal question jurisdiction.
appears that the newly filed Complaint successfully
eliminates any suggestion that the action is based on claims
payment or handling. In fact, Paragraph 19 reads:
The plaintiffs do not challenge the decision under FEMA
guidelines that the building was not insured for flood
damage, nor do they challenge the claims handling or claim
payment. The plaintiffs make no claims regarding the denial
of their claim under the policy; but instead contend that the
procurement of the worthless policy by the defendant was
improper, misleading and deceptive.
Houck, the insureds brought a class action in state
court alleging that the insured had “improperly steered
them to purchase flood insurance coverage which was more
expensive and in excess of their discernible needs.”
Id. at 454. The case was removed by the insurer who
alleged federal question jurisdiction pursuant to the
National Flood Insurance Act. In allowing the remand back to
state court, the Houck court observed that the
claims at issue in that case all arose in the policy
procurement context and that plaintiffs had no claims
regarding the denial of their claim under the policy.
Id. at 462. Where the court was faced with solely