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USAA General Indemnity Co. v. Lighthouse Property Insurance Corp.

United States District Court, E.D. Louisiana

September 19, 2017

USAA GENERAL INDEMNITY COMPANY INDIVIDUALLY AND AS SUBROGEE OF TERRENCE R. SCOTT
v.
LIGHTHOUSE PROPERTY INSURANCE CORPORATION

         SECTION “N” (2)

          ORDER AND REASONS

          KURT D. ENGELHARDT UNITED STATES DISTRICT JUDGE.

         Presently before the Court is a Motion to Dismiss pursuant to the Federal Rules of Civil Procedure 12(b)(6) and 12(b)(7), and, in the alternative, Motion for Summary Judgment filed by defendant, Lighthouse Property Insurance Corporation (“Lighthouse”). (Rec. Doc. 10). The Motion is opposed by the plaintiff, USAA General Indemnity Company, individually and as subrogee of Terrence Scott (“USAA”). (Rec. Doc. 13). Lighthouse filed a reply to USAA's opposition to the Motion to Dismiss. (Rec. Doc. 18).[1]

         Having carefully considered the parties' submissions and the applicable law, IT IS ORDERED that Lighthouse's Motion to Dismiss and Motion for Summary Judgment (Rec. Doc. 10) are DENIED for the reasons stated herein.

         IT IS FURTHER ORDERED that any party opposed to this Court entering a stay in the captioned matter, pending the resolution of Scott v. Lighthouse Prop. Ins. Corp., Civil Action No. 17-1376, filed in the Civil District Court for the Parish of Orleans, must Show Cause in writing on or before September 27, 2017, why this Court should not stay the instant proceedings.

         I. BACKGROUND

         On or about February 20, 2015, Terrence R. Scott's (“Scott”) property at 1809 Stall Drive, Harvey, Louisiana sustained damage as the result of a fire. (Rec. Doc. 1 at p. 3). At the time of the fire, the damaged property was allegedly covered by two homeowner's insurance policies: one issued by USAA (Policy No. 29656996)[2] and another issued by Lighthouse.[3] (See Rec. Doc. 1 at p. 2-3). Both policies contained “equivalent Other Insurance clauses.”[4] (Rec. Doc. 1 at p. 3). The USAA policy provided: “If a loss covered by this policy…is also covered by other insurance, we will pay only the proportion of the loss that the amount of insurance that applies under this policy bears to the total amount of insurance covering the loss.” (Id.) Similarly, the Lighthouse policy allegedly reads: “If a loss covered by this policy is also covered by: Other insurance, we will pay only the proportion of the loss that the limit of liability that applies under this policy bears to the total amount of insurance.” (Id.).

         A dispute arose between Scott and USAA regarding Scott's first-party insurance claim with USAA. (Id. at p. 4). Subsequently, USAA filed a Declaratory Action to resolve coverage issues.[5](Id.). Both USAA and Scott filed Third-Party Demands against Lighthouse. (Id.). This Court dismissed with prejudice USAA's Third Party Demand against Lighthouse, reasoning that USAA was precluded from bringing third-party claims against Lighthouse for breach of contract and bad faith because there was no contractual relationship between the two insurers. (Id.). Thereafter, Scott dismissed his claims against Lighthouse. (Id.). USAA and Scott reached a settlement agreement wherein USAA tendered Scott a check on or about March 13, 2017 in the amount of $500, 000[6] as “full and final settlement of all claims, causes of action and losses, including dwelling, personal property and loss of use damages, arising from the fire.” (Id.). Scott filed suits against USAA and Lighthouse in the Civil District Court for the Parish of Orleans on February 10, 2017. (See Rec. Doc. 10-1 at p. 2-3). Scott then appealed this Court's Order enforcing the aforementioned settlement, which was dismissed for want of prosecution on May 10, 2017. (Rec. Doc. 13 at p. 3).

