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Barbe v. Ocwen Loan Servicing, LLC

United States District Court, E.D. Louisiana

May 22, 2019

MARC G. BARBE
v.
OCWEN LOAN SERVICING, LLC and AMERICAN MODERN HOME INSURANCE COMPANY

         SECTION “F”

          ORDER AND REASONS

          MARTIN L. C. FELDMAN UNITED STATES DISTRICT JUDGE.

         Before the Court are the defendants' Rule 12(b)(6) motions to dismiss the plaintiff's first amended complaint. For the reasons that follow, the motions are GRANTED.

         Background

         This lawsuit concerns allegations that a mortgage servicing company and a homeowners' insurance carrier conspired to issue a force-placed insurance policy with inflated premiums and then failed to pursue and arbitrarily withheld policy proceeds.

         Marc Barbe and his wife, Renada, are the mortgagors of a home located in Metairie, Louisiana. Ocwen Loan Servicing, LLC services their mortgage. The mortgage agreement requires the Barbes to insure their property against any hazards “for which Lender requires insurance;” it further provides that, if they fail to maintain appropriate coverage, “Lender may obtain insurance coverage, at Lender's option and Borrower's expense.”[1]

         By letter dated December 31, 2015, Ocwen advised Mr. Barbe that it had not received proof of coverage, as required by the terms of the mortgage, and therefore had renewed a lender-placed policy at his expense. Ocwen explained that the policy's annual premium of $3, 927 would be billed to Mr. Barbe's escrow account and that he could cancel the coverage at any time, and earn a corresponding refund of any unearned premium, by providing Ocwen with evidence of other acceptable coverage. Ocwen also strongly recommended that Barbe obtain his own policy and warned that the cost of the lender-placed coverage “may be much higher than the amount [he] would normally pay.” Finally, Ocwen attached to that letter a copy of the policy it had obtained from American Modern Home Insurance Company, which named Ocwen as the “insured” and listed the Barbes as “borrowers.” On August 5, 2016, high velocity winds damaged the Barbes' roof and exterior elevations, which allowed water to infiltrate the interior of the home and damage the ceilings, walls, floors, and fixtures. The Barbes promptly notified American Modern and filed a claim under the policy. According to the Barbes, American Modern's adjusters provided grossly inadequate estimates and failed to fully and properly pay the property damage claim.

         On August 3, 2018, Marc Barbe and Renada Barbe sued American Modern Home Insurance Company and Ocwen Loan Servicing, LLC in Louisiana state court, alleging that American Modern breached the insurance contract and engaged in bad faith claims adjusting practices under Louisiana law, that Ocwen breached the mortgage agreement by overcharging plaintiffs for the insurance policy and failing to assist them in pursuing insurance proceeds, and that the defendants negligently coordinated their efforts to overcharge plaintiffs for the policy. After timely removing the lawsuit to this Court, the defendants moved to dismiss the plaintiffs' petition for failure to state a claim. The plaintiffs then filed an amended complaint on February 19, 2019, after which Renanda Barbe voluntarily dismissed her claims with prejudice.

         In his first amended complaint, Mr. Barbe asserts that he is an “insured” under the American Modern policy, or at the very least, a third-party beneficiary of the policy. He then alleges that American Modern breached the insurance contract by failing to properly investigate and pay his claim and is also liable for bad faith statutory penalties under Louisiana law. With respect to Ocwen, Mr. Barbe alleges that his mortgage servicer breached the mortgage agreement by overcharging for the insurance policy and by failing to assist him in obtaining sufficient insurance proceeds to repair his property. Barbe also alleges that American Modern and Ocwen participated in a conspiracy, in which Ocwen would pass along an inflated premium to the Barbes and receive “commissions and/or kickbacks” from American Modern; he asserts a claim of unjust enrichment against each defendant for the alleged unearned benefits they received at his expense.

         The defendants now move to dismiss the plaintiff's first amended complaint for failure to state a claim upon which relief may be granted.

         I.

         Rule 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)).

