Barrios v. Great American Assurance Co.
| Decision Date | 16 August 2011 |
| Docket Number | CIVIL ACTION NO. H-10-3511 |
| Parties | HORACIO BARRIOS, et al., Plaintiffs, v. GREAT AMERICAN ASSURANCE COMPANY, et al., Defendants. |
| Court | U.S. District Court — Southern District of Texas |
Pending before the Court is the defendant's, Great American Assurance Company, motion for summary judgment (Docket Entry No. 21). The plaintiffs, Horacio Barrios and Jose Jorge Batres, filed a response (Docket Entry No. 24), to which Great American replied (Docket Entry No. 25). Also pending is the other defendant's, Bayview Loan Servicing, LLC, motion for summary judgment (Docket Entry No. 29), to which the plaintiffs responded (Docket Entry No. 34). After having carefully reviewed the motions, the responses, the record and the applicable law, the Court grants both defendants' motions in their entirety.
This case concerns a dispute over who is insured by a lender-placed insurance policy covering a commercial property damaged during Hurricane Ike, which is located at 1923 Main Street, Houston, Texas 77002. While the plaintiffs claim co-ownership of the property, Barrios is listed as the mortgagor under a mortgage loan with Bayview. Bayview, in turn, required the plaintiffs to maintain an insurance policy covering potential wind, hail and hurricane damage. When the plaintiffs failed to do so, Bayview arranged for Great American to issue it a lender-placed insurance policy,1 which covered the property during all relevant times to protect Bayview's mortgagee interest in the property. Bayview required the plaintiffs to make the monthly payments on this policy. The notice of insurance reflects Batres and Barrios as the mortgagors and Bayview as the insured mortgagee.
On September 13, 2008, Hurricane Ike damaged the property. On March 16, 2009, an insurance adjuster inspected the property, and Great American ultimately paid $40,999.63 towards repairing the property. On August 18, 2010, the plaintiffs filed suit in state court, and the defendants timely removed the suit to this Court, which has jurisdiction pursuant to 28 U.S.C. § 1332.
The plaintiffs contend that the amount of money that Great American paid towards repairing the property was insufficient to complete the repairs. They assert claims for breach of contract, violations of the Texas Deceptive Trade Practices Act ("DTPA") and the Texas Insurance Code, common law fraud and negligence. They argue that Bayview failed to compel Great American to expend enough money to complete the repairs. They maintain that, although they are not in privity with and lack standing against General American, equitable concerns should allow them to force Great American to perform the duties that it allegedly owes the plaintiffs under the policy.2
1. Great American's Contentions
Great American claims that the plaintiffs lack standing to assert any claims against it. It asserts that the plaintiffs' breach of contract, DTPA and Texas Insurance Code claims are barred because they are not named insureds, additional insureds or third-party beneficiaries under the policy. It avers that the plaintiffs' have not alleged facts to support their fraud claim, and that Texas law does not recognize a negligence cause of action against an insurer.
2. Bayview's Contentions
Bayview also contends that the plaintiffs lack standing to bring their claims, and that they cannot establish the requisite elements of their asserted causes of action.
Federal Rule of Civil Procedure 56 authorizes summary judgment against a party who fails to make a sufficient showing of the existence of an element essential to that party's case and on which that party bears the burden at trial. See Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc). The movant bears the initial burden of "informing the Court of the basis of its motion" and identifying those portions of the record "which it believes demonstrate the absence of a genuine issue of material fact." Celotex, 477 U.S. at 323; see also, Martinez v. Schlumber, Ltd., 338 F.3d 407, 411 (5th Cir. 2003). Summary judgment is appropriate if "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c).
If the movant meets its burden, the burden then shifts to the nonmovant to "go beyond the pleadings and designate specific facts showing that there is a genuine issue for trial." Stults v.Conoco, Inc., 76 F.3d 651, 656 (5th Cir. 1996) (citing Tubacex, Inc. v. M/V Risan, 45 F.3d 951, 954 (5th Cir. 1995); Little, 37 F.3d at 1075). "To meet this burden, the nonmovant must 'identify specific evidence in the record and articulate the 'precise manner' in which that evidence support[s] [its] claim[s].'" Stults, 76 F.3d at 656 (quoting Forsyth v. Barr, 19 F.3d 1527, 1537 (5th Cir. 1994), cert. denied, 513 U.S. 871 (1994)). The nonmovant may not satisfy its burden "with some metaphysical doubt as to the material facts, by conclusory allegations, by unsubstantiated assertions, or by only a scintilla of evidence." Little, 37 F.3d at 1075 (internal quotation marks and citations omitted). Instead, it "must set forth specific facts showing the existence of a 'genuine' issue concerning every essential component of its case." American Eagle Airlines, Inc. v. Air Line Pilots Ass'n, Int'l, 343 F.3d 401, 405 (5th Cir. 2003) (quoting Morris v. Covan World Wide Moving, Inc., 144 F.3d 377, 380 (5th Cir. 1998)).
