Hiscox Dedicated Corporate Member, Ltd. v. Matrix Group Limited, Inc. et al
Filing
221
ORDER granting 142 Plaintiff Hiscox's Motion for Partial Summary Judgment. Signed by Judge Virginia M. Hernandez Covington on 8/2/2011. (CR)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
HISCOX DEDICATED CORPORATE
MEMBER, LTD.,
Plaintiff,
v.
CASE NO:
8:09-cv-2645-T-33AEP
MATRIX GROUP LIMITED, INC.
and LOUIS ORLOFF,
Defendants.
_______________________________/
ORDER
This cause comes before the Court pursuant to Plaintiff
Hiscox's Motion for Partial Summary Judgment (Doc. # 142).
Defendants filed a Response in opposition thereto (Doc. #
161).
For the reasons that follow, the Court finds that the
motion is due to be granted.
Hiscox seeks a judgment that, as a matter of law, it was
obligated to pay insurance proceeds to Defendants' mortgagee,
Superior Bank (the "Mortgagee") and that Hiscox has a legal
right to recover from Defendants the insurance proceeds paid
to the Mortgagee,1 assuming a jury's verdict in Hiscox's favor
as to coverage, or lack thereof, under the insurance policy
(the "Policy").
1
The undisputed record establishes that Hiscox paid the
Mortgagee a net amount of $447,330.51.
I.
Legal Standard
Summary judgment is appropriate if the pleadings, the
discovery and disclosure materials on file, and any affidavits
show that there is no genuine issue as to any material fact
and that the movant is entitled to judgment as a matter of
law. Fed. R. Civ. P. 56(a).
An issue is genuine if the evidence is such that a
reasonable jury could return a verdict for the nonmoving
party.
Mize v. Jefferson City Bd. of Educ., 93 F.3d 739, 742
(11th Cir. 1996) (citing Hairston v. Gainesville Sun Publ’g
Co., 9 F.3d 913, 918 (11th Cir. 1993)).
A fact is material if
it may affect the outcome of the suit under the governing law.
Allen v. Tyson Foods, Inc., 121 F.3d 642, 646 (11th Cir.
1997).
The Court must draw all inferences from the evidence in
the light most favorable to the non-movant and resolve all
reasonable doubts in that party's favor.
461 F.3d 1315, 1320 (11th Cir. 2006).
See Porter v. Ray,
The moving party bears
the initial burden of showing the Court, by reference to
materials
on
file,
that
there
are
no
genuine
material fact that should be decided at trial.
issues
See id.
of
When
a moving party has discharged its burden, the non-moving party
2
must then go beyond the pleadings, and by its own affidavits,
or by depositions, answers to interrogatories, and admissions
on file, designate specific facts showing there is a genuine
issue for trial.
II.
See id.
Analysis
This motion requires the Court to construe the mortgage
loss payable clause in the insurance policy issued by Hiscox
to Defendants and naming Superior Bank as the mortgagee/loss
payee.
In doing so, the Court applies the "general rule that
contracts prepared by an insurance company are to be construed
against the insurer, and where two interpretations of policy
language can fairly be made, the one allowing the greatest
coverage to the insured will prevail."
Independent Fire Ins.
Co. v. NCNB Nat'l Bank of Fla., 517 So.2d 59, 63 (Fla. 1st DCA
1987).
F.
The clause at issue provides:
Additional Conditions
***
2. Mortgageholders
***
b.
We will pay for covered loss of or damage
to buildings or structures to each
mortgageholder shown in the Declarations
in
their
order
of
precedence,
as
interests may appear.
***
d.
If we deny your claim because of your
acts or because you have failed to comply
with the terms of this Coverage Part, the
mortgageholder will still have the right
to
receive
loss
payment
if
the
3
e.
mortgageholder:
(1) Pays any premium due under this
Coverage Part at our request if you
have failed to do so;
(2) Submits a signed, sworn proof of
loss within 60 days after receiving
notice from us of your failure to do
so; and
(3) Has notified us of any change in
ownership, occupancy or substantial
change
in
risk
known
to
the
mortgageholder.
If we pay the mortgageholder for any loss
or damage and deny payment to you because
of your acts or because you have failed
to comply with the terms of this Coverage
Part:
(1) The mortgageholder's rights under
the mortgage will be transferred to
us to the extent of the amount we
pay; and
(2) The
mortgageholder's
right
to
recover the full amount of the
mortgageholder's claim will not be
impaired.
Doc. # 142, Exh. A, CP 00 10 04 02, ¶ F.2.b, d & e.
A.
Hiscox's Obligation to Pay the Mortgagee
A loss payable clause is a method by which a mortgagee or
lienholder
protects
its
property
interest.
There
are
generally two types of loss payable clauses: (1) an open loss
payable clause, and (2) a union, standard or New York clause.
Progressive Am. Ins. Co. v. Florida Bank at Daytona Beach, 452
So.2d 42, 44 (Fla. 5th DCA 1984).
In an open loss payable
clause, the mortgagee stands in the mortgagor/insured's place
and is subject to the same defenses as may be used against the
4
mortgagor/insured.
Id.
