Thompson et al v. Lyndon Southern Insurance Company et al
Filing
43
MEMORANDUM OPINION AND ORDER FINDING AS MOOT 40 MOTION to Stay Pretrial Proceedings, GRANTING 23 MOTION for Judgment on the Pleadings. Plaintiffs Paula and Steven Thompsons' claim against Chase for negligent, wanton, or intentional interference with a contractual relationship is DISMISSED WITH PREJUDICE, and Chase is dismissed as a defendant in this action. Signed by Judge Annemarie Carney Axon on 8/28/2018. (JLC)
FILED
2018 Aug-28 AM 10:00
U.S. DISTRICT COURT
N.D. OF ALABAMA
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ALABAMA
MIDDLE DIVISION
PAULA THOMPSON and
STEVEN THOMPSON,
Plaintiffs,
vs.
LYNDON SOUTHERN
INSURANCE COMPANY, et al.,
Defendants.
)
)
)
)
)
)
)
)
)
)
)
Case No.: 4:18-CV-00623-ACA
MEMORANDUM OPINION AND ORDER
This breach of contract and bad faith action arises out of the purchase and
loss of Plaintiffs Paula and Steven Thompson’s car. The Thompsons financed the
purchase of the car with a loan from Defendant JPMorgan Chase Bank, N.A.
(“Chase”), and Chase is named as an additional insured under the Thompsons’ car
insurance policy. After a fire destroyed their car, the Thompsons submitted a
claim to their insurer, Defendant Lyndon Southern Insurance Company (“Lyndon
Southern”), alleging that the full amount owed under the policy was the purchase
price of the vehicle. (See Doc. 28 at 3). Lyndon Southern denied the Thompsons’
claim, but paid Chase for the loss. The Thompsons then filed suit against Chase
and Lyndon Southern. 1 The Thompsons assert breach of contract, bad faith, and
conversion claims against Lyndon Southern, and a claim against Chase for tortious
interference with a contractual relationship. (Doc. 1-1 at 7-12). This action is
before the court on Chase’s motion for judgment on the pleadings. (Doc. 24). For
the reasons explained below, the court finds that Chase’s motion is due to be
granted.
I.
STANDARD OF REVIEW
Federal Rule of Civil Procedure 12(c) provides that: “After the pleadings are
closed—but early enough not to delay trial—a party may move for judgment on
the pleadings.” Fed. R. Civ. P. 12(c). “Judgment on the pleadings is appropriate
when there are no material facts in dispute and the moving party is entitled to
judgment as a matter of law.” Douglas Asphalt Co. v. Qore, Inc., 541 F.3d 1269,
1273 (11th Cir. 2008) (citing Cannon v. City of West Palm Beach, 250 F.3d 1299,
1301 (11th Cir. 2001)). When ruling on a motion for judgment on the pleadings,
the court must accept the facts alleged in the complaint as true and view them in
the light most favorable to the nonmoving party.
Mikko v. City of Atlanta,
Georgia, 857 F.3d 1136, 1139 (11th Cir. 2017) (citation omitted).
1
The Thompsons also name several other companies in their complaint that are allegedly related
to Lyndon Southern. (Doc. 1-1 at 2).
2
II.
FACTUAL ALLEGATIONS
The Thompsons purchased a used car on May 11, 2016. (Doc. 1-1 at ¶ 6).
To help finance the purchase, the Thompsons took out a loan with Chase. (Id. at
¶¶ 6-7, 11). The loan required the Thompsons to insure the car and name Chase as
an “additional loss payee” under the insurance policy.
(Id. at ¶¶ 8-9).
Accordingly, the Thompsons had the car insured with a policy from Lyndon
Southern, and the insurance policy names Chase as an additional insured. (Doc. 11 at ¶ 12-14; Doc. 2-2 at 2).
On July 15, 2016, a fire caused substantial damage to the Thompsons’ car,
and the car was a total loss. (Doc. 1-1 at ¶¶ 15, 20). The Thompsons reported the
loss to Lyndon Southern. (Id. at ¶¶ 18-19). According to the Thompsons, the
insurance policy required Lyndon Southern to provide full coverage for the loss.
(See id. at ¶ 20). Nevertheless, Lyndon Southern refused to pay the Thompsons’
claim. (Id. at ¶¶ 22-23, 29). The Thompsons allege that Lyndon Southern acted in
bad faith and did not determine the value of the loss before refusing to pay the
Thompsons’ claim. (Id. at ¶¶ 22, 34).
Rather than paying the Thompsons, Lyndon Southern paid Chase for the loss
without obtaining the Thompsons’ permission. (Id. at ¶ 23). The amount Lyndon
Southern paid to Chase was less than the amount the Thompsons owed to Chase
under the loan. (Id. at ¶ 35). According to the Thompsons, Chase settled the claim
3
without their consent for less than “the full and fair market value” of their car, and
Chase “has not taken any action to receive the full money owed” to the Thompsons
under the insurance policy. (Id. at ¶¶ 23, 35-36, 78).
Based on Lyndon Southern’s and Chase’s alleged actions following the loss
of the Thompsons’ car, the Thompsons initiated this action against Chase, Lyndon
Southern, and another allegedly related insurance company in the Circuit Court of
Etowah County. (Doc. 1-1). Chase and Lyndon Southern removed the action to
this court on the basis of diversity jurisdiction.
(Doc. 1).
The Thompsons’
complaint asserts a single claim against Chase for tortious interference with a
contractual relationship. (Doc. 1-1at 10-11).
III.
DISCUSSION
The Thompsons allege that Chase negligently, wantonly, or intentionally
interfered with their contractual rights under the Lyndon Southern insurance
policy.
