Impac Funding Corporation v. Amica Mutual Insurance Company et al

Filing 20

ORDER denying Defendant Amica Mutual Insurance Company's #19 Motion to Dismiss and Request for Oral Argument [1-9]. Plaintiff Impac Funding Corporation, as Master Servicer for Impac CMB Trust Series 2005-4's, Request for Oral Argument #12 is DENIED. Signed by Judge Richard W. Story on 3/18/13. (cem)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
IMPAC FUNDING
CORPORATION, AS MASTER
SERVICER FOR IMPAC CMB
TRUST SERIES 2005-4,
Plaintiff,
v.
AMICA MUTUAL INSURANCE
COMPANY,
Defendant.

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CIVIL ACTION NO.
1:12-CV-873-RWS

ORDER

This case comes before the Court on Defendant’s Motion to Dismiss [19]
and Request for Oral Argument [1-9] and Plaintiff’s Request for Oral Argument
[12]. After reviewing the record, the Court enters the following Order.
Background1
This case involves a dispute over the payment of insurance proceeds. In
or around 2005, Lynn Christopher (“Christopher”) obtained a loan (the “Loan”)
1

Because the case is before the court on a motion to dismiss, the Court accepts
as true the facts alleged in the Complaint. Bryant v. Avado Brands, Inc., 187 F.3d
1271, 1273 n.1 (11th Cir. 1999).

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in connection with the purchase of real property (the “Property”). (Compl.,
Dkt. [1-3] ¶ 4.) In connection with the Loan, Defendant Amica Mutual
Insurance Company (“Amica”) issued an insurance policy to Christopher
providing certain insurance coverage for the Property (the “Insurance Policy”).
(Id. ¶ 6.) The Loan was deposited into the Impac CMB Trust Series 2005-4 (the
“Trust”), for which Plaintiff Impac Funding Corporation (“Impac”) acts as
master servicer and GMAC Mortgage Corporation (“GMAC”) acts as subservicer. (Id. ¶ 7.) “As the holder of the Loan, the Trust has an interest in any
proceeds paid by Amica under the Insurance Policy, and Amica is obligated to
pay any such proceeds to, and for the benefit of, the Trust.” (Id. ¶ 8.)
“On or around January 3, 2008, the Property sustained certain losses
covered by the Insurance Policy (the ‘Covered Losses’).” (Id. ¶ 9.) Christopher
submitted a claim under the Insurance Policy to Amica, seeking to recover for
the Covered Losses. (Id. ¶ 10.) Amica issued two checks for the Covered
Losses, specifically:
(a)

check number 2197005 in the amount of $92,309.61 payable
to Disaster Restoration and Consultants and Lynn
Christopher and GMAC Mortgage Corporation, Its
Successors and/or Assigns and Countrywide Mortgage,
ISAOA as Mortgagees (the “First Check”); and
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(b)

check number 2237118 in the amount of $154,690.65
payable to Disaster Restoration and Consultants and Lynn
Christopher and GMAC Mortgage Corporation, ISAOA and
Countrywide Mortgage, ISAOA as Mortgagees (the “Second
Check,” and together with the First Check, the “Checks”).