The clause states that the mortgagee
is paid "as its interest shall appear."
On the other hand, a
union, standard or New York clause provides language to the
effect that the mortgagor/insured's acts or neglect will not
invalidate
the
if
the
due,
the
lienholder/mortgagee shall on demand pay the premiums.
Id.;
mortgagor/insured
insurance,
provided
fails
pay
to
that
premiums
see, e.g., Independent Fire Ins. Co., 517 So.2d at 61 n.1.
The Court finds that the loss payable clause in the case
at bar falls into the union, standard or New York category.
See Secured Realty Inv. Fund, Ltd, III v. Highlands Ins. Co.,
678 So.2d 852, 855 (Fla. 3d DCA 1996).
The loss payable
clause
a
provides
that
even
if
there
is
denial
of
the
mortgagor/insured's claim, "the mortgageholder will still have
the right to receive loss payment if the mortgageholder"
complies with the listed conditions. One of these is that the
mortgagee pay any premium due at the request of the insurer if
the mortgagor/insured fails to pay the same.2
In return for
incurring premium liability, the lienholder/mortgagee is freed
from the policy defenses that the insurer might have against
2
The fact that the premium for this Policy was paid by
the mortgagor/insured up front does not affect the Court's
analysis as to the type of clause contained within the Policy.
5
the owner/mortgagor.
Progressive Am. Ins. Co., 452 So.2d at
44.
Hiscox, as a matter of law, had a separate contractual
obligation to pay the insurance proceeds to the Mortgagee so
long as the Mortgagee complied with the terms of the loss
payable clause.
Specifically, the Mortgagee was entitled to
payment so long as the Mortgagee paid any premium due upon
request, submitted a Sworn State in Proof of Loss and notified
Hiscox of any change in ownership.
Defendants argue that Hiscox failed to offer evidence
that the three conditions in the loss payable clause occurred.
More accurately, Defendants argue that because the conditions
listed
never
arose,
Hiscox's
obligation
to
pay
off
the
Mortgageholder never arose, and, therefore, Hiscox's payment
to
the
Mortgageholder
does
not
implicate
or
obligate
Defendants. This Court finds the argument to be without merit
and
notes
Defendants'
failure
to
cite
any
case
law
specifically on-point. Defendants argue that because the loss
payable clause could be read to require the Mortgageholder to
actually pay some of the premium in order to activate the
clause (which did not occur in this case), the Court should
find the loss payable clause to be ambiguous.
The Court
declines Defendants' invitation to find the clause ambiguous
6
and notes that even if the clause were ambiguous, the case law
is clear that "where two interpretations of policy language
can fairly be made, the one allowing the greatest coverage to
the insured will prevail."
So.2d at 63.
Independent Fire Ins. Co., 517
As such, the interpretation urged by Defendants
would, in fact, result in less coverage under the Policy, not
the greatest coverage.
The Court finds that there are no genuine issues of
material fact regarding the Mortgagee's compliance with its
obligations under the Policy, and partial summary judgment is
due to be granted that Hiscox was obligated to pay insurance
proceeds to the Mortgagee under the Policy.
B.
Hiscox's Right to Recover Insurance Proceeds from
Defendants
Subject
to
the
Jury's
Verdict
on
Coverage
Defendants
concede
that
"[t]echnically,
plaintiff
essentially would have the right to step into the shoes of the
mortgage holder" and seek reimbursement from Defendants of the
insurance proceeds paid to the Mortgagee under the Policy in
the
event
that
Defendants'
claim
was
denied
based
on
Defendants' acts or because Defendants failed to comply with
the terms of the Coverage Part of the Policy.
6 n.2.
Doc. # 161, p.
Defendants, however, argue that a genuine issue of
7
material fact exists that precludes summary judgment on a
determination
of
Hiscox's
legal
right
to
recover
those
proceeds from Defendants; i.e., the validity of Hiscox's
denial of Defendants' claims under the Policy.
Specifically,
Defendants argue that the Court cannot rule in favor of Hiscox
on this motion without a jury first finding that Hiscox
properly denied Defendants' claims on the basis of Defendants'
acts or failure to comply with the terms of the Coverage Part
of the Policy.
The Court finds Defendants' argument to be
without merit and notes that Defendants cited no authority in
support of this argument.
The Court can find as a matter of
law that Hiscox has a legal right to recover insurance
proceeds from Defendants in the event that the jury renders a
verdict in favor of Hiscox on coverage.
III. Conclusion
Accordingly, the Court finds that Hiscox was obligated to
pay insurance proceeds to the Mortgagee and that if Hiscox
demonstrates to the satisfaction of the trier of fact that
Defendants violated the terms of the Policy, then the rights
of the Mortgagee transfer to Hiscox, and Hiscox is entitled to
seek repayment from the Defendants of the insurance proceeds
paid to the Mortgagee.
8
Accordingly, it is
ORDERED, ADJUDGED, and DECREED:
Plaintiff Hiscox's Motion for Partial Summary Judgment
(Doc. # 142) is GRANTED.
DONE and ORDERED in Chambers in Tampa, Florida, this 2nd
day of August, 2011.
9
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