         Under 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 unadorned, the-defendant-unlawfully-harmed-me accusation.” Id. at 678 (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). Stated differently, Rule 8 “does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions.” Id. at 678-79.

         In 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 conclusory allegations in the complaint as true. Id. at 502-03; see also Iqbal, 556 U.S. at 678 (“[W]e are not bound to accept as true a legal conclusion couched as a factual allegation.”) (internal citations omitted).

         To 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.”). This is a “context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Id. 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.” Id. at 678 (internal quotations omitted) (citing Twombly, 550 U.S. at 557). “[A] plaintiff's obligation to provide the ‘grounds' of his ‘entitle[ment] to relief'”, thus, “requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555 (alteration in original) (citation omitted).

         Finally, when reviewing a motion to dismiss, the Court may consider documents that are essentially “part of the pleadings” -- that is, any documents attached to or incorporated into the plaintiff's complaint by reference that are central to the plaintiff's claim for relief. Causey v. Sewell Cadillac-Chevrolet, Inc., 394 F.3d 285, 288 (5th Cir. 2004) (citing Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498-99 (5th Cir. 2000)). The Court is also permitted to consider matters of public record and other matters subject to judicial notice without converting the motion into one for summary judgment. See United States ex rel. Willard v. Humana Health Plan of Texas Inc., 336 F.3d 375, 379 (5th Cir. 2003).

         Here, the Barbes' mortgage agreement, the American Modern force-placed insurance policy, and Ocwen's December 31, 2015 letter notifying the Barbes that the force-placed policy would be renewed are all attached to the plaintiff's first amended complaint and are central to his claims for relief. Therefore, the Court may consider the content of these documents in deciding the defendants' motions to dismiss.

         II.

         A.

         The Court first considers whether the plaintiff has stated a breach of contract claim against American Modern. Specifically, Barbe alleges that American Modern breached the force-placed insurance policy by failing to adequately investigate, adjust, and pay his claim.

         “To state a claim under an insurance policy, the plaintiff must be a named insured, an additional named insured, or an intended third-party beneficiary of the policy.” Guthrie Brown v. Am. Modern Home Ins. Co., No. 16-16289, 2017 U.S. Dist. LEXIS 80057, at *10-11 (E.D. La. May 25, 2017) (Lemmon, J.) (citing Williams v. Certain Underwriters of Lloyd's of London, 398 Fed.Appx. 44, 47 (5th Cir. 2010)). Although the plaintiff asserts that he is either an insured, or at the very least a third-party beneficiary of the policy, he fails to allege facts to support either status.

         The plaintiff first alleges that he is an insured under the policy “according to the express language provided therein, ” but he points to no language within the policy that identifies him as an insured or an additional named insured. To the extent he relies on the “Evidence of Insurance” certificate to support his purported insured status, another Section of this Court has expressly rejected that argument. See Riley v. Southwest Business Corp., No. 06-4884, 2008 WL 4286631, at *6-7 (E.D. La. Sept. 17, 2008). In Riley, Judge Vance held that an insurance certificate identical to the one at issue here did not constitute a binding contract between an insurance carrier and a borrower because it “clearly note[d] that [lender] is the ‘insured' and that [plaintiff] is merely the ‘borrower[, ]'” and it “expressly refer[ed] the reader to the terms of the policy and disclaim[ed] any legal effect.” Id.[2] Accordingly, the insurance certificate does not make Barbe a party to the American Modern insurance contract.

         The plaintiff's attempt to claim third-party beneficiary status fares no better. Under Louisiana law, a contract for the benefit of a third party is referred to as a stipulation pour autrui. See Joseph v. Hosp. Serv. Dist. No. 2 of the Parish of St. Mary, 939 So.2d 1206, 1211 (La. 2006). The Louisiana Supreme Court has articulated three criteria for determining whether a contract stipulates a benefit for a third party: “1) the stipulation for a third party is manifestly clear; 2) there is certainty as to the benefit provided the third party; and 3) the benefit is not a mere incident of the contract between the promisor and the promisee.” Id. at 1212. The state ...


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