Blackstone v. Chase Manhattan Mortgage Corporation et al

Filing 85

ORDER & REASONS: for the reasons stated, dfts' 51 60 Motions for Summary Judgment are GRANTED. Signed by Chief Judge Sarah S. Vance on 3/12/2012. (rll, )

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
TAMEKA BLACKSTONE

CIVIL ACTION

VERSUS

NO: 10-4604

CHASE MANHATTAN MORTGAGE
CORPORATION, CHASE HOME
FINANCE, LLC, JPMORGAN CHASE
BANK, N.A., NOVASTAR HOME
MORTGAGE, INC., and LIBERTY
MUTUAL FIRE INSURANCE COMPANY

SECTION: R(3)

ORDER AND REASONS
Defendant Liberty Mutual Fire Insurance Company (“Liberty
Mutual”) moves for summary judgment on the issues of detrimental
reliance and whether plaintiff Tameka Blackstone’s flood
insurance policy was in effect at the time Hurricane Katrina
hit.1

Defendants Chase Manhattan Mortgage Corporation, JPMorgan

Chase Bank, National Association, as successor by merger to Chase
Home Finance LLC, and JPMorgan Chase Bank, N.A. (collectively,
“Chase”) also move for summary judgment on the issue of
detrimental reliance.2

For the following reasons, the Court

GRANTS defendants’ motions.

I.

BACKGROUND
On October 2, 2003, Tameka Blackstone entered into a

mortgage with Novastar Home Mortgage, Inc. in connection with her
1

R. Doc. 51.

2

R. Doc. 60.

purchase of property located at 4618 Coronado Drive, New Orleans,
Louisiana.3
Chase.

The mortgage was later transferred from Novastar to

Blackstone asserts that under the mortgage agreement, she

was required to pay funds for escrow items.4

The mortgage

provides that escrow items included “premiums for any and all
insurance required by Lender under Section 5" of the mortgage
agreement, which covered, inter alia, “any . . . hazards
including, but not limited to, earthquakes and floods, for which
Lender requires insurance.”5
Blackstone alleges that in 2003, Chase purchased flood
insurance on her property through Prudential Insurance Company
and Liberty Mutual.6

Blackstone says she then began making

escrow payments which included payments for flood insurance.7
According to Blackstone, she believed she had flood insurance and
received notices advising her of the amount of the premium to be
paid by the mortgagee.8

3

R. Doc. 44 at ¶III.

4

Id. at ¶V.

5

R. Doc. 44-1 at 5-6.

6

R. Doc. 44 at ¶VIII.

7

Id. at ¶VII.

8

Id. at ¶IX.
2

Blackstone asserts that as a result of Hurricane Katrina,
her home was flooded.9

She thereafter made a claim under her

flood insurance policy but was advised that her flood insurance
had been cancelled.10

Blackstone further asserts that Chase then

informed her that because her home was not located in a Special
Flood Hazard Area, it did not require flood insurance.11
Blackstone alleges that at no time before Hurricane Katrina was
she advised or otherwise aware that her home was not in a flood
zone, or that the mortgage companies were not making payments on
her flood insurance.12

Instead, Blackstone contends that she had

continued to make payments for escrow items and that her payments
never decreased.13
On November 23, 2010, Blackstone sued Chase in state court
asserting claims for breach of contract and detrimental
reliance.14

On December 22, 2010, Chase removed the action to

this Court based on diversity jurisdiction.15

After the Court

granted defendants’ motion to dismiss for failure to state a
9

Id. at ¶XI.

10

Id. at ¶XII.

11

Id. at ¶XIII.

12

Id. at ¶XIV.

13

Id.

14

R. Doc. 1-2.

15

R. Doc. 1.
3

claim, Blackstone filed an amended complaint that asserts a claim
of detrimental reliance against Liberty Mutual and Chase
defendants.16

She also asserts that Liberty Mutual failed to

inform her that her policy had been canceled.17
Chase and Liberty Mutual both move for summary judgment on
the issue of detrimental reliance.

