The opinion
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
JOHN HALEY CIVIL ACTION
VERSUS NO. 22-1728
AMERICAN SECURITY INSURANCE SECTION: “G”(5)
COMPANY
ORDER AND REASONS
In this litigation, Plaintiff John Haley (“Plaintiff”) brings breach of insurance contract and
bad faith claims against Defendant American Security Insurance Company (“Defendant”).1 Before
the Court is Defendant’s unopposed “Motion for Summary Judgment.”2 The instant motion for
summary judgment was filed on August 19, 2022 and set for submission on September 21,
2022.3 Under Local Rule 7.5, an opposition to a motion must be filed eight days before the
noticed submission date. Plaintiff has not filed an opposition to the instant motion and therefore
the motion is unopposed. A federal district court may grant an unopposed motion if the motion
has merit.4 Considering the motion, memorandum in support, record, and applicable law, this
Court finds that Plaintiff lacks standing to sue under the insurance contract and grants
Defendant’s motion for summary judgment.
1 Rec. Doc. 1-1 at 4.
2 Rec. Doc. 10.
3 Id.
4 See Braly v. Trail, 254 F.3d 1082 (5th Cir. 2001).
I.Background
On May 3, 2022, Plaintiff filed a complaint against Defendant in the Twenty-Fourth
Judicial District Court for the Parish of Jefferson, State of Louisiana.5 On June 13, 2022, Defendant
removed the case to this Court.6 According to the Petition, Defendant issued an insurance policy
(the “Policy”) covering Plaintiff’s home and surrounding structures at 5808 Rosalie Court in
Metairie, Louisiana (the “Property”).7 Plaintiff alleges that Hurricane Ida damaged the Property
on or about August 29, 2021.8 On or about December 15, 2021, Plaintiff purportedly notified
Defendant of the loss.9 Plaintiff asserts that Defendant underreported the property damage in the
estimate on the claim and that Defendant’s adjustment of the claim was unrealistic.10 Plaintiff
asserts that he hired an expert adjuster to inspect his property who opined that the Property was
damaged in the amounts of $176,110.00 and $8,946.17, respectively.11
On August 19, 2022, Defendant filed the instant motion for summary judgment asserting
that Plaintiff cannot assert valid claims of breach of insurance contract or bad faith under Louisiana
law.12 The motion for summary judgment was set for submission on September 21, 2022.13
Under Local Rule 7.5, an opposition to a motion must be filed eight days before the noticed
submission date.
5 Id.
6 Rec. Doc. 1.
7 Rec. Doc. 1-1 at 4.
8 Id. at 5.
9 Id.
10 Id.
11 Id. at 6.
12 Id. at 3-6.
13 Id.
Plaintiff has not filed an opposition to the motion. Therefore, the motion is
deemed unopposed.
II. Defendant’s Arguments
Defendant makes two arguments in support of its motion for summary judgment.14 First,
Defendant argues that Plaintiff lacks standing to enforce the policy.15 Defendant contends that only
the insured, additional insured, or a third-party beneficiary to a policy can sue its issuer for breach
of an insurance contract under Louisiana law.16 Defendant points out that Plaintiff is listed on the
Policy’s declarations page as a Borrower and not as the insured party.17 Defendant asserts that
Plaintiff’s mortgage lender Select Portfolio Servicing, Inc. (“Select”) is the only named insured,
and therefore only Select may sue Defendant to enforce the policy.18 Defendant further argues that
Plaintiff is not a third-party beneficiary of the insurance contract and “all policy benefits are
payable to the named insured lender, Select.”19 Thus, Defendant argues that summary judgment is
proper because “[P]laintiff has no legally cognizable claim for relief to enforce the policy of
insurance.”20
Second, Defendant argues that Plaintiff cannot assert a bad faith claim under Louisiana law
because he “does not have a cognizable claim for insurance coverage.”21 Defendant asserts that “a
14 Rec. Doc. 10 at 1.
15 Rec. Doc. 10-2 at 4.
16 Id. at 4–5.
17 Id.
18 Id.
19 Id.
20 Id. at 1.
21 Id. at 6.
plaintiff must have a valid underlying claim upon which insurance coverage is based” to “maintain
an insurance bad faith claim under” Louisiana Revised Statutes §§ 22:1892 and 22:1973.22
Defendant refers to its argument that a borrower whose mortgage lender is the named insured on
an insurance policy lacks standing to sue for a breach of insurance contract claim.23 Therefore,
Defendant argues that summary judgment is proper because Plaintiff is not entitled to assert a bad
faith claim under Louisiana law.24
III.Legal Standard
A. Legal Standard for Summary Judgment
Summary judgment is appropriate when the pleadings, discovery, and affidavits
demonstrate “no genuine dispute as to any material fact and the movant is entitled to judgment as
a matter of law.”25 To decide whether a genuine dispute as to any material fact exists, the court
considers “all of the evidence in the record but refrains from making credibility determinations or
weighing the evidence.”26 All reasonable inferences are drawn in favor of the nonmoving party.
