Wagner v. Director, Federal Emergency Management Agency

Christian Wagner (plaintiff) owned a home built on top of an ancient, dormant landslide in Malibu, California. A dormant landslide is a landslide that is currently inactive but could possibly be reactivated by its original causes or by new causes. Unusually high rainfall in 1982 and 1983 saturated and destabilized the subsurface soil under Wagner’s home, causing the landslide to reactivate. The reactivation of the landslide damaged Wagner’s home. Wagner had a Standard Flood Insurance Policy (SFIP) through the the National Flood Insurance Program (NFIP), a federal program that provided federally subsidized flood insurance plans to homeowners. NFIP was administered by the Federal Emergency Management Agency (FEMA) (defendant). Wagner’s SFIP policy covered direct physical losses caused by flood; damage caused by earth movements was specifically excluded. Wagner filed a claim under his SFIP policy for the damage caused by the reactivated landslide. FEMA adjusters investigated Wagner’s claim and determined that Wagner’s property had been damaged by the reactivated landslide and not by a flood. Accordingly, FEMA denied coverage because Wagner’s SFIP policy only covered flood damage. Wagner sued FEMA in district court, arguing that his SFIP should cover the damage because (1) the subsurface saturation constituted a flood; and (2) because the subsurface saturation reactivated the landslide, the damage to Wagner’s home was proximately caused by a flood. The district court granted summary judgment to Wagner and ordered FEMA to pay the full policy amount. FEMA appealed.