Chase provides several

grounds in support of its argument that Blackstone’s reliance was
unreasonable as a matter of law.18

Liberty Mutual contends that

Blackstone’s detrimental reliance claim is foreclosed.

Liberty

Mutual points out that Blackstone’s policy was subject to
specific renewal provisions and argues that her policy was duly
cancelled before Hurricane Katrina because she failed to comply
with those provisions.19
In response, Blackstone asserts that there are issues of
fact precluding summary judgment in favor Chase.

She also

asserts that Liberty Mutual should be equitably estopped from
denying coverage.20

In addition, Blackstone now represents that

16

R. Doc. 44.

17

R. Doc. 44 at ¶XV.

18

R. Doc. 60-1 at 5.

19

R. Doc. 51-1 at 2.

20

R. Doc. 71 at 6-7.
4

she “does not desire to pursue a detrimental reliance claim
against Liberty Mutual.”21

II.

STANDARD
Summary judgment is appropriate when “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(c)(2); Celotex Corp. v. Catrett, 477 U.S. 317,
322-23 (1986); Little v. Liquid Air Corp., 37 F.3d 1069, 1075
(5th Cir. 1994).

When assessing whether a dispute as to any

material fact exists, the Court considers “all of the evidence in
the record but refrains from making credibility determinations or
weighing the evidence.”

Delta & Pine Land Co. v. Nationwide

Agribusiness Ins. Co., 530 F.3d 395, 398 (5th Cir. 2008).

All

reasonable inferences are drawn in favor of the nonmoving party,
but “unsupported allegations or affidavits setting forth
‘ultimate or conclusory facts and conclusions of law’ are
insufficient to either support or defeat a motion for summary
judgment.”

Galindo v. Precision Am. Corp., 754 F.2d 1212, 1216

(5th Cir. 1985) (quoting C. Wright, A. Miller & M. Kane, Federal
Practice and Procedure: Civil 2d § 2738 (1983)).

21

Id. at 6.
5

If the dispositive issue is one on which the moving party
will bear the burden of proof at trial, the moving party “must
come forward with evidence which would ‘entitle it to a directed
verdict if the evidence went uncontroverted at trial.’”

Int’l

Shortstop, Inc. v. Rally’s, Inc., 939 F.2d 1257, 1263-64 (5th
Cir. 1991).

The nonmoving party can then defeat the motion by

either countering with sufficient evidence of its own, or
“showing that the moving party’s evidence is so sheer that it may
not persuade the reasonable fact-finder to return a verdict in
favor of the moving party.”

Id. at 1265.

If the dispositive issue is one on which the nonmoving party
will bear the burden of proof at trial, the moving party may
satisfy its burden by merely pointing out that the evidence in
the record is insufficient with respect to an essential element
of the nonmoving party's claim.

See Celotex, 477 U.S. at 325.

The burden then shifts to the nonmoving party, who must, by
submitting or referring to evidence, set out specific facts
showing that a genuine issue exists.

See id. at 324.

The

nonmovant may not rest upon the pleadings, but must identify
specific facts that establish a genuine issue for trial.

Id. at

325; see also Little, 37 F.3d at 1075 (“Rule 56 ‘mandates the
entry of summary judgment, after adequate time for discovery and
upon motion, against a party who fails to make a showing
sufficient to establish the existence of an element essential to

6

that party’s case, and on which that party will bear the burden
of proof at trial.’”) (citing Celotex, 477 U.S. at 332).

III. CHASE DEFENDANTS
A.

Standard
Blackstone contends that she detrimentally relied on

Chases’s representations that it had paid her flood insurance
premiums out of the escrow funds Blackstone paid.

Under

Louisiana law, “[a] party may be obligated by a promise when he
knew or should have known that the promise would induce the other
party to rely on it to his detriment and the other party was
reasonable in so relying.”

La. Civ. Code art. 1967.

