Conyers et al v. Balboa Insurance Company
Filing
34
ORDER granting in part and denying in part 27 Defendant's Motion for Summary Judgment. The Court grants the Motion as to Plaintiffs' entitlement to attorney's fees. The Motion is otherwise denied. Signed by Judge Virginia M. Hernandez Covington on 3/26/2013. (CH)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
CHRIS CONYERS and
BRANDI CONYERS,
Plaintiffs,
v.
Case No. 8:12-cv-30-T-33EAJ
BALBOA INSURANCE COMPANY,
Defendant.
_____________________________/
ORDER
This cause comes before the Court in consideration of
Defendant
Balboa
Judgment
(Doc.
Insurance
#
27),
Company’s
filed
on
Motion
November
for
30,
Summary
2012.
Plaintiffs Chris and Brandi Conyers filed a response in
opposition to the Motion (Doc. # 29) on December 7, 2012.
Balboa filed a reply, with leave of Court, on December 14,
2012. (Doc. # 32). For the reasons that follow, the Motion
is granted in part and denied in part.
I.
Background
The Conyers bring this insurance action against Balboa
Insurance
Company
to
recover
for
damage
caused
Conyers’ property by alleged sinkhole activity.
at 2).
to
the
(Doc. # 17
At the time of the damage, the subject property was
secured by a mortgage serviced by BAC Home Loan Servicing,
LLC.
(Mortg. Doc. # 27-1 at 1; Aff. Doc. # 27-8 at 1-2).
As part of the mortgage agreement, the Conyers agreed to
maintain
hazard
required by BAC.
insurance
on
the
subject
property
(Mortg. Doc. # 27-1 at 8).
as
However, at
some point, the Conyers failed to maintain the required
hazard insurance, and BAC consequently purchased a lenderplaced insurance policy at the Conyers’ expense.
Notice Doc. # 27-2 at 2).
(Coverage
That policy refers to BAC as the
named insured and refers to the Conyers as the “borrower.”
(Id. at 5; Insuring Agreement Doc. # 27-4 at 13).
The
“Loss Payment” section of the relevant policy provides as
follows:
13. Loss Payment. WE will adjust each LOSS with
YOU and will pay YOU.
If the amount of LOSS
exceeds YOUR insurable interest, the BORROWER may
be entitled, as a simple loss payee only, to
receive payment for any residual amount due for
the LOSS, not exceeding the lesser of the
applicable Limit of Liability indicated on the
NOTICE OF INSURANCE and the BORROWER’s insurable
interest in the damaged or destroyed property on
the DATE OF LOSS. Other than the potential right
to receive such payment, the BORROWER has no
rights under the Residential Property Form.
(Insuring Agreement Doc. # 27-4 at 13).
Underlying
foreclosure
this
action.
insurance
In
dispute
October
of
is
2009,
a
due
mortgage
to
the
Conyers’ failure to make their required mortgage payments,
2
BAC
initiated
property.
September
foreclosure
(Polk
24,
Cnty.
2010,
proceedings
Docket
the
Doc.
Circuit
#
Court
on
the
27-3
at
for
Polk
Conyers’
1).
On
County,
Florida, entered a summary final judgment of foreclosure
against the Conyers.
(Foreclosure Judgment Doc. # 27-5).
Amid the foreclosure proceedings, in February of 2010,
the Conyers notified Balboa of the loss they incurred as a
result of the alleged sinkhole activity (Doc. # 17 at 2;
Doc. # 27 at 3), and Balboa ultimately denied the Conyers’
claim (Doc. # 27 at 3; Doc. # 29 at 2).
consequently
initiated
the
instant
action
The Conyers
in
October
of
2011 in Polk County Circuit Court, asserting “third-party
beneficiary
standing
[insurance] policy.”
to
enforce
the
provisions
of
the
(Doc. # 1 at 1; Doc. # 17 at 3).
Balboa filed a notice of removal in this Court on January
6, 2012.
(Doc. # 1).
