Kelly v. Balboa Ins. Co.

• Decision Date: 29 May 2012
• Docket Number: Case No. 8:11–cv–450–T–35–MAP.
• Citation: 897 F.Supp.2d 1262
• Parties: Kurtis KELLY, Plaintiff, v. BALBOA INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Middle District of Florida

897 F.Supp.2d 1262

Kurtis KELLY, Plaintiff,

v.BALBOA INSURANCE COMPANY, Defendant.

Case No. 8:11–cv–450–T–35–MAP.

United States District Court,

M.D. Florida,

Tampa Division.

May 29, 2012.

Peter Michael Cardillo, Cardillo Law Firm, Matthew Joseph Cardillo, Matt Cardillo, PA, Tampa, FL, for Plaintiff.

Scott Parker Yount, Garrison, Yount, Forte, Mulcahy, & Lehner, LLC, Tampa, FL, for Defendant.

ORDER

MARY S. SCRIVEN, District Judge.

THIS CAUSE comes before the Court for consideration of Defendant's Motion for Summary Judgment (Dkt. 33), Plaintiff's Response in Opposition (Dkt. 41), Defendant's Reply to the Response in Opposition (Dkt. 59), and Defendant's Motion to Dismiss for Lack of Subject Matter Jurisdiction for Lack of Standing (Dkt. 50) and Plaintiff's Response in Opposition. (Dkt. 60) Upon consideration of all relevant filings, case law, and being otherwise fully advised, the Court DENIES in part and GRANT in part Defendant's Motion for Summary Judgment (Dkt. 33) and DENIES its Motion to Dismiss (Dkt. 50), as described herein.

I. BACKGROUND

Plaintiff is the owner of the property located at 6620 Jennifer Drive, Temple Terrace, Florida (the “Subject Property”). The property was secured by a mortgage serviced by Countrywide Loans. (Dkt. 33 at 3) As part of the mortgage agreement, Plaintiff agreed to maintain acceptable and continuous hazard insurance on his home until he paid off his loan. ( Id.) At some point, Plaintiff's hazard insurance lapsed or was pending expiration. ( See Dkt. 33–9) Thereafter, Countrywide Loans obtained a lender placed mortgage protection policy, policy number 4800–0100, with policy limits of $101,000.00 from NewPort Insurance Company effective February 24, 2002 ¹ (the “Subject Policy”). On May 1, 2005, the Subject Policy was assigned to Defendant. ( See Dkt. 33–11) On April 27, 2009, Plaintiffs mortgage was assigned from Countrywide Loans to BAC Home Loans Servicing, LP. (Dkt. 33 at 3, n. 1)

The subject policy does not refer to Plaintiff as an insured. However, the Loss Payment section of the policy provides:

13. Loss Payment. WE will adjust each LOSS with YOU and will pay YOU. If the amount of LOSS exceeds YOUR insurable interest, the BORROWER may be entitled, as a simple loss payee only, to receive payment for any residual amount due for the LOSS, not exceeding the lesser of the applicable Limit of Liability indicated on the NOTICE OF INSURANCE and the BORROWER'S insurable interest in the damages or destroyed property on the DATE OF LOSS. Other than the potential right to receive such payment, the BORROWER has no rights under the Residential Property Form.

(Dkt. 33–11 at 12) BORROWER refers to Plaintiff. In a letter dated March 23, 2010, Plaintiff provided Defendant with notice of his claim for loss to the Subject Property. (Dkt. 33–24) In a letter dated June 2, 2010, Defendant denied coverage for the loss under the Subject Policy. (Dkts. 18–3, 62–1)

On February 4, 2011, Plaintiff filed this action in state court against Defendant alleging Defendant is liable for breach of contract (“Count 1”), bad faith (“Count 2”) and unfair claim settlement practices (“Count 3”). (Dkt. 2) On March 3, 2011, Defendant timely removed this action to this Court. (Dkt. 1) On March 4, 2011, Defendant moved the Court to dismiss Counts 2 and 3, or in the alternative abate Counts 2 and 3 pending resolution of Count 1. (Dkt. 4) On March 11, 2011, the Court denied Defendant's motion to dismiss, but granted Defendant's motion to abate Counts 2 and 3 pending final resolution,including appeals of Count 1. (Dkt. 5) On November 8, 2011, Plaintiff filed an amended complaint again alleging Defendant is liable for breach of contract, bad faith and unfair claim settlement practices. (Dkt. 18) On November 21, 2011, Defendant answered the breach of contract claim in Plaintiff's Complaint. ² (Dkt. 19)

Defendant seeks an Order dismissing this action for lack of subject matter jurisdiction (Dkt. 50) or granting summary judgment in its favor against Plaintiff. (Dkt. 33) Defendant argues Plaintiff is not a third-party beneficiary, or in the alternative he is only an incidental third-party beneficiary who lacks standing to bring this action. Further, Defendant argues (1) Plaintiff is not entitled to attorney's fees and costs as a third-party beneficiary; (2) Plaintiff has no residual amount of insurance proceeds available to him to cover his alleged insurable interest; (3) Plaintiff cannot establish that his loss occurred during the Subject Policy coverage period; (4) the damage that is the subject of Plaintiffs Complaint was not hidden; (5) Plaintiff should be estopped from pursing this action; and (6) the statute of limitations bars any claims for loss prior to February 4, 2006.

