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Barbe v. American Modern Home Insurance Company

United States District Court, E.D. Louisiana

July 25, 2019

MARC G. BARBE
v.
AMERICAN MODERN HOME INSURANCE COMPANY

         SECTION “F”

          ORDER AND REASONS

          MARTIN L. C. FELDMAN UNITED STATES DISTRICT JUDGE.

         Before the Court is American Modern Home Insurance Company's motion to dismiss the plaintiff's second amended complaint for failure to state a claim. For the reasons that follow, the motion is GRANTED.

         Background

         This lawsuit concerns allegations that a mortgage servicing company and an insurance carrier conspired to issue a force-placed insurance policy with inflated premiums and to withhold 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. Pursuant to the mortgage agreement, the Barbes are required to insure the property, and if they fail to maintain appropriate coverage, Ocwen is permitted to obtain insurance at their expense. By letter dated December 31, 2015, Ocwen advised Mr. Barbe that it had not received proof of coverage, as required by the mortgage, and had therefore renewed a lender-placed policy at his expense. Ocwen also encouraged Barbe to obtain his own policy and warned about the cost of lender-placed coverage. Finally, Ocwen attached to the letter a copy of the policy it had obtained from American Modern Home Insurance Company, which named Ocwen as the “insured” and the Barbes as “borrowers.”

         On August 5, 2016, high velocity winds damaged the Barbes' roof and exterior elevations, which allowed water to infiltrate the home and damage the ceilings, walls, floors, and fixtures. After assessing the damage, the Barbes notified American Modern and filed a claim under the policy.

         Displeased with the manner in which their claim was handled, the Barbes sued American Modern Home Insurance Company and Ocwen Loan Servicing, LLC in Louisiana state court on August 3, 2018. Asserting various causes of action sounding in contract and tort, the Barbes alleged that: (1) American Modern breached the insurance policy and engaged in bad faith claims adjusting practices under Louisiana law, (2) Ocwen breached the mortgage agreement by overcharging for the insurance policy and by failing to help them pursue insurance proceeds, and (3) American Modern and Ocwen conspired to overcharge for the policy. After removing the lawsuit to this Court, the defendants moved to dismiss the plaintiffs' petition for failure to state a claim. On February 19, 2019, the plaintiffs were granted leave to file an amended complaint, and the defendants' motions to dismiss were denied as moot.

         In his first amended complaint[1], Mr. Barbe asserted that he is an insured or third-party beneficiary under the American Modern policy, such that the insurer is liable to him for breaching the terms of the policy and for engaging in bad faith claims adjusting practices. With respect to Ocwen, Barbe alleged that his mortgage servicer breached the mortgage agreement by overcharging for the insurance policy and by failing to help him pursue policy proceeds. Barbe also claimed that American Modern and Ocwen engaged in a conspiracy, in which Ocwen would pass along an inflated premium to the Barbes and receive “kickbacks” from American Modern. Finally, he asserted an unjust enrichment claim against each defendant for their role in the alleged kickback scheme.

         Once again, the defendants moved to dismiss Mr. Barbe's amended complaint for failure to state a claim. On May 22, 2019, the Court granted the motions to dismiss with prejudice, as to the plaintiff's unjust enrichment claims, and without prejudice, as to his breach of contract and tort claims. Finding that the viability of Mr. Barbe's claims against American Modern hinge on his status as a third-party beneficiary under the policy, the Court offered the plaintiff “one final opportunity to amend his complaint to allege facts demonstrating that the value of his insurance claim exceeds the current balance on his mortgage, if he can in good faith do so.”

         In his second amended complaint, the plaintiff reproduces his first amended complaint nearly verbatim but removes allegations of a civil conspiracy. Mr. Barbe also pleads two additional allegations concerning the value of his interest in the property: (1) as of July 2013, he owed $140, 126.41 on the mortgage; and (2) in a matter currently pending in state court, Ocwen alleges that Barbe has breached the Loan Modification Agreement, but Barbe “vigorously denies any obligation on the loan or mortgage to Ocwen or any other party or entity.”

         American Modern, the only defendant remaining in this action, [2]now moves to dismiss the plaintiff's second amended complaint.

         I.

         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 ...


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