On November 30, 2012, Balboa filed the instant Motion
for
Summary
Judgment,
arguing
that
(1)
due
to
the
foreclosure process, the Conyers “have been divested of all
interest in the subject property” (Doc. # 27 at 6); (2) the
Conyers
“are
not
a
named
insured
or
additional
insured
under the Balboa policy” Id. at 10; (3) the Conyers “have
no residual available to them as the borrower under the
3
subject policy” Id.; and (4) the Conyers are not entitled
to attorney’s fees under Section 627.428, Florida Statutes.
Id.
II.
Legal Standard
Summary judgment is appropriate “if the movant shows
that there is no genuine dispute as to any material fact
and the movant is entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56(a).
enough
to
defeat
a
A factual dispute alone is not
properly
pled
motion
for
summary
judgment; only the existence of a genuine issue of material
fact will preclude a grant of summary judgment.
Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986).
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 moving party bears the initial
burden of showing the court, by reference to materials on
file, that there are no genuine issues of material fact
that
should
be
decided
at
trial.
4
Hickson
Corp.
v.
N.
Crossarm Co., Inc., 357 F.3d 1256, 1260 (11th Cir. 2004)
(citing
Celotex
(1986)).
Corp.
v.
Catrett,
477
U.S.
317,
323
“When a moving party has discharged its burden,
the non-moving party 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 that there is a genuine issue for
trial.”
Jeffery v. Sarasota White Sox, Inc., 64 F.3d 590,
593-94 (11th Cir. 1995) (citing Celotex, 477 U.S. at 324).
If
there
is
a
conflict
between
the
parties’
allegations or evidence, the non-moving party’s evidence is
presumed to be true and all reasonable inferences must be
drawn in the non-moving party’s favor.
Shotz v. City of
Plantation, Fla., 344 F.3d 1161, 1164 (11th Cir. 2003).
If
a reasonable fact finder evaluating the evidence could draw
more
than
one
inference
from
the
facts,
and
if
that
inference introduces a genuine issue of material fact, the
court should not grant summary judgment.
Samples ex rel.
Samples v. City of Atlanta, 846 F.2d 1328, 1330 (11th Cir.
1988) (citing Augusta Iron & Steel Works, Inc. v. Employers
Ins.
of
Wausau,
835
F.2d
855,
856
(11th
Cir.
1988)).
However, if the non-movant’s response consists of nothing
“more than a repetition of his conclusional allegations,”
5
summary judgment is not only proper, but required.
v.
Ross,
663
F.2d
1032,
1034
(11th
Cir.
Morris
1981),
cert.
denied, 456 U.S. 1010 (1982).
III. Discussion
A.
Plaintiffs’ Remaining Interest after Foreclosure
Section 627.405, Florida Statutes, provides the basis
for standing to sue under an insurance contract, to wit:
(1) No contract of insurance of property or of
any interest in property or arising from property
shall be enforceable as to the insurance except
for the benefit of persons having an insurable
interest in the things insured as at the time of
the loss.
(2) “Insurable interest” as used in this section
means
any
actual,
lawful,
and
substantial
economic interest in the safety or preservation
of the subject of the insurance free from loss,
destruction, or pecuniary damage or impairment.
(3) The measure of an insurable interest in
property is the extent to which the insured might
be damnified by loss, injury, or impairment
thereof.
Fla. Stat. § 627.405 (emphasis added).
In Florida, an insurable interest is not determined by
the concept of title, but rather whether the insured has a
substantial
Baltazar
v.
economic
Balboa,
interest
No.
in
the
property.
8:10-cv-2932-T-33MAP,
2011
See
WL
2217332, at *2 (M.D. Fla. June 7, 2011) (citing Aetna Ins.
Co. v. King, 265 So. 2d 716, 718 (Fla. 1st DCA 1972)).
6
In
the
instant
property
at
case,
the
the
time
Conyers
of
the
were
loss
the
and
owners
of
therefore
the
had
an
actual, lawful, and substantial economic interest in the
safety or preservation of the subject property.
Therefore,
as defined by Section 627.405, the Conyers have standing to
bring this action as third-party beneficiaries.
In
that,
the
due
to
Motion
the
for
final
Summary
judgment
Judgment,
of
Balboa
foreclosure
argues
entered
against the Conyers in September of 2010, “Plaintiffs have
been divested of all interest in the subject property . . .
and this Court cannot provide Plaintiffs with the relief
prayed for in the Amended Complaint.”
