LaCroix v. U.S. Bank, N.A. et al
Filing
33
ORDER granting 4 Motion to Dismiss (Written Opinion). Signed by Senior Judge David S. Doty on 6/20/2012. (PJM)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Civil No. 11-3236(DSD/JJK)
Matthew LaCroix, as an
individual and as a
representative of the classes,
Plaintiff,
ORDER
v.
U.S. Bank, N.A.,
Defendant.
Kai H. Richter, Esq., E. Michelle Drake, Esq. and Nichols
Kaster, PLLP, 80 South Eighth
Street, Suite 4600,
Minneapolis, MN 55402, counsel for plaintiff.
Vernle C. Durocher, Jr., Esq., Kristin K. Zinsmaster,
Timothy J. Droske, Esq., and Dorsey & Whitney, LLP, 50
South Sixth Street, Suite 1500, Minneapolis, MN 55402,
counsel for defendant.
This matter is before the court upon the motion to dismiss by
defendant U.S. Bank, N.A. (U.S. Bank).
Based on a review of the
file, record and proceedings herein, and for the following reasons,
the court grants the motion.
BACKGROUND
This putative class action arises from the issuance of forceplaced insurance by U.S. Bank.
On November 15, 2005, plaintiff
Matthew LaCroix obtained a loan from nonparty TD Banknorth, N.A.
(T.D. Bank) in the amount of $112,400.
The loan is secured by a
mortgage (Mortgage) of property located in Manchester, Connecticut.
See Compl. ¶ 18.
TD Bank assigned LaCroix’s Mortgage to U.S. Bank,
who is currently the lender-in-interest, on November 15, 2005. Id.
¶ 19.
The Mortgage included a provision (Hazard Provision) governing
insurance:
Fire, Flood and Other Hazard Insurance.
[1]1 Borrower shall insure all improvements on
the Property, whether now in existence or
subsequently erected, against any hazards,
casualties, and contingencies, including fire,
for which Lender requires insurance. [2] This
insurance shall be maintained in the amounts
and for the periods that Lender requires.
[3]
Borrower
shall
also
insure
all
improvements on the Property, whether now in
existence or subsequently erected, against
loss by floods to the extent required by the
Secretary.
Id. Ex. 1 ¶ 4.
LaCroix’s property was initially not part of a Special Flood
Hazard Area (SFHA).
Id. ¶ 20.
In September 2008, the Federal
Emergency Management Agency (FEMA) published a flood-map revision
and placed LaCroix’s property in an SFHA zone.
Id.
The National
Flood Insurance Act (NFIA) and the Flood Disaster Protection Act
(FDPA) require insurance for any improved property in an SFHA
zone.2
Specifically, flood insurance is required in “an amount at
1
The court numbers each sentence in the Hazard Provision for
ease of discussion.
2
The FDPA amended the NFIA in 1973 and created the
requirement that property in SFHA zones maintain flood insurance.
See Flood Disaster Protection Act of 1973, Pub. L. No. 93-234, 87
(continued...)
2
least equal to the outstanding principal balance of the loan or the
maximum limit of coverage made available under the Act with respect
to the particular type of property, whichever is less.”
§ 4012a(b)(1).
42 U.S.C.
The maximum limit of coverage available under the
NFIA for residential property is $250,000.
Id. § 4013(b)(2); 44
C.F.R. § 61.6.
On November 16, 2009, U.S. Bank sent LaCroix notice that he
was required to “maintain flood insurance in an amount at least
equal to the lesser of: (1) The replacement cost of [his] dwelling;
[or] (2) The maximum available under the National Flood Insurance
Program, currently $250,000.00.”
Id. ¶ 24; id. Ex. 3.
The notice
also stated that U.S. Bank would purchase lender-placed insurance
if LaCroix did not submit proof of “adequate flood insurance
coverage within 45 days.”
Id. ¶ 24; id. Ex. 3.
The notice also
explained that lender-placed insurance “may be more expensive than
you [will be] able to obtain on your own.”
Id. ¶ 24; id. Ex. 3.
On January 27, 2010, U.S. Bank notified LaCroix that it had
force placed insurance (Policy I), effective January 1, 2010,
because of the “shortage in coverage between [his] required flood
coverage and [his] current flood insurance policy.”
Ex. 4.
premium.
Id. ¶ 27; id.
Policy I provided $64,488 in coverage and had a $580
Id. ¶ 28; id. Ex. 5.
2
The policy stated that “THIS
(...continued)
Stat. 975. The two acts are used interchangeably throughout the
order.
3
INSURANCE WILL NOT PROVIDE AN AMOUNT OF COVERAGE GREATER THAN THE
NET AMOUNT YOU OWE ON THE MORTGAGE.”
Id. ¶ 28; id. Ex. 5.
Policy
I also stated that “[c]overage under this policy will only apply if
the loss to the building exceeds the amount of coverage provided by
your flood insurance policy.”
Id. ¶ 28; id. Ex. 5.
LaCroix’s condominium association maintained $1,110,200 in
flood insurance, and his pro-rata share resulted in $69,387.50 of
coverage (Condominium Policy).
Id. ¶ 23; id. Ex. 2.
Between the
Condominium Policy and Policy I, LaCroix’s total flood insurance
equaled $133,875.50.
Id. ¶ 29.
At that time, the principal
balance remaining on LaCroix’s Mortgage was approximately $103,600.
See id.
