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Media Alerts - Feaz v. Wells Fargo Bank, N.A.
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February 20, 2014
  Feaz v. Wells Fargo Bank, N.A.
Headline: Eleventh Circuit holds flood insurance covenant in FHA mortgage contracts imposes the minimum coverage amount.

Area of Law: Banking, Mortgages

Issue(s) Presented: Whether the flood insurance covenant in FHA mortgage contracts imposes the minimum or maximum coverage amount.

Brief Summary: Faire Feaz ("Ms. Feaz") appealed the dismissal of her breach of contract claim against her lender. The Eleventh Circuit affirmed based on its interpretation of the flood insurance covenant in FHA mortgage contracts, concluding that the standard form language imposes a minimum coverage amount a borrower must have.

Significance (if any):

Extended Summary (if applicable): Ms. Feaz obtained $63,000 of flood insurance coverage on her home for an FHA issued mortgage from her initial lender. In 2003, Wells Fargo acquired the mortgage and Ms. Feaz renewed her flood insurance. In 2007, Wells Fargo required Ms. Feaz to increase her flood-insurance coverage to $250,000 or the home's replacement value, whichever was less. After she failed to do so, Wells Fargo force-placed the insurance and passed the premium cost to her.

The district court granted Wells Fargo's motion to dismiss, rejecting Ms. Feaz's claim that the force-placed insurance was a breach of contract. The Eleventh Circuit affirmed, finding the covenant requiring the borrower to insure "to the extent required by the Secretary" of HUD, unambiguously makes the federally mandated flood insurance amount the minimum, not the maximum requirement for coverage. The Eleventh Circuit, noting a split on the issue, agreed with the courts that declared the amount to be a minimum. The court relied upon the unique nature of a government-drafted contract, in which the intent of the contracting parties' is not determinative. Additionally, the court noted the language of the mortgage contract and the federal regulations in support of its conclusion.

To view opinion:

Panel (if known): Carnes, Chief Judge; Dubina, Circuit Judge, and Rosenthal (United States District Judge for the Southern District of Texas, sitting by designation)

Argument (if known): November 20, 2013

Date of Issued Opinion: February 10, 2014

Docket Number: 13-10230

Decided: Affirmed

Case Alert Author: Henry Alvarez, Michelle Gonzalez, Colette Largo, Kathryn Lecusay, Maxine Meltzer, Jesse Peterson, Raphael Sanchez

Counsel (if known): Mark R. Freeman, Amicus Curiae United States of America
Stanley P. Baudin, Appellant Faire Feaz
Jan T. Chilton, Appellees Wells Fargo Bank, N.A. and Wells Fargo Home Mortgage, Inc.

Author of Opinion: Judge Rosenthal

    Posted By: Gary Kravitz @ 02/20/2014 09:52 AM     11th Circuit  

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