"A fact is material only if its resolution would affect the outcome of the action . . . and an issue is genuine only 'if the evidence is sufficient for a reasonable jury to return a verdict for the [nonmovant].'" Wiley v. State Farm Fire and Cas. Co., 585 F.3d 206, 210 (5th Cir. 2009) (internal citations omitted). When determining whether the nonmovant has established a genuine issue of material fact, a reviewing court must construe "all facts and inferences . . . in the light most favorable to the [nonmovant]." Boudreaux v. Swift Transp. Co., Inc., 402 F.3d 536, 540 (5th Cir. 2005) (citing Armstrong v. Am. Home Shield Corp., 333 F.3d 566, 568 (5th Cir. 2003)). Likewise, all "factual controversies [are to be resolved] in favor of the [nonmovant], but only where there is an actual controversy, that is, when both parties have submitted evidence of contradictory facts." Boudreaux, 402 F.3d at 540 (citing Little, 37 F.3d at 1075 (emphasis omitted)). Nonetheless, a reviewing court may not "weigh the evidence or evaluate the credibility of witnesses." Boudreaux, 402 F.3d at 540 (citing Morris, 144 F.3d at 380). Thus,"[t]he appropriate inquiry [on summary judgment] is 'whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.'" Septimus v. Univ. of Houston, 399 F.3d 601, 609 (5th Cir. 2005) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52 (1986)).
The Court grants both of the defendants' motions for summary judgment in their entirety because it determines that the plaintiffs lack standing to bring suit under the insurance policy. The plaintiffs are not named insureds, additional insureds or intended third-party beneficiaries of the policy. Regarding Great American's motion, the plaintiffs appeal only to equity, conceding that it has no privity with Great American and lack standing, and conceding that Great American's arguments are legally correct. Regarding Bayview's motion, the plaintiffs have cited no legal obligation requiring Bayview to have exerted more effort to force General American to pay the plaintiffs more money under the policy. The Court declines the plaintiffs' invitation to "circumvent the law" due to equitable considerations that, standing alone, are insufficient to survive either defendant's summary judgment motion. This explanation alone is sufficient to find in the defendants' favor, but the following additional reasons undergird the Court's holding.3
1. Breach of Contract
The Court grants the defendants' motions regarding the plaintiffs' breach of contract claims. To establish a claim for breach of contract, a plaintiff must show: "[1] the existence of a valid contract, [2] the plaintiff's performance or tendered performance, [3] the defendant'sbreach of the contract, and [4] damages as a result of the breach." Trahan v. Fire Ins. Exch., 179 S.W.3d 669, 674-75 (Tex. App. - Beaumont 2005, no pet.) (citing Sullivan v. Smith, 110 S.W.3d 545, 546 (Tex. App. - Beaumont 2003, no pet.).
Regarding Great American, its contractual obligations are limited to its named insured: Bayview. The plaintiffs are not listed as insureds or additional insureds in the policy between Great American and Bayview.4 Without a valid contract between Great American and the plaintiffs, the plaintiffs' cannot establish any element of this claim against it. See Trahan, 179 S.W.3d at 674-75 (citing Sullivan, 110 S.W.3d at 546). Regarding Bayview, the only known contract between it and the plaintiffs is the underlying promissory note secured by a deed of trust on the property, and the plaintiffs have neither asserted a breach of that note or deed, nor established any element of a breach of contract claim regarding those documents.
Nor are the plaintiffs third-party beneficiaries of the policy. To qualify as a third-party beneficiary of an insurance contract, a plaintiff must prove that: (1) it was not privy to the contract; (2) the contract was made at least in part for its benefit; and (3) the contracting parties intended to benefit the plaintiff by their contract. Talman Home Fed. Sav. & Loan Ass'n of Illinois v. American Bankers Ins.,...
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