(Id. ¶¶ 11-12.) The Proceeds of the Checks were intended to be used to make
repairs to the Property. (Id. ¶ 13.)
“Although the Checks bear the alleged endorsements of each of the
payees, neither GMAC nor anyone on behalf of the Trust received . . . or
endorsed either of the Checks.” (Id. ¶ 14.) Nor were the purported
endorsements made by an authorized representative of GMAC or the Trust. (Id.
¶ 15.) Similarly, “neither Christopher nor Countrywide Mortgage endorsed
either of the Checks, and the alleged endorsements of Christopher and
Countrywide Mortgage on the Checks were not authorized to be made by
Christopher and Countrywide Mortgage, respectively.” (Id. ¶ 16.) On the
contrary, “Disaster Restoration and Consultants obtained the Checks and forged
the endorsements of GMAC, Christopher, and Countrywide Mortgage . . . .”
(Id. ¶ 17.)
After forging these endorsements, Disaster Restoration and Consultants
presented the Checks to Branch Banking & Trust Company (“BB&T”) for
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payment. (Id. ¶ 18.) BB&T paid the entire proceeds of both Checks to Disaster
Restoration and Consultants, drawing on Amica’s account at Sovereign Bank.
(Id. ¶¶ 19-20.) Disaster Restoration and Consultants received the proceeds of
the Checks but did not perform repairs to the Property. (Id. ¶ 21.) “The Trust
has been injured by virtue of the failure to receive any insurance proceeds and
the fact that no repairs were undertaken at the Property.” (Id. ¶ 23.)
Based on the foregoing allegations, Impac filed suit against Amica,
raising claims for breach of contract (Count I) and enforcement of the checks
pursuant to O.C.G.A. § 11-3-309 (Count II). (See generally Compl., Dkt. [13].) Amica now moves to dismiss the Complaint on grounds that it fails to state
a claim for relief or, alternatively, is barred by the two-year contractual statute
of limitations to sue contained in the Insurance Policy. (See generally Amica’s
Mot. to Dismiss, Dkt. [19-1].) The Court sets out the legal standard governing
Amica’s motion before considering it on the merits.
Discussion
I.

Defendant’s Request for Oral Argument [1-9] and Plaintiff’s Request
for Oral Argument [12]

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The Court finds that oral argument is not necessary for the Court to
resolve Amica’s Motion to Dismiss. Accordingly, the parties’ requests for oral
argument are DENIED.
II.

Defendant’s Motion to Dismiss [19]
A.

Motion to Dismiss Legal Standard

Federal Rule of Civil Procedure 8(a)(2) requires that a pleading contain a
“short and plain statement of the claim showing that the pleader is entitled to
relief.” While this pleading standard does not require “detailed factual
allegations,” “labels and conclusions” or “a formulaic recitation of the elements
of a cause of action will not do.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). In order to
withstand a motion to dismiss, “a complaint must contain sufficient factual
matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”
Id. (quoting Twombly, 550 U.S. at 570). A complaint is plausible on its face
when the plaintiff pleads factual content necessary for the court to draw the
reasonable inference that the defendant is liable for the conduct alleged. Id.
At the motion to dismiss stage, “all-well pleaded facts are accepted as
true, and the reasonable inferences therefrom are construed in the light most
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favorable to the plaintiff.” Bryant v. Avado Brands, Inc., 187 F.3d 1271, 1273
n.1 (11th Cir. 1999). However, the same does not apply to legal conclusions set
forth in the complaint. Sinaltrainal v. Coca-Cola Co., 578 F.3d 1252, 1260
(11th Cir. 2009) (citing Iqbal, 556 U.S. at 678). “Threadbare recitals of the
elements of a cause of action, supported by mere conclusory statements, do not
suffice.” Iqbal, 556 U.S. at 678. Furthermore, the court does not “accept as
true a legal conclusion couched as a factual allegation.” Twombly, 550 U.S. at
555.
B.

Analysis

As stated in the Background section, supra, Amica advances two
arguments in support of its Motion to Dismiss. Amica first argues that the
Complaint fails to state a claim and, second, that the claims raised in the
Complaint are barred by the two-year contractual statute of limitations
contained in the Insurance Policy. The Court first addresses Amica’s statute of
limitations defense before turning to its contention that the Complaint fails to
state a claim.
1.

Statute of Limitations

The parties do not dispute that the Insurance Policy contains a two-year
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limitation period on filing suit against Amica under the Insurance Policy.
Amica contends that this contractual period of limitations began to run when the
insurance proceeds allegedly were disbursed improperly, which, in this case,
was on February 20, 2008 and March 25, 2008 (the dates the two Checks were
issued). (Amica’s Mot. to Dismiss, Dkt. [19-1] at 5 (citations omitted).) Thus,
Amica contends, the contractual period of limitations for claims arising out of
the two payments expired on February 20, 2010 and March 25, 2010,
respectively, making Impac’s Complaint—filed on February 10, 2012—timebarred by almost two years. (Id. at 5-6.)
Impac does not dispute the legal principles asserted by Amica but
contends that under the specific facts of this case, the two-year contractual
period of limitations does not apply. (Mem. of Law in Opp’n to [Amica’s
Motion to Dismiss]2 (“Impac’s Opp’n Br.”), Dkt. [9] at 10-19.) Specifically,
Impac argues that the statute of limitations was waived by Amica, and/or that

