28 Fla. L. Weekly Supp. 217a
Online Reference: FLWSUPP 2803LORE
Insurance — Mortgage protection — Standing — Third-party beneficiaries — Mortgagors do not have standing to bring claim for damages against insurer as third-party beneficiaries of lender-placed mortgage protection insurance policy where policy specifically excludes coverage for any interest that mortgagors may have in property — Having insurable interest in property is insufficient to provide mortgagors with standing to pursue claim under policy as intended third-party beneficiaries where policy language demonstrates contrary intent — Motion to dismiss is granted
HAROLD LORENCEAU, et al., Plaintiffs, v. GREAT AMERICAN ASSURANCE CO., Defendant. Circuit Court, 11th Judicial Circuit in and for Miami-Dade County. Case No. 2019-030425-CA-01, Section CA24. May 7, 2020. Antonio Arzola, Judge. Counsel: Kertch Conze, Law Offices of Kertch Conze, P.A., Miramar, for Plaintiffs. Gary M. Pappas, Carlton Fields, P.A., Miami, and Johanna W. Clark, Carlton Fields, P.A., Orlando, for Defendant.
ORDER GRANTING DEFENDANT’S MOTIONTO DISMISS PLAINTIFFS’ FIRST AMENDEDCOMPLAINT AND ENTERING FINALJUDGMENT OF DISMISSAL WITH PREJUDICE
THIS CAUSE having come before the Court on April 30, 2020, on Defendant Great American Assurance Company’s Motion to Dismiss Plaintiff’s First Amended Complaint, and the Court having heard argument of counsel and having reviewed the merits of said Motion, Plaintiffs’ Response in Opposition to the Motion, Defendant’s Reply Memorandum, and the First Amended Complaint, and being otherwise fully advised in the premises, the Court finds as follows:
On January 21, 2020, Plaintiffs, Harold Lorenceau and Kareen Lorenceau, filed their Amended Complaint against Great American Assurance Company (“Great American”) alleging one count for breach of contract and one count seeking declaratory relief. Plaintiffs pled that they were intended third-party beneficiaries or parties with an “insurable interest” in property giving them standing to pursue their claim for damages under the insurance Policy issued by Great American to Carrington Mortgage Services, Inc. (“Carrington”), their lender. The Plaintiffs’ Amended Complaint was filed following this Court’s order granting Defendant’s original Motion to Dismiss where this Court provided Plaintiffs with leave to amend their initial complaint to attach the Policy that had been produced by Great American. See Order dated January 10, 2020. Great American filed its Motion to Dismiss Plaintiff’s First Amended Complaint on January 31, 2020. In their Response in Opposition filed on March 6, 2020, Plaintiffs also rely on Florida Statute section 627.405 for their standing. Great American filed its Reply Memorandum on April 27, 2020. As explained below, the Court finds that, based on the allegations of the First Amended Complaint, the Plaintiffs are not intended third party beneficiaries of the Policy. Thus, Plaintiffs’ First Amended Complaint is dismissed with prejudice.
In ruling on a motion to dismiss, a trial court is limited to the four corners of the complaint and its incorporated attachments. One Call Prop. Servs. Inc. v. Sec. First Ins. Co., 165 So. 3d 749, 752 (Fla. 4th DCA 2015) [40 Fla. L. Weekly D1196a]. If an exhibit attached to the complaint facially negates the cause of action asserted, the exhibit controls. Fladell v. Palm Beach Co. Canvassing Bd., 772 So. 2d 1240, 1242 (Fla. 2000) [25 Fla. L. Weekly S1102b]; see also Harry Pepper & Assoc. v. Lasseter, 247 So. 2d 736, 737 (Fla. 3d DCA 1971). In Florida, coverage under an insurance contract is defined by the plain language and terms of the policy. Swire Pac. Holdings, Inc. v. Zurich Ins. Co., 845 So. 2d 161, 165 (Fla. 2003) [28 Fla. L. Weekly S307d].