(Doc. # 27 at 9-10).
This argument is unsupported by Florida law.
In Florida, as explained above, a party’s insurable
interest relates to its actual economic interest in the
subject
property
at
the
time
of
the
loss.
Subsequent
foreclosure proceedings do not extinguish such an interest
unless the underlying debt was discharged in full.
See In
re Cayer, 150 B.R. 829, 831 (Bankr. M.D. Fla. 1993) (“‘The
right to receive the insurance proceeds was fixed at the
time of the loss, and subsequent foreclosure proceedings
could
not
evidenced
have
by
extinguished
the
note
this
and
right
mortgage
7
unless
was
the
debt
discharged
in
full.’”) (quoting Sea Isle Corp. v. Hochberg, 198 So. 2d
336, 337 (Fla. 3d DCA 1967)).
Balboa’s evidence demonstrates that, upon the final
judgment of foreclosure, the Conyers owed the mortgagee a
total of $121,410.50. (Foreclosure Judgment Doc. # 27-5 at
2).
Even assuming, as the Conyers claim, that the total
amount
of
the
proceeds
from
the
judicial
sale
of
the
property were applied to reduce this debt (Doc. # 29 at 8),
the
Conyers
still
owe
the
mortgagee
$106,410.50.
As
explained in In re Cayer, a mortgagee’s right to receive
insurance proceeds is fixed at the time of the loss and
subsequent foreclosure proceedings do not extinguish this
right unless the mortgage debt is discharged in full.
B.R. at 831.
150
Additionally, as provided by Section 627.405,
the Conyers have standing to enforce Balboa’s promise to
pay the mortgagee the extent of its loss in the subject
property.
This Court finds no authority indicating that
either the Conyers’ insurable interest or the mortgagee’s
right to receive insurance proceeds has been extinguished
by the subsequent foreclosure proceedings.1
Thus, Balboa is
not entitled to summary judgment on this issue.
1
Balboa acknowledges that the question of “whether a
(former) owner of property is divested of all interests,
8
B.
Named Insured
Balboa
next
argues
that
summary
judgment
is
appropriate because the Conyers are not “named insureds”
under the lender-placed insurance policy.
10).
This argument is unconvincing.
(Doc. # 27 at
Under Florida law, an
insurance company’s promise to pay the extent of a loss may
be
enforced
by
a
third-party
beneficiary
possesses no policy in his name.
even
if
he
Schlehuber v. Norfolk &
Dedham Mut. Fire Ins. Co., 281 So. 2d 373, 375 (Fla. 3d DCA
1973); see also Fawkes v. Balboa Ins. Co., No. 8:10-cv2844-T-30TGW, 2012 WL 527168, at *3 (M.D. Fla. Feb. 17,
2012); Kelly v. Balboa Insurance Co., 8:11-cv-450-T-35MAP,
2012 WL 4761905, at *3 (M.D. Fla. May 29, 2012).
In Fawkes, the mortgage lender similarly obtained a
lender-placed insurance policy after the plaintiff stopped
making
mortgage
payments
and
failed
insurance on the subject property.
The
court
in
that
case
to
maintain
hazard
2012 WL 527168, at *1.
explained
that,
although
the
plaintiff was neither a named insured nor an additional
insured, the plaintiff nonetheless had standing to pursue
including any insurable interests, upon entry of a final
judgment of foreclosure, followed by a sale and issues of
the certificates of sale and title,” appears to be one of
first impression in the state of Florida. (Doc. # 32 at 3).
9
her
claim
against
the
defendant
third-party beneficiary.
insurance
Id. at *3.
company
as
a
In the instant case,
the Court finds that the Conyers likewise have standing and
may proceed against Balboa as third-party beneficiaries.
C.
Residual Amounts Lacking
Balboa next argues that “[u]nder Florida law, when a
named insured’s insurable
interest exhausts the coverage
available under a lender-placed insurance policy, there are
no residual amounts of insurance available to a borrower
for its ‘insurable interest’ in the things insured.”
# 27 at 11).
(Doc.
Balboa relies on Aldridge v. Peak Property
and Casualty Insurance Corp., 873 So. 2d 499 (Fla. 2d DCA
2004), for this principle.