2

This brief is captioned “Memorandum of Law in Opposition to Defendants’
Motions to Dismiss” and was filed in opposition to Amica’s Motion to Dismiss and
former-Defendant BB&T’s motion to dismiss. BB&T subsequently was dismissed
from the suit by consent of the parties. (Consent Order of Dismissal with Prejudice,
Dkt. [17].)
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Amica should be equitably estopped from asserting it, and/or that the statute of
limitations should be equitably tolled. (Id.)
At this stage in the litigation, and in light of representations made by
Impac in its brief in opposition to the Motion to Dismiss, the Court finds that it
cannot rule as a matter of law that Plaintiff’s claims are barred by the
contractual statute of limitations. On the contrary, the Court finds that further
discovery is warranted on the issue of whether Amica waived the contractual
limitations period. The Court reaches this conclusion in light of Impac’s
representations, discussed below, that Amica led GMAC to believe that a
lawsuit was unnecessary.
Specifically, Impac makes the following representations. GMAC first
learned about the forged Checks on or about July 16, 2009, after which it
immediately contacted Amica to request a forgery affidavit and other
information. (Impac’s Opp’n Br., Dkt. [9] at 7 (citing GMAC Chronology, Dkt.
[10-1]).3) GMAC then spent the next eight months discussing and negotiating

3

Impac represents that GMAC had much of the relevant dealings with Amica.
(Impac’s Opp’n Br., Dkt. [9] at 3 n.1.) Impac further represents that GMAC is a
separate and distinct entity from Impac and that Impac, to date, has been able to obtain
only limited information from GMAC regarding its dealings with Amica. (Id.) The
information Impac has been able to obtain is set forth in a chronology created by or on
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the matter with Amica and BB&T in an effort to recover the proceeds of the
Checks. (Id. at 3, 7.) Impac contends that through “various misstatements and
misrepresentations made by Amica and BB&T, GMAC was falsely led to
believe that the Trust would in fact be reimbursed for its losses.” (Id. at 3
(citing GMAC Chronology, Dkt. [10-1] at 2-5).) For example, Impac states that
on January 6, 2010, Amica advised GMAC that affidavits of forgery had been
forwarded to BB&T and that BB&T was considering settling the claims. (Id. at
7 (citing GMAC Chronology, Dkt. [10-1] at 3).)
On February 23, 2010, Amica told GMAC for the first time that its claim
had been denied by Amica’s bank. (Id. at 8 (citing GMAC Chronology, Dkt.
[10-1] at 4).) The next day, GMAC discovered that neither Amica nor Amica’s
bank had ever contacted BB&T about the forged checks. (Id. (citing GMAC
Chronology, Dkt. [10-1] at 4-5).) On February 25, 2010, Amica notified
GMAC that the bank denied its claim on grounds that the statute of limitations