To

establish a claim of detrimental reliance a plaintiff must
demonstrate “(1) a representation by conduct or word; (2)
justifiable reliance; and (3) a change in position to one’s
detriment because of the reliance.”

Suire v. Lafayette City-

Parish Consol. Gov’t, 907 So.2d 37, 59 (La. 2005)(citing cases).
The theory of detrimental reliance focuses on “whether a
representation was made in such a manner that the promisor should
have expected the promisee to rely upon it, and whether the
promisee so relies to his detriment.”

Id.

The doctrine is

“designed to prevent injustice by barring a party from taking a
position contrary to his prior acts, admissions, representations,
or silence.”

Id.

But claims of detrimental reliance are “not
7

favored in Louisiana [and] [d]etrimental reliance claims must be
examined carefully and strictly.”

In re Ark-La-Tex Timber Co.,

482 F.3d 319, 334 (5th Cir. 2007).

B.

Discussion
Chase argues that Blackstone cannot prevail on her claim of

detrimental reliance for several reasons.

First, Chase contends

that Blackstone has not specified any representations made to her
regarding payment for her flood insurance.22

Although Blackstone

alleges that Chase “represented” to her that it was making
payments for her flood insurance by accepting escrowed funds,
Chase points out that Blackstone has not presented any evidence
in support of this contention.
Second, Chase contends that any reliance on Blackstone’s
part was unreasonable as a matter of law.

Chase demonstrates

that nothing in the mortgage agreement states that Chase required
Blackstone to carry flood insurance.23

Further, Chase argues

that Blackstone not only has no evidence that Chase paid her
flood insurance, but also that she failed to verify that the
payment of her flood insurance premiums was actually occurring.24
In support, Chase submits a July 26, 2004 notice sent by Liberty

22

R. Doc. 60-1 at 5.

23

R. Doc. 60-1 at 6.

24

Id. at 8-9.
8

Mutual to Blackstone.

This notice states that it is a flood

insurance renewal invoice, gives Blackstone instructions for
renewing her policy, contains the amount of the renewal, tells
her how much the premiums is, and, most importantly, clearly
identifies the expiration date as October 2, 2004.25

Chase also

submits Blackstone’s deposition testimony that she received the
renewal notice but took no action.
The Court finds that Blackstone was unreasonable as a matter
of law because the existence of the fully integrated mortgage
agreement forecloses any reasonable reliance on other outside
sources.

Nothing in the mortgage agreement states that Chase was

required to pay flood insurance premiums.

Indeed, the mortgage

provides that if “Borrower fails to maintain any of the coverages
described above, Lender may obtain insurance coverage . . . [but]
Lender is under no obligation to purchase any particular type or
amount of coverage.”26

Under Louisiana law, “one who signs a

contract is presumed to know its terms.”

Leach v. Ameriquest

Mortgage Servs., No. 06-1981, 2007 WL 2900480, at *3 (E.D. La.
Oct. 2, 2007)(citing Tweedel v. Brasseaux, 433 So.2d 133, 138
(La. 1983)).

Because Blackstone must be presumed to know the

terms of her mortgage agreement, any reliance on representations
outside that mortgage agreement are unreasonable as a matter of

25

R. Doc. 79-6.

26

R. Doc. 44-1 at 6.
9

law.

See Drs. Bethea, Moustoukas and Weaver LLC v. St. Paul

Guardian Ins. Co., 376 F.3d 399, 404 (5th Cir. 2004) (plaintiffs
were unreasonable as a matter of law when they relied on
documents purportedly contradicting a fully-integrated contract);
Robin v. Binion, No. 04-1695, 2007 WL 2895307, at *2-*3 (W.D. La.
Jan. 5, 2007)(unreasonable to rely on oral promises in the face
of a “fully-integrated, unambiguous contract between the parties
that specifically limits the ways in which that contract can be
amended, modified or altered”).
The Court also rejects Blackstone’s argument that she was
not unreasonable as a matter of law because Chase can provide no
evidence that her escrow payments were reduced after her flood
insurance policy was cancelled.

