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COHEN v. FIA

June 8, 1983

BENJAMIN COHEN, Plaintiff,
v.
FEDERAL INSURANCE ADMINISTRATION, et al., Defendants



The opinion of the court was delivered by: ALTIMARI

MEMORANDUM AND ORDER

 ALTIMARI, D.J.

 This is an action to recover on a policy issued under the Federal Crime Insurance Program ("FCIP") for losses allegedly sustained in a burglary of plaintiff's premises on or about January 31, 1981. Defendant, Federal Crime Insurance Program, refused to pay this claim. Plaintiff moved under Rule 12(f), Federal Rules of Civil Procedure to strike defendants' affirmative defenses. All the named defendants, except Howard Brodie, cross-moved to dismiss the complaint.

 In a Report and Recommendation dated April 29, 1983, United States Magistrate David F. Jordan recommended that the Court grant plaintiff's motion and deny defendants' motion. By letter dated May 16, 1983, defendants objected to the Magistrate's recommendation.

 FACTS

 On or about April 2, 1980, plaintiff purchased insurance in the amount of $10,000. covering his home in North Hills, New York. On or about January 30, 1981, plaintiff's home was allegedly burglarized, and he suffered a loss in excess of $25,000.00 (Cohen Aff. para. 8). Sometime in early February, 1981, plaintiff notified the agent-broker who sold him the policy, Howard Brodie, that his home had been burglarized. (Cohen Aff. Par. 5; Brodie Aff. Par. 2). Mr. Brodie, after calling a toll free number provided by the Federal Crime Insurance Program's Abstract of Residential Application (Pl. Exh. A), advised plaintiff that the loss could only be reported on Form #5, titled the "Crime Insurance Notice and Proof of Loss." (Brodie Aff. para. 3). Mr. Brodie obtained a copy of Form #5 and forwarded it to plaintiff. On March 12, 1981, approximately 40 days after the burglary, plaintiff "filed" Form #5, the written notice and proof of loss, with Mr. Brodie (Cohen Aff. Par. 7; Brodie Aff. Par. 4). Though it is not stated in the complaint or in plaintiff's supporting affidavits, apparently Mr. Brodie did not forward said notice to the defendants until on or about April 21, 1981, approximately eighty days after the burglary and forty days after he had received it from plaintiff. (Pl. Memo. at 3). The FCIP received the notice of loss from Mr. Brodie on April 24, 1981 (Pl. Ex. D). In a letter dated June 11, 1981, the FCIP denied coverage as a result of plaintiff's failure to comply with a policy provision requiring an insured to "File a detailed proof of loss, duly sworn to, with the insurer through its authorized agent within 60 days after a discovery of loss." (Pl. Exh. D).

 The Federal defendants to this action have asserted five affirmative defenses. Basically, they claim that plaintiff failed to comply with the terms of the policy requiring him to file a notice of proof of loss within 60 days from the date of loss, and that the complaint, therefore, states no cause of action. Defendants also asserted the defense of sovereign immunity. At a conference before Magistrate Jordan, however, the parties orally agreed to the substitution of the proper party defendant, the Director of the Federal Emergency Management Agency.

 Plaintiff argues that Mr. Brodie was an "authorized agent" of the FCIP empowered to receive the notice of proof of loss on behalf of the defendants. Alternatively, he claims that since the program's abstract of residential application does not provide for filing a proof of loss, the provision of the insurance policy so providing is ineffective. Plaintiff cites no authority in support of his second, and to say the least novel claim.

 Defendant takes the position that under the insurance policy, and the statutes and regulations applicable thereto, Mr. Brodie was not the FCIP's authorized agent for the purpose of filing the proof of loss required under the policy. Plaintiff's complaint, they argue, does not contain allegations establishing compliance with the terms of the policy and, as such, states no cause of action.

 DISCUSSION

 The standard residential crime insurance policy issued to plaintiff provides in pertinent part:

 
"4. Insured's Duties When Loss Occurs. Upon knowledge of loss or of an occurrence which may give rise to a claim for loss, the insured shall (a) give notice thereof as soon as practicable to law enforcement authorities and to the Insurer through any of its authorized agents, and (b) file detailed proof of loss, duly sworn to, with the insurer through its authorized agents within sixty (60) days after the discovery of loss."

 "8. Action Against Insurer. No action shall lie against the Insurer unless, as a condition precedent thereto, there shall have been full compliance with all the terms of this policy. . . ." (Pl. Ex. B).

 Several issues must be resolved; (a) was Howard Brodie the FCIP's authorized agent for purposes of filing a notice of proof of loss; and (b) if Mr. Brodie was not an authorized agent, is plaintiff precluded from recovering on the policy due to his filing a notice of proof of loss approximately 83 days after the alleged burglary. (Pl. Ex. D).

 THE APPLICABLE REGULATIONS

 Plaintiff's insurance policy is explicitly made subject to the crime insurance provisions of Title VI of the Housing and Urban Development Act of 1970, 12 U.S.C. Section 1749bbb-10a et seq., and the regulations issued thereunder, 44 C.F.R. Parts 80-83. The policy form is prescribed by 44 C.F.R. Section 83.26.

 Part 80 of the regulations, titled Description of Program and Offer to Agents, contains the following relevant sections:

 
Section 80.1 defines "agent or broker" as: "any person authorized to engage in the property insurance business as an agent or ...

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