Week Eighteen

Week of May 1, 2017 through May 5, 2017

Grayson O Company v. Agadir International LLC (Motz 5/5/2017): The Fourth Circuit held that the defendant had not infringed upon the plaintiff’s mark, finding that the plaintiff’s mark was weak and differed in appearance from that of the defendant’s mark despite the similarity of the facilities, advertising, and quality of marks. The court noted that the plaintiff presented no meaningful evidence of intent to infringe, nor did the plaintiff present evidence of actual confusion. The court affirmed the district court’s ruling. Full Opinion

Michael Woods v. City of Greensboro (Davis 5/5/2017): The Fourth Circuit held that the plaintiff set forth sufficient factual allegations to establish an imputed racial identity, which confers standing to assert a racial discrimination claim under 42 U.S.C. § 1981. Applying the Twombly/Iqbal pleading standard, the court found that the allegations were more than sufficient to nudge the plaintiff’s claims across the line from conceivable to plausible, and found that the district court misinterpreted and misapplied the controlling pleading standard. As a result, the district court’s order dismissing the claim was reversed and the case was remanded for further proceedings, despite Judge Wilkinson’s dissent. Full Opinion

Jeisson Uribe v. Jefferson Sessions III (Keenan 5/3/2017): The Fourth Circuit held that Maryland’s third degree burglary charge qualifies as a crime involving moral turpitude under 8 U.S.C. § 1227(a)(2)(A)(ii), finding that a conviction under Maryland’s third degree burglary statute necessarily involves conduct that “shocks the public conscience as inherently base, vile, or depraved.” In so doing, it denied the defendant’s petition for review of an order of the Board of Immigration Appeals, which had affirmed an immigration judge’s holding that the defendant was removable under 8 U.S.C. § 1227(a)(2)(A)(ii), based on two convictions for crimes involving moral turpitude. Full Opinion

Gary Woodson v. Allstate Insurance Company (Niemeyer 5/3/2017): The Fourth Circuit reversed the district court’s findings, holding that the Woodsons’ breach of contract claim was barred by the statute of limitations, and that the Woodsons’ state law claim under the North Carolina Unfair and Deceptive Trade Practices Act for the bad faith handling of their insurance policy claim was preempted by federal law. The Fourth Circuit also held that any similar claims the Woodsons postulate under Title 44 Part 62 of the Code of Federal Regulations (if available) are barred by the one-year statute of limitations contained in federal law. Lastly, the district court’s award of attorneys’ fees to the Woodsons, premised on state law, was set aside. Full Opinion

The State of North Carolina v. Alcoa Power Generating, Inc. (Niemeyer 5/3/2017): The Fourth Circuit held that Alcoa had title to a segment of the Yadkin River. The court affirmed the district court’s ruling, that the Yadkin River was not navigable at statehood and thus not property of North Carolina. The court affirmed the district court’s ruling because the district court did not clearly err in its finding. Full Opinion

US v. Karen Kimble (Wynn 5/2/2017): The Fourth Circuit held that the district court did not err in admitting certain evidence obtained following a search of the defendant’s home pursuant to a validly issued warrant under the Fourth Amendment to the United States Constitution. Accordingly, the Fourth Circuit concluded that the district court correctly admitted the evidence which, together with additional evidence offered at trial, provided sufficient support for the trial court’s guilty verdict on each of the government’s charges against the defendant. Full Opinion

US v. Gregory Garcia (Duncan 5/2/2017): The Fourth Circuit held that the district court did not err by denying the defendant’s post-trial motions for judgment of acquittal and a new trial. It also held that the district court did not err by taking judicial notice of a portion of the U.S. Citizenship and Immigration Services website. Accordingly, the Fourth Circuit affirmed the defendant’s convictions on two counts of unlawful procurement of naturalization, in violation of 18 U.S.C. § 1425(a). Full Opinion

US v. Jerrod Mack (Niemeyer 5/1/2017): The Fourth Circuit affirmed the district court’s sentence of the defendant to 70 months’ imprisonment. The court found that because the Supreme Court recently held that Sentencing Guidelines are not subject to vagueness challenges under the Due Process Clause (Beckles v. United States, 137 S. Ct. 886 (2017)), and that the defendant’s North Carolina conviction for attempting and conspiring to commit first-degree burglary qualifies as a crime of violence under U.S.S.G. § 4B1.2(a) (2014), the sentence was appropriate. Full Opinion

US v. Fathia-Anna Davis (Shedd 5/1/2017): The Fourth Circuit held that the district court did not err by denying the defendant’s motion to dismiss the “murder-for-hire” charge against her under 18 U.S.C. § 1958 as there were no grounds to dismiss the charge on the “manufactured jurisdiction” doctrine since the doctrine does not categorically prohibit government agents who are conducting an undercover operation from using a facility of interstate or foreign commerce to initiate contact with a suspect, but rather prohibits them from doing so for the sole purpose of transforming a state crime into a federal crime. The Fourth Circuit additionally concluded that the district court did not err in establishing and considering 120 months’ imprisonment appropriate for the defendant and that the court did not abuse its discretion by imposing the sentence. The court affirmed the defendant’s conviction and sentence. Full Opinion

US v. Marcel Kiza (Duncan 5/1/2017): The Fourth Circuit held that the district court did not err in denying the defendant’s motion for acquittal under Rule 29 of the Federal Rules of Criminal Procedure by finding that social security survivors’ benefits under 18 U.S.C. § 641 are a thing of value because the benefits originate from the United States government and are regulated and accounted for by the government. The Fourth Circuit also found that the defendant’s other argument that the district court otherwise erred in denying his Rule 29 motion because the government failed to prove the second and third elements of the offense lacked merit. Lastly, the court held that the district court’s trial management was reasonable and far from an abuse of discretion. Accordingly, the judgment of the district court was affirmed. Full Opinion

