Tuesday, May 18, 2010

FYI: 4th Cir Says State Law Tort Claims Preempted by Nat'l Flood Ins Act

The U.S. Court of Appeals for the Fourth Circuit recently held that state law tort claims against an independent contractors hired by the Federal Emergency Management Agency (“FEMA”) were preempted under the National Flood Insurance Act of 1968 (“NFIA”).  A copy of the opinion is attached.


In 1998, FEMA began a reassessment of flood elevation maps in an area of South Carolina that included Plaintiff’s property.  FEMA hired the Defendant as an independent contractor to provide engineering and related services to assist in remapping the area.  Defendant’s evaluation concluded that a large portion of Plaintiff’s property was a floodway, which significantly reduced Plaintiff’s property value.  After an unsuccessful administrative appeal pursuant to the NFIA, Plaintiff filed a number of state law claims against the Defendant for professional malpractice, civil conspiracy, injurious falsehood and for violation of the South Carolina Unfair Trade Practices Act (“SCUTPA”). 


The Court determined that the NFIA preempts Plaintiff’s state law claims under a theory of obstacle preemption, which applies “where state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.”  The Court found that the NFIA sets up a specific system for appealing the accuracy of flood maps that carefully balances the interests of landowners with the purposes of the NFIA.  Allowing state law causes of action against FEMA’s independent contractors would “undermine the primary purposes of the NFIA to strike a balance.” 


Importantly, the Court noted that NFIA only allowed an appeal of an assessment on the grounds that it was “scientifically or technically incorrect,” and then, “the only available remedy is modification of the determination.”  The Court thus concluded that allowing state law tort actions against independent contractors hired by FEMA would increase the costs of the program, hindering FEMA’s ability implement the law, “thus destroying the balance struck by Congress in promulgating the NFIA.”  Thus, the Appellate Court upheld the district court and concluded that Plaintiff’s claims were preempted by federal law.

Let me know if you have any questions.  Thanks.


Ralph T. Wutscher

Kahrl Wutscher LLP

The Loop Center Building

105 W. Madison Street, Suite 2100
Chicago, Illinois  60602
Direct:  (312) 551-9320 

Fax:  (866) 581-9302
Mobile:  (312) 493-0874




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