A federal district court in Florida has dismissed a claim by an insured under a standard flood insurance policy (“SFIP”) for its attorneys' fees, finding that the insurer that had issued the policy was not an agency of the United States. But the court also found that the insured could not recover pre-judgment interest on its claim because of sovereign immunity.
The Case
In September 2017, property in Marco Island, Florida, owned by Island Club Condominium, Inc., suffered damage due to Hurricane Irma.
Island Club subsequently sued Wright National Flood Insurance Company, a write-your-own (“WYO”) insurer from which Island Club had acquired a SFIP under the National Flood Insurance Program (“NFIP”), alleging that Wright had breached the SFIP by failing to comply with the appraisal requirements under the policy to resolve a dispute as to the amount of loss.
Among other relief, Island Club sought an award of attorneys' fees and costs under the Equal Access to Justice Act (“EAJA”), 28 U.S.C. § 2412. Island Club also sought prejudgment interest on all overdue payments.
Wright moved to dismiss Island Club's claims for attorneys' fees, costs, and interest.
The District Court's Decision
The court granted Wright's motion.
In its decision, the court explained that to recover attorneys' fees and costs under the EAJA, a party must be the prevailing party in an action “by or against the United States or any agency or any official of the United States acting in his or her official capacity.” 28 U.S.C.A. § 2412(b) (emphasis added). The court then said that although a WYO insurer acted as a “fiscal agent” of the United States, it was not thereby transformed into an official federal “agency” under the EAJA.
Because serving as a fiscal agent, without more, did not convert a WYO insurer into an official government agency, the court ruled that Island Club failed to plausibly allege entitlement to attorneys' fees and costs under the EAJA.
The court then declared that Eleventh Circuit precedent barred Island Club from recovering prejudgment interest against a WYO insurer – acting as a “fiscal agent” of the federal government – based on the sovereign immunity principle that rendered the United States immune from interest awards absent express congressional consent (although the court added that the Eleventh Circuit had not addressed post-judgment interest so it could not conclude at this stage that Island Club also was barred from recovering post-judgment interest).
The case is Island Club Condominium v. Wright National Flood Ins. Co., No. 4:18-cv-103034LK (S.D. Fla. May 9, 2019). Attorneys involved include: For Island Club Condominium, Inc., Plaintiff: Scott Gregory Millard, Cohen Law Group, Maitland, FL. For Wright National Flood Insurance Company, Defendant: Jason Paul Stearns, Taylor Robert Ryan, Freeborn & Peters LLP, Tampa, FL.
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].