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