Morgan et al v. Americas Insurance Company
ORDER AND REASONS denying 5 Motion to Dismiss for Failure to State a Claim. Signed by Judge Jane Triche Milazzo. (ecm)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
STACY MORGAN, ET AL.
AMERICAS INSURANCE COMPANY
ORDER AND REASONS
Before the Court is Defendant’s Motion to Dismiss (Doc. 5). For the
following reasons, this Motion is DENIED.
Following a 2015 fire, Hollis Burton hired A-Plus Contractors, LLC (APlus) to perform remediation and repairs to his property. Burton was insured
for this loss by Defendant Americas Insurance Company (“AIC”).
executed a post-lost “Assignment of Insurance Benefits” (“AOB”) form in favor
of A-Plus, whereby he assigned all benefits of the policy relative to the 2015
Pursuant to this assignment, Plaintiffs seek payment from
Defendant for the work completed on the property.
On June 15, 2016,
Plaintiffs filed suit in Louisiana State Court seeking payment for the repair
and remediation costs and damages for breach of contract, negligence, and
arbitrary and capricious penalties, attorneys’ fees, and general and special
damages pursuant to Louisiana Revised Statutes §§ 22:1973 and 22:658.
Defendant removed the matter to this Court on the basis of diversity
jurisdiction on August 14, 2016 and promptly filed a Motion to Dismiss.
To survive a Rule 12(b)(6) motion to dismiss, a plaintiff must plead
enough facts “to state a claim to relief that is plausible on its face.”1 A claim is
“plausible on its face” when the pleaded facts allow the court to “[d]raw the
reasonable inference that the defendant is liable for the misconduct alleged.”2
A court must accept the complaint’s factual allegations as true and must “draw
all reasonable inferences in the plaintiff’s favor.”3
The Court need not,
however, accept as true legal conclusions couched as factual allegations.4
To be legally sufficient, a complaint must establish more than a “sheer
possibility” that the plaintiff’s claims are true.5 “A pleading that offers ‘labels
and conclusions’ or ‘a formulaic recitation of the elements of a cause of action’”
will not suffice.6
Rather, the complaint must contain enough factual
allegations to raise a reasonable expectation that discovery will reveal evidence
of each element of the plaintiffs’ claim.7
Ashcroft v. Iqbal, 556 U.S. 662, 667 (2009) (quoting Bell Atlantic Corp. v. Twombly,
550 U.S. 544, 547 (2007)).
3 Lormand v. U.S. Unwired, Inc., 565 F.3d 228, 232 (5th Cir. 2009).
4 Iqbal, 556 U.S. at 667.
6 Id. at 678 (quoting Twombly, 550 U.S. at 555).
7 Lormand, 565 F.3d at 255–57.
LAW AND ANALYSIS
In this Motion, Defendant makes three arguments relative to the
sufficiency of Plaintiffs’ claims.
First, it argues that Stacy Morgan lacks
standing to bring this suit. Second, it argues that Plaintiffs’ breach of contract
claim must be dismissed because there is no contract between AIC and
Plaintiffs. Finally, it argues that Plaintiffs’ cannot bring claims for statutory
penalties and attorneys’ fees pursuant to La. Rev. Stat. §§ 22:1892 and
22:1973. The Court will address these arguments in turn.
I. Stacy Morgan’s Standing to Bring this Action
Defendant first argues that Morgan does not have standing to bring suit
against AIC personally pursuant to Federal Rule of Civil Procedure 17, which
provides, in pertinent part:
(b) Capacity to Sue or Be Sued. Capacity to sue or be sued is
determined as follows:
(1) for an individual who is not acting in a representative capacity,
by the law of the individual’s domicile;
(2) for a corporation, by the law under which it was organized; and
(3) for all other parties, by the law of the state where the court is
Because Morgan is domiciled in Louisiana, his capacity to sue in this action is
governed by Louisiana law. Under Louisiana law, “[e]xcept as otherwise
provided by law, an action can be brought only by a person having a real and
actual interest which he asserts.”8
Defendant asserts that Stacy Morgan lacks the capacity to bring this suit
because he did not personally accept assignment of Burton’s rights as an
insured. A plain reading of the Assignment of Benefits form indicates that
La. Code Civ. Pro. art. 681.
Burton assigned “all remaining benefits for his insurance policy with America’s
Insurance Company for structural repair as it relates to the fire claim which
occurred in 2015 . . . to A-Plus Contractors, L.L.C. and Stacy Morgan.”9
Notably absent is any language indicating that Morgan is precluded from
bringing claims in his personal capacity. Accordingly, the plain language of
the AOB gives Stacy Morgan standing to pursue this action.
