Okpalobi v. American National Property and Casualty Company

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF LOUISIANA

ROSE OKPALOBI CIVIL ACTION

VERSUS NO. 23-6691

AMERICAN NATIONAL PROPERTY AND SECTION: “G”(5)

CASUALTY COMPANY, et al.

ORDER AND REASONS

Before the Court are Defendant PHH Mortgage Corporation’s (“PHH”) FRCP 12(b)(6)

Motion to Dismiss for Failure to State a Claim and FRCP 12(b)(1) Motion to Dismiss for Lack of

Standing,1 Defendant Mortgage Assets Management, LLC’s (“MAM”) “Motion to Dismiss with

Prejudice for Failure to State a Claim and Motion to Dismiss for Lack of Standing,”2 Plaintiff Rose

Okpalobi’s (“Plaintiff”) Motion to Strike Defendant PHH Mortgage Corporation’s Motion to

Dismiss for Lack of Standing,3 MAM’s Motion to Opt Out of the Streamlined Settlement

Program,4 and Plaintiff’s Cross Motion to Strike MAM’s Motion to Opt Out of the Streamlined

Settlement Program.5 PHH and MAM contend that Plaintiff does not have standing to bring the

claims in the Petition against them in her individual capacity in this Hurricane Ida litigation.6 PHH

1 Rec. Doc. 18.

2 Rec. Doc. 25.

3 Rec. Doc. 23.

4 Rec. Doc. 30.

5 Rec. Doc. 31.

6 Rec. Docs. 18, 23.

and MAM also contend that Plaintiff fails to state any viable claim against PHH and MAM.7

Plaintiff opposes, contending that she has standing to bring this suit in her individual capacity

against PHH and MAM.8 She also contends that she has sufficiently alleged claims against PHH

and MAM.9 Having considered the motions, the memoranda in support and in opposition, the

record, and the applicable law, the Court grants MAM’s Motion to Opt Out of the Streamlined

Settlement Program. The Court denies PHH’s Motion to Dismiss under Rule 12(b)(6) and MAM’s

Motion to Dismiss under Rule 12(b)(6) without prejudice and grants Plaintiff leave to file an

Amended Complaint. If upon amendment, Plaintiff fails to provide sufficient factual support for

each element of each claim, upon motion by a party, the Court will dismiss the claims. The Court

also denies Plaintiff’s Motion to Strike PHH’s Motion to Dismiss and her Motion to Strike MAM’s

Motion to Opt out of the Streamlined Settlement Program.

I. Background

A. Factual Background

This litigation arises out of property damage caused by Hurricane Ida on August 29, 2021.10

Plaintiff Rose Okpalobi, individually and on behalf of the Estate of Ifeanyi Charles Anthony

Okpalobi filed a Petition in the Civil District Court for the Parish of Orleans on August 29, 2023

against Defendants PHH Mortgage Corporation (“PHH”), Champion Mortgage Company, Inc.

(“Champion”), Mortgage Assets Management LLC (“MAM”), and American National Property

and Casualty Company (“ANPAC”) to recover damages related to the property at 4928 Cartier

7 Rec. Docs. 18, 23.

8 Rec. Docs. 23, 24, 31, 32,

9 Rec. Docs. 23, 24, 31, 32.

10 Rec. Doc. 1-9 at 3.

Avenue, New Orleans, LA 70122 (“Property”).11 MAM was formerly known as Reverse Mortgage

Solutions, Inc.12 In the Petition, Plaintiff alleges that the Property sustained damage as a result of

Hurricane Ida.13

According to Plaintiff, PHH, Champion, and MAM (collectively, “Mortgage Companies”),

serviced the mortgage on the Property.14 Plaintiff alleges that these Mortgage Companies took out

Policy Number AMJ0079021 (“Policy”) with ANPAC for the Property as part of Plaintiff’s

mortgage, but these Mortgage Companies “intentionally failed and refused to make a claim on the

policy…” after the Property sustained damage caused by Hurricane Ida.15 Plaintiff brings a breach

of fiduciary duty claim against PHH, Champion, and Mortgage Assets, asserting that they owed a

fiduciary duty to Plaintiff because Plaintiff is a third-party beneficiary of the Policy.16 Plaintiff

also brings a negligence claim against PHH, Champion, and Mortgage Assets, asserting that they

intentionally failed to file a claim on the Policy after Plaintiff notified them that Hurricane Ida

caused damage to the Property.17 Plaintiff also asserts a breach of insurance contract claim and

claims for violations of Louisiana Revised Statute Sections 22:1892 and 22:1973 against all

Defendants as a result of Defendants’ alleged failure to timely pay insurance proceeds due under

the Policy.18

11 Id. at 1–2.

12 Id. at 2.

13 Id. at 3.

14 Id. at 3.

15 Id. at 3, 5.

16 Id. at 6–7.

17 Id. at 7.

18 Id. at 8–10.

B. Procedural Background

On November 3, 2023, ANPAC removed the case to this Court under 28 U.S.C.

