Municipal Assoc. of SC v. USAA General Indemnity Co., No. 11-2220 (4th Cir. 2013)Annotate this Case
MASC filed an action in the district court seeking a declaration that South Carolina municipalities were entitled to assess municipal business license taxes based on, or measured by, the total flood insurance premiums collected in the particular municipality by insurance companies under an arrangement with FEMA. The district court denied the insurance companies' motion for summary judgment on grounds of preemption and sovereign immunity. The flood insurance premiums were federal property that could not be taxed and the participating private insurance companies, in their operation of and participation with the National Flood Insurance Program, were federal instrumentalities so closely connected with the federal government that they were immune from taxation. The federal government did not consent to this tax, and it was therefore invalid. Accordingly, the court reversed the district court's grant of partial summary judgment to MASC and denial of summary judgment to the insurance companies.