United States District Court, E.D. Louisiana
ORDER AND REASONS
ANN VIAL LEMMON UNITED STATES DISTRICT JUDGE
HEREBY ORDERED that American Modern Home Insurance
Company's Motion to Dismiss Pursuant to Rules 12(b)(1)
and 12(b)(6) of the Federal Rules of Civil Procedure (Doc.
#46) is GRANTED, and plaintiffs' claims against American
Modern Home Insurance Company are DISMISSED WITHOUT
FURTHER ORDERED that American Security Insurance
Company's Motion to Dismiss (Doc. #48) is GRANTED, and
plaintiffs' claims against American Security Insurance
Company are DISMISSED WITH PREJUDICE.
FURTHER ORDERED that Ocwen Loan Servicing, LLC's Rule
12(b)(1) and Rule 12(b)(6) Motion to Dismiss for Failure to
State a Claim on which Relief Can be Granted (Doc. #47) is
GRANTED, and plaintiffs' claims against Ocwen Loan
Servicing, LLC are DISMISSED WITHOUT PREJUDICE.
FURTHER ORDERED that plaintiffs are granted leave to file an
amended complaint within 15 days of the date of this order to
allege claims against American Modern Home Insurance Company
and Ocwen Loan Servicing, LLC as specified herein. Judgment
will be entered in defendants' favor if an amended
complaint complying with this order is not filed within 15
days of the date of this order.
matter is before the court on a motions to dismiss filed by
defendants, Ocwen Loan Servicing, LLC, American Security
Insurance Company and American Modern Home Insurance Company.
Defendants argue that this suit should be dismissed because
plaintiffs, Robin Guthrie Brown and Michelle Guthrie Brown,
do not have standing to pursue claims against defendants as
plaintiffs are not third-party beneficiaries under the
homeowners' insurance policies that their mortgagee,
Ocwen, procured for the property after plaintiffs failed to
supply satisfactory proof of insurance.
own a home in Belle Chasse, Louisiana. Ocwen holds the
mortgage on the property. Because plaintiffs did not provide
sufficient proof of insurance, Ocwen obtained forced-placed
homeowners' insurance policies on the property to protect
its interest. American Security underwrote a policy with
effective dates of August 23, 2014, to August 23, 2015, which
stated that Ocwen was the insured and plaintiffs were the
“Borrowers.” American Modern underwrote a policy
with effective dates of January 1, 2015, to January 1, 2016,
which stated that Ocwen was the insured.
19, 2015, lightning hit plaintiffs' home and caused
damage. Robin Guthrie Brown notified Ocwen and American
Security and made an insurance claim. American Security
inspected the damages and paid $31, 615.55, listing Ocwen and
plaintiffs as payees on the check.
29, 2015, lightning struck the home again, causing more
damage. Robin Guthrie Brown notified Ocwen and American
Security. American Security found that there was no
March 7, 2016, plaintiffs' home experienced a power
surge, which caused damage to various electrical systems and
appliances. Robin Guthrie Brown notified Ocwen and American
Modern. American Modern found that there was no coverage for
the claimed damage and that there was no additional damage
other than that caused by the previous lightning strikes.
November 10, 2016, plaintiffs filed this action against
American Security, American Modern and Ocwen. Defendants
filed motions to dismiss. Plaintiffs responded by filing a
superseding amended complaint. In the amended complaint,
plaintiffs allege that they are beneficiaries of the
insurance policies because they are listed as
“borrowers” in the policies and paid the
insurance premiums through Ocwen. Plaintiffs claim that they
must be beneficiaries of the American Security insurance
policy because they were listed as payees on the $31, 615.55
insurance proceeds check. Plaintiffs also cite provisions of
the American Modern policy that impose duties and obligations
on them as evidence that they are beneficiaries of that
insurance policy. Plaintiffs allege that American Security
and American Modern breached the insurance contracts by
failing to properly pay and are liable for penalties and
attorneys' fees under Louisiana Revised Statutes
§§ 22:1892 and 22:1973. Plaintiffs allege that
Ocwen is liable for detrimental reliance because they relied
on Ocwen to acquire insurance on their behalf in the event
that their homeowners' insurance lapsed, and that Ocwen
has refused to make claims on the policies. Plaintiffs also
seek to have Ocwen joined as an involuntary plaintiff to this
action against the insurance companies.
Security and American Modern filed motions to dismiss the
amended complaint under Rules 12(b)(1) and 12(b)(6) of the
Federal Rules of Civil Procedure. The insurers argue that
plaintiffs' claims should be dismissed pursuant to Rule
12(b)(1) due to lack of standing because plaintiffs are not
named insured, additional insured, or third-party
beneficiaries under the insurance policies. American Security
and American Modern also argue that plaintiffs' claims
should be dismissed pursuant to Rule 12(b)(6) for failure to
state a claim because they have not properly alleged, and
cannot demonstrate, that they are third-party beneficiaries
under the insurance policies. Ocwen argues that plaintiffs do
not have a claim against it for detrimental reliance and it
is not an indispensable party to this litigation. Further,
Ocwen argues that if it were added as an involuntary
plaintiff, this court would lack diversity subject matter
jurisdiction over this matter because both Ocwen and American
Security are citizens of Delaware.
American Modern's and American Security's Motions to
Dismiss (Docs. # 46 & 48)
Rule 12(b)(1) of the Federal Rules of Civil
filed under Rule 12(b)(1) of the Federal Rules of Civil
Procedure allow a party to challenge the subject matter
jurisdiction of the district court to hear a case.”