Yet “unsupported allegations or affidavits setting forth ‘ultimate or conclusory facts and
conclusions of law’ are insufficient to either support or defeat a motion for summary judgment.”27
If the entire record “could not lead a rational trier of fact to find for the non-moving party,” then
no genuine issue of fact exists and, consequently, the moving party is entitled to judgment as a
22 Id.
23 Id.
24 Id.
25 Fed. R. Civ. P. 56(a); see also Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994).
26 Delta & Pine Land Co. v. Nationwide Agribusiness Ins. Co., 530 F.3d 395, 398–99 (5th Cir. 2008).
27 Galindo v. Precision Am. Corp., 754 F.2d 1212, 1216 (5th Cir. 1985); Little, 37 F.3d at 1075.
matter of law.28 The nonmoving party may not rest upon the pleadings.29 Instead, the nonmoving
party must identify specific facts in the record and articulate the precise manner in which that
evidence establishes a genuine issue for trial.30
The party seeking summary judgment always bears the initial responsibility of showing the
basis for its motion and identifying record evidence that demonstrates the absence of a genuine
issue of material fact.31 “To satisfy this burden, the movant may either (1) submit evidentiary
documents that negate the existence of some material element of the opponent’s claim or defense,
or (2) if the crucial issue is one on which the opponent will bear the ultimate burden of proof at
trial, demonstrate that the evidence in the record insufficiently supports an essential element of the
opponent’s claim or defense.”32 If the moving party satisfies its initial burden, the burden shifts to
the nonmoving party to “identify specific evidence in the record, and to articulate” precisely how
that evidence supports the nonmoving party’s claims.33 The nonmoving party must set forth
“specific facts showing the existence of a ‘genuine’ issue concerning every essential component
of its case.”34
The nonmovant’s burden of demonstrating a genuine issue of material fact is not satisfied
merely by creating “some metaphysical doubt as to the material facts,” “by conclusory
28 Matsushita Elec. Indus. Co. Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986).
29 Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986).
30 See id.; Ragas v. Tenn. Gas Pipeline Co., 136 F.3d 455, 458 (5th Cir. 1998).
31 Celotex, 477 U.S. at 323.
32 Duplantis v. Shell Offshore, Inc., 948 F.2d 187, 190 (5th Cir. 1991) (internal citation omitted).
33 Forsyth v. Barr, 19 F.3d 1527, 1537 (5th Cir. 1994), cert. denied, 513 U.S. 871 (1994); see also Morris
v.Covan World Wide Moving, Inc., 144 F.3d 377, 380 (5th Cir. 1998).
34 Morris, 144 F.3d at 380; see also Bellard v. Gautreaux, 675 F.3d 454, 460 (5th Cir. 2012).
allegations,” by “unsubstantiated assertions,” or “by only a scintilla of evidence.”35 Moreover, the
nonmoving party may not rest upon mere allegations or denials in its pleadings.36 Hearsay
evidence and unsworn documents that cannot be presented in a form that would be admissible in
evidence at trial do not qualify as competent opposing evidence.
B. Legal Standard for Interpreting Insurance Contracts under Louisiana Law
Under Louisiana law, “an insurance policy is a contract between the parties and should be
construed by using the general rules of interpretation of contracts set forth in the Louisiana Civil
Code.”37 “The Louisiana Civil Code provides that ‘[t]he judiciary’s role in interpreting insurance
contracts is to ascertain the common intent of the parties to the contract’ by construing words and
phrases ‘using their plain, ordinary and generally prevailing meaning.’”38 “Interpretation of an
insurance contract generally involves a question of law.”39
If the contract is clear and unambiguous and does not have absurd consequences, the court
applies the ordinary meaning of the contractual language.40 If the insurance policy contains
ambiguous provisions, the ambiguity “must be resolved by construing the policy as a whole.”41
35 Little, 37 F.3d at 1075 (internal citations omitted).
36 Morris, 144 F.3d at 380.
37 In re Katrina Canal Breaches Litig., 495 F.3d 191, 206 (5th Cir. 2007) (quoting Cadwallader v. Allstate
Ins. Co., 2002-1637 (La. 6/27/03); 848 So. 2d 577, 580). Wisznia Co. v. Gen. Star Indem. Co., 759 F.3d 446,
448 (5th Cir. 2014) (quoting Mayo v. State farm Mut. Auto. Ins. Co., 2003-1801, at 3 (La. 2/25/04); 869 So.