II. Viability of Breach of Contract Claims
Defendant next avers that Plaintiffs cannot assert breach of contract
claims against it because they only executed a contract with Burton, their
insured. This appears to the Court to be a challenge to the validity of the AOB,
whereby Burton assigned to Plaintiffs “all remaining benefits for his insurance
policy with America’s Insurance Company” relative to the 2015 fire claim. As
a post-loss assignee, Plaintiffs acquired those rights possessed by the assignor
at the time of the assignment, essentially stepping into Burton’s shoes.10
Accordingly, if the AOB is valid, Plaintiffs may step into Burton’s shoes and
pursue an action for breach of contract relative to the claim.
Under Louisiana law, “[a]ll rights may be assigned, with the exception
of those pertaining to obligations that are strictly personal. The assignee is
subrogated to the rights of the assignor against the debtor.”11 This general
principle is, however, subject to restrictions, in that “[a] right cannot be
assigned when the contract from which it arises prohibits the assignment of
that right.”12 With regard to post-loss assignments of insurance claims, any
policy language purporting to limit such assignments must “mak[e] it clear and
Doc. 15-1 (emphasis added).
Del-Remy Cor. V. Lafayette Ins. Co., 616 So. 2d 231, 233 (La. App. 5 Cir. 1993).
11 La. Civ. Code art. 2642.
12 La. Civ. Code art. 2653.
explicit that post-loss assignments are prohibited under the policy.”13 This rule
recognizes the inherent distinction between a post-loss assignment of claims
arising under a policy, where the insurer’s liability is already fixed, and an
assignment of the policy itself, which might expose an insurer to more liability
than it contemplated.14
Put differently, “[p]ost-loss assignment of claims
arising under the policy is not equivalent to the assignment of the policy itself,
or an interest in the policy.”15
The insurance policy in this matter states that “[a]ssignment of this
policy will not be valid unless we give our written consent.”16 Notably absent
from this provision is any language limiting post-loss assignment of claims.
Accordingly, the Court finds that Burton had the right to assign his rights
relative to the 2015 fire claim. Having allegedly accepted such an assignment,
Plaintiffs may step into his shoes and assert any claims that he may have
relative to AIC, including breach of contract claims. Defendant’s Motion is
therefore denied in this respect.
III. Claims for Statutory Penalties and Attorneys’ Fees
Defendant finally contends that Plaintiffs’ claims for bad faith penalties
and attorneys’ fees brought pursuant to La. Rev. Stat. §§ 22:1892 and 22:1973
must be dismissed. It relies on the Louisiana Fourth Circuit Court of Appeal
case of R.L. Lucien Tile Company Inc. v. American Sec. Ins. Co. for the
proposition that such claims may not be assigned.17 The Court finds that case
to be distinguishable from this matter. Though the court in that case found
that a putative assignee could not bring a bad faith claim, this ruling followed
In re Katrina Canal Breaches Litigation, 63 So. 3d 955, 962 (La. 2011).
16 Doc. 5-4 at 34.
17 8 So. 3d 753 (La. App. 4 Cir. 2009).
the court’s finding that the putative assignee did not hold a valid assignment.
Moreover, this case’s lack of precedential value in cases involving claim-specific
post-loss assignments has been noted by both another section of this Court 18
and the Louisiana Supreme Court.19
The Court finds that assignment of bad faith claims is consistent with
the general principle that “all rights may be assigned,” as previously
discussed.20 Indeed, the Louisiana Supreme Court has recently noted that
when a plaintiff brings suit as an assignee, they have stepped into the shoes of
the assignor and can bring claims as an insured.21 This view was echoed by
another section of this Court in Pontchartrain Gardens, Inc. v. State Farm
General Ins. Co., wherein Judge Vance found that Louisiana law did not bar
an assignee from bringing claims for bad faith damages pursuant to La. Rev.
Stat. § 22:1973.22 This Court finds that analysis persuasive.23 Accordingly,
Plaintiff’s Motion to dismiss is denied with regard to Plaintiffs’ claims under
La. Rev. Stat. §§ 22:1892 and 22:1973.
In re Katrina Canal Breaches Consol. Litig., No. 05-4182, 2009 WL 1046016, at *3
(E.D. La. Apr. 16, 2009).
19 In re Katrina Canal Breaches Litigation, 63 So. 3d at 962.
20 La. Civ. Code art. 2642.
21 Kelly v. State Farm Fire & Cas. Co., 169 So. 3d 328, 335 (La. 2015).
22 Pontchartrain Gardens, Inc. v. State Farm Gen. Ins. Co., No. 07-7965, 2009 WL
86671, at *4 (E.D. La. Jan. 13, 2009).
23 Defendant urges the Court to disregard Pontchartrain Gardens as a non-binding
Erie guess in light of the latter-issued R.L. Lucien case. Because the Court finds Lucien
distinguishable, Pontchartrain Gardens retains its persuasive value.
For the foregoing reasons, Plaintiffs’ Motion to Dismiss (Doc. 5) is
New Orleans, Louisiana this 6th day of February, 2017.
JANE TRICHE MILAZZO
UNITED STATES DISTRICT JUDGE
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