§ 1332(a).19 On January 3, 2024, ANPAC filed a Motion to Dismiss, and Plaintiff filed an

opposition on January 15, 2024.20 On February 28, 2024, the Court granted ANPAC’s motion and

dismissed ANPAC as a defendant.21

On January 24, 2024, PHH filed the instant Motion to Dismiss based on Rules 12(b)(1) and

12(b)(6).22 On February 6, 2024, Plaintiff filed an opposition to PHH’s Motion and also filed a

Motion to Strike PHH’s Motion.23 On February 14, 2024, PHH filed an opposition to Plaintiff’s

Motion to Strike.24 On February 9, 2024, MAM filed the instant Motion to Dismiss25 and Motion

to Opt Out of the Streamlined Settlement Program.26 On February 23, 2024, Plaintiff filed an

opposition to MAM’s Motion to Dismiss27 and also filed a Motion to Strike MAM’s Motion to

Opt Out of the SSP.28 On March 4, 2023, MAM filed a reply to Plaintiff’s opposition to its Motion

to Dismiss.29

19 Rec. Doc. 1.

20 Rec. Docs. 8, 11.

21 Rec. Doc. 33.

22 Rec. Doc. 18.

23 Rec. Docs. 23, 24.

24 Rec. Doc. 27.

25 Rec. Doc. 25.

26 Rec. Doc. 30.

27 Rec. Doc. 32.

28 Rec. Doc. 31.

29 Rec. Doc. 34.

II. Parties’ Arguments

A. Cross-Motions Addressing Plaintiff’s Standing to Bring Claims in Her Indvidual

Capacity Under Federal Rule of Civil Procedure 12(b)(1)

1. PHH’s Arguments in Support of its Motion

PHH contends that Plaintiff Rose Okpalobi does not have standing to sue in her individual

capacity because she does not own the Property, is not a party to the mortgage loan, and is not a

named insured under the ANPAC insurance policy.30 PHH notes that Plaintiff is suing PHH in

both her individual capacity and as the Executrix of the Estate of Ifeanyi Charles Anthony

Okpalobi (“Borrower”).31 PHH notes that after Borrower passed away on November 15, 2018, a

Petition for Probate of Statutory Testament was filed in the Civil District Court for Orleans Parish

and the presiding judge in this succession case entered an order confirming Rose Okpalobi as the

Executrix of Borrower’s estate.32 PHH further contends that though Borrower’s two vehicles and

unspecified contents located at 3028 and 30230 Gentilly Blvd, New Orleans, Louisiana, were

placed into the possession of Rose Okpalobi, the November 16, 2021 Order on Judgment of

Possession is silent as to Plaintiff’s ownership of the Property.33 PHH notes that no other

judgments have been entered in that case.34 PHH concludes that Rose Okpalobi does not have

standing to bring this matter in her individual capacity as she does not have title to the Property.35

30 Rec. Doc. 18-1 at 5.

31 Id.

32 Id. at 5–6.

33 Id. at 6.

34 Id.

35 Id.

2. Plaintiff’s Opposition to PHH’s Motion

Plaintiff filed an opposition to PHH’s motion, contending that she has standing to sue in

her individual capacity because she is a part owner of the Property, as it was bequeathed to her by

her husband in his last will dated March 16, 2018.36 PHH also notes that Plaintiff is an executor of

a Corporate Assignment of Mortgage for the Property and she is the Executrix of Borrower’s

estate, “which is a third-party beneficiary of the insurance policy provided by ANPAC.”37 Plaintiff

further contends that this issue of ownership of the Property is not for this Court to adjudicate.38

According to Plaintiff, “when succession documents are silent, a reservation or deference is made

to Louisiana Succession Law.”39 Plaintiff posits that she is “a legal usufructuary since she was the

legally married spouse before death and surviving spouse.”40 Plaintiff asserts that she has met the

requirements of standing under Article III of the U.S. Constitution to bring these claims against

PHH.41 Plaintiff also contends that she has standing because she is a third-party beneficiary of the

Insurance Policy.42

3. MAM’s Arguments in Support of its Motion

MAM similarly contends that Plaintiff does not have standing to sue in her individual

capacity because she “does not own the Property, she is not a party to the contract, and she is not

36 Rec. Doc. 24 at 3.

37 Id.

38 Id.

39 Id.

40 Id.

41 Id.

42 Id. at 4–6.

named as an insured under the Insurance Policy issued by ANPAC.43

4. Plaintiff’s Opposition to MAM’s Motion

In her opposition to MAM’s Motion, Plaintiff raises the same arguments from her

opposition to PHH’s motion.44

5. MAM’s Reply

In its reply, MAM reiterates that “Plaintiff does not have standing since Plaintiff does not

own the Property, she is not a party to the mortgage loan at issue, and she is not an Insured under

the ANPAC policy at issue …”45 MAM asserts that Plaintiff lacks standing to assert a claim, not

standing to sue under Article III as Plaintiff posits.46

B. Cross Motions Addressing Pleading Insufficiencies Under Federal Rule of Civil

Procedure 12(b)(6)

1. PHH’s Arguments in Support of its Motion

a. The Breach of Contract Claim

PHH argues that Plaintiff fails to allege a breach of contract claim because she fails to

identify a specific provision in the Insurance Policy that requires PHH to pursue a claim against

ANPAC.47 PHH further argues that the plain language of the mortgage contract states that PHH is

not obligated to pursue a claim against ANPAC, as it states that “[i]n the event of loss, Borrower

shall give prompt notice to the insurance carrier and Lender. Lender may make proof of loss if

43 Rec. Doc. 25-1 at 4.

44 Rec. Doc. 32 at 2–6.

45 Rec. Doc. 34 at 2.

46 Id.

47 Rec. Doc. 18-1 at 6.

note made promptly by Borrower.”48 PHH contends that “may” in this clause gives PHH the option

to assert a claim but does not require it to assert a claim.49

b. The Breach of Fiduciary Duty Claim

PHH also argues that Plaintiff fails to state a breach of fiduciary duty claim because