2d 96, 99) (quotation marks omitted).
38 Wisznia Co., 759 F.3d at 448–49 (quoting Mayo, 869 So. 2d at 99).
39 In re Katrina Canal Breaches Litig., 495 F.3d at 206 (citing Bonin v. Westport Ins. Corp., 930 So. 2d 906,
910 (La. 2006)).
40 Prejean v. Guillory, 2010-0740, at 6 (La. 7/2/10); 38 So. 3d 274, 279; see also Sapp v. Wood Grp. PSN,
Inc., No. 15-3, 2016 WL 6995897, at *4 (E.D. La. Nov. 30, 2016) (Brown, J.).
41 Louisiana Ins. Guar. Ass'n v. Interstate Fire & Cas. Co., 630 So. 2d 759, 763 (La. 1994) (citing LA. CIV.
CODE art. 2050).
Yet an insurance contract “should not be interpreted in an unreasonable or strained manner under
the guise of contractual interpretation to enlarge or restrict its provisions beyond what is reasonably
contemplated by unambiguous terms or achieve an absurd conclusion.”42 “Courts lack the
authority to alter the terms of insurance contracts under the guise of contractual interpretation when
the policy’s provisions are couched in unambiguous terms.”43
IV.Analysis
Defendant contends that Plaintiff lacks standing to sue for breach of insurance contract and
bad faith because he is not a named insured, an additional named insured, or a third-party
beneficiary under the Policy.44 Defendant argues that the Court should grant summary judgment
in its favor because Plaintiff lacks standing.45 Considering the uncontroverted evidence before the
Court, Defendant has demonstrated that Plaintiff lacks standing to sue under the Policy.
Prior jurisprudence indicates that “[t]o state a claim under an insurance policy, the plaintiff
must be a named insured, an additional insured, or an intended third-party beneficiary of the
policy.”46 Here, Plaintiff is not a named insured or an additional insured under the Policy because
his mortgage lender, Select, took out the Policy.47 The Policy does not designate Plaintiff as an
42 Cadwallader, 848 So. 2d at 580.
43 Id.
44 Rec. Doc. 10-2 at 1.
45 Id.
46 James v. Am Sec. Sec. Inc., 2021 WL 5795292, at *2 (E.D. La. Dec. 7, 2021) (Feldman, J.); see also
Williams v. Certain Underwriters at Lloyd’s of London, 398 F. App’x 44, 48–49 (5th Cir. 2010).
47 Rec. Doc. 1-2 at 2 & 4. Specifically, Select sent Plaintiff a “Notice of Placement of Insurance” on
September 14, 2021 stating that “[e]nclosed is an insurance policy/certificate we have obtained in accordance
with your mortgage documents and/or Deed of Trust.” Id. at 2 (emphasis added); see also James, 2021 U.S.
Dist. LEXIS 233769, at *2 (granting motion to dismiss finding that homeowner lacked standing to sue on an
insurance contract where the mortgage lender purchased the policy and was the only named insured).
additional insured party.48 Therefore, Plaintiff only has standing to bring this suit if he is an
intended third-party beneficiary.
Under Louisiana law, a contracting party may stipulate a benefit for a third person called a
third-party beneficiary.49 Louisiana courts have termed this stipulation as a stipulation pour
autrui.50 The Louisiana Supreme Court has articulated that the contract must “manifest a clear
intention to benefit the third party,” and that “absent such a clear manifestation, a party claiming
to be a third-party beneficiary cannot meet his burden of proof.”51 There are three key criteria
under Louisiana law for determining whether such stipulation exists in a contract: (1) the
stipulation must be “manifestly clear;” (2) the benefit to the third party must be certain; and (3)
the benefit may not be a “mere incident” of the contract.52 Further, a stipulation pour autrui is
never presumed, and the party claiming the benefit bears the burden of proof.53
In James v. American Security Insurance Co., another judge in the Eastern District of
Louisiana found that a homeowner-borrower cannot prove a stipulation pour autrui unless the
insurance contract’s language indicates that the borrower receives proceeds under the policy’s
terms or has some right to report damage to the insurance company.54 The homeowner-borrower
brought breach of contract and bad faith claims under the insurance policy on his home against the
