Latisha Williams, et al v. Fidelity National Insurance

Filing

UNPUBLISHED OPINION FILED. [09-31048 Affirmed ] Judge: CES , Judge: ECP , Judge: JWE Mandate pull date is 11/03/2010 [09-31048]

Latisha Williams, et al v. Fidelity National Insurance

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IN THE UNITED STATES COURT OF APPEALS United States Court of Appeals FOR THE FIFTH CIRCUIT Fifth Circuit FILED
October 13, 2010 N o . 09-31048 Lyle W. Cayce Clerk

L A T IS H A WILLIAMS; LAWRENCE WILLIAMS, P la in t if f s ­ A p p e lla n t s v. C E R T A I N UNDERWRITERS AT LLOYD'S OF LONDON, D e fe n d a n t ­ A p p e lle e

A p p e a l from the United States District Court for the Eastern District of Louisiana U S D C No. 2:07-cv-04428

B e fo r e STEWART, PRADO, and ELROD, Circuit Judges. P E R CURIAM:* L a t is h a Williams and Lawrence Williams ("the Williamses") appeal the d is t r ic t court's dismissal of their claims against Certain Underwriters at Lloyd's o f London ("Lloyd's"). The Williamses sued Lloyd's for, inter alia, recovery for w in d and flood damage sustained to their home as a result of Hurricane Katrina u n d e r their mortgagee's, Homecomings Financial ("Homecomings"), force-placed flo o d insurance policy with Lloyd's (`the Policy"). The district court dismissed the

Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH CIR. R. 47.5.4.

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Williamses' claims under Federal Rule of Civil Procedure 12(b)(1) with prejudice fo r lack of standing. O n appeal, the Williamses argue that they have standing to sue under the P o lic y as third-party beneficiaries. Pointing to specific terms of the Policy, the W illia m s e s contend that the Policy creates a stipulation pour auturi in their fa v o r as laid out by Joseph v. Hospital Service District No. 2. of the Parish of St. M a r y , 2005-C-2364 (La. 10/15/06), 939 So. 2d 1206, 1211. Because the Policy d o e s not manifest a clear intention to benefit the Williamses, we affirm the d is t r ic t court's dismissal of the Williamses' claims against Lloyd's. I . FACTUAL AND PROCEDURAL BACKGROUND T h e Williamses had homeowner's insurance on their home in New Orleans (t h e "Property") from Fidelity National Insurance Company ("Fidelity"). The W illia m s e s also had flood insurance on the Property, which lapsed in June 2005. As a result of the lapse, Homecomings, the mortgagee, purchased the Policy to p r o t e c t its interest in the Property against flood damage. The Policy is a "forcep la c e d " (also known as "lender-placed") policy, which insures the lender's c o l l a t e r a l when the borrower fails to maintain a specific type of insurance. A fo r c e -p la c e d policy allows the lender to protect its exposure on a property up to t h e amount of the mortgage on the date of issuance. Here, Homecomings

m a in t a in s an umbrella force-placed insurance program with Lloyd's, which a llo w s Homecomings to have force-placed coverage on many properties at the s a m e time. T h e Policy lists Homecomings as the sole insured and provides coverage u p to $169,000. The Policy contains three sections that are at issue on appeal. The first section, which appears in the "Coverage" area of the Policy, reads: D. T E M P O R A R Y HOUSING EXPENSE

I f insured property is a dwelling and a flood loss covered by this p o li c y makes it unsafe or in poor condition to live in, or if a civil

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authority will not let owner go to and use the dwelling as a result o f flooding to neighboring locations, we cover the reasonable a m o u n t owner paid in renting a temporary dwelling that is e q u iv a le n t to owner's damaged dwelling so that owner's h o u s e h o ld can maintain its normal standard of living. We will not a p p ly the deductible to this coverage. This coverage is subject to the fo llo w in g conditions, limitations and exclusions: 1. 2. W e will only pay if dwelling is for a single family and it is o w n e r 's primary home. W e will pay owner for the shortest time required to repair or r e p la c e that damaged portion of dwelling that made it u n s a fe or in poor condition to live in. If owner permanently r e lo c a t e s to a new dwelling, we will pay for the shortest time r e q u ir e d to permanently relocate owner's family to the new d w e llin g . T h is coverage shall continue (even if the coverage that applies t o the described location expires after the date of loss) until t h e repair and/or replacement of the damaged portion of the in s u r e d dwelling is completed, or after owner has p e r m a n e n t ly relocated. O u r limit of liability for this coverage is a maximum of $1,000 fo r each flood loss or occurrence.