Plaintiff did not allege a “special relationship of trust and confidence and an advantage that the

defendant had over the plaintiff” in the Petition.50 PHH further contends that Louisiana law

requires a written agreement between a financial institution and a customer of the financial

institution in which the parties agree that the financial institution acts as a fiduciary.51 PHH notes

that Plaintiff’s Petition does not state any facts related to the existence of such a written agreement

for PHH to be Plaintiff’s fiduciary.52 PHH notes that courts have rejected breach of fiduciary

claims brought by mortgagors against their mortgage lenders for not pursuing insurance claims for

damage to the mortgagees’ property.53

PHH points to the Louisiana Credit Agreement Statute, La. Rev. Stat. Section 6:1121 et

seq. (“LCAS”) as barring Plaintiff’s claims against PHH because they are not based on a valid

written credit agreement.54 According to PHH, “[t]he Louisiana Supreme Court has interpreted the

LCAS to bar all claims against creditors that are not based on written credit agreements, regardless

48 Id. at 7.

49 Id.

50 Id.

51 Id. at 8.

52 Id.

53 Id. at 9.

54 Id. at 9–10.

of the legal theory the debtor purports to assign to those claims.”55 Further, PHH asserts that “[t]he

LCAS makes it clear that no unwritten agreement between a creditor and a debtor may be created

or implied.”56

d. Attorneys’ Fees

PHH avers that Plaintiff is not entitled to attorneys’ fees because she has not identified any

statute or contractual provision that would allow her to collect attorneys’ fees in this matter.57

e. The Statutory Bad Faith Claims

PHH contends that La. Rev. Stat. Sections 22:1892 and 22:1927 are not applicable because

PHH is not an insurer as it is a mortgage lender and Plaintiff has not alleged that PHH is an

insurer.58

2. Plaintiff’s Opposition to PHH’s Motion

a. The Breach of Contract and Breach of Fiduciary Duty Claim

Plaintiff contends that the mortgage agreement “creates a contractual obligation on [PHH]

to make a claim/proof of loss on behalf of the Plaintiff, which in turn creates a fiduciary duty to

the Plaintiff.”59 Plaintiff further contends that “[t]he fact that the contract between the Plaintiff and

the Defendants uses the word ‘MAY’ does not absolve the Defendants of their duties and liabilities

to the Plaintiff.”60 Plaintiff counters that her claims against PHH are not barred by the LCAS

55 Id. at 10.

56 Id.

57 Id. at 10–11.

58 Id. at 11.

59 Rec. Doc. 24 at 6.

60 Id. at 7.

because the Mortgage Agreement between Plaintiff and PHH is valid contract “obliging the

Defendants to produce a submit a satisfactory proof of loss.”61

b. The Statutory Bad Faith Claims and Attorneys’ Fees

Plaintiff contends that La. Civ. Code Art. 1983 allows her to assert these claims and fees.62

Plaintiff requests leave to amend the Petition if the Court finds that her claims under La. Rev. Stat.

Sections 22:1892 and 22:1927 fail.63

3. Plaintiff’s Motion to Strike PHH’s 12(b)(6) Motion to Dismiss

In Plaintiff’s Motion to Strike PHH’s Motion to Dismiss, she argues that PHH “relies on a

document that does not exist.”64 The document Plaintiff is referring to is the mortgage contract

between PHH and Borrower that PHH referenced in the Motion to Dismiss.65 Plaintiff contends

that this mortgage contract PHH referenced in its motion is actually “a sale of property agreement

between Security Homestead Association and [Borrower], together with his first wife” and PHH

is not named as a party to this agreement.66

4. PHH’s Opposition to Plaintiff’s Motion to Strike

PHH filed an opposition to Plaintiff’s Motion to Strike, clarifying that it made a

typographical error in referencing the exhibit number and page number for the relevant portions

of the mortgage contract.67 PHH states that its counsel emailed Plaintiff’s counsel to clarify the

61 Id. at 8.

62 Id.

63 Id.

64 Rec. Doc. 23-1 at 1.

65 Id. at 1–2.

66 Id. at 2.

67 Rec. Doc. 27 at 1–3.

exhibit citation.68

5. MAM’s Arguments in Support of its Motion

a. The Breach of Contract Claim

MAM contends that there is no contract between MAM and Plaintiff that contains any

obligations for MAM to fail to perform under, as the Insurance Policy between ANPAC and MAM

is “purely for the benefit” of MAM.69 MAM further contends that even if Plaintiff is a third-party

beneficiary to the Insurance Policy, Plaintiff has not pointed to any provision in the Insurance

Policy or the mortgage contract that requires MAM to pursue a claim against ANPAC or that MAM

is required to pursue a claim against ANPAC to the satisfaction of the Plaintiff as the borrower.70

b. The Negligence Claim

MAM argues that “Plaintiff has presented absolutely no credible evidence that a duty exists

nor any evidence that MAM has breached any duty.”71 MAM asserts that duty questions in a

negligence claim are “essentially legal questions.”72 MAM reiterates that it has no contractual

obligation to file a claim against ANPAC.73 Further, MAM avers that it did not instruct ANPAC

on how to adjust and evaluate damages, so Plaintiff’s allegation that MAM’s adjuster failed to

fully and properly evaluate the cause and extent of the damage cannot constitute a negligence claim

against MAM.74

68 Id. at 3.

69 Rec. Doc. 25-1 at 5.

70 Id. at 5–6.

71 Id. at 6.

72 Id.

73 Id.

74 Id.

c. The Breach of Fiduciary Claim

According to MAM, Plaintiff failed to state a claim for breach of fiduciary duty because

the Petition does not allege the existence of a “special relationship” of trust and confidence and it

also does not allege that MAM enjoyed any form of advantage over Plaintiff.75 MAM also argues

that La. Rev. Stat. Section 6:1124 provides that financial institutions do not owe a fiduciary duty

to its customers unless there is a written agreement stipulating to this.76 MAM notes that both state

courts and federal courts in Louisiana have applied Section 6:1124 to dismiss fiduciary claims

against financial institutions when a plaintiff has not alleged that there is a written agreement

providing that the financial institution owes a fiduciary duty to the plaintiff.77 MAM also argues

that Plaintiff’s claims fail under the Louisiana Credit Agreement Statute.78

d. Attorneys’ Fees and Bad Faith Claims

MAM contends that there is no law, statute, or contract allowing Plaintiff to recover

attorneys’ fees.79 Similarly, MAM contends that Plaintiff’s bad faith claims against it fail because