48 See Rec. Doc. 1-2 at 2 & 4.
49 La. Civ. Code art. 1978.
50 James, 2021 U.S. Dist. LEXIS 233769, at *2 n.2 (E.D. La. Dec. 7, 2021) (Feldman, J.).
51 Id. at 2.
52 Id.
53 Id.
54 Id. at *4–7.
insurance company.55 The James court dismissed the homeowner-borrower’s claims against the
insurance company, stating that “there is no ‘manifestly clear’ stipulation for the benefit of a third
party in the insurance policy” because the loss payment provisions of the contract stated that any
payment was due to the named insured, the lender.56 Notably, the district court dismissed the
homeowner-borrower’s claims for a lack of standing even where the policy listed both the
homeowner-borrower and the named insured lender as recipients of specific proceeds under the
policy.57
Here, Plaintiff brings the exact same claims as the borrower-plaintiff in James. Plaintiff is
listed on the Policy merely as “Borrower,” not as insured, and Plaintiff pays his premiums through
his lender, Select.58 Further, the plain language of the Policy only provides benefits or rights to
Select as the named insured.59 Prior jurisprudence establishes that even where a borrower is listed
on the homeowner insurance policy and pays premiums through the lender, such designation is
nonetheless “insufficient to create third-party beneficiary status unless the borrower is also due
some sort of benefit under the policy.”60
In Lee v. Saefco Insurance Co., another judge in the Eastern District of Louisiana found
that a plaintiff listed solely as a “Borrower” on the insurance policy can be found as a third-party
55 Id. at *1.
56 Id. at *6.
57 Id. at *5 (“[A]n endorsement to the policy states that ‘you’ in that phrase (and throughout the policy) is
understood to mean ‘the financial institution as named insured and the borrower shown in the
[d]eclarations.’”).
58 See id.; see also Rec. Doc. 1-2 at 13.
59 Rec. Doc. 1-2 at 6.
60 Turner v. Am. Sec. Ins. Co., 2022 U.S. Dist. LEXIS 41349, at *2 (W.D. La. Mar. 8, 2022).
beneficiary where the policy expressly provides for payment to the Borrower.61 The Loss Payment
provision stated that “[a]mounts payable in excess of [the lender’s] interest will be paid to the
‘borrower’ unless some other person is named by the ‘borrower’ to receive payment.”62 The Lee
court found that this language “manifests a clear intent to benefit the borrower.”63
Unlike the policy at issue in Lee, here, the Policy insures Plaintiff’s property but only
designates Plaintiff as a borrower.64 Additionally, the Policy contains no express provisions
conferring any payment or benefits to Plaintiff. The Loss Payment section of the Policy states that
Defendant “will adjust all losses with the named insured. Loss will be made payable to the named
insured.”65 Under this Policy, there is only one named insured—Select.66 There is no language
indicating an intent to confer benefits to Plaintiff. The Definitions provision of the Policy states
that the term borrower “refers to the person or persons who have entered into a lien or mortgage
agreement with the named insured for the property shown as the described property in the
Declarations.”67 Plaintiff has not opposed this motion or presented any argument or evidence to
show that the insurance contract manifests a clear intention to benefit Plaintiff as a third party.
Because the Policy states that all losses will be adjusted and made payable to the named
insured, and because Plaintiff is not the named insured,68 this Court cannot find that the Policy
61 2008 U.S. Dist. LEXIS 69817 at *10–*11 (E.D. La. July 2, 2008) (Africk, J.).
62 Id. at *11.
63 Id.
64 Rec. Doc. 1-2 at 4.
65 Id. at 12.
66 Id. at 4.
67 Id. at 6 (emphasis added).
68 Id. at 4, 12.
confers a manifestly clear and certain benefit onto Plaintiff. Therefore, this Court cannot find that
Plaintiff is a third-party beneficiary under the Policy because the Policy fails to confer a manifestly
clear and certain benefit onto Plaintiff. As such, summary judgment is proper because Plaintiff
cannot be found to be a named insured, an additional named insured, or a recipient of a stipulation
pour autrui under the Policy.
V. Conclusion
For the reasons stated above, this Court grants Defendant’s unopposed motion for summary
judgment because there is no genuine dispute to any material fact regarding Plaintiff’s standing to
sue under the Policy. Accordingly,
IT IS HEREBY ORDERED that Defendant American Security Insurance Company’s
“Motion for Summary Judgment”® is GRANTED. Plaintiff's claims against Defendant are
dismissed for lack of standing.
NEW ORLEANS, LOUISIANA, this 28th day of November, 2022.
NANNETTE JOLYYETTE BROWN (or
CHIEF JUDGE
UNITED STATES DISTRICT COURT
® Rec. Doc. 10.
1]