As the non-moving party that

carries the burden of proof, it is Blackstone who has the burden
to set out specific facts showing that a genuine issue of
material fact exists.

See Celotex, 477 U.S. at 324.

Blackstone

also asserts that Chase paid her flood insurance premiums out of
the escrow account in September 2006, but provides no evidence to
support this assertion.

The Court does not consider conclusory

allegations and bald assertions to be competent summary judgment
evidence.

Warfield v. Byron, 436 F.3d 551, 559 (5th Cir. 2006)

(citing Freeman v. Tex. Dept. of Crim. Justice, 369 F.3d 854, 860
(5th Cir. 1994)).

10

Nevertheless, Blackstone contends that there is a genuine
issue of material fact on the issue of whether she paid Chase
funds for flood insurance.27

She submits (1) a “Monthly Mortgage

Payment Analysis” dated December 1, 2003 that contains a
breakdown of her escrow payments, noting that $18.17 is for flood
insurance;28 (2) a letter addressed to her from Chase that
indicated a surplus in her escrow account;29 (3) a letter dated
September 26, 2006 addressed to her from Chase that indicated
that hazard insurance had been set up in her escrow account;30
(4) Prudential’s October 2, 2003 Flood Policy Declaration naming
Chase as mortgagee;31 and (5) Liberty Mutual’s July 26, 2004
notice, naming Chase as Payor.32
The Court finds that Blackstone fails to establish any
representation by Chase on which she could have reasonably
relied.

Blackstone admitted that it was she who originally

elected to get flood insurance coverage.33

Further, she admitted

receiving the July 26, 2004 notice from Liberty Mutual which gave

27

R. Doc. 79 at 2-4.

28

R. Doc. 79-2, Ex. 1.

29

R. Doc. 79-3, Ex. 2.

30

R. Doc. 79-4, Ex. 3.

31

R. Doc. 79-5, Ex. 4.

32

R. Doc. 79-6, Ex. 5.

33

R. Doc. 60-3 at 7.
11

the expiration date of her flood policy and contained explicit
instructions on how to renew it, how much it would cost, and
where to send the money to renew the policy.

She also admitted

that she never received a renewal policy, yet she did not contact
anyone at Liberty Mutual or Chase to find out why.

She was thus

on notice of facts that should have caused her to make inquiries,
and she unreasonably failed to do so.

Because such inquiries

would have easily resolved the issue, she could not have
reasonably relied on any prior conduct by Chase suggestive of the
contrary.

See Miller v. Lowe, No. 08-1624, 2009 WL 4730201, at

*4 (W.D. La. Dec. 4, 2009)(plaintiffs’ detrimental reliance claim
failed when plaintiffs had a “ready and convenient means of
determining the facts at issue”)(internal quotations omitted).
And although Blackstone submits a 2003 mortgage payment
analysis, Chase submits Blackstone’s escrow disclosure statements
for September 2004 and projected for October 2004 to September
2005.34

These documents reflect no actual or projected payments

for flood insurance from December 2003 to December 2005.
Further, her escrow statement from August 20, 2005 shows no
payments for flood insurance from October 2004 through the end of
August 2005.

Thus Blackstone was advised that Chase was not

escrowing funds for flood insurance and Blackstone could not have
reasonably relied on any of the material she cites for a contrary

34

R. Doc. 81, Exs. A and B.
12

conclusion.

Moreover, nothing in the letter notifying Blackstone

about the escrow surplus suggests that the surplus was due to
flood insurance payments.

Likewise, the letter notifying her

that hazard insurance costs were added to her escrow account does
not indicate a representation by Chase that it continued to cover
her flood insurance payments.
Finally, the flood policy declarations and July 26, 2004
notice from Liberty Mutual do not constitute representations by
Chase.

In Louisiana, “[d]etrimental reliance requires a

representation to be made by the defendant or his agent.”