         Thereafter, USAA filed a Complaint against Lighthouse on April 24, 2017 claiming that it is conventionally and legally subrogated to the rights of its insured by virtue of its indemnity payment to Scott. (Rec. Doc. 1 at p. 4). In its Complaint, USAA seeks reimbursement, contribution, and/or indemnity from Lighthouse for its pro-rated share of the total loss based on two claims.[7](See Id. at p. 5-6). First, USAA alleges that by virtue of its indemnity payment, it is now conventionally subrogated to the rights and causes of action of its insured, namely a breach of contract claim. (Id. at p. 4-5). USAA claims that Lighthouse materially breached its contract with USAA's subrogor, Scott, when it did not perform its obligations to pay its pro-rated share of the adjusted loss to Scott's property as provided for in the Lighthouse policy. (Id. at p. 5). USAA's second claim-labeled “Equitable Subrogation/Contribution”-demands that Lighthouse pay a pro-rated share of the loss [500, 000 paid to Scott] based on Lighthouse Policy's “Other Insurance” clause and USAA being legally subrogated to the rights of its insured having satisfied the entire debt owed by Lighthouse and USAA to their insured. (Id. at p. 6).

         Presently, Lighthouse moves to dismiss USAA's Complaint pursuant to Fed.R.Civ.P. 12(b)(6) and 12(b)(7), or in the alternative, seeks summary judgment pursuant to Fed.R.Civ.P. 56, on the grounds that the Complaint fails to allege sufficient facts to show that USAA is entitled to recovery by way of conventional or legal subrogation or otherwise and for failure to join a necessary party, namely Scott, the purported subrogor.

         As the basis of its Motion to Dismiss, Lighthouse presents the following arguments. (Rec. Doc. 10). First, Lighthouse contends that this Court has already determined that USAA has no standing or right of action to recover from Lighthouse. (Rec. Doc. 10-1 at p. 6). Thus, Lighthouse argues that claims against it relative to the loss are precluded by res judicata because they have already been determined by this Court. (Id.). Second, Lighthouse alleges that USAA failed to plead facts sufficient to support a breach of contract cause of action because it failed to identify the requisite express agreement required for conventional subrogation. (Id. at p. 7). Third, Lighthouse alleges that the common-law doctrine of equitable subrogation does not exist in Louisiana and that USAA did not plead sufficient facts to sustain a cause of action under legal subrogation. (Id. at p. 8). Fourth, Lighthouse argues that USAA has no rights against Lighthouse through subrogation unless and until it has actually made payment on the debt at issue. (Id. at p. 10). Alternatively, Lighthouse moves for summary judgment in the absence of evidence that Scott has received payment from USAA. (Id.). Finally, Lighthouse moves for dismissal for failure to join Scott, a required and indispensable party. (See Id. at p. 11-13).

         II. LAW AND ANALYSIS

         A. Motion to Dismiss Under Rule 12(b)(6)

         i. Legal Standard

         Rule 8 of the Federal Rules of Civil Procedure requires that a complaint provide a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). To survive a motion to dismiss pursuant to Rule 12(b)(6), “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal citation omitted). Facial plausibility exists “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. “The plausibility standard is not akin to a ‘probability requirement, ' but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. Factual allegations that are "merely consistent with a defendant's liability, stop short of the line between possibility and plausibility of entitlement to relief, " and thus are inadequate. Id. (internal quotations omitted). Rather, a complaint's allegations “must make relief plausible, not merely conceivable, when taken as true.” United States ex rel. Grubbs v. Kanneganti, 565 F.3d 180, 186 (5th Cir. 2009).

         “Determining whether a complaint states a plausible claim for relief…[is] a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Iqbal, 556 U.S. at 679 (internal citations omitted); see also Robbins v. Oklahoma, 519 F.3d 1242, 1248 (10th Cir. 2008) (degree of required specificity depends on context, i.e., the type of claim at issue). In evaluating a Rule 12(b)(6) motion, the Court is bound to “accept all well-pleaded facts as true, and . . . view them in the light most favorable to the plaintiff.” Campbell v. Wells Fargo Bank, N.A., 781 F.2d 440, 442 (5th Cir. 1986). Further, “[a]ll questions of fact and any ambiguities in the controlling substantive law must be resolved in the plaintiff's favor.” Lewis v. Fresne, ...


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