 

Highlight Case

Gary Woodson v. Allstate Insurance Company, No.16-1935

Decided: May 3, 2017

The Fourth Circuit reversed the district court’s findings, holding that the Woodsons’ breach of contract claim was barred by the statute of limitations, and that the Woodsons’ state law claim under the North Carolina Unfair and Deceptive Trade Practices Act for the bad faith handling of their insurance policy claim was preempted by federal law. The Fourth Circuit also held that any similar claims the Woodsons postulate under Title 44, Part 62, of the Code of Federal Regulations (if available) are barred by the one-year statute of limitations contained in federal law. Lastly, the district court’s award of attorneys’ fees to the Woodsons, premised on state law, was set aside.

Under the National Flood Insurance Act of 1968 (“NFIA”) (42 U.S.C. § 4001(a)), flood insurance is sold either directly by the Federal Emergency Management Agency (“FEMA”) or by private insurance companies known as “write-your-own” companies. The write-your-own companies enter into a standardized agreement with FEMA.  FEMA authorizes the private company to issue flood insurance in the company’s name and assigns the company the responsibility of “the adjustment, settlement, payment and defense of all claims arising from policies of flood insurance it issues under the Program.” 44 C.F.R. § 62.23(d). FEMA, however, has the ultimate responsibility for paying all claims and expenses. Regulations specify terms and conditions of these policies. Per statute and regulation, the policy provides the conditions and limitations for filing suit for claims under the policy. These policies are highly regulated and subject exclusively to federal law.

The Woodsons purchased their National Flood Insurance policy through Allstate, a write-your-own insurance company, to insure their waterfront home in Jarvisburg, North Carolina. Hurricane Irene struck the Woodsons’ home on August 27, 2011; thereafter, they notified Allstate. Allstate sent a man to inspect the property. The inspection determined that soil washed away from around the house and that there was no damage or permanent movement of the home. The inspection report recommended a reimbursement of $1,200.

The Woodsons subsequently retained their own engineering firm, which submitted a report describing substantial damage caused by the storm. The Woodsons eventually submitted a claim for $272,473 in damages.  Allstate sent a letter, dated on February 28, 2012, denying the Woodson’s claim. In the letter, Allstate advised the Woodsons that they could appeal the denial of the coverage to FEMA. Accordingly, the Woodsons appealed to FEMA, who found “no reason” to overturn Allstate’s denial of the claim. On February 27, 2013, the Woodsons filed a complaint in North Carolina state court for breach of the insurance contract and violation of North Carolina Unfair and Deceptive Trade Practices Act. On April 1, 2013, Allstate removed the case to federal court.

At a bench trial, the district court found that the damage was caused by the storm. It found damages of $233,398 were appropriate for the breach of contract. Moreover, the court also found that Allstate denied the Woodsons’ claim in violation of N.C. Gen. State 75-1.1 et seq. It trebled the damage figure found with the breach of contract for a total award on the bad-faith-handling amounting to $700,194. Lastly, the court granted the Woodsons attorneys’ fees in the amount of $63,962.50. Allstate appealed the judgment on the merits and the court’s award of attorneys’ fees; the two appeals were consolidated by the Fourth Circuit.

The Fourth Circuit found that the Woodsons’ breach of contract claim was barred by the one-year statute of limitations found in 42 U.S.C. § 4072, 44 C.F.R. § 62.22, and the Insurance Policy. It noted that the aggregate of the aforementioned provisions establish that (1) the limitations period of one year begins to run from the date that all or part of the claim is denied; (2) that the action may be filed only in a U.S. District Court; (3) that the U.S. District Court must be where the property is located; and (4) that these requirements and restrictions apply not only to “any claim . . . under the policy,” but also to “any dispute . . . arising out of the handling of any claim under the policy.” It reasoned that because the Woodsons failed to file their complaint in U.S. District Court within one year of the denial-of-coverage letter, both claims were barred.

The court rejected the Woodsons’ argument that the statute of limitations should be tolled by their filing of a complaint in state court because the state court lacked jurisdiction in the first place. The court also rejected the Woodsons’ argument that Allstate waived its statute of limitations defense by not presenting it to the district court, because the district court was presented with the limitations issue and relevant evidence, and the Woodsons were aware that the issue was before the court. Accordingly, the statute of limitations defense was sufficiently preserved for review upon appeal.

The Fourth Circuit also found that the Woodsons’ claim against Allstate for bad faith handling of their claim under the North Carolina Unfair and Deceptive Trade Practices Act was preempted by federal law and therefore barred. The Fourth Circuit reasoned that the insurance policy the Woodsons purchased was fully regulated by federal law, and state law could not govern claims or disputes involving bad faith handling of the claims; in so doing, the court referenced the policy and federal regulations. Moreover, the court found that “every other circuit to have considered this issue has concluded that state-law claims against write-your-own insurance providers are preempted by federal law.” These circuits are: the Tenth Circuit, the Fifth Circuit, the Third Circuit, the Eleventh Circuit, and the Sixth Circuit.

Lastly, the court recognized that there might be a possibility of bad-faith-handling liability for write-your-own-policy insurers in the federal regulations. However, it noted that such claims would be governed exclusively by federal law; and that this was not at issue on appeal.

In sum, the Fourth Circuit reversed the finding of breach of contract by the district court and reversed the finding of bad faith handling of an insurance claim under North Carolina state law by the district court. It also set aside attorneys’ fees that flowed from the district court’s findings.

Full Opinion

John Dunbar Kornegay, III

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