MAM is not an insurer.80

6. Plaintiff’s Opposition to MAM’s Motion

a. The Breach of Contract Claim

Plaintiff reiterates that she may bring breach of contract claims because she is a third-party

75 Id. at 7.

76 Id.

77 Id.

78 Id. at 8.

79 Id.

80 Id. at 8–9.

beneficiary of the insurance policy issued by ANPAC.81

b. The Breach of Fiduciary Duty Claim

Plaintiff reiterates that MAM owes a fiduciary duty to Plaintiff because the “insurance

policy was executed to protect the property of the Plaintiff,” the insurance policy creates a “vested

interest” for Plaintiff because the policy limit exceeds the mortgage balance, and MAM “is the

only party allowed to produce a proof of loss …”82

c. Bad Faith Claims and Attorneys’ Fees

Plaintiff reiterates that MAM is liable under La. Rev. Stat. Sections 22:1892 and 1927.83

Plaintiff again argues in the alternative that MAM is liable for bad faith claims under La. Civ. Code

art. 1983.84

7. MAM’s Reply

First, MAM argues that the documents Plaintiff attached to her opposition should be

stricken from the record because they were not referenced in the Petition and are not central to any

of her claims against MAM.85 MAM also contends that Plaintiff is not a third-party beneficiary

under the Insurance Policy.86 MAM further contends that Louisiana courts have held that mortgage

lenders do not owe a fiduciary duty to their borrowers.87

81 Rec. Doc. 32 at 4–6.

82 Id. at 6.

83 Id. at 7.

84 Id.

85 Rec. Doc. 34 at 2.

86 Id. at 3–4.

87 Id. at 4.

C. Cross Motions Addressing the Issue of MAM Opting Out of the Streamlined Settlement

Program

1. MAM’s Motion

MAM contends that it should be allowed to opt out of the Streamlined Settlement Program

“SSP” so that the Court may consider its Motion to Dismiss based on Federal Rules of Civil

Procedure 12(b)(1) and 12(b)(6).88 According to MAM, the “Court should decided these legal

issues before MAM is required to engage in the costly exchange of documents, disclosures, and

settlement negotiations.”89 In the alternative, MAM “requests that the Court extend any deadline

for disclosures required under the CMO until 45 days after MAM is required to file an answer

should the Court deny its Motion to Dismiss.”90

2. Plaintiff’s Motion to Strike MAM’s Motion

In opposition, Plaintiff contends that MAM’s Motion to Opt out of the SSP violates the

CMO because MAM did not timely file the motion.91 According to Plaintiff, MAM needed to file

the motion by December 27, 2023 because the Court entered the CMO Order on December 12,

2023 and the CMO allows a defendant 15 days to file a motion to opt out of the SSP.92

III. Legal Standards

A. Rule 12(b)(1)

“Federal courts are courts of limited jurisdiction; without jurisdiction conferred by statute,

88 Rec. Doc. 30 at 1.

89 Rec. Doc. 30-1 at 2.

90 Rec. Doc. 30 at 1.

91 Rec. Doc. 31-2 at 2.

92 Id.

they lack the power to adjudicate claims.”93 A motion to dismiss under Rule 12(b)(1) challenges a

federal court’s subject matter jurisdiction.94 Under Rule 12(b)(1), “[a] case is properly dismissed

for lack of subject matter jurisdiction when the court lacks the statutory or constitutional power to

adjudicate the case.”95 “Lack of subject-matter jurisdiction may be found in the complaint alone,

the complaint supplemented by the undisputed facts as evidenced in the record, or the complaint

supplemented by the undisputed facts plus the court’s resolution of the disputed facts.”96 The party

asserting jurisdiction bears the burden of establishing that the district court possesses jurisdiction.97

When, as here, grounds for dismissal may exist under both Rule 12(b)(1) and Rule 12(b)(6), the

Court should, if necessary, dismiss only under the former without reaching the question of failure

to state a claim.98 A court’s dismissal for lack of subject matter jurisdiction is not a decision on the

merits and does not prevent the plaintiff from pursuing the claim in another forum.99

B. Rule 12(b)(6)

Federal Rule of Civil Procedure 12(b)(6) provides that an action may be dismissed “for

failure to state a claim upon which relief can be granted.”100 A motion to dismiss for failure to state

93 In re FEMA Trailer Formaldehyde Products Liab. Litig. (Mississippi Plaintiffs), 668 F.3d 281, 286 (5th

Cir. 2012).

94 Fed. R. Civ. P. 12(b)(1).

95 Home Builders Ass’n of Miss., Inc. v. City of Madison, Miss., 143 F.3d 1006, 1010 (5th Cir. 1998) (internal

quotation marks and citation omitted).

96 In re FEMA, 668 F.3d at 287.

97 Ramming v. United States, 281 F.3d 158, 161 (5th Cir. 2001).

98 Valdery v. La. Workforce Com’n, No. 15-01547, 2015 WL 5307390 (E.D. La. Sept. 10, 2015) (Vance, J.)

(citing Hitt v. City of Pasadena, 561 F.2d 606, 608 (5th Cir. 1997)).

