A federal district court in New Jersey has dismissed a homeowner's complaint against his mortgagee bank seeking damages for the bank's alleged failure to purchase or force-place flood insurance on the mortgaged property, which had been damaged by Superstorm Sandy.
The Case
In the lawsuit Simon Zarour filed against JPMorgan Chase Bank, N.A., Mr. Zarour asserted that he owned a home at 32 Ocean Avenue in Monmouth Beach, New Jersey; that Chase was the mortgagee on the property; and that the property had been designated by the Federal Emergency Management Agency (“FEMA”) as located in Zone VE – a flood-prone area requiring flood insurance.
Mr. Zarour asserted that Chase had not purchased or force-placed a flood insurance policy on the property, and that he had not maintained this type of insurance on the property himself.
Mr. Zarour alleged that, on October 29, 2012, Superstorm Sandy made landfall in New Jersey and caused significant damage to the property in excess of $600,000; that damage, he said, was not covered by flood insurance.
Mr. Zarour asserted a claim of negligence against Chase for its purported failure to ensure that the property had sufficient insurance coverage in accordance with federal law. He also asserted a breach of contract claim against Chase for violating the terms of the mortgage, which he alleged necessarily included any and all obligations of a mortgagee imposed by federal law.
Mr. Zarour sought compensatory damages in the combined amount of $1,500,000, in addition to consequential and punitive damages, and attorneys' fees.
Chase moved to dismiss Mr. Zarour's complaint, arguing that there was no private right of action under the Flood Disaster Protection Act of 1973 (“FDPA”) and its related regulations, including the National Flood Insurance Act of 1968 (“NFIP”), 42 U.S.C. § 4001-4129, and that Mr. Zarour's state law claims based on alleged conduct that would constitute a violation of the FDPA and its related regulations were preempted by the FDPA.
Chase also argued that Mr. Zarour had not pleaded the requisite elements of claims for negligence or a breach of contract, and that those claims had to fail as a matter of law.
The Mortgage
Paragraph 5 of the mortgage provided:
If Borrower fails to maintain any of the coverages described above, Lender may obtain insurance coverage at Lender's option and Borrower's expense.
The District Court's Decision
The district court granted Chase's motion to dismiss.
In its decision, the district court ruled that Mr. Zarour could not maintain a cause of action, no matter how it was styled, based on violations of the FDPA. It explained that, “Congress did not expressly confer a private right of action in the FDPA. And courts that have considered the issue have concluded that no private right of action exists.”
The case is Zarour v. JPMorgan Chase Bank, N.A., No. 14-cv-06261-NLH-AMD (D.N.J. Feb. 21, 2017). Attorneys involved include: TOMAS ESPINOSA, 8324 KENNEDY BLVD., NORTH BERGEN, NJ 07047, On behalf of Plaintiff. BRIAN PETER SCIBETTA, RICHARD P. HABER, BUCKLEY MADOLE, P.C., 99 WOOD AVENUE SOUTH, SUITE 803, ISELIN, NJ 08830, On behalf of Defendant.
Steven A. Meyerowitz
Steven A. Meyerowitz, a Harvard Law School graduate, is the founder and president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. He may be contacted at [email protected].