behalf of GMAC (the “GMAC Chronology”), which Impac presents in support of its
opposition to Amica’s motion. (Dkt. [10-1].) Impac contends, “Assuming, arguendo,
that the Court does not outright deny the [Motion to Dismiss], the fact that Impac has
only been able to obtain limited information demonstrates why the Court should deny
the [Motion] so that Impac can pursue party and non-party discovery in that regard.”
(Impac’s Opp’n Br., Dkt. [9] at 3 n.1.)
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had expired. (Id. (citing GMAC Chronology, Dkt. [10-1] at 5).) GMAC
subsequently learned that BB&T had requested an appraisal and percentage
interest worksheet from Amica but that Amica never provided those documents
to BB&T. (Id. (citing GMAC Chronology, Dkt. [10-1] at 5).) Discussions
regarding the Checks continued between Amica and/or BB&T and GMAC until
March 26, 2010. (Id. (citing GMAC Chronology, Dkt. [10-1] at 5).) Impac
filed suit against Amica to recover the proceeds of the Checks on February 10,
2012. (Compl., Dkt. [1-3].)
In light of the foregoing account of events preceding denial of GMAC’s
claim, the Court cannot rule as a matter of law that the contractual limitations
period is an absolute bar to the claims raised in the Complaint. See Day v.
Burnett, 377 S.E.2d 734, 734 (Ga. Ct. App. 1989) (“Ordinarily, whether a cause
of action should be barred by the statute of limitations is a mixed question of
law and fact to be decided by a jury.”). On the contrary, the Court finds that
issues of fact exist as to whether Amica waived the limitations period. The
Georgia courts have held that an insurance company may waive a contractual
limitation period on the right to file suit where, by its conduct, it leads the
insured to believe that filing suit is unnecessary:
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An insurance company may waive the contractual limitation
provision where the company leads the insured by its actions to
rely on its promise to pay, express or implied. . . . If the insurer
never denied liability, but continually discussed the loss with its
insured with a view toward negotiation and settlement without the
intervention of a suit, whether or not this lulled the insured into a
belief that the [limitation provision] in the contract was waived by
the insurer can become a disputed question of fact for the jury.
Auto-Owners Ins. Co. v. Ogden, 569 S.E.2d 833, 835 (Ga. 2002) (internal
quotes and citations omitted). See also Balboa Life and Cas., LLC v. Home
Builders Fin., Inc., 697 S.E.2d 240, 244 (Ga. Ct. App. 2010) (same).
In this case, issues of fact exist as to whether Amica waived the
contractual limitations period by not denying GMAC’s claim and continually
negotiating and discussing the matter with GMAC until after the expiration of
the limitations period. Indeed, Impac has presented evidence of representations
by Amica that it was taking steps to facilitate settlement of GMAC’s claims,
e.g., by sending forgery affidavits to BB&T, and that BB&T was considering
settling the claims. This raises a genuine issue of fact as to whether Amica
mislead GMAC into believing that its claim would be resolved without the
necessity of a suit. Thus, in light of this question as to whether Amica waived

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the contractual limitations period, the Court cannot rule as a matter of law that
Plaintiff’s claims are barred.
2.

Failure to State a Claim

Utilizing the legal standard set out in section A, supra, the Court now
considers Amica’s argument that the Complaint fails to state a claim upon
which relief may be granted, first with respect to Impac’s claim for breach of
contract and second with respect to its claim for enforcement of the checks,
pursuant to O.C.G.A. § 11-3-309.
i.

Breach of Contract

In support of its claim for breach of contract, Impac alleges that
“[p]ursuant to the Insurance Policy, the Trust, as the holder of the Loan, was
entitled to receive any proceeds paid by Amica under the Insurance Policy for
damage to the Property, including the amounts paid by Amica for the Covered
Losses.” (Compl., Dkt. [1-3] ¶ 25.) “After the Property sustained the Covered
Losses, the Trust was vested with an interest in any proceeds paid by Amica
under the Insurance Policy, including the proceeds of the Checks.” (Id. ¶ 26.)
Amica issued the Checks pursuant to the Insurance Policy to pay for the
Covered Losses, but neither GMAC nor any other entity or person acting on
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behalf of the Trust received the Checks, endorsed the Checks, or received the
proceeds therefrom. (Id. ¶¶ 27-28.) “Because the Trust never received the
proceeds of the Checks, Amica remains indebted to the Trust for the amounts of
the Checks, pursuant to its obligations under the Insurance Policy.” (Id. ¶ 29.)
Amica seeks dismissal of this claim, arguing that its only obligation
under the Insurance Policy was to issue payment jointly to the insured and the
Trust, which obligation it contends it satisfied by issuing the Checks to GMAC
as a joint payee. (Amica’s Mot. to Dismiss, Dkt. [19-1] at 3.) Amica argues
that the Insurance Policy “imposes no obligation upon Amica to insure that
each listed payee on a payment actually endorses same, or that the funds are
used as anticipated.” (Id.) Thus, Amica contends, “by virtue of the very
allegations contained in Plaintiff’s Complaint, Amica fulfilled all obligations it
owed to Plaintiff under the policy, and any failure of Plaintiff to actually
deposit the proceeds of the payments into its account is due solely to the actions
of [Disaster Restoration and Consultants], an independent third party . . . .”4