The
Court
present case.
assert
a
finds
this
argument
inapplicable
to
the
In Aldridge, the mortgagors attempted to
first-party
claim
against
an
under a lender-placed insurance policy.
insurance
company
Id. at 499-500.
The Aldridge court found that “the relief sought –- the
payment
of
proceeds
to
the
[mortgagors]
–-
would
be
directly in derogation of the undisputed rights of [the
mortgagee
bank,
which
insurance policy.”
was
the
named
Id. at 500.
insured]
under
the
Furthermore, the court
emphasized that “at no point have [the mortgagors] asserted
10
a third-party beneficiary claim.”
case,
the
Complaint
standing
Conyers
their
to
specifically
reliance
enforce
upon
the
Id.
asserted
in
“third-party
provisions
insurance on the property.”
In the instant
of
the
Amended
beneficiary
the
policy
(Doc. # 17 at 3).
of
Thus,
“focusing on . . . whether residual amounts of insurance
are available to Plaintiff[s] is irrelevant at this point
because Plaintiff[s], as . . . third-party beneficiar[ies]
of the subject policy, [are] entitled to pursue a claim
against Defendant for the [cost of] repairs to the subject
property” in light of the mortgagee’s failure to pursue a
claim
as
the
named
insured
under
the
subject
policy.
Fawkes, 2012 WL 527168, at *4.
D.
Attorney’s Fees
Finally,
Balboa
entitled
to
627.428,
Florida
argues
attorney’s
fees
Statutes.
that
and
(Doc.
the
Conyers
costs
#
27
are
under
at
Section
13).
section provides, in relevant part:
Upon the rendition of a judgment or decree by any
of the courts of this state against an insurer
and in favor of any named or omnibus insured or
the named beneficiary under a policy or contract
executed by the insurer, the trial court or, in
the event of an appeal in which the insured or
beneficiary prevails, the appellate court shall
adjudge or decree against the insurer and in
favor of the insured or beneficiary a reasonable
11
not
That
sum as fees or compensation for the insured’s or
beneficiary’s attorney prosecuting the suit in
which the recovery is had.
Fla. Stat. § 627.428.
“Section 627.428 must be strictly construed because an
award of attorney’s fees is in derogation of common law.”
Pepper’s Steel & Alloys, Inc. v. United States, 850 So. 2d
462,
465
2003).
insured,
omnibus
(Fla.
a
Thus,
named
only
a
named
beneficiary,
insured,
or
an
an
express
assignee of an insured’s contractual insurance rights may
receive an award of attorney’s fees under the statute.
See
Continental Cas. Co. v. Ryan Inc. E., 974 So. 2d 368, 377
(Fla.
2008)
insured’s
the
(“[O]nly
estate,
policy,
and
the
named
specifically
other
third
or
omnibus
named
parties
insured,
beneficiaries
who
claim
the
under
policy
coverage through an assignment are entitled to an award of
fees under section 627.428.”).
Rather than directly asserting their eligibility for
an award of fees under the statute, the Conyers instead
contend that “the issue of attorney’s fees is not ripe for
determination.”
(Doc. # 29 at 10).
In so arguing, the
Conyers cite to the Fawkes decision, which declined to rule
on
the
issue
of
entitlement
summary judgment stage.
to
attorney’s
fees
2012 WL 527168, at *5.
12
at
the
The Fawkes
court reasoned that, “although this issue appears to be a
matter of first impression, the Court did locate a few
Florida cases holding that a loss-payable mortgagee under
an
insurance
policy
is
Section 627.428(1).”
deemed
Id.
‘an
insured’
pursuant
to
(internal quotations omitted).
The court thus found that “at [the summary judgment] stage,
and on this limited record, the Court cannot conclude, as a
matter of law, that Plaintiff could not be considered an
‘insured’ under section 627.428(1).”
Id.