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T h e second section, which appears in the "General Conditions" area of the P o lic y , states: A. I n s u r a b le Interest and Limit of Liability

T h is policy provides indirect coverage to owner's insurable in te r e s t in the insured property which has been pledged as s e c u r it y for a loan you have made to the owner. Regardless of the in s u r a b le interests of the owner or any other person or persons in the insured property, you are our sole insured under this p o li c y . Even if more than one person has an insurable interest in the insured property, we shall not be liable for more than the a m o u n t of insurance you requested for each specific described lo c a tio n .

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The third section, which appears in the "Lender-Placed Flood Insurance D e d u c t ib le Buy-Back Coverage Endorsement" area of the policy, provides: A. C O N D IT IO N S .... 1. I n s u r a b le Interest. Regardless of the insurable interest o f Owner or any other person or persons in the insured p r o p e r t y , you are our sole insured under this policy and a n y benefits payable under this Endorsement will be made d ir e c t ly to you, for the account of the owner.

The Property sustained damage as a result of Hurricane Katrina and its a fterm a th . At the time, the Williamses' mortgage principal balance was

$ 1 4 2 ,6 1 7 .8 0 . Homecomings submitted a flood damage claim to Lloyd's, and after a n investigation by an independent adjuster, Lloyd's issued payment to H o m e c o m in g s in the amount of $57,244.20. The Williamses allegedly submitted in s u r a n c e claims to Fidelity and Lloyd's and were given loss estimates that were le s s than the true value of the damage to their home. T h e Williamses sued both Fidelity and Lloyd's, seeking, inter alia, recovery fr o m Lloyd's for flood damage under the Policy.1 Lloyd's filed a Rule 12(b)(1) m o t io n to dismiss for lack of standing (the "Motion"). The Williamses failed to r a is e the "Temporary Housing Expense" section before the district court. The d is t r ic t court granted the Motion and dismissed Lloyd's from the case. The W illia m s e s timely appealed. II. JURISDICTION AND STANDARD OF REVIEW T h is Court has jurisdiction over the district court's final judgment under 28 U.S.C. § 1291. This Court reviews de novo a district court's Rule 12(b)(1)

The Williamses' case against Fidelity proceeded in district court, and seems to have reached a tentative settlement. See Williams v. Fidelity Ins. Co., No. 07-4428 (E.D. La. May 19, 2010) (order of dismissal).

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dismissal for lack of standing.

Cornerstone Christian Sch. v. Univ.

I n te r s c h o la s tic League, 563 F.3d 127, 133 (5th Cir. 2009). A motion to dismiss u n d e r Rule 12(b)(1) "should be granted only if it appears certain that the p la in t iff cannot prove any set of facts in support of his claim that would entitle h im to relief." Home Builders Ass'n of Miss., Inc. v. City of Madison, 143 F.3d 1 0 0 6 , 1010 (5th Cir. 1998). This Court "must accept as true all material

a lle g a t io n s of the complaint, and must construe the complaint in favor of the c o m p la in in g party." Warth v. Seldin, 422 U.S. 490, 501 (1975). I I I . DISCUSSION T o have standing to sue in federal court, a plaintiff must bring a "case or c o n t r o v e r s y ." U.S. CONST. art. III. "This requires more than an abstract legal d is p u t e ." Donelon v. La. Div. of Admin. Law ex rel. Wise, 522 F.3d 564, 566 (5th C ir . 2008) (citing Allen v. Wright, 468 U.S. 737, 754 (1984)). To satisfy Article I I I 's standing requirement, a plaintiff must allege (1) a "personal injury" that is (2 ) "fairly traceable to the defendant's allegedly unlawful conduct" and (3) "likely t o be redressed by the requested relief." Allen, 468 U.S. at 751. A plaintiff has standing to sue under an insurance policy if the plaintiff is a named insured or an additional named insured, see Joseph v. Hospital Service D is tr ic t No. 2 of the Parish of St. Mary, 2005-C-2364 (La. 10/15/06); 939 So. 2d 1 2 0 6 , 1211, or if the plaintiff is an intended third-party beneficiary of the policy. LA. CIV. CODE ANN. art. 1978 ("A contracting party may stipulate a benefit for a third person called a third party beneficiary."). It is undisputed that the W illia m se s are neither named insureds nor additional insureds under the Policy. At issue is only whether the Williamses are third-party beneficiaries. Under Louisiana law, a contract for the benefit of a third party is called a "stipulation pour autrui." Paul v. La. State Emps.' Grp. Benefit Program, 990 8 9 7 (La. App. 1 Cir. 5/12/00), 762 So. 2d 136, 140; see also BLACK'S LAW D ICTIONARY 1551 (9th ed. 2009) (translating "stipulation pour autrui" as a 5