99 Hitt, 561 F.2d at 608.

100 Fed. R. Civ. P. 12(b)(6).

a claim is “viewed with disfavor and is rarely granted.”101 “To survive a motion to dismiss, a

complaint must contain sufficient factual matter, accepted as true, to state a claim for relief that is

plausible on its face.”102 The “[f]actual allegations must be enough to raise a right to relief above

the speculative level.”103 The complaint need not contain detailed factual allegations, but it must

offer more than mere labels, legal conclusions, or formulaic recitations of the elements of a cause

of action.104 That is, the complaint must offer more than an “unadorned, the defendant-unlawfully-

harmed-me accusation.”105 Although a court must accept all “well-pleaded facts” as true, a court

need not accept legal conclusions as true.106 “[L]egal conclusions can provide the framework of a

complaint, [but] they must be supported by factual allegations.”107 Similarly, “[t]hreadbare recitals

of the elements of a cause of action, supported by mere conclusory statements” will not suffice.108

If the factual allegations are insufficient to raise a right to relief above the speculative level, or an

“insuperable” bar to relief exists, the claim must be dismissed.”109

101 Kaiser Aluminum & Chem. Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d 1045, 1050 (5th Cir. 1982).

102 Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570

(2007)). (internal quotation marks omitted).

103 Twombly, 550 U.S. at 555. Put another way, a plaintiff must plead facts that allow the court to draw a

“reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678.

104 Iqbal, 556 U.S. at 678.

105 Id.

106 Id. at 677–78.

107 Id. at 679.

108 Id. at 678.

109 Carbe v. Lappin, 492 F.3d 325, 328 n.9 (5th Cir. 2007); Moore v. Metro. Human Serv. Dist., No. 09-6470,

2010 WL 1462224, at * 2 (E.D. La. Apr. 8, 2010) (Vance, J.) (citing Jones v. Bock, 549 U.S. 199, 215 (2007)).

IV. Analysis

A. Whether Plaintiff Rose Okpalobi has Standing to Sue in Her Individual Capacity

PHH and MAM move the Court for an Order dismissing all claims Plaintiff has asserted

against them in her individual capacity under Federal Rule of Civil Procedure 12(b)(1), arguing

that Plaintiff does not have standing because she does not have title to the Property, as the Judgment

of Possession in the Succession of Ifeanyi Charles Anthony Okpalobi does not state that Rose

Okpalobi owns the Property.110 Plaintiff opposes, contending that she does in fact own the Property

because her husband bequeathed it to her in his last will.111

Under Louisiana law, judgments of possession in succession cases are considered “prima

facie” evidence of the rights of the heirs of the decedent.112 The right to assert inheritance rights is

subject to a 30 year prescriptive period, which runs from the decedent’s death.113 A succession can

be reopened if “[a]fter … rendition of a judgment of possession by a court of competent

jurisdiction, if other property is discovered, or for any other proper cause, upon the petition of any

interested person …”114 Louisiana courts have noted that “judgments of possession are rarely

amended for grounds other than discovery of additional property or new wills.”115

Here, on March 6, 2019, Plaintiff filed a Petition for Probate of Statutory Testament in the

Civil District Court for the Parish of Orleans, State of Louisiana.116 On November 16, 2021, the

110 Rec. Doc. 18-1 at 6; Rec. Doc. 25-1 at 4.

111 Rec. Doc. 32 at 3; Rec. Doc. 24 at 3.

112 La. Code of Civ. Proc. art. 3062.

113 See La. Civ. Code art. 3502, 934.

114 La. Code. Civ. P. art. 3393(B).

115 Succession of Murray, 2022-667 (La. App. 3 Cir. 5/10/23), 372 So. 3d 1, 6 (citing Estate of Sylvester, 93-

731 (La. App. 3 Cir. 2/24/94, 631 So.2d 614, 619).

116 Rec. Doc. 18-5 at 1. Succession of Dr. Ifeanyi Charles Anthony Okpalobi, No. 19-2450 (Civ. Dist. Ct. Par.

court entered a Judgment of Possession that was silent as to Rose Okpalobi’s possession of the

Property.117 Plaintiff nonetheless contends that she has title to the Property because her husband

bequeathed the Property to her in his last will, deference should be made to Louisiana Succession

law when the Judgment of Possession is silent as to ownership of the Property, and that she was a

legal usufructuary.118 Plaintiff did not cite any legal authority for these arguments. The Judgment

of Possession placed Plaintiff in possession of certain property of Dr. Ifeanyi Okpalobi, but it is

silent on the issue of possession of the Property at issue in this litigation.119 Therefore, this Court

will follow the Judgment of Possession and find that Rose Okpalobi does not have standing to sue

in her individual capacity in this matter at this time. However, because the court in the Succession

of Dr. Ifeyani Charles Anthony Okpalobi recognized that Plaintiff is executrix of his estate, she

may bring claims on behalf of the Estate against MAM and PHH.120 The Court thus turns to address

whether Plaintiff on behalf of the Estate has sufficiently plead claims under Rule 12(b)(6).

B. Whether Claims Should be Dismissed Under Rule 12(b)(6)

PHH and MAM move the Court for dismissal of Plaintiff’s claims against them under Rule

12(b)(6), as PHH and MAM contend that they are not insurers for the breach of insurance contract

and statutory bad faith claims to apply.121 PHH and MAM further contend that Plaintiff’s breach

of fiduciary duty claim also fails because there is no written agreement between PHH and Plaintiff

Orleans Mar. 6, 2019).