On November 24, 2010, U.S. Bank sent LaCroix a second floodinsurance
notice,
explaining
sufficient coverage.”
that
he
“still
Id. ¶ 31; id. Ex. 6.
[did]
not
have
The notice stated that
if U.S. Bank did “not receive [notice of] adequate flood insurance
coverage by 11/9/2010,3 then as a federally regulated lender, U.S.
Bank [would be] required to lender place coverage.”
6.
Id. ¶ 31; Ex.
On December 15, 2010, U.S. Bank sent LaCroix an updated notice
of force-placed insurance.
Id. ¶ 32; id. Ex. 7.
The new policy
(Policy II) provided $93,814 in coverage and had an $844 premium.
Id. ¶ 32; id. Ex. 8.
Policy II had a backdate of November 9, 2010,
and replaced Policy I.
3
See id. ¶ 32 n.5; id. Ex. 8.
Policy II
This date was fifteen days before the date of the notice.
4
reiterated that “THIS INSURANCE WILL NOT PROVIDE AN AMOUNT OF
COVERAGE GREATER THAN THE NET AMOUNT YOU OWE ON THE MORTGAGE.”
Id. ¶ 34; id. Ex. 8.
Policy II also stated that “[c]overage under
this policy will only apply if the loss to the building exceeds the
amount of coverage provided by your flood insurance policy.”
Id.
¶ 34; id. Ex. 8.
LaCroix then contacted U.S. Bank regarding the additional
coverage.
In response, on January 3, 2011, U.S. Bank explained
that FEMA Guidelines require that “flood insurance coverage for a
condominium unit must be equal to the replacement cost of the
building
divided
by
the
number
of
units
in
the
building.”
Id. ¶ 36; id. Ex. 9.
On November 2, 2011, LaCroix filed this class-action complaint
alleging breach of contract, breach of the covenant of good faith
and fair dealing, unjust enrichment, breach of fiduciary duty and
violation of the Connecticut Unfair Trade Practices Act (CUTPA).
U.S. Bank moves to dismiss for failure to state a claim.
DISCUSSION
I.
Standard of Review
To survive a motion to dismiss for failure to state a claim,
“‘a complaint must contain sufficient factual matter, accepted as
true, to state a claim to relief that is plausible on its face.’”
Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 594 (8th Cir. 2009)
5
(quoting Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009)).
“A
claim has facial plausibility when the plaintiff [has pleaded]
factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.”
Iqbal, 129 S. Ct. at 1949 (citing Bell Atl. Corp. v. Twombly, 550
U.S. 544, 556 (2007)).
Although a complaint need not contain
detailed factual allegations, it must raise a right to relief above
the speculative level.
See Twombly, 550 U.S. at 555.
“[L]abels
and conclusions or a formulaic recitation of the elements of a
cause of action are not sufficient to state a claim.”
Iqbal, 129
S. Ct. at 1949 (citation and internal quotation marks omitted).
II.
Choice of Law
In diversity cases, the court applies “the choice of law
principles of the state in which the district court is located.”
Highwoods Props. Inc. v. Exec. Risk Indem., Inc., 407 F.3d 917, 920
(8th Cir. 2005) (citation omitted).
Minnesota courts generally
enforce the parties’ agreement regarding choice of law, absent
evidence that the agreement was made in bad faith or in an attempt
to evade the law of Minnesota.
Hagstrom v. Am. Circuit Breaker
Corp., 518 N.W.2d 46, 48 (Minn. Ct. App. 1994); see Miliken & Co.
v. Eagle Packaging Co., 295 N.W.2d 377, 380 n.1 (Minn. 1980).
In
this action, the Mortgage states: “This Security Instrument shall
be governed by Federal law and the law of the jurisdiction in which
the Property is located.”
Compl. Ex. 1 ¶ 14.
6
The property is
located in Manchester, Connecticut.
See id. ¶ 13.
There is no
evidence of bad faith or any attempt to evade the law of Minnesota.
Therefore, the court applies the substantive law of Connecticut.
III.
Breach of Contract
Under Connecticut law, a claim for breach of contract requires
“formation of an agreement, performance by one party, breach of the
agreement by the other party and damages.”
Chiulli v. Zola, 905
A.2d 1236, 1243 (Conn. App. Ct. 2006) (citation omitted).
LaCroix
argues that it was a breach of contract for U.S. Bank to require
flood insurance in excess of the principal balance of the Mortgage.
In response, U.S. Bank argues that it had discretion to determine
the applicable amount of flood insurance.4
Construction of a mortgage is governed by the principles of
contract interpretation.
See Jancewicz v. 1721, LLC, 39 A.3d 782,
784-85 (Conn. App. Ct. 2012).
“Where the language of the contract
is clear and unambiguous, the contract is to be given effect
according to its terms.
A court will not torture words to import
ambiguity where the ordinary meaning leaves no room for ambiguity.”
Ass’n Res., Inc. v. Wall, 2 A.3d 873, 898 (Conn. 2010) (citation
omitted). When interpreting a contract, “the intent of the parties
4
U.S. Bank concedes that LaCroix’s breach of contract claim
is not preempted by the National Bank Act (NBA). See Def.’s Mem.
Supp. 19; see also 12 C.F.R. § 34.4(b).
U.S. Bank does argue,
however, that LaCroix’s remaining claims are preempted by the NBA.
The court need not answer this question, because all of LaCroix’s