Ramming v. United States, 281 F.3d 158, 161 (5th
Cir. 2001). Constitutional standing is an element of subject
matter jurisdiction that may be challenged under Rule
12(b)(1). See Moore v. Bryant, 853 F.3d 245, 248
(5th Cir. 2017). A district court may dismiss a matter
pursuant to Rule 12(b)(1) “on any one of three separate
bases: (1) the complaint alone; (2) the complaint
supplemented by undisputed facts evidenced in the record; or
(3) the complaint supplemented by undisputed facts plus the
court's resolution of disputed facts.” Id.
(quotation omitted). In a 12(b)(1) motion, the party
asserting jurisdiction bears the burden of proof that
jurisdiction does in fact exists. Ramming, 281 F.3d
Article III of the Constitution of the United States, a
litigant must have “‘standing' to invoke the
power of the federal court.” Allen v. Wright,
104 S.Ct. 3315, 3324 (1984). “‘In essence the
question of standing is whether the litigant is entitled to
have the court decide the merits of the dispute or of a
particular issue.'” Id. (quoting Warth
v. Seldin, 95 S.Ct. 2197, 2205 (1975)). The party
seeking to have claims redressed by the federal court must
establish the elements of standing for each claim that he
seeks to press. Lujan v. Defenders of Wildlife, 112
S.Ct. 2130, 2136 (1992); DaimlerChrysler Corp. v.
Cuno, 126 S.Ct. 1854, 1867 (2006). Absent Article III
standing, a federal court does not have subject matter
jurisdiction to address a plaintiff's claims, and the
claim must be dismissed. U.S. Const. art. 3, § 2, cl. 1.
has constitutional and prudential requirements. Standing, at
its “irreducible constitutional minimum, ”
requires a plaintiff to demonstrate that: (1) he has suffered
an “injury-in-fact”; (2) the injury is fairly
traceable to the defendant's actions; and (3) that the
injury will likely be redressed by a favorable decision.
Lujan, 112 S.Ct. at 2136. An
“injury-in-fact” is “an invasion of a
legally protected interest which is (a) concrete and
particularized, and (b) actual or imminent, not conjectural
or hypothetical.” Webb v. City of Dall., Tex.,
314 F.3d 787, 791 (5th Cir. 2002).
Cotton v. Certain Underwriters at Lloyd's of
London, 831 F.3d 592, 593 (5th Cir. 2016), the
plaintiffs' mortgagee, First American Bank and Trust,
obtained forced-placed flood insurance on plaintiffs'
properties from Certain Underwriters at Lloyd's of London
(“Lloyd's”). Plaintiffs' properties
sustained flood damages during Hurricane Isaac. Id.
First American made a claim under the Lloyd's policy, and
Lloyd's paid for some damages. Id. Plaintiffs
sued Lloyd's for additional flood insurance payments.
Id. The United States Court of Appeals for the Fifth
Circuit found that, although plaintiffs were not named or
additional insureds or third-party beneficiaries of the
insurance policies, they had Article III standing to bring a
claim against Lloyd's because the requirements of
constitutional standing are satisfied in that they were
harmed by Lloyd's paying an insufficient amount on the
flood insurance claim and they would indirectly benefit from
a ruling against Lloyd's. Id. at 595.
court explained that there is a difference between Article
III standing and “standing” that
“describe[s] whether a party has a right to sue under a
contract.” Id. at 594-95. The second type of
“standing” “is really an issue of
‘contract interpretation' that goes to the merits
of a claim.” Id. at 594 (citing Perry v.
Thomas, 107 S.Ct. 2520, 2527 (1987)). The court further
recognized that in Williams v. Certain Underwriters at
Lloyd's of London, 398 Fed.Appx. 44, 47 (5th Cir.
2010), it found that the plaintiffs did not have Article III
standing to sue Lloyd's on a force placed insurance
policy when they were not named or additional insured or
third-party beneficiaries of the policy. Id. at 595.
However, the court reasoned that Williams did not
control because it was “nonprecedential” and
predated a more recent Supreme Court case that reiterated
that “the question whether a plaintiff states a claim
for relief ‘goes to the merits' in the typical
case, not the justiciability of a dispute, and conflation of
the two concepts can cause confusion.” See Bond v.
United States, 564 U.S. 211, 219, 131 S.Ct. 2355, 180
L.Ed.2d 269 (2011) (citation omitted). Contrary to that
clarification, Williams based its “no
standing” holding on a Louisiana case that treated the
issue as one of failure to state a claim. See 398
Fed.Appx. at 47 (citing Joseph v. Hosp. Serv. Dist. No. 2
of Par. of St. Mary, 939 So.2d 1206, 1215 (La. 2006)
(finding that the alleged breach of a contract between a
hospital and a medical corporation did not create a cause of
action in favor of individual doctors affiliated with the
medical corporation because the contract did not create a
stipulation pour autrui in favor of the doctors)).
Cotton, regardless of whether plaintiffs are
additional or named insureds or third-party beneficiaries
under the American Security or American Modern insurance
policies, they have Article III standing to state claims
against the insurers because they were allegedly harmed by
underpayment of insurance proceeds and they would indirectly
benefit from judgment against the insurers. The issue of
whether plaintiffs have “standing” ...