117 Rec. Doc. 18-5 at 27.

118 Rec. Doc. 24 at 3.

119 Rec. Doc. 18-5 at 27.

120 Rec. Doc. 18-5 at 8.

121 Rec. Doc. 18-1 at 6–7, 11; Rec. Doc. 25-1 at 5, 8.

and no written agreement between MAM and Plaintiff stating that PHH and MAM are fiduciaries

for Plaintiff.122 Plaintiff opposes, asserting that she may bring the breach of insurance contract,

breach of fiduciary claims, and statutory bad faith claims against PHH and MAM because she is a

third-party beneficiary to the Insurance Policy between ANPAC and MAM.123 The parties also

dispute whether Plaintiff is entitled to attorneys’ fees.124

1. The Breach of Insurance Contract Claim

In the Petition, Plaintiff brings a “Breach of the Insurance Contract” claim against “the

mortgage companies and the insurance company,” alleging that they failed to timely pay Plaintiff

her insurance proceeds.125 Because the Insurance Policy does not list PHH or MAM as insurers,

Plaintiff has not stated viable breach of insurance contract claims against PHH and MAM. As

Plaintiff alleges, PHH and MAM are mortgage companies rather than insurers.126 Further, this

Court held that Plaintiff is not a third-party beneficiary to the Insurance Policy in its February 28,

2024 Order and Reasons granting ANPAC’s Motion to Dismiss.127 Thus, Plaintiff’s breach of

contract claim against PHH and MAM must be dismissed.

2. Statutory Bad Faith Claims and Attorneys’ Fees

Plaintiff asserts “Bad Faith” claims against “Defendants” under La. Rev. Stat. Sections

122 Rec. Doc. 25-1 at 6–7; Rec. Doc. 18-1 at 7–10.

123 Rec. Doc. 32 at 4–7; Rec. Doc. 24 at 4–8.

124 Rec. Doc. 24 at 8; Rec. Doc. 32 at 7; Rec. Doc. 18-1 at 10; Rec. Doc. 25-1 at 8.

125 Id. at 8–9.

126 Rec. Doc. 1-9 at 2.

127 Rec. Doc. 33.

22:1973 and 22:1892.128 She references an “insurer” in this claim.129 Because Plaintiff failed to

state a breach of insurance contract claim against PHH and MAM, Plaintiff also fails to state claims

under La. Rev. Stat. Sections 22:1892 and 22:1973 against PHH and MAM, as any recovery under

those statutes is based on the existence of an insurance contract between Plaintiff and PHH or an

insurance contract between Plaintiff and MAM.130 Further, Plaintiff did not cite to any law

allowing recovery of attorneys’ fees in the Petition.

In opposition to the instant motion, Plaintiff argues in the alternative that if the Court finds

that she may not bring claims based on Sections 22:1973 and 22:1892, she should be allowed to

amend the Petition to assert bad faith claims under La. Civ. Code art. 1983.131 Article 1983

provides that “[c]ontracts have the effect of law for the parities and may be dissolved only through

the consent of the parties or on grounds provided by law. Contracts must be performed in good

faith.”132 Article 1983 is silent as to what penalties may be imposed if a contract is not performed

in good faith.133 The Fifth Circuit has recognized that “[a] breach of the duty of good faith and fair

dealing [under Article 1983] requires a breach of contract.”134 As the Court has explained, Plaintiff

has not alleged a viable breach of insurance contract claim against PHH and MAM. Therefore,

128 Rec. Doc. 1-9 at 9.

129 Id.

130 See O’Meallie v. Great Lakes Reinsurance (UK) PLC, No. 22-4081, 2023 WL 4201766, at *2 (E.D. La.

June 27, 2023) (Milazzo, J.) (dismissing the plaintiff’s statutory bad faith penalties claim under La. Rev. Stat. Sections

22:1892 and 22:1973 because the plaintiffs have not stated a breach of contract claim against insurer in Hurricane Ida

case); Bradley v. Allstate Ins. Co., 620 F.3d 509, 526 (5th Cir. 2010) (“a plaintiff attempting to base her theory of

recovery against an insurer on [Louisiana’s bad faith statutes] must first have a valid, underlying, substantive claim

upon which the insurance coverage is based.”) (quotation and citation omitted).

131 Rec. Doc. 32 at 7.

132 La. Civ. Code art. 1983.

133 See id.

134 Schaumburg v. State Farm Mut. Auto. Ins. Co., 421 Fed. App’x. 434, 439 (5th Cir. 2011).

Plaintiff also has not stated a claim under Article 1983.135

3. Breach of Fiduciary Duty Claim

Plaintiff asserts a “Breach of Fiduciary” claim against PHH, Champion, and MAM for

failing to file claims with ANPAC after the Property was damaged by Hurricane Ida.136 Plaintiff

alleges that the “[t]he mortgage companies are contractually obligated to assist Plaintiff in

procuring sufficient insurance proceeds to secure its interest” and “by virtue of their role as

mortgagee and named insured of the insurance policy, the mortgage companies owe a fiduciary

duty to the Plaintiff because she is a third-party beneficiary of the insurance contract …”137

Plaintiff alleges that MAM and PHH breached their duties by failing to file claims with the insurer

despite Plaintiff’s requests for them to do so.138

Under Louisiana law, there are “no implied fiduciary obligations.”139 La. Rev. Stat. Section

6:1124 requires a fiduciary relationship to be established through “a written agency or trust

agreement under which the financial institution specifically agrees to act and perform in the

capacity of a fiduciary.”140 Further, Section 6:1124 “is not limited to credit agreements and shall

apply to all types of relationships to which a financial institution may be a party.”141

135 See Amoco Prod. Co v. Tex. Meridian Res. Expl. Inc., 180 F.3d 664 (5th Cir. 1999) (Louisiana law requires

contracts to be performed in good faith); Jones v. Honeywell Int. Inc., 295 F. Supp. 2d. 652 (M.D. La. 2003) (Under

Louisiana law, implied duty of good faith arises only in context of performance of contract); Brenner v. Zaleski, 2014-

1323 (La. App. 4 Cir. 6/3/15), 174 So.3d 76 (A contract is the law between the parties, and the parties will be held to

full performance in good faith of the obligations flowing from the contract).