Burks

v. Prudential Ins. Co. of North America, 388 Fed. Appx. 387, 38889 (5th Cir. 2010)(citing Audler v. CBC Innovis Inc., 519 F.3d
239, 254 (5th Cir. 2008)).

Here, the policy declarations letter

is from Prudential for October 2003 to October 2004 and the July
26, 2004 notice is from Liberty Mutual.

As such, they do not

constitute representations made by Chase to Blackstone.

See id.

at 389 (no detrimental reliance when the documents on which
plaintiff relied were prepared by a third party).
For all of the foregoing reasons, the Court finds that
Blackstone’s detrimental reliance claims against Chase must be
dismissed on summary judgment.

See Burks, 388 Fed. Appx. at 389

(plaintiff’s detrimental reliance claim failed as a matter of law
when flood insurance renewal documents were clear and plaintiff
did not renew them).

13

IV.

Liberty Mutual

A.

Standard
Congress established the National Flood Insurance program

through the National Flood Insurance Act of 1968.
¶¶ 4001-4129.

See 42 U.S.C.

Under the NFIP, the Director of the Federal

Emergency Management Agency has the authority to use private
insurance companies, referred to as Write-Your-Own companies, to
help administer the program.

The WYO companies directly issue

federally underwritten Standard Flood Insurance Policies (SFIP)
to the public.

See 42 U.S.C. ¶¶ 4071-72 (creating federal

jurisdiction for claims under the National Flood Insurance Act).
No WYO company has any permission to alter, vary, or waive any
provision of an SFIP.

See 44 C.F.R. ¶¶ 61.4(b), 61.13(d).

WYO

companies defend against claims but FEMA reimburses them for
defense costs because WYO companies are fiscal agents of the
United States.

See 42 U.S.C. ¶ 4071(a)(1); 44 C.F.R. ¶¶

62.23(g), (i)(6).
The Fifth Circuit has held that “state law tort claims
arising from claims handling by a WYO are preempted by federal
law.”

Wright v. Allstate Ins. Co., 415 F.3d 384, 390 (5th Cir.

2005).

See, e.g., Gallup v. Omaha Prop. and Cas. Ins. Co., 434

F.3d 341 (5th Cir. 2005); Neason v. Fidelity Nat. Ins. Co., No.
09-1683, 2010 WL 1817760, at *2 (E.D. La. May 5, 2010).

But the

Fifth Circuit has also held that the National Flood Insurance Act
14

does not preempt state tort law claims that arise from policy
procurement.

Campo v. Allstate Ins. Co., 562 F.3d 751, 757 (5th

Cir. 2009).

B.

Discussion
Liberty Mutual argues that because Blackstone failed to

renew her policy, it was under no obligation to provide coverage
under that policy.35

Article VII(H) (“Policy Renewal”) of the

SFIP states:

1.
2.
3.

35

This policy will expire at 12:01 a.m. on the last
day of the policy term.
We must receive the payment of the appropriate
renewal premium within 30 days of the expiration
date.
If we find, however, that we did not place your
renewal notice into the U.S. Postal Service, or if
we did mail it, we made a mistake, e.g., we used an
incorrect, incomplete, or illegible address, which
delayed its delivery to you before the due date for
the renewal premium, then we will follow these
procedures:
a.
If you or your agent notified us, not later
than 1 year after the date on which the
payment of the renewal premium was due, of
nonreceipt of a renewal notice before the due
date for the renewal premium, and we determine
that the circumstances in the preceding
paragraph apply, we will mail a second bill
providing a revised due date, which will be 30
days after the date on which the bill is
mailed.
b.
If we do not receive the premium requested in
the second bill by the revised due date, then
we will not renew the policy. In that case,

R. Doc. 51.
15

the policy will remain an expired policy as of
the expiration date shown on the Declarations
Page.36
It is undisputed that Blackstone’s premiums were not paid on time
and that the policy lapsed on October 2, 2004.37

Although

Blackstone argues that she was never notified that her policy was
cancelled, it is undisputed that she did not comply with Article
VII(H) once she received the statutorily required renewal notice.
Blackstone herself attached a renewal notice to her first amended
complaint.38

This notice, sent by Liberty Mutual, is addressed

to Blackstone and clearly states that it is a “Flood Insurance
Renewal Notice.”

