Ludwig et al v. PHH Mortgage Corporation

Filing 75

RULING AND ORDER granting 58 Motion to Dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1) for lack of standing. Plaintiff William J. Ray's claims be and are hereby DISMISSED WITH PREJUDICE for lack of subject matter jurisdiction. Plaintiff William J. Ray be and is hereby TERMINATED as a party to this action. Signed by Judge Brian A. Jackson on 6/5/2024. (EDC)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA
ELAINE LUDWIG, ET AL. CIVIL ACTION
VERSUS
PHH MORTGAGE CORPORATION NO. 22-00349-BAJ-EWD

RULING AND ORDER
Before the Court is Defendant's IVEotion To Dismiss For Lack Of
Jurisdiction (Doc. 58), which seeks dismissal of Plaintiff William J. Ray from this
lawsuit pursuant to Federal Rule of Civil Procedure 12(b)(l) for Ray's alleged lack of
standing. The Motion is opposed. (Doc. 66). Defendant filed a Reply. (Doc. 70).
This case concerns the use and possession of insurance proceeds that were

distributed to Plaintiff Elaine Ludwig and Defendant for hurricane-related damage
to Ludwig's home (the "Property"). (Doc. 1-1). The Property is subject to a reverse

mortgage held by Defendant. (Id. at ^ 2). According to the terms of this reverse
mortgage, insurance proceeds are to be held by Defendant and doled out to Ludwig
as repairs progress, so long as those repairs are done in accordance with a series of

terms and conditions set by Defendant. (Id. at ^ 5). Plaintiffs contest these conditions,
and, upon Defendant s refusal to allow Ludwig to cash the proceeds of this check
without their involvement, filed suit alleging conversion of the check, breach of
contract, negligent and/or intentional infliction of emotional distress, fraud, and

violation of the Fair Debt Collection Practices Act. (Id.).

Ludwig purchased the Property prior to her marriage to Ray. (Doc. 58-2). It is
uncontested that Ray is not listed as a borrower or insured under any of the
contractual documents at issue, and that the Property is entirely Ludwig's separate

property. (Doc. 58-5 at pp. 1-3). Despite this, Plaintiffs bring this matter jointly, and
assert that Ray possesses standing by virtue of his status as Ludwig's spouse as well
as his residing at and improving the Property over the past several years. (Doc. 66 at

pp. 2-4). In support of this position, Plaintiffs point to various cases for the proposition
that, under Louisiana law, spouses and family members can have economic interests
over properties in which they reside or improve even when said persons do not own
the relevant property. (Id.). From here, Plaintiffs provide that the "salient portion of

the definition of'insurable interest' found in LSA R.S. 22:614 means 'any lawful and
substantial economic interest in the safety or preservation of the subject of the
insurance free from loss, destruction, or pecuniary damage. Stokes v. Republic

Underwriters Ins. Co., 387 So.2d 1261, 1262 (La. App. 1980) (emphasis added). Based
on this chain of reasoning, Plaintiffs conclude that Ray possesses an insurable

interest in the Property, and that he therefore has standing to join in bringing suit
on insurance proceeds relating thereto.

Defendant contests Plaintiffs raising the claim that Ray potentially possesses
insurable interests at this stage in the litigation, that Ray possesses insurable
interests at all, and that, even if Ray does possess such interests, he cannot maintain
claims against Defendant in the absence of any sort of contractual relationship. (Doc.

70).

The Court concurs with Defendant on its final point, and reaches no
conclusions on the others. This matter revolves around the reverse mortgage contract
and supplementary contracts executed by and between Ludwig and Defendant, a
relationship that Ray is not a part of. (See Doc. 58-5 at pp. 2-3). To maintain claims

stemming from an alleged breach of contract, plaintiffs must either be in privity of
contract with a given defendant or possess some third-party beneficiary rights. Aron
v. G. Lewis-Louisiana No.2, L.L.C., No. CV 21-136-SDD-SDJ, 2023 WL 157794, at *2
(M.D. La. Jan. 11, 2023) (C.J. Dick); Pearl River Basin Land and Dev. Co., L.L.C. v.
State, ex rel. Governor's Office of Homeland Sec. and Emergency Preparedness, 29 So.

3d 589, 592 (La. App. 1st Cir. 2009). Plaintiffs also have not alleged any facts
purporting to show that Ray was or is a third-party beneficiary to the contracts
executed by and between Ludwig and Defendant. Ray therefore has no standing to

bring the claims outlined in the Complaint, and will be dismissed as a party.
Accordingly,

IT IS ORDERED that Defendant's Motion To Dismiss For Lack Of
Jurisdiction (Doc. 58) is GRANTED pursuant to Federal Rule of Civil Procedure

12(b)(l) for lack of standing.

IT IS FURTHER ORDERED, AD JUDGED, AND DECREED that Plaintiff
William J. Ray's claims be and are hereby DISMISSED WITH PREJUDICE for
lack of subject matter jurisdiction.

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that Plaintiff
William J. Ray be and is hereby TERMINATED as a party to this action.
Baton Rouge, Louisiana, this^—day of June, 2024

(3-.&>
JUDGE BRIAN i. JACKSON
UNITED STATE^mSTRICT COURT
MIDDLE DISTRICT OF LOUISIANA