United States District Court, M.D. Louisiana
RULING ON MOTION FOR SUMMARY JUDGMENT
JAMES J. BRADY, District Judge.
This case is before the Court on a Motion for Summary Judgment (Doc. 13) filed by the defendant, Meritplan Insurance Company (Meritplan). Plaintiff Katherine Reado (Reado) filed an opposition (Doc. 17) to which Meritplan replied (Doc. 19). Oral argument is unnecessary.
On July 13, 2012, Reado lost her home to a fire. Prior to this, she insured the home through Allstate, but she allowed coverage to lapse. Accordingly, her mortgage lender, GMAC Mortgage, LLC (GMAC) purchased insurance with Meritplan to protect its interest in the home. GMAC sent Reado a letter informing her that it had purchased insurance, and in the letter, GMAC told Reado that she would be paying the premiums. Reado paid these premiums, and after the fire, she filed a claim with Meritplan as if she were the insured. However, the contract- explicit in its terms-only covered GMAC.
During the claims process, Reado spoke with a business associate of her nephew, Greg Harrison (Harrison), a veteran of the construction business. Harrison, for reasons that both sides dispute, said the house should be gutted. Reado, also for reasons that both sides dispute, had the house gutted on August 3, 2012 and submitted a claim for the cost to Meritplan; Meritplan refused to pay this claim. Reado sued in November of 2013 alleging violations of several statutes and raising claims relating to negligence and detrimental reliance.
Standard of Review
A motion for summary judgment should be granted when the pleadings, depositions, answers to the interrogatories, and admissions on file, together with the affidavits, show that there is no genuine dispute of material fact and that the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). A factual dispute is genuine when "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The admissibility of evidence for summary judgment purposes conforms to the rules of admissibility at trial. Pegram v. Honeywell, Inc., 361 F.3d 272, 285 (5th Cir. 2004) (citations omitted). Material facts are those "that might affect the outcome of the suit under the governing law." Anderson, 477 U.S. at 248. Whether a fact is material will depend on the substantive law. Id. When addressing a summary judgment motion, the court must make reasonable inferences in favor of the non-moving party. Evans v. City of Bishop, 238 F.3d 586, 589 (5th Cir. 2000). If the movant meets his initial burden of showing the absence of a genuine dispute of material fact, the burden shifts to the nonmovant to identify or produce evidence that establishes a genuine dispute of material fact. Allen v. Rapides Parish Sch. Bd., 204 F.3d 619, 621 (5th Cir. 2000).
I. Insurance Claims
Reado makes two claims that are directly related to the insurance policy. First, she seeks to recover the expenses for gutting the house that she claims she is due under the policy. Second, she seeks to recover penalties under Louisiana's insurance law.
A. The policy
An insurance contract is, like other contracts, the law between the parties. Pareti v. Sentry Indemnity Company, 536 So.2d 417, 420 (La. 1988). Although ambiguities are to be construed in favor of the insured, the Court "has no authority to alter the terms of policies... when the policy provisions are couched in unambiguous language." Id. Several cases from Louisiana appellate courts have held that when the lender obtains insurance on mortgaged property, the owner of the property is not the insured and thus may not recover under the policy. E.g. Scheaffer v. Newport Insurance Co., 2008-1008 (La.App. 4 Cir. 12/17/08); 1 So.3d 756. In Scheaffter, the court noted that the policy was "specifically and unambiguously... issued to protect only [the lender's] interest in the property." Id. at *6; 760.
Insurance contracts can name third party beneficiaries, but this must be done clearly and unequivocally; the requirements of a Stipulation Pour Autrui must be met. These three requirements are that the stipulation for the third party is clear, that there is certainty regarding the benefit to the third party, and that the benefit is not simply incidental to the contract between the parties. Joseph v. Hosp. Serv. Dist. No. 2 of Parish of St. Mary, 2005-2364 *8-9 (La. 10/15/06); 939 So.2d 1206, 1212.
Although Reado paid the premiums and may have thought she was insured, the policy terms are explicit: it only covers the named insured, and that named insured is GMAC. The letter that Reado received indicated that the insurance policy covered her property, but the language of that letter also clearly indicated that GMAC purchased the policy for its own protection. There is nothing in the policy that meets the requirements for a Stipulation Pour Autrui ; indeed, the evidence indicates that GMAC purchased the policy for its own benefit rather than Reado's ...