136 Rec. Doc. 1-9 at 6.

137 Id.

138 Id. at 6–7.

139 La. Rev. Stat. § 1124.

140 Id.

141 Id.

Borrower Ifeanyi Charles Anthony Okpalobi obtained an Adjustable Rate Home Equity

Conversion Mortgage (the “Mortgage Contract”) for the Property from Lender Wells Fargo Bank,

N.A. dated January 6, 2010.142 Wells Fargo Bank, N.A. then assigned this mortgage to Nationstar

Mortgage LLC d/b/a Champion Mortgage Company on August 15, 2017.143 Although it is unclear

when this mortgage was assigned to PHH and MAM, the Petition alleges that PHH, Champion,

and MMA serviced the mortgage.144 This mortgage contract contains a “Fire, Flood and Other

Hazard Insurance” provision requiring Borrower to obtain insurance for the Property and the

“insurance policies and any renewals shall be held by Lender and shall include loss payable clauses

in favor of, and in a form acceptable to, Lender.”145 If the Property suffers damage, “Borrower

shall give Lender immediate notice by mail” and “Lender may make proof of loss if not made

promptly by Borrower.”146 Further, the insurance companies shall make payments to Lender only

instead of to Borrower and Lender jointly.147

The mortgage contract does not reflect that lenders such as PHH and MAM agreed to act

and perform in the capacity of a fiduciary. When the “Fire, Flood, and Other Hazard Insurance”

provision is read in its entirety, the provision reflects the Lender’s intent to protect its interest in

the Property, as it requires Borrower to notify Lender of any damage to the Property immediately

and any payments by the insurance companies for damage to the Property are only made to the

142 Rec. Doc. 18-4.

143 Rec. Doc. 32-3 at 1.

144 Rec. Doc. 1-9 at 2.

145 Rec. Doc. 18-4 at 2–3.

146 Id. at 3.

147 Id.

Lender instead of Borrower. Further, “may” is permissive language that allows the Lender to make

proof of loss to the insurer if the Borrower has not done so promptly.148 As the Court explained in

its Order and Reasons granting ANPAC’s 12(b)(6) motion to dismiss, Plaintiff is not a third-party

beneficiary to the Insurance Policy because there are no provisions in the Insurance Policy intended

to benefit Plaintiff or Borrower.149

Louisiana courts have applied La. Rev. Stat. Section 6:1124 to dismiss breach of fiduciary

claims mortgagors have brought against mortgagees based on the allegation that the mortgagee

failed to obtain additional proceeds from the insurer.150 In Dace v. Novastar Mortgage, Inc., the

Louisiana Fourth Circuit Court of Appeal affirmed the trial court’s finding that the mortgagee,

Novastar, owed no duty to the plaintiff to file a claim with the insurance company after Hurricane

Katrina caused damage to the mortgaged property.151 Novastar obtained a forced placed insurance

policy that the plaintiff paid as part of his monthly mortgage payments.152 The insurance policy

provided, in part, that “[i]n the event of loss, Borrower shall give prompt notice to the insurance

carrier and Lender. Lender may make proof of loss if not made promptly by Borrower …”153 The

Louisiana Fourth Circuit reasoned that this language in the mortgage contract “does not require

148 Green v. Underwriters at Lloyd’s, London, No. 23-927, 2023 WL 9002678, at *5 (E.D. La. Dec. 28, 2023)

(Milazzo, J.) (the plaintiff alleged that his/her mortgage lender was negligent in not procuring additional insurance

proceeds to repair the property that was damaged by Hurricane Ida, but the presiding judge pointed to the “may”

language in the mortgage contract to find that it does not create this obligation).

149 Rec. Doc. 33.

150 Jennifer Guillory v. Carrington Mortgage Srvs., LLC., No. 22-192, 2024 WL 1020555, at *18 (M.D. La.

Mar. 8, 2024) (DeGravelles, J.) (collecting cases).

151 Dace, 2011 WL 9165407, at *3.

152 Id. at *1. The petition alleged that “Novastar had the Policy Placed on the Property.”

153 Id. at *3.

Novastar to make a claim under any insurance policy.”154 The court also concluded that “because

there is no written agency or trust agreement between the parties, we find Novastar owned neither

a fiduciary duty nor general duty to [the plaintiff] to file an insurance claim against [the

insurer].”155

In Barbe v. Ocwen Loan Servicing, LLC, the plaintiff alleged that his mortgage servicer

breached the mortgage agreement by failing to assist him in obtaining sufficient insurance proceeds

to repair his property.156 The mortgage contract provided that “Borrower shall give prompt notice

to the insurance carrier and Lender” of loss.157 However, the presiding judge reasoned that the

mortgage contract “place[d] no obligation on Ocwen to independently pursue or even assist the

Barbes in pursuing insurance proceeds from the insurer.”158 The presiding judge also reasoned that

“the permissive provision that allows Ocwen to ‘make proof of loss if not made promptly by

Borrower’ also does not impose upon Ocwen a duty to submit proof of loss or otherwise pursue a

claim.”159 The presiding judge further reasoned that this permissive provision “vests Ocwen with

the right to submit proof of loss to the insurer in the event the Barbes fail to do so.”160 The presiding

judge concluded, in part, that because the mortgage contract does not give rise to a duty on

Ocwen’s part to pursue insurance proceeds from American Modern, Plaintiff failed to state a claim

154 Id.

155 Id.

156 Barbe v. Ocwen Loan Servicing, LLC, 383 F.Supp.3d 634, 639 (E.D. La. 2019) (Feldman, J.).

157 Id. at 644.

158 Id.

159 Id.

160 Id.

against Ocwen for breach of the mortgage agreement.161

Here, the terms of the mortgage contract do not create any fiduciary duties for MAM and

PHH. Because the mortgage contract is the private law governing this dispute between Plaintiff,

MAM, and PHH and interpretation of this contract is a matter of law, it would be futile for Plaintiff

to amend the Petition for any pleading insufficiencies.