4

Amica misconstrues Impac’s contract claim as “aris[ing] out of [Disaster
Recovery Consultant]’s forging of the endorsements on the subject payments and
absconding with the same after cashing them.” (Amica’s Mot. to Dismiss, Dkt. [19-1]
at 3.) Amica continues, “Plaintiff does not allege, nor is there any evidence, that
Amica was complicit in or assisted with [Disaster Recovery Consultant]’s actions in
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(Id. at 3-4.) In response, Impac argues that Amica was obligated under the
Insurance Policy to pay the Trust, not merely to issue the Checks, which were
never provided to the Trust. (Impac’s Opp’n Br., Dkt. [9] at 20.)
The relevant provision of the Insurance Policy states as follows: “If a
mortgagee is named in this policy, any loss payable under Coverage A or B will
be paid to the mortgagee and you, as interests appear.” (Insurance Policy, Part
1, Dkt. [2-1] at 17 of 24, ¶ K.1. (emphasis added).) The Court agrees with
Impac that it has stated a plausible claim for breach of contract based on
Amica’s failure to pay the Trust in accordance with this provision. Despite
Amica’s vehement assertions to the contrary, it has cited no authority for the
proposition that an Insurance Company’s obligation to pay a loss payee is
discharged simply by issuing a check in the payee’s name. By contrast, Impac
points to authority for the proposition that a breach of contract claim is viable
under these circumstances. See, e.g., Balboa Life & Cas., 697 S.E.2d at 480-81
(recognizing validity of mortgagee’s claim for breach of insurer’s contractual

wrongfully cashing the same.” (Id.) Contrary to this characterization of Impac’s
claim, and as stated below, Impac’s breach of contract claim does not stem from
Disaster Recovery Consultant’s actions but from Amica’s alleged failure to fulfill its
obligations under the Insurance Policy.
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obligation to pay mortgagee, where insurer issued checks jointly payable to
mortgagee and insured and where insured forged mortgagee’s endorsement and
absconded with proceeds). Accordingly, Amica’s Motion to Dismiss is
DENIED as to this claim.
ii.

Enforcement of the Checks

In support of its claim to enforce the Checks under O.C.G.A. § 11-3-309,
Impac alleges the following. The Checks were made payable to both GMAC
and Disaster Restoration and Consultants, among other payees. (Compl., Dkt.
[1-3] ¶ 32.) Disaster Restoration and Consultants obtained the checks and
forged the endorsements of GMAC and the other payees on the Checks. (Id. ¶
33.) “Due to the forged endorsements of GMAC [and the other payees],
Disaster Restoration and Consultants was not a ‘holder’ of the Checks and was
not entitled to enforce the Checks.” (Id. ¶ 34.) Moreover, “[b]ecause Disaster
Restoration and Consultants was not a ‘holder’ of the Checks and was not
entitled to enforce [them], the payment of the Checks to Disaster Restoration
and Consultants did not discharge Amica’s obligations to pay the Checks to the
payees.” (Id. ¶ 35.) Impac finally alleges that the Trust never received the