Great American issued a lender-placed “Mortgage Protection Insurance” policy bearing number E027127 (“Policy”) to Carrington, insuring Carrington’s interest in Plaintiffs’ property located at 17600 N.E. 3rd Ct., North Miami Beach, Florida 33162. The Declarations page of the policy identifies Carrington as the sole Named Insured. The Policy defines “Named Insured” as “the creditor, lending institution, company, or person holding or servicing the mortgage interest in the described location” (i.e., Carrington). Additionally, the Policy defines “you” and “your” as the Named Insured identified on the Policy declarations. The Policy also specifically excludes mortgagors — such as Plaintiffs — from coverage as a Named Insured:
B. Mortgagor is the purchaser of the described location for whom you [Carrington] have financed property or which you are servicing for others under the terms of a written agreement. The mortgagor is not a Named Insured under this policy.
Policy Definitions, page 1 of 11 (bold font original). Thus, the Court finds that Plaintiffs are not named insureds under the Policy.
Plaintiffs allege that they are intended third party beneficiaries under the Policy. First, the Court finds that, based on the express language of the Policy and case law, Plaintiffs do not qualify as intended third party beneficiaries. The Florida Supreme Court has held that four elements are required to state a claim for breach of contract as an intended third-party beneficiary: “(1) existence of a contract; (2) the clear or manifest intent of the contracting parties that the contract primarily and directly benefit the third party; (3) breach of the contract by a contracting party; and (4) damages to the third party resulting from the breach.” Mendez v. Hampton Court Nursing Ctr., LLC, 203 So. 3d 146, 148 (Fla. 2016) [41 Fla. L. Weekly S394a]; Found. Health v. Westside EKG Assocs., 944 So. 2d 188, 195 (Fla. 2006) [31 Fla. L. Weekly S669b]. A non-party to a contract may not sue for breach of that contract unless the party was an intended third-party beneficiary of such contract. See Biscayne Inv. Grp., Ltd. v. Guarantee Mgmt. Servs., Inc., 903 So. 2d 251, 254 (Fla. 3d DCA 2005) [30 Fla. L. Weekly D1207a]. A non-party is the specifically intended beneficiary only if the contract clearly expresses intent to primarily and directly benefit the third party. Id. The intent of the parties, “gleaned from the contract itself, is determinative.” Networkip, LLC v. Spread Enters., Inc., 922 So. 2d 355, 358 (Fla. 3d DCA 2006) [31 Fla. L. Weekly D653a] quoting City of Tampa v. Thornton-Tomasetti, P.C., 646 So. 2d 279, 282 (Fla. 2d DCA 1994). It is insufficient to show that only one of the contracting parties unilaterally intended some benefit to the third party. Biscayne Inv. Grp., 903 So. 2d at 254. It is also insufficient to show that the non-party will obtain an incidental or consequential benefit from the contract. Networkip, 922 So. 2d at 358.
Here, the express language of the Policy contradicts Plaintiffs’ allegations that they are insured or third-party beneficiaries under the Policy and that Great American was contractually obligated to pay Plaintiffs any benefits under the Policy. Instead, the language of the Policy contains a clear and manifest intent not to primarily and directly benefit the Plaintiffs, as mortgagors. The Policy specifically excludes coverage for any interest that mortgagors — such as Plaintiffs — may have in the Property:
Unless indicated otherwise by endorsement, this policy does not . . . provide coverage for the interest or equity of the mortgagor. This is creditor placed insurance, protecting your mortgagee interest, subject to policy terms and conditions. Please read your policy for specific terms and conditions of coverage.
Policy Declarations (bold font original). This exclusion applies to any party having an insurable interest in the property — as Plaintiffs claim here — other than Carrington:
J. Insurable Interest — If more than one party has an insurable interest in the property, we [Great American] shall not be liable for more than your [Carrington] interest in the property unless the other party is an Additional Insured.
Policy Conditions, page 9 of 11 (bold font original). Plaintiffs are not named as “Additional Insureds” in the Policy. These Policy terms contradict Plaintiffs’ claims in their First Amended Complaint and therefore control over Plaintiffs’ allegations. Thus, based on the plain language of the Policy, Plaintiffs have not and cannot satisfy the second element necessary to proceed forward with, or prevail on, a claim for breach of contract as intended third-party beneficiaries under the Policy.