(Doc. 1-1 at 10-11).
Chase contends that the Thompsons’ tortious
interference claim fails as a matter of law and should be dismissed. (Doc. 24 at 69). For the reasons discussed below, the court agrees.
To establish a claim for tortious interference, a plaintiff must prove: “‘1) the
existence of a contract or business relation; 2) the defendant’s knowledge of the
contract or business relation; 3) intentional interference by the defendant with the
contract or business relation; 4) the absence of justification for the defendant’s
4
interference; and 5) damage to the plaintiff as a result of the interference.’”
McFarlin v. Conseco Serv., LLC, 381 F.3d 1251, 1261 (11th Cir. 2004) (quoting
Ex parte Awtrey Realty Co., 827 So. 2d 104, 108-09 (Ala. 2001)). In addition to
these elements, the defendant must be “a ‘third party,’ i.e., a ‘stranger’ to the
contract with which the defendant allegedly interfered.” Id. (quoting BellSouth
Mobility, Inc. v. Cellulink, Inc., 814 So. 2d 203, 212 (Ala. 2001)); see also Waddell
& Reed, Inc. v. United Investors Life Ins. Co., 875 So. 2d 1143, 1154 (Ala. 2003)
(“Clearly, a party to a contract or business relationship cannot be liable for tortious
interference with that contract or business relationship.”) (citation omitted). A
defendant “is not a stranger to a contract just because [he] is not a party to the
contract.” Parsons v. Aaron, 849 So. 2d 932, 946 (Ala. 2002) (quotation and
emphasis omitted).
Instead, “‘a defendant is a party in interest to a business or
contractual relationship if the defendant has any beneficial or economic interest in,
or control over, that relationship.’” Tom’s Foods, Inc. v. Carn, 896 So. 2d 443,
454 (Ala. 2004) (quoting Waddell & Reed, Inc., 875 So. 2d at 1154 (alterations in
original omitted).
Chase argues that the Thompsons’ tortious interference claim fails because,
as an additional insured, it is not a stranger to the insurance policy. (Doc. 24 at 8;
Doc. 30 at 4). Indeed, the Thompsons allege that their loan with Chase required
them to name Chase an additional loss payee on the insurance policy and that the
5
Lyndon Southern policy names Chase an additional loss payee. (Doc. 1-1 at ¶¶ 9,
14). The policy’s declaration page confirms that Chase is an additional insured
under the policy. (Doc. 2-2 at 3).
As an additional insured, Chase has a direct,
legitimate economic interest in the Lyndon Southern insurance policy.
See
Standard Fire Ins. Co. v. Knowles, 129 F. Supp. 3d 1271, 1292 (N.D. Ala. 2015)
(“A lienholder who is named as a loss payee on an insurance policy is entitled to
the insurance proceeds to the extent of the amount of his debt . . . .”). Thus, Chase
is not a stranger to the insurance policy, and, as a matter of law, it cannot be liable
to the Thompsons for interfering with the policy. See Waddell & Reed, 875 So. 2d
at 1153-57.
The Thompsons do not respond directly to Chase’s argument that their
tortious interference claim fails because it is not a stranger to the insurance policy.
(See Doc. 28). Rather, in their opposition to Chase’s motion, the Thompsons argue
that Lyndon Southern and Chase conspired to settle the loss without the
Thompsons’ consent for less than the fair market value of their car at the time of
the fire. (Id. at 3-5). That argument does not save their claim against Chase,
however, because the Thompsons asserted a tortious interference claim against
Chase and not a conspiracy claim. (See Doc. 1-1).
The Thompsons also argue that they should be allowed to conduct discovery
before the court rules on Chase’s pending motion. (Doc. 28 at 2, 6). But, the
6
motion for judgment on the pleadings tests only the sufficiency of the pleadings.
(See Docs. 23 & 24). Chase attached the declaration page from the Lyndon
Southern insurance policy and the retail installment contract (“RIC”) that
memorialized its loan to the Thompsons to its answer, and Chase refers to those
documents in its brief in support of its motion. (See Docs. 2 and 24). The loan and
insurance policy are central to the Thompsons’ claims, and the authenticity of the
documents attached to Chase’s answer is not in dispute. (See Docs. 1-1 and 28).
Accordingly, the court may consider those documents when ruling on Chase’s
motion for judgment on the pleadings without treating it as a motion for summary
judgment under Rule 56. See Fed. R. Civ. P. 12(d); Horsley v. Feldt, 304 F.3d
1125, 1134 (11th Cir. 2002) (citations omitted). Thus, the court does not need to
allow the Thompsons to conduct discovery before ruling on Chase’s motion.
Chase is an additional insured under the Lyndon Southern insurance policy.
(Doc. 1-1 at ¶ 14). Therefore, Chase is not a stranger to the policy and cannot be
liable for tortious interference with the insurance policy. See Waddell & Reed, 875
So. 2d at 1154. As a result, the Thompsons’ claim against Chase fails as a matter
of law, and Chase is entitled to a judgment on the pleadings.
IV.
CONCLUSION
The court GRANTS Chase’s motion for judgment on the pleadings. (Doc.
23). The Thompsons’ claim against Chase for negligent, wanton, or intentional
7
interference with a contractual relationship is DISMISSED WITH PREJUDICE,
and Chase is dismissed as a defendant in this action. The court DENIES Chase’s
motion to stay, (Doc. 40), as MOOT.
DONE and ORDERED this August 28, 2018.
_________________________________
ANNEMARIE CARNEY AXON
UNITED STATES DISTRICT JUDGE
8
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?