The opinion
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
LAKE CHARLES DIVISION
GERRY THOMAS CASE NO. 2:22-CV-05952
VERSUS JUDGE JAMES D. CAIN, JR.
PROCTOR FINANCIAL INSURANCE CO MAGISTRATE JUDGE KAY
ET AL
MEMORANDUM RULING
Before the Court is “Defendants National Fire and Marine Insurance Company and
Proctor Financial Inc.’s Rule 12(b)(1) and/or 12(b)(6) Motion to Dismiss” (Doc. 12) and
“Defendant NewRez LC d/b/a Shellpoint Mortgage Servicing’s Motion to Dismiss” (Doc.
14).
INTRODUCTION
On or about August 27, 2020, Hurricane Laura made landfall near Lake Charles,
Louisiana. On or about October 9, 2020, Hurricane Delta made landfall near Lake Charles,
Louisiana. During the relevant time period, Plaintiff owned property located in Lake
Charles, Louisiana, which was financed by NewRez LLC and/or Shellpoint Mortgage
Servicing (“Shellpoint”) through a mortgage agreement. Also during that same time period,
Proctor Financial Insurance Corporation and/or Proctor Financial, Inc. (“Proctor”) and/or
National Fire and Marine Insurance (“National”) had issued a lender-placed policy to
protect Shellpoint’s interest in the mortgaged property because Plaintiff failed to provide
insurance as required by the mortgage agreement between Plaintiff and Shellpoint.
In his Petition for Damages initially filed in state court, Plaintiff, Gerry Thomas,
alleges that Proctor/National failed to properly adjust his loss claims regarding the property
as a result of Hurricanes Laura and Delta. At some point, subsequent to the Hurricanes,
Plaintiff contacted Shellpoint and requested that he be appointed as the representative to
allow him to proceed against Proctor/National to recover the damage caused by the
Hurricanes. Shellpoint rejected Plaintiff’s request and did not pursue additional amounts
claimed for hurricane damage limits, which Plaintiff alleges he is entitled to from
Proctor/National. Plaintiff alleges that Shellpoint’s refusal to pursue additional amounts
claims for the hurricane damages, limited the amount he would or could have received
from Proctor and/or National.
Plaintiff is attempting to recover damages for mental anguish, aggravation, and
inconvenience from Shellpoint and/or Proctor/National’s actions, including additional
sums for repairs, other structure, contents, debris removal, and additional living expenses,
as well as penalties, attorney fees, and costs pursuant to Louisiana Revised Statutes
22:1892 and 22:1973.
RULE 12(b)(1) STANDARD
Rule 12(b)(1) of the Federal Rules of Civil Procedure provides:
Every defense to a claim for relief in any pleading must be
asserted in the responsive pleading if one is required. But a
party may assert the following defenses by motion: (1) lack of
subject-matter jurisdiction. . .
A court may base its disposition of a motion to dismiss under Rule 12(b)(1) on: (1)
the complaint alone; (2) the complaint supplemented by undisputed facts; or (3) the
complaint supplemented by undisputed facts plus the court’s resolution of disputed facts.
Robinson v. TCI/US West Communications, Inc., 117 F.3d 900 (5th Cir. 1997), citing
Williamson v. Tucker, 645 F.2d 404, 413 (5th Cir.), cert. denied, 454 U.S. 897, 102 S.Ct.
396, (1981).
A case is properly dismissed for lack of subject matter jurisdiction when the court
lacks the statutory or constitutional power to adjudicate the case. Smith v. Reg’l Transit
Auth. 756 F.3d 340, 347 (5th Cir. 2014) (quoting Krim v. pcOrder.com. Inc., 402 F.3d 489,
494 (5th Cir. 2005). In considering a challenge to subject matter jurisdiction, the district
court is “free to weigh the evidence and resolve factual disputes in order to satisfy itself
that it has the power to hear the case.” Id.
Courts may consider affidavits and exhibits submitted in connection with a Rule
12(b)(1) motion to dismiss. Moran v. Kingdom of Saudi Arabia, 27 F.3d 169, 172 (5th Cir.
1994). Once challenged with competent proof, the plaintiff must prove by a preponderance
of the evidence that the court has subject matter jurisdiction. Middle South Energy, Inc. v.