The parties have not directed the Court to any reported Florida appellate court opinion analyzing a homeowner’s standing as a third party beneficiary of a lender-placed insurance policy. Nevertheless, as Great American described in its Motion and Reply, Chief Judge Michael Moore’s decision in Catatonic Invs. Corp. v. Great Am. Assurance Co., 2014 WL 11997839 (S.D. Fla. Nov. 25, 2014) is directly on point. In Catatonic, Judge Moore considered a mortgagor/plaintiff’s claim against Great American involving a similar lender placed insurance policy that also excluded the plaintiff, as mortgagor, from coverage. Like the Plaintiffs here, the plaintiff in Catatonic claimed to be a third party beneficiary of the policy. Judge Moore ruled that because the policy specifically excluded the mortgagor/plaintiff from coverage, Great American did not intend to make plaintiff a third-party beneficiary to the policy. Therefore, Judge Moore dismissed the complaint with prejudice.
Great American’s Motion and Reply also correctly point out that other insurers have issued lender placed insurance policies excluding the mortgagor/homeowner from coverage like the Great American policy does here. Those insurers have also prevailed against third-party-beneficiary claims by plaintiff/mortgagors like Plaintiffs in the instant case. See Mustakas v. Integon Nat’l Ins. Co., 2019 WL 6324259 (S.D. Fla. Nov. 26, 2019) (Rosenberg, J.) (dismissing homeowner’s complaint alleging status as a third party beneficiary of lender placed policy because the policy expressly excluded plaintiff from coverage and thus policy was not intended to primarily and directly benefit homeowner); Suarez v. Integon Nat’l Ins. Co., 2019 WL 8014371 (S.D. Fla. October 15, 2019) (Moreno, J.) (following Catatonic and dismissing homeowner’s complaint alleging status as a third party beneficiary of lender placed policy because policy expressly excluded plaintiff from coverage); Bajduan v. Integon Nat’l Ins. Co., 2019 WL 8014367 (S.D. Fla. Sept. 30, 2019) (Ungaro, J.) (dismissing homeowner’s complaint alleging status as a third party beneficiary of lender placed policy and rejecting reliance on Fla. Stat. §627.405 because policy clearly and expressly excluded plaintiffs from coverage demonstrating contracting parties’ intent not to primarily and directly benefit plaintiffs); Ulloa v. Integon Nat’l Ins. Co., 2019 WL 2176941 (S.D. Fla. March 13, 2019) (Torres, J.) (rejecting homeowner’s insurable interest argument under Fla. Stat. §627.405 because policy expressly excluded homeowner from coverage); Arias v. Integon Nat’l Ins. Co., 2018 WL 4407624 (S.D. Fla. Sept. 17, 2018) (Altonaga, J.) (following Catatonic and dismissing homeowner’s third party beneficiary complaint against insurance company that issued lender-placed policy to homeowner’s bank); and Hogan v. Praetorian Ins. Co., 2017 WL 5643234 (S.D. Fla. July 31, 2017) (Ungaro, J.) (rejecting homeowner claim that she was a third party beneficiary under a lender placed insurance policy based on her insurable interest and Fla. Stat. §627.405 because the policy expressly excluded the homeowner from coverage).
Plaintiffs’ Response directs the Court to a line of cases from the Middle District of Florida against Balboa Insurance Company allowing homeowners to proceed as third party beneficiaries of the lender-placed policy Balboa issued to the homeowner’s mortgagees. See, e.g., Kelly v. Balboa Ins. Co., 897 F.Supp.2d 1262 (M.D. Fla. 2012). As Great American discusses in its Reply, however, the Balboa policy at issue in those cases is distinguishable because it does not include the express exclusion of the mortgagor as the Great American, Praetorian, and Integon policies did in Catatonic, Mustakas, Suarez, Bajduan, Ulloa, Arias, and Hogan. As Judge Ungaro stated in Hogan, “the Court has carefully reviewed the [Balboa] cases and finds them to be inapposite, as none of these cases involve policies that contain ‘the clear or manifest intent not to primarily and directly benefit the third party.’ ” 2017 WL 5643234 at *4 (emphasis original, quoting Catatonic).