II. LEGAL STANDARDS

Summary judgment is appropriate when the movant can show that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law. Fennell v. Gilstrap, 559 F.3d 1212, 1216 (11th Cir.2009) ( citing Welding Servs., Inc. v. Forman, 509 F.3d 1351, 1356 (11th Cir.2007)). Which facts are material depends on the substantive law applicable to the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The moving party bears the burden of showing that no genuine issue of material fact exists. Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir.1991). Evidence is reviewed in the light most favorable to the non-moving party. Fennell, 559 F.3d at 1216.

A moving party discharges its burden by showing there is an absence of evidence to support the non-moving party's case. Dietz v. Smithkline Beecham Corp., 598 F.3d 812, 815 (11th Cir.2010). When a moving party has discharged its burden, the non-moving party must then go beyond the pleadings, and by its own affidavits, or. by depositions, answers to interrogatories, and admissions on file, designate specific facts showing there is a genuine issue for trial. Porter v. Ray, 461 F.3d 1315, 1321 (11th Cir.2006). The party opposing a motion for summary judgment must rely on more than conclusory statements or allegations unsupported by facts. Evers v. Gen. Motors Corp., 770 F.2d 984, 986 (11th Cir.1985) (“conclusory allegations without specific supporting facts have no probative value.”). If material issues of fact exist that would not allow the Court to resolve an issue as a matter of law, the Court must not decide them, but rather, must deny the motion and proceed to trial.

III. DISCUSSIONA. STANDING

Defendant argues that Plaintiff is not a named insured, additional insured, or a third-party beneficiary of the Subject Policy and, therefore, lacks standing to bring this claim. Plaintiff does not dispute that he is not named as an insured under the Subject Policy. Plaintiff, however, contends that as owner of the Subject Property he is a third-party beneficiary of the Subject Policy and, therefore, has standing to bring this action.

Florida Statute § 627.405 provides

(1) No contract of insurance of property or of any interest in property or arising from property shall be enforceable as to the insurance except for the benefit of persons having an insurable interest in the things insured as at the time of the loss. (2) ‘Insurable interest’ as used in this section means any actual, lawful, and substantial economic interest in the safety or preservation of the subject of the insurance free from loss, destruction, or pecuniary damage or impairment. (3) The measure of an insurable interest in property is the extent to which the insured might be damnified by loss, injury, or impairment thereof.

Fla. Stat. § 627.405. The insurable interest is determined at the time of loss. Schlehuber v. Norfolk & Dedham Mut. Fire Ins. Co., 281 So.2d 373, 375 (Fla. 3d DCA 1973).

There is no dispute that Plaintiff was the owner of the Subject Property during the alleged period of loss and still is the owner of the Subject Property. As owner of the Subject Property during the time of the loss Plaintiff had an economic interest in the safety or preservation of the Subject Property. Therefore, the promise by Defendant to pay the mortgagee to the extent of its loss in the Subject Property may be enforced by Plaintiff, as a third-party beneficiary even if Plaintiff possesses no policy of insurance in his name. Schlehuber, 281 So.2d at 375 (“[The Court] conclude[s] that the language of the mortgage payment clause which was a part of that policy represents a promise by the insurance company to pay to the mortgagees the extent of their loss as their interests appear. This promise may be enforced by the appellant as a third party beneficiary even though he possessed no policy in his name.”) Accordingly, the Court finds that Florida Statute § 627.405 provides the basis for Plaintiff to bring this action.

B. ATTORNEY'S FEES AND COSTS AS A THIRD PARTY BENEFICIARY

Defendant argues that even if Plaintiff is a third-party beneficiary under the Subject Policy, summary judgment should be entered precluding Plaintiff from being entitled to attorney's fees under Fla. Stat. § 627.428 because Florida law holds that Section 627.428(1) does not include third-party beneficiaries. Section 627.428(1) provides that:

Upon the rendition of a judgment or decree by any of the courts of this state against an insurer and in favor of any named or omnibus insured or the named beneficiary under a policy or contract executed by the insurer, the trial court or, in the event of an appeal in which the insured or beneficiary prevails, the appellate court shall adjudge or decree against the insurer and in favor of the insured or beneficiary a reasonable sum as fees or compensation for the insured's or beneficiary's attorney prosecuting the suit in which the recovery is had.

Fla. Stat. § 627.428(1). “Section 627.428 must be strictly construed because an award of attorneys' fees is in derogation of common law.” Pepper's Steel & Alloys, Inc. v. United States, 850 So.2d...