City of New Orleans, 800 F.2d 488, 490 (5th Cir. 1986). For purposes of ruling on a motion
to dismiss for want of standing, both the trial and reviewing courts must accept as true all
material allegations of the complaint and must construe the complaint in favor of the
complaining party. Warth v Seldin, 422 U.S. 490, 501, 95 S.Ct. 2197 (1975). A motion to
dismiss under Rule 12(b)(1) should be granted only if it appears certain that the plaintiff
cannot prove any set of facts in support of his claims that would entitle plaintiff to relief.
Ramming v. United States, 281 F.3d 158, 161 (5th Cir. 2001).
RULE 12(b)(6) STANDARD
The standard for review of a motion to dismiss under Rule 12(b)(1) is the same as
that for a motion to dismiss pursuant to Rule 12(b)(6). United States v. City of New
Orleans,2003 WL 22208578, at *1 (E.D. La. 2003) (quoting Benton v. United States, 960
F.2d 19, 21 (5th Cir. 1991).
Rule 12(b)(6) allows for dismissal when a plaintiff “fail[s] to state a claim upon
which relief can be granted.” When reviewing such a motion, the court should focus on the
complaint and its attachments. Wilson v. Birnberg, 667 F.3d 591, 595 (5th Cir. 2012). The
court can also consider documents referenced in and central to a party’s claims, as well as
matters of which it may take judicial notice. Collins v. Morgan Stanley Dean Witter, 224
F.3d 496, 498–99 (5th Cir. 2000); Hall v. Hodgkins, 305 Fed. App’x 224, 227 (5th Cir.
2008) (unpublished).
Such motions are reviewed with the court “accepting all well-pleaded facts as true
and viewing those facts in the light most favorable to the plaintiff.” Bustos v. Martini Club,
Inc., 599 F.3d 458, 461 (5th Cir. 2010). However, “the plaintiff must plead enough facts
‘to state a claim to relief that is plausible on its face.’” In re Katrina Canal Breaches Litig.,
495 F.3d 191, 205 (5th Cir. 2007) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)). Accordingly, the court’s task is not to evaluate the plaintiff’s likelihood of success
but instead to determine whether the claim is both legally cognizable and plausible. Lone
Star Fund v. (U.S.), L.P. v. Barclays Bank PLC, 594 F.3d 383, 387 (5th Cir. 2010).
LAW AND ANALYSIS
Defendants, Proctor/National and Shellpoint, move to dismiss the instant lawsuit
because Plaintiff does not have standing to bring these claims and the Petition fails to state
a claims for insurance benefits against these Defendants. As previously noted, the
insurance policies at issues are lender-placed policies that Shellpoint procured from
Proctor/National to protect its interest in the mortgaged property. Consequently, Shellpoint
is the insured under the subject policies. “Although the borrower typically pays the
insurance premium [for lender placed policies] through its mortgage lender, the insurance
policy is for the benefit of the mortgagee.” Brown v. Am. Mod. Home Ins. Co., 2017 WL
2290268, at *4 (E.D. La. May 25, 2017).
In order to bring a claim arising from an insurance policy, a plaintiff must be either
(1) a named insured; (2) an additional named insured; or (3) an intended third-party
beneficiary of the policy. Gary v. Am. §. Ins. Co., 2021 WL 2143061,, at *2 (W.D. La. May
26, 2021). Within the context of “force-placed” or “lender-placed” policies issued to a
mortgagee of a covered property, Louisiana law has consistently held that a borrower has
no standing to bring a claim against an insurer. Ortego v. First Am. Title Ins. Co., 569 So.2d
101, 106 (La. Ct. App. 1990); Trosclair v. Chicago Titile Insurance Company, 374 So.2d
197 (La.App. 4th Cir. 1979); Kilson v. Am. Rd. Ins. Co., 345 So.2d 967, 969 (La.App. 4th
Cir. 1977).