Second, the Court rejects the Plaintiffs’ argument that they are intended third-party beneficiaries under the Policy because they have an insurable interest in the Property pursuant to Florida Statutes section 627.405. As with Plaintiffs’ first argument, the Court adopts the reasoning of the United States District Court for the Southern District of Florida in Catatonic and its progeny. The plaintiff in Catatonic relied on the identical “insurable interest” argument under §627.405 as Plaintiffs do here. See 2014 WL 11997839 at *2. Nevertheless, based on similar Great American policy language excluding the mortgagor/plaintiff from coverage, Judge Moore rejected plaintiff’s insurable interest argument finding “the Policy contains the clear or manifest intent not to primarily and directly benefit the third party.” Id. at *3 (emphasis in original). As a result, Judge Moore found that plaintiff could not be a third party beneficiary under Florida law. Id. Similarly, in Hogan, the plaintiff claimed that she had standing as a third party beneficiary of the policy because she had an insurable interest in the property pursuant to §627.405. See Hogan, 2017 WL 5643234 at *3. The court rejected this argument and held that the mere ownership of the insured property is insufficient to provide the homeowner plaintiff the requisite standing or right to pursue a claim under an insurance policy as an intended third-party beneficiary where the language of the insurance policy demonstrates a contrary intent. Id.; see also Bajduan, 2019 WL 8014367 at *6; Ulloa, 2019 WL 2176941 at *3.
Plaintiffs’ Response directs the Court to Schlehuber v. Norfolk & Dedham Mut. Fire Ins. Co., 281 So. 2d 337 (Fla. 3d DCA 1973) for the proposition that a homeowner can be a third party beneficiary of an insurance policy, even though the homeowner has no policy in his own name, based on its insurable interest in the property covered by the policy and §627.405. Schlehuber is a case upon which Middle District of Florida relied in the Balboa line of cases. See, e.g., Kelly v. Balboa, 897 F.Supp. at 1266. As Great American explains in its Reply, however, the Schlehuber case is distinguishable because it did not involve a lender placed policy, let alone one that expressly excluded the plaintiff from coverage like the Policy at issue in this case or in Catatonic and its progeny in the Southern District of Florida. Furthermore, while the Balboa line of cases did involve lender placed policies, once again, the Court distinguishes these cases because those policies did not have the express exclusions that the policies in Catatonic and its progeny contained. As Judge Torres stated in Ulloa when referring to the Balboa line and Schlehuber, “But, those cases are unavailing because none of them contain policies with a clear or manifest intent not to benefit a third party.” 2019 WL 2176941 at *4 emphasis in original).
In the present Policy, as in the cases cited above, the language clearly and unambiguously shows that the contracting parties, Great American and Carrington, explicitly intended to benefit only Carrington through the Policy, with no direct benefit whatsoever to the mortgagor, Plaintiffs. This Policy language negates the Plaintiffs’ argument that their ownership of the Property confers third-party beneficiary standing pursuant to §627.405 or as intended third party beneficiaries under the Policy. Plaintiffs have not and cannot satisfy the elements necessary to proceed forward with, or prevail on, a claim for breach of contract as intended third-party beneficiaries under the Policy based on their ownership of the Property.
Pursuant to the express language of the Great American insurance policy and applicable case law, Plaintiffs have no standing to pursue their claim against Great American as intended third-party beneficiaries. Plaintiffs have already amended their complaint once, and given the clear and unambiguous language in the Policy not to primarily and directly benefit the Plaintiffs, the Court finds that any further amendment would be futile. Plaintiffs’ secondary count for declaratory relief fails for the same reasons listed hereinabove.
Accordingly, after due consideration, it is ORDERED AND ADJUDGED as follows:
Defendant Great American Assurance Company’s Motion to Dismiss Plaintiffs’ First Amended Complaint is GRANTED and the First Amended Complaint, and this action, are DISMISSED WITH PREJUDICE. The Court enters a Final Judgement of Dismissal. Plaintiffs shall take nothing by this action and Defendant shall go hence without day.