Further, it states the expiration date of the

current policy and the cost of renewal, and instructs Blackstone
to indicate the desired coverage amount and return the bottom
section of the notice with a check or money order for that
coverage to Liberty Mutual.

Blackstone contends that it was her

“understanding” that Chase would “take care of paying that,” but
this understanding does not relieve Blackstone’s “duty to read
and understand the terms of [the] SFIP.”

Richmond Printing LLC

v. Dir. Fed. Dkdk , 72 Fed. Appx. 92, 98 (5th Cir. 2003).

See

also Bull v. Allstate Ins. Co., 649 F. Supp. 2d 529, 540 (W.D.
La. 2009)(plaintiffs “had a legal duty to read, familiarize, and

36

R. Doc. 51, Def.’s Ex. 2 at 12.

37

R. Doc. 71 at 1.

38

R. Doc. 44, Pla.’s Ex. 4.
16

understand the terms of the SFIP regardless of any assurance” the
Allstate agent gave them).

Further, Blackstone never timely

contacted Liberty Mutual in an effort to comply with Article
VII(H)(3).

The Court finds that Blackstone’s policy clearly

lapsed on October 4, 2004.

See Burks, 388 Fed. Appx. at 389.

Although Blackstone withdrew her claim of detrimental
reliance against Liberty Mutual, she nevertheless contends that
Liberty Mutual should be equitably estopped from asserting any
defenses that arise under Article VII(H) of the SFIP.39

She

asserts that when she called Liberty Mutual to make a claim
following Hurricane Katrina, Liberty Mutual’s agents informed her
that her policy was not active, rather than cancelled.40

Because

she did not know that the policy had been cancelled, Blackstone
argues, she could not have informed Liberty Mutual that she
failed to receive a cancellation notice under Article VII(H)(3).
Accordingly, Blackstone requests that Liberty Mutual be equitably
estopped from using Article VII(H)(3) as a basis for nonpayment.
At the outset, the Court notes that Blackstone has never
pleaded equitable estoppel, and the Court will not entertain
theories that first appear in responsive pleadings.

Moreover,

even if Blackstone had properly pleaded equitable estoppel, the
Fifth Circuit has made clear that such claims are not available

39

R. Doc. 71.

40

R. Doc. 71 at 3; R. Doc. 71, Pla.’s Ex. 2 at 2.
17

against the federal government in the context of the NFIP.
Collins v. Nat’l Flood Ins. Prog., 394 Fed. Appx. 177, 179-80
(5th Cir. 2010)(equitable estoppel argument not available because
any payment on plaintiff’s claim would come out of the public
treasury); Marseilles Homeowners Condominium Ass’n v. Fidelity
Nat’l Ins. Co., 542 F.3d 1053, 1056 (5th Cir. 2008)(rejecting
insured’s claim that insurer was equitably estopped from arguing
failure to submit proof of loss).

See also Wright v. Allstate

Ins. Co., 415 F.3d 384 (5th Cir. 2004)(“The Supreme Court has
made clear that judicial use of the equitable doctrine of
estoppel cannot grant respondent a money remedy that Congress has
not authorized.”)(internal quotations omitted).

Accordingly, the

Court finds that Blackstone has failed to demonstrate a genuine
issue of material fact that would preclude the Court from finding
that the policy had lapsed as a matter of law.

V.

CONCLUSION
For the foregoing reasons, defendants’ motions for summary

judgment are GRANTED.

New Orleans, Louisiana, this 12th day of March, 2012.
__
_________________________________
SARAH S. VANCE
UNITED STATES DISTRICT JUDGE

18