Plaintiff maintains that he is a third-party beneficiary of the insurance policies
pursuant to a stipulation pour autrui. The party claiming the benefit of this status bears the
burden of pleading and supporting the claim. Sinegal v. American Security Insurance Co.,
2021 WL 3183287, *2 (W.D. La. July 27, 2021). A stipulation pour autrui is never
presumed. Smith v State Farm Ins. Co., 869 So.2d 909, 912-13 (La.App. 4 Cir. 3/3/04)
(quoting Homer v. Nat. Bank v. Tri--District Development Corp., 534 So.2d 154, 156
(La.App. 3 Cir. 1988)).
There are three requirements for a valid stipulation pour autrui: (1) the stipulation
for a third party is manifestly clear; (2) there is certainty as to the benefit provided the third
party; and (3) the benefit is not a mere incident of the contract between the promisor and
the promisee.” Lee v. Safeco Ins. Co. of America, 2008 WL 2622997, *3 (E.D. La. July 2,
2008). Plaintiff argues that there is certainty as to the benefit to accrue to him and relies on
the following policy language concerning subrogation:
In the event the Underwriters makes any payment under this policy, it shall
be subrogated to the extent of such payment to all rights of the Named
Insured and of the Borrower against any party who may be legally liable for
causing damage to or destruction of the property securing the loan in
question.1
Plaintiff also relies on the policy language in the Mortgage Guard Endorsement
portion of the policy:
When Covered Residential Property or Covered Mobile Home Property is
designated as HO (Homeowners) by the “specific reporting” method and as
to such property you are required pursuant to the terms of a written escrow
agreement to procure or maintain in force insurance on behalf of a
“borrower,” but fail to do so because of an unintentional error by the Named
Insured or by the person or entity that is responsible for tracking insurance
for the Named Insured, . . .2
Plaintiff also relies on a later provision of that Endorsement, in the Property
Coverage Limits section:
1 Doc. 12-2, p. 7.
2 Id. p. 62.
. . . but we will pay no more than the actual amount of direct physical loss or
damage to the reported premises, or the actual amount incurred for loss of
use of the reported premises, determined in accordance with the terms and
conditions of the “borrower’s policy” which would have been in effect but
for you unintentional error or omission, less the amount due you or the
“borrower” from all other insurance on the Covered Residential Property or
Covered Mobile Home Property.
Finally, Plaintiff refers he Court to the following Definition in the Endorsement:
“Borrower’s Policy” means the insurance policy the Named Insured is
required, pursuant to the terms of a written escrow agreement, to procure or
maintain in force insurance on behalf of a “borrower” with proceeds from
the “borrower’s” escrow account, whether or not such policy was actually
procured or maintained.3
Defendant, Shellpoint, argues that Plaintiff did not allege that he was an intended
third-party beneficiary, and even if the Court allowed Plaintiff to Amend the Petition, the
insurance policy does not make it manifestly clear that a benefit is owed to Plaintiff by the
insurer.
First, as noted by Shellpoint, the subrogation provision stipulates National’s right to
subrogate any payment against Shellpoint or Plaintiff’s right to recover against third
parties. The remaining provisions protect Shellpoint when and if a mortgage or other
written escrow specifically requires the lender to maintain lender-placed insurance policies
for the benefit of a borrower. Plaintiff has failed to allege and/or establish that this mortgage
agreement requires that the policy be “for the benefit of the borrower.” The insurance
policy is for the benefit of the mortgagee to protect its interest in the mortgage because
Plaintiff failed to procure an insurance policy as required by the mortgage agreement
3 Id. p. 64.
between Plaintiff and the lender. As such, the provisions cited by Plaintiff do not clearly
manifest a benefit to Plaintiff, rather the Declaration page and the policy names Shellpoint
as the Insured,*l and anguage in the loss payment provision identifies only Shellpoint as
the Named Insured.°
CONCLUSION
Because he is not a named insured, an additional named insured, or an intended
third-party beneficiary of the policy, Plaintiff lacks standing to enforce the insurance
policy. In addition, Plaintiff's Petition fails to state a claim for insurance benefits.
Accordingly, the Court will grant Defendants’ motion and dismiss Plaintiff's claims with
prejudice.
THUS DONE AND SIGNED in Chambers on this 5th day of January, 2023.
JAMES D. CAIN, JR.
UNITED STATES DISTRICT JUDGE
4 Id. p., Declaration Page, and p. 1 of the policy (“Named Insured means the Lending Institution named on the
Declaration Page...”).
5 5.
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