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proceeds of the Checks, and that the Checks may be enforced against Amica for
the benefit of the Trust. (Id. ¶ 36.)
Amica seeks dismissal of this claim on two grounds. First, Amica
contends that although the Checks were issued to all payees, not in the
alternative, Disaster Restoration and Consultants nevertheless had an interest in
their proceeds as a listed payee. (Amica’s Mot. to Dismiss, Dkt. [19-1] at 4.)
Second, Amica argues that the Court cannot enter judgment in favor of Impac
because Amica is “‘not adequately protected against the loss that might occur
by reason of a claim by another person to enforce the instrument.’” (Id. at 4
(quoting O.C.G.A. § 11-3-309(b)).)
In response, Impac first argues that Disaster Restoration and
Consultants’s interest in the Checks is irrelevant because the Check, issued to
the payees not in the alternative, could only be negotiated, discharged, or
enforced by all of them, not by Disaster Restoration and Consultants
individually. (Impac’s Opp’n Br., Dkt. [9] at 22 (citing O.C.G.A. § 11-3-110,
Cmt. 4).) “Because the Checks were not actually endorsed or negotiated by
GMAC,” Impac continues, “Disaster Restoration and Consultants’s ‘interest’ in
the Checks does not impact Amica’s obligations to the Trust under the Checks.”
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(Id.) Impac attacks Amica’s second contention by arguing that Amica does, in
fact, have adequate protection “from essentially having to pay twice.” (Id. at
23.) Impac contends that in the event Amica is required to pay the proceeds of
the Checks to the Trust, “[it] can pursue its own claims for indemnity and/or
contribution, including against its own bank and Disaster Restoration and
Consultants to recover any such losses.” (Id.)
The Court finds that Impac has stated a plausible claim for enforcement
of the checks under O.C.G.A. § 11-3-309. This provision states as follows:
(a)

A person not in possession of an instrument is entitled to
enforce the instrument if (i) the person was in possession of
the instrument and entitled to enforce it when loss of
possession occurred; (ii) the loss of possession was not the
result of a transfer by the person or a lawful seizure; and (iii)
the person cannot reasonably obtain possession of the
instrument because the instrument was destroyed, its
whereabouts cannot be determined, or it is in the wrongful
possession of an unknown person or a person that cannot be
found or is not amenable to service of process.

(b)

. . . The court may not enter judgment in favor of the person
seeking enforcement unless it finds that the person required
to pay the instrument is adequately protected against loss
that might occur by reason of a claim by another person to
enforce the instrument.

O.C.G.A. § 11-3-309.

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While neither party has pointed the Court to any Georgia authority on
point, other courts have recognized a cause of action under these circumstances
under similar Uniform Commercial Code provisions. For example, the court in
General Motors Acceptance Corporation v. Abington Casualty Insurance
Company held that delivery of a check to one co-payee constitutes delivery to
the remaining co-payee (or co-payees); thus, the court held, where a check is
paid to one co-payee without the endorsement of the other, the other may sue
the drawer of the check as the owner of a lost instrument under the foregoing
provision. 602 N.E.2d 1085, 1088-89 (Mass. 1992). Thus, in accordance with
this authority, the Court finds that Impac has stated a plausible claim under
O.C.G.A. § 11-3-309.
Moreover, the Court agrees with Impac that Amica has adequate
protection against being required to, “in essence, ‘pay twice’” (Amica’s Mot. to
Dismiss, Dkt. [19-1] at 4), such that O.C.G.A. § 11-3-309(b) is not a bar to
Impac’s claim. As Impac argues, in the event Amica is required to pay the
proceeds of the Checks to Impac, Amica may seek to recover its losses from the
drawee bank. See Abington Cas. Ins. Co., 602 N.E.2d at 1089 (“If GMAC [a
co-payee] prevails, then [the insurer] will be forced to bring a conversion suit
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against the drawee bank for payment of the check on a missing
endorsement. . . . The loss, ultimately, must fall on the drawee bank who was in
the best position to prevent the error.”). Amica has not argued that this or other
remedies would not be available to it, and therefore the Court cannot rule as a
matter of law that Impac’s claim is barred.
Conclusion
In accordance with the foregoing, Defendant Amica Mututal Insurance
Company’s Motion to Dismiss [19] and Request for Oral Argument [1-9] are
DENIED. Plaintiff Impac Funding Corporation, as Master Servicer for Impac
CMB Trust Series 2005-4,’s Request for Oral Argument [12] is DENIED.
SO ORDERED, this 18th

day of March, 2013.

________________________________
RICHARD W. STORY
United States District Judge

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