4. Negligence Claim

In pleading her “Particulars of Negligence” claim, Plaintiff alleges that the “mortgage

companies owe a duty of care to the Plaintiff as they facilitated and secured the insurance policy

on the Plaintiff’s Property …”162 Plaintiff further alleges that “[t]his duty of care requires the

mortgage companies to act in a manner consistent with the protection of both their interest and that

of the Plaintiff which demands the responsibility of filing an insurance claim in the event of

property damage.”163

A mortgagor may assert a negligence claim by alleging that the mortgagee assumed a duty

under tort law with respect to the mortgagor’s inadequate filing of insurance claims to obtain

insurance proceeds.164 Plaintiff attempts to allege such a claim here, but the Petition lacks facts

suggesting that PHH and MAM as mortgagors assumed such a duty. Therefore, Plaintiff has not

stated a negligence claim against PHH and MAM.

5. Plaintiff’s Request to Amend the Pleadings

For the reasons discussed above, the Court finds that Plaintiff has not stated any viable

161 Id.

162 Rec. Doc. 1-9 at 7.

163 Id.

164 See Barbe, 282 F.Supp.3d at 644–45 (citing Obioha v. Proctor Fin. Ins. Co., Nos. 06-5364, 06-9231, 2007

WL 2903227, at *3 (E.D. La. Oct. 2, 2007) (Vance, J.).

claims against PHH or MAM. Plaintiff argues that she should be allowed to amend the pleadings

to address any deficiencies. Federal Rule of Civil Procedure 15(a)(2) provides that a court “should

freely give leave when justice so requires.”165 Short of granting a motion to dismiss, the Court may

grant Plaintiffs leave to file an amended complaint.166 Accordingly, at this time, the Court will

deny PHH and MAM’s motions to dismiss and grant Plaintiff leave to file an amended complaint.

C. Whether MAM is Allowed to Opt Out of the Streamlined Settlement Program

Having determined that MAM’s Motion to Dismiss has merit, the Court also finds it

appropriate to grant MAM’s Motion to Opt Out of the SSP, as it would be contrary to the efficient

administration of justice. This Court adopted Case Management Order (“CMO”) No. 1 on August

26, 2022 to facilitate the speedy and orderly resolution of insurance cases arising out of Hurricane

Ida through the SSP.167 Requiring MAM to proceed with the SSP hinders the resolution of this

matter and thus would be contrary to the goals of the CMO in efficiently resolving Hurricane Ida

disputes, as Plaintiff, absent pleading amendments to the Petition, has no viable claims against

MAM. Other sections of this Court have granted the defendants’ untimely motions to opt out of

the SSP when there was a mandatory, enforceable arbitration clause in Hurricane Ida disputes

because it would promote the efficient administration of justice.168

165 Fed. R. Civ. Pro. R. 15(a).

166 See Carroll v. Fort James Corp., 470 F.3d 1171, 1175 (5th Cir. 2006) (quoting Dussouy v. Gulf Coast Inv.

Corp., 660 F.2d 594, 597–98 (5th Cir. 1981)).

167 See Rec. Doc. 7.

168 Academy of Sacred Heart of New Orleans v. Certain Underwriters at Lloyd’s London, 651 F.Supp.3d 822,

831 (E.D. La. 2023) (Africk, J.) (419 Carondelet, LLC v. Certain Underwriters at Lloyd’s London, et al., No. 22-

4311, 2023 WL 143318, at *2–3 (E.D. La. Jan. 10, 2023) (Vitter, J.).

V.Conclusion

For the reasons discussed above,

IT IS HEREBY ORDERED that PHH Mortgage Corporation’s FRCP 12(b)(1) Motion

to Dismiss for Lack of Standing169 and Mortgage Assets Management, LLC’s Motion to Dismiss

for Lack of Standing”170 are DENIED.

IT IS FURTHER ORDERED that PHH Mortgage Corporation’s FRCP 12(b(6) Motion

to Dismiss for Failure to State a Claim171 and Mortgage Assets Management, LLC’s Motion to

Dismiss with Prejudice for Failure to State a Claim172 are DENIED WITHOUT PREJUDICE.

Plaintiff is granted leave to amend the Complaint within fourteen days of this Order to cure the

deficiencies noted, if possible. If upon amendment, Plaintiff fails to provide sufficient factual

support for each element of each claim, upon motion by a party, the Court will dismiss the claims.

IT IS FURTHER ORDERED that Mortgage Assets Management, LLC’s Motion to Opt

Out of the Streamlined Settlement Program173 is GRANTED.

169 Rec. Doc. 18.

170 Rec. Doc. 25.

171 Rec. Doc. 18.

172 Rec. Doc. 25.

173 Rec. Doc. 30.

IF IS FURTHER ORDERED that Plaintiff Rose Okpalobi’s (“Plaintiff”) Motion to

Strike Defendant PHH Mortgage Corporation’s Motion to Dismiss for Lack of Standing!” and

Cross Motion to Strike MAM’s Motion to Opt Out of the Streamlined Settlement Program!” are

DENIED.

NEW ORLEANS, LOUISIANA, this day of May, 2024.

NANNETTE J pee BROWN

CHIEF JUDGE

UNITED STATES DISTRICT COURT

™ Rec. Doc. 23.

™ Rec. Doe. 31.

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