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stipulation "for other persons"). Although article 1978 specifies that stipulations p o u r autrui may exist, "[t]he code provides no analytic framework for d e t e r m in in g whether" one exists in any given situation. Joseph, 939 So. 2d at 1211. Instead, "the code has left to the jurisprudence the obligation to develop t h e analysis to determine when a third party beneficiary contract exists on a c a s e by case basis." Id. at 1212. When a court performs this determination, " [e ]a c h contract must be evaluated on its own terms and conditions in order to d e t e r m in e if the contract stipulates a benefit for a third person." Id. A court s h o u ld consider "three criteria for determining whether contracting parties have p r o v id e d a benefit for a third party." Id. These criteria are whether "1) the s t ip u la t io n for a third party is manifestly clear; 2) there is certainty as to the b e n e fit provided the third party; and 3) the benefit is not a mere incident of the c o n t r a c t between the promisor and the promisee." Id. A. W a iv e r

T h e Williamses argue for the first time in their reply brief on appeal that la n g u a g e in the "Temporary Housing Expense" section of the Policy supports the fin d in g of a stipulation pour auturi such that they have standing to sue under t h e Policy. The Williamses argued in their opening brief only that the "Insurable I n t e r e s t and Limit of Liability" and "Conditions / Insurable Interest" sections g a v e them standing. Similarly, in the district court the Williamses only argued t h a t the "Insurable Interest and Limit of Liability" and "Conditions / Insurable I n t e r e s t " sections gave them standing and did not argue that the "Temporary H o u s in g Expense" section gave them standing. In its order granting Lloyd's m o t io n to dismiss for lack of standing, the district court did not reference the " T e m p o r a r y Housing Expense" section. "[A]rguments not raised before the district court are waived and cannot be r a is e d for the first time on appeal." Martco Ltd. P'ship v. Wellons, Inc., 588 F.3d 6

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864, 877 (5th Cir. 2009) (citing LeMaire v. La. Dep't of Transp. & Dev., 480 F.3d 3 8 3 , 387 (5th Cir. 2007)). Furthermore, Federal Rule of Appellate Procedure 2 8 (a ) states that an appellant's opening brief "must contain . . . the argument, w h ic h must contain . . . appellant's contentions and the reasons for them, with c it a t io n s to the authorities and parts of the record on which the appellant relies . . . ." An appellant's "[f]ailure to satisfy the requirements of Rule 28 as to a p a r tic u la r issue ordinarily constitutes abandonment of the issue." United States v . Miranda, 248 F.3d 434, 443 (5th Cir. 2001). The Williamses "Temporary Housing Expense" argument fails to overcome e it h e r bar. While our review is of the entire Policy, Lloyd's would be prejudiced if we entertained this eleventh-hour argument. As this case does not involve " `s u b s t a n t ia l public interests,'" Hatley v. Lockhart, 990 F.2d 1070, 1073 (5th Cir. 1 9 9 3 ) (quoting Cont'l Ins. Cos. v. Ne. Pharm. & Chem. Co., 842 F.2d 977, 984 (8 t h Cir. 1988)), we decline to exercise our "discretion to consider issues not r a is e d in the briefs." Hatley, 990 F.2d at 1073. B. S t i p u la t i o n Pour Autrui

T h e r e is no presumption of a stipulation pour autrui; the party claiming a stipulation pour autrui bears the burden of showing that one exists. Joseph, 9 3 9 So. 2d at 1212. "The most basic requirement of a stipulation pour autrui is t h a t the contract manifests a clear intention to benefit the third party; absent s u c h a clear manifestation, a party claiming to be a third party beneficiary c a n n o t meet his burden of proof." Id. The Williamses do not, and cannot, satisfy their burden of showing that t h e Policy manifests a clear intent to benefit them. The Policy is intended to b e n e fit one party and one party only: Homecomings. The Policy clearly and u n a m b ig u o u s ly states, "Regardless of the insurable interests of the owner [the W illia m s e s ] . . . in the insured property, you [Homecomings] are our sole insured u n d e r this policy." (emphases omitted). 7 Further, to obviate any possible

