United States District Court, E.D. Louisiana
ORDER AND REASONS
MARTIN[ L. C. FELDMAN UNITED STATES DISTRICT JUDGE
the Court is Pacific Union Financial, LLC's motion to
dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6).
For the following reasons, the motion is GRANTED.
lenders often require the borrower to maintain insurance on
the mortgaged property. When the borrower fails to secure his
own insurance, the mortgage agreement typically authorizes
the lender to secure the insurance and pass the cost on to
the borrower. This case is about whether the lender is
authorized to select insurance, called lender-placed
insurance, that is significantly more expensive than the
insurance the borrower could obtain on his own.
6, 2014, John Woodside bought a home in Madisonville,
Louisiana for $170, 000. He obtained a $157, 712 mortgage
from American National Mortgage Co., Inc., which was
immediately sold to Pacific Union Financial, LLC. Pacific
Union currently services the mortgage. The mortgage agreement
requires that Woodside insure his property “against any
hazards, casualties, and contingencies, including fire, for
which Lender requires insurance, ” and against floods.
Additionally, if Woodside fails to obtain insurance,
“then the Lender may do and pay whatever is
necessary to protect the value of the Property and
Lender's rights in the Property, ” including
obtaining insurance. Pacific Union would withdraw funds from
Woodside's escrow account to purchase the LPI policy. The
parties agreed that Pacific Union may control and manage
Woodside's escrow funds.
obtained a policy that insured the property from May 2, 2014
until May 5, 2015. The flood insurance policy provided $207,
000 in coverage; the annual premium was $788. On May 7, 2015,
Pacific Union sent a letter to Woodside stating that the
policy lapsed on May 2, 2015, and that it had not received an
acceptable renewal or replacement policy. The letter warned
that if Pacific Union did not receive proof of flood
insurance within 45 days, it would purchase coverage on
Woodside's expense, and that it would cost “at
least $8, 196.62 annually.” Accordingly, on June 23,
2015, Pacific Union notified Woodside that it had acquired
lender-placed insurance, also called force-placed insurance,
for the property through Ironshore Europe Limited. The LPI
policy provided $155, 646 in coverage and cost $8, 196.62 per
year. The notice informed Woodside that the LPI policy would
be cancelled as soon as Woodside obtained an acceptable
policy. Pacific Union paid itself $8, 196.62 out of
Woodside's escrow account on August 14, 2015. The
following year, on March 16, 2016, Woodside obtained
acceptable coverage. Accordingly, Pacific Union cancelled the
LPI policy and credited Woodside's escrow account $1,
055.43, the prorated cost of the LPI policy for the remaining
brought this proposed class action lawsuit against Pacific
Union on November 10, 2017. He alleges that Pacific Union
breached the explicit terms of the mortgage agreement, the
implied covenant for good faith and fair dealing, and its
fiduciary duties when it selected a LPI policy that was
significantly more expensive than the policy he had
originally selected. On January 11, 2018, Pacific Union moved
to dismiss the complaint for failure to state a claim,
pursuant to Federal Rule of Civil Procedure 12(b)(6).
12(b)(6) of the Federal Rules of Civil Procedure allows a
party to move for dismissal of a complaint for failure to
state a claim upon which relief can be granted. Such a motion
is rarely granted because it is viewed with disfavor. See
Lowrey v. Tex. A & M Univ. Sys., 117 F.3d 242, 247
(5th Cir. 1997)(quoting Kaiser Aluminum & Chem.
Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d 1045,
1050 (5th Cir. 1982)).
Rule 8(a)(2) of the Federal Rules of Civil Procedure, a
pleading must contain a "short and plain statement of
the claim showing that the pleader is entitled to
relief." Ashcroft v. Iqbal, 556 U.S. 662,
678-79 (2009)(citing Fed.R.Civ.P. 8). "[T]he pleading
standard Rule 8 announces does not require 'detailed
factual allegations, ' but it demands more than an
accusation." Id. at 678 (citing Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 555 (2007)).
considering a Rule 12(b)(6) motion, the Court
“accept[s] all well-pleaded facts as true and view[s]
all facts in the light most favorable to the
plaintiff.” See Thompson v. City of Waco,
Texas, 764 F.3d 500, 502 (5th Cir. 2014) (citing Doe
ex rel. Magee v. Covington Cnty. Sch. Dist. ex rel.
Keys, 675 F.3d 849, 854 (5th Cir. 2012)(en banc)). But,
in deciding whether dismissal is warranted, the Court will
not accept as true legal conclusions. Id. at 502-03
(citing Iqbal, 556 U.S. at 678).
survive dismissal, “‘a complaint must contain
sufficient factual matter, accepted as true, to state a claim
to relief that is plausible on its face.'”
Gonzalez v. Kay, 577 F.3d 600, 603 (5th Cir.
2009)(quoting Iqbal, 556 U.S. at 678)(internal
quotation marks omitted). “Factual allegations must be
enough to raise a right to relief above the speculative
level, on the assumption that all the allegations in the
complaint are true (even if doubtful in fact).”
Twombly, 550 U.S. at 555 (citations and footnote
omitted). “A claim has facial plausibility when the
plaintiff pleads factual content that allows the court to
draw the reasonable inference that the defendant is liable
for the misconduct alleged.” Iqbal, 556 U.S.
at 678 (“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.”). The Court's task “is to
determine whether the plaintiff stated a legally cognizable
claim that is plausible, not to evaluate the plaintiff's
likelihood of success.” Thompson v. City of Waco,
Texas, 764 F.3d 500, 503 (5th Cir. 2014)(citation
omitted). This 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. “Where a complaint pleads facts that are merely
consistent with a defendant's liability, it stops short
of the line between possibility and plausibility of
entitlement to relief.” I ...