Richard S. Arvai and Ellen M. Arvai, Appellants, v. First Federal Savings & Loan Association, Appellee, 698 F.2d 683 (4th Cir. 1983)

Plaintiffs Richard S. and Ellen M. Arvai appeal the dismissal of their action under the National Flood Insurance Act, 42 U.S.C. §§ 4001 et seq., against defendant First Federal Savings & Loan Association. The Arvais alleged that First Federal failed to comply with the provisions of Sec. 4012a(b) and Sec. 4104(a) of the Act. The district court held that no private right of action existed under the Act and accordingly dismissed the complaint for failure to state a claim upon which relief could be granted. We affirm.

The general mandate of Sec. 4012a(b) is that federally regulated lenders shall not make loans secured by improved realty located in flood hazard areas unless the property is covered by flood insurance. Similarly, Sec. 4104(a) requires these same lenders to notify purchasers that the improved realty is located in a flood hazard area. The facts, taken in the light most favorable to the Arvais, are that they purchased flood-prone property with funds secured by the property and obtained from a federally regulated lender, First Federal. First Federal failed to comply with the requirements of Sec. 4012a(b) and Sec. 4104(a). The Arvais' property was subsequently flooded and suffered non-insured flood damage. The Arvais sought monetary relief against First Federal for its noncompliance under the Act.

Because the Act, by its terms, does not expressly grant plaintiffs a private cause of action, the Arvais proceeded on the theory that the Act created an implied private action. The district court correctly analyzed this claim under the standard of Cort v. Ash, 422 U.S. 66, 95 S. Ct. 2080, 45 L. Ed. 2d 26 (1975), and its progeny. After scrutinizing the language and legislative history of the Act, the district court found that the Arvais as borrowers were not in a class for whose especial benefit the Act was passed. The court further found no specific congressional intent to allow a private action for damages, and concluded that no private action for damages existed under the Act. The court was aided in its dissection of the Act by the opinion of the Fifth Circuit in Till v. Unifirst Federal Savings and Loan Association, 653 F.2d 152 (5th Cir. 1981), which also held that no private damage action existed under the Act.

Like the district court, we are persuaded by the reasoning of Till. Having studied the briefs and record and considered oral argument of counsel, we affirm the district court's judgment on the basis of its well-reasoned order dismissing the Arvais' complaint for failure to state a remediable claim. Arvai v. First Federal Savings & Loan Association, 539 F. Supp. 921 (D.S.C. 1982).

AFFIRMED.