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ambiguity, the Policy specifies that Homecomings is Lloyd's "sole insured under t h is policy" and that benefits paid will be "made directly to" Homecomings. The Policy contains some language that, if viewed in isolation, might in d ic a te a stipulation for the Williamses. For example, the Policy states that it " p r o v id e s . . . coverage to owner's [the Williamses'] insurable interest." (emphasis omitted). This language might seem to imply that the Policy is in t e n d e d to benefit the Williamses. But viewed in context, this language refers t o the Williamses' insurable interest only as a means of identifying the coverage t o Homecomings, with no thought of a benefit to the Williamses: "This policy p r o v id e s indirect coverage to owner's insurable interest in the insured property w h ic h has been pledged as security for a loan you have made to the owner." (emphases omitted). This language specifies that the coverage is indirect

(p r o v id e d for Homecomings, rather than for the Williamses), and that the Policy c o v e r s the Property qua security for a loan provided by Homecomings. The P r o p e r ty itself is not important; the Property is only important in its capacity as c o lla t e r a l used to secure Homecomings's loan. Likewise, the Policy says that "benefits . . . will be made . . . for the account o f the owner." The Williamses rely heavily on this language, arguing that, as the " o w n e r s ," it shows that the Policy explicitly contemplates a benefit to them. This in t e r p r e t a t io n , while plausible when reading selected portions of this sentence in isolation, is not viable when reading the sentence as a whole: "Regardless of t h e insurable interest of Owner [the Williamses] or any other person or persons in the insured property, you [Homecomings] are our [Lloyd's] sole insured under t h is policy and any benefits payable under this Endorsement will be made d ir e c t ly to you [Homecomings], for the account of the owner [the Williamses]." T h e Williamses attempt to analogize to Lee v. SafeCo Insurance Co. of A m e r ic a , No. 08-1100, 2008 WL 2622997 (E.D. La. July 2, 2008). However, Lee is distinguishable because the policy language in Lee is materially different from 8

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the language in the instant case. In Lee, AMC held a mortgage on Lee's New O r le a n s property. Id. at *1. AMC acquired an insurance policy on Lee's

p r o p e r t y from GICA. Id. at *3. Asserting that the property was damaged by H u r r ic a n e s Katrina and Rita, Lee submitted a claim to GICA. Id. at *1. After G I C A refused to pay, Lee filed suit. Id. GICA filed a Rule 12(b)(1) motion to d is m is s for lack of standing, arguing that Lee did not have an insurance contract w it h GICA and was not a third-party beneficiary to AMC's policy. Id. AMC's policy with GICA stated, "`Amounts payable in excess of your [A M C 's ] interest will be paid to the "borrower" [Lee] unless some other person is named by the "borrower" to receive payment.'" Id. at *4 (emphasis supplied b y district court). The district court found that "[t]his provision clearly

s t ip u la t e s that the portion of any loss payment exceeding the value of AMC's in t e r e s t in the property will be paid directly to Lee, as the `borrower' under the P o lic y ." Id. Accordingly, the statement was "clear and unambiguous, and

t h e r e fo r e manifest[ed] the clear intention of [AMC and GICA] to provide this b e n e fit to" Lee. Id. (quotation omitted). The district court denied GICA's motion t o dismiss for lack of standing. Id. at *1. U n lik e in Lee, where AMC's contract with GICA clearly envisioned a b e n e fit to Lee--the payment of any amount in excess of AMC's interest in the p r o p e r t y -- in the instant case, the Policy does not envision a benefit to the W illia m s e s . The Policy refers to "the account of" the Williamses not to describe a benefit to the Williamses like the one provided in Lee, but merely to d is t in g u is h the "Williams" account from the myriad other accounts which H o m e c o m in g s has with Lloyd's. At the time of the storm the Williamses had a principal mortgage balance o f $142,617.80 and the policy limit was $169,000, so that a payment to the fullest e x t e n t of the policy limit would have resulted in $26,382.20 more than the o u ts t a n d in g mortgage balance. The Policy, however, does not have a provision 9

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like the one in Lee that specified any excess payment would be given to Lee h e r s e lf. Even assuming that any potential additional benefit might go to the W illia m s e s , the language in the Policy falls well below the requisite finding of a "manifestly clear stipulation" to create a stipulation pour autrui. IV. CONCLUSION B y failing to raise the argument until their Reply brief on appeal, the W illia m s e s waived their argument that the "Temporary Housing Expense" s e c t io n gives them standing to pursue a claim under the Policy. The Policy does n o t contain a stipulation pour autrui in the Williamses' favor because it does not m a n ife s t a clear intent to benefit the Williamses. The district court therefore p r o p e r ly dismissed their claims against Lloyd's for lack of standing. A F F IR M E D .

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