Since the Fawkes decision, however, at least one case
in this district has declined to award attorney’s fees to a
third-party beneficiary plaintiff seeking to enforce the
promise of an insurance company to pay a mortgagee the
extent
of
a
loss
suffered
while
the
plaintiff
insurable interest in the subject property.
had
an
In that case,
Kelly v. Balboa Insurance Co., 2012 WL 4761905, the court
granted the defendant’s motion for summary judgment as to
the plaintiff’s entitlement to attorney’s fees, reasoning
that “[a] third-party beneficiary is not included among the
categories of persons authorized under section 627.428 to
receive an award of attorney’s fees.”
Id. at *4.
In an effort to reconcile these cases, the Court looks
to State Farm Fire & Cas. Co. v. Kambara, 667 So. 2d 831,
13
833 (Fla. 4th DCA 1996), the case which the Fawkes court
cited for the proposition that “under Florida law, a party
can be a third-party beneficiary for purposes of standing
and an ‘omnibus insured’ for purposes of entitlement to
attorney’s fees under section 627.428(1).”
Fawkes, 2012 WL
527168, at *5.
The Kambara decision explained that “[t]he
difference
in
the
insurance
policy
way
benefits
are
is
significant
derived
for
from
purposes
an
of
establishing who is and who is not an omnibus insured . . .
.”
667 So. 2d at 834.
In Kambara, the appellee “was forced to litigate his
entitlement to receive medical payments coverage under a
premises liability policy.”
Id. at 831.
The court found
that because the appellee
“received first-party benefits
under
of
an
omnibus
clause
an
insurance
policy,”
he
constituted an omnibus insured and was therefore entitled
to statutory attorney’s fees.
Id. at 831-32.
The medical
payments coverage portion of the premises liability policy
provided as follows:
We will pay medical expenses for bodily injury
caused by an accident on your premises you own or
rent, on ways next to the premises you own or
rent, or because of your operations.
The
accident
must
take
place
in
the
coverage
territory during the policy period.
14
Id.
at
832.
The
Kambara
court
thus
reasoned
that,
“[b]ecause the medical payments in this case are to be paid
directly to a party injured on the premises of the named
insured, without regard to the named insured’s liability,
we believe that a medical payments claimant can be defined
as
an
insured
under
the
policy
to
whom
benefits
flow
directly under the terms of the policy,” and, accordingly,
found
that
such
an
individual
would
be
entitled
attorney’s fees under Section 627.428(1).
to
Id. at 833-34
(internal quotations omitted).
Additionally,
the
Kambara
court
distinguished
the
injured party’s case from a theoretical scenario involving
a
third-party
beneficiary
where
“the
benefits
inure
directly to the tortfeasor who is the insured [and] [t]he
benefits flow to the injured person only if that person
successfully establishes liability against the tortfeasor.”
Id. at 834.
According to Kambara, the difference in the
way these benefits are derived from the insurance policy is
crucial in determining whether an individual is an omnibus
insured rather than a third-party beneficiary.
Id.
In analogizing Kambara to the instant case, the Court
finds that, although the Conyers indeed have standing as
third-party
beneficiaries
to
15
bring
this
action,
their
third-party
attorney’s
beneficiary
fees
status
under
does
Section
not
entitle
627.428.
The
them
to
insuring
agreement in this case does not provide the Conyers with
the direct benefit of coverage, but rather prevents BAC
from receiving a windfall in the event that an insurance
recovery by BAC exceeds the total amount of BAC’s insurable
interest in the subject property.
#
27-4
at
13).
The
(Insuring Agreement Doc.
insuring
agreement
contains
no
provision that might be considered the equivalent of the
medical payments coverage provision in Kambara.
the
residual
section,
the
amounts
policy
mentioned
does
not
in
appear
direct payment to the borrower.
the
to
Other than
“Loss
Payment”
contemplate
any
Accordingly, the Court
finds that the Conyers are not entitled to attorney’s fees
under Section 627.428.
Accordingly, it is
ORDERED, ADJUDGED, and DECREED:
Defendant
Balboa
Insurance
Company’s
Motion
for
Summary Judgment (Doc. # 27) is GRANTED in part and DENIED
in part.
The Court GRANTS the Motion as to Plaintiffs’
entitlement to attorney’s fees.
DENIED.
16
The Motion is otherwise
DONE and ORDERED in Chambers in Tampa, Florida, this
26th day of March, 2013.
Copies: All Counsel of Record
17
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