Paternostro v. WELLS FARGO HOME MORTG.

• Decision Date: 08 December 2009
• Docket Number: No. 09-CA-469.,09-CA-469.
• Citation: 30 So.3d 45
• Parties: Kimberle S. PATERNOSTRO and Dino D. Paternostro v. WELLS FARGO HOME MORTGAGE, INC.
• Court: Court of Appeal of Louisiana — District of US

30 So.3d 45

Kimberle S. PATERNOSTRO and Dino D. Paternostro v. WELLS FARGO HOME MORTGAGE, INC.

No. 09-CA-469.

Court of Appeal of Louisiana, Fifth Circuit.

December 8, 2009.

Patricia S. Leblanc, Michael L. Fantaci, Attorneys at Law, Metairie, LA, for Plaintiff/Appellant.

Stephen W. Rider, Lauren Campisi, Attorneys at Law, New Orleans, LA, for Defendant/Appellee.

Panel composed of Judges WALTER J. ROTHSCHILD, FREDERICKA HOMBERG WICKER, and JUDE G. GRAVOIS.

JUDE G. GRAVOIS, Judge.

The plaintiffs, Kimberle and Dino Paternostro, have appealed the summary judgment granted in favor of the defendant, Wells Fargo Home Mortgage, Inc. ("Wells Fargo"). For the reasons that follow, we affirm.

FACTS AND PROCEDURAL HISTORY

Plaintiffs filed a petition for damages against Wells Fargo indicating that when they purchased their home located at 4620 Hessmer Avenue in Metairie, Louisiana, in 1999, they obtained both hazard and flood insurance coverage on their homesite (premises) and its contents (personal property) from State Farm Fire and Casualty Company ("State Farm"). In their petition, plaintiffs allege that they sustained losses to their personal property on August 29, 2005 from Hurricane Katrina, resulting in their submitting a claim to State Farm under their flood insurance policy for personal property losses amounting to $58,676.88. State Farm thereupon informed plaintiffs that $26,447.34 of their claim was over their policy limits for personal property coverage, that $3,729.54 of their claim was non-recoverable due to depreciation, and that their claim would be reduced by $500 due to the policy's deductible. State Farm thereupon paid $29,000 to plaintiffs for their personal property losses under their flood insurance policy issued by State Farm.

In their petition, plaintiffs also allege, among other things: 1) that they obtained flood insurance coverage for their premises in the amount required by Wells Fargo, plus personal property coverage of up to $50,000; 2) that their flood insurance policy with State Farm had an indexed inflation provision on their personal property coverage so that the coverage levels thereon would automatically increase annually; 3) that in 2003 when Wells Fargo received notice of an underpayment of their flood insurance premiums, Wells Fargo paid the underpayment due and State Farm reinstated their contents coverage to $54,000; 4) that in 2004, Wells Fargo again underpaid their flood insurance premium and that State Farm again notified Wells Fargo of the underpayment; 5) that Wells Fargo did not, however, subsequently pay the underpayment premium, resulting in State Farm's decreasing their personal property coverage level from $56,700 to $27,500; 6) that because Wells Fargo had received an identical notice the previous year and had paid the underpayment premium without any action by plaintiffs, they relied on Wells Fargo's prior course of conduct and assumed that the underpayment premium payment had been made by Wells Fargo as it had done in the prior year; 7) that because the prior year's coverage had not been corrected, State Farm renewed the contents coverage at the $28,500 level for the 2005-06 coverage period; 8) that Wells Fargo placed itself in a fiduciary position with respect to the insurance premiums payments which plaintiffs relied on to their detriment; and 9) that Wells Fargo's failure to pay their insurance premiums from the funds held in escrow constituted a breach of that fiduciary duty, making Wells Fargo liable to them for $30,176.88 for their excess personal property flood losses.

Wells Fargo responded to plaintiffs' petition with a general denial.

Plaintiffs thereafter filed a supplemental and amending petition alleging, among other things: 1) that Wells Fargo voluntarily undertook to collect payments and make payments from plaintiffs' escrow account for the premiums on plaintiffs personal property, for which Wells Fargo had no insurable interest; 2) that the renewal certificates plaintiffs received from State Farm stated "do not pay" and "premium is being paid by mortgagee"; 3) that Wells Fargo intervened in the relationship between plaintiffs and their insurer which created a legal relationship and duty between Wells Fargo and plaintiffs; and 4) alternatively, that the actions of Wells Fargo on behalf of plaintiffs created a contract which Wells Fargo breached by failing to pay the premiums maintaining the insurance at the amount agreed to at the outset of the parties' business relationship.

Wells Fargo also denied the allegations of plaintiffs' supplemental and amending petition.

Wells Fargo thereafter filed a motion for summary judgment claiming it was not liable to plaintiffs under any legal theory. The trial court held a hearing on the motion for summary judgment¹ and took the matter under advisement. The trial court subsequently rendered judgment in favor of Wells Fargo granting its motion for summary judgment. This timely appeal followed.

LAW

Appellate courts review a district court's grant of summary judgment de novo, viewing the record and all reasonable inferences that may be drawn from it in the light most favorable to the non-movant. Hines v. Garrett, XXXX-XXXX (La.6/25/04) 876 So.2d 764, 765. A motion for summary judgment should be granted only if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, show that there is no genuine issue as to material fact and that the mover is entitled to judgment as a matter of law. La. C.C.P. art. 966.

A material fact is one that potentially insures or prevents recovery, affects a litigant's ultimate success, or determines the outcome of the lawsuit. Smith v. Our Lady of the Lake Hosp., Inc., 93-2512, p. 27 (La.7/5/94), 639 So.2d 730, 751. An issue is a genuine issue if it is such that reasonable persons could disagree; if only one conclusion could be reached by reasonable persons, summary judgment is appropriate as there is no need for trial on that issue. Id.

Summary judgment procedure is intended to make a just and speedy determination of every action. La. C.C.P. art. 966. It is favored and the procedure shall be construed to achieve this intention. Id. Under C.C.P. art. 966, the initial burden is on the mover to show that no genuine issue of material fact exists. If the moving party points out that there is an absence of factual support for one or more elements essential to the adverse party's claim, action or defense, the nonmoving party then must produce factual support sufficient to establish that he will be able to satisfy his evidentiary burden of proof at trial. La. C.C.P. art. 966(C)(2). If the nonmoving party fails to do so, there is no genuine issue of material fact, and summary judgment should be granted. La. C.C.P. arts. 966 and 967.

ANALYSIS

In its motion for summary judgment, Wells Fargo claimed that it had no contractual or other legal duty to procure or maintain any insurance on plaintiffs property, including plaintiffs' personal property flood insurance coverage. It reasoned that because plaintiffs cannot establish a claim against Wells Fargo based on either contract or negligence, it was entitled to judgment as a matter of law. Specifically, Wells Fargo argued that plaintiffs' claim based on fiduciary duty must be dismissed because LSA-R.S. 6:1124² expressly limits the imposition of a fiduciary duty on a lender such as Wells Fargo. Wells Fargo also argued that the mortgage contract expressly provided that plaintiffs had to procure and maintain flood insurance coverage; plaintiffs thus had the responsibility to ensure that the correct insurance premium was paid. Wells Fargo specifically notes that the notices regarding renewals were sent to plaintiffs with copies to Wells Fargo. Plaintiffs therefore had actual knowledge of the change in coverage about which they complain.

Wells Fargo further argued that plaintiffs' detrimental reliance claim must also be dismissed as a matter of law because any alleged detrimental reliance cannot be deemed reasonable. Wells Fargo contends that plaintiffs' mortgage contract requires plaintiffs to procure and maintain insurance; thus any alleged reliance on Wells Fargo cannot be reasonable as such would allow plaintiffs to amend the provision of the mortgage contract to impose duties upon Wells Fargo that were not bargained for. Wells Fargo further argued that plaintiffs could not have reasonably relied on Wells Fargo to maintain coverage as alleged because there is no provision in the mortgage contract obligating Wells Fargo 1) to purchase or maintain insurance for the benefit of plaintiffs, 2) to notify plaintiffs of any change in coverage, or 3) to notify plaintiffs of any lack of coverage. Based on this reasoning, Wells Fargo argued that plaintiffs cannot succeed in a negligence claim against Wells Fargo.

Finally, Wells Fargo argued that the Louisiana Credit Agreement Statute, LSA-R.S. 6:1121, et seq., bars any causes of action against Wells Fargo based on its purported unwritten agreement to pay the flood insurance premiums for plaintiffs' contents coverage. Specifically, Wells Fargo states that under these statutes,³ unless an agreement is in writing and signed by the creditor and debtor, there can be no finding of a new agreement. Wells Fargo concludes that these statutes bar all causes of action whether in contract or tort because plaintiffs' purported agreement is not in writing.

In addition to plaintiffs' mortgage contract, the following were among the exhibits that were attached to Wells Fargo's motion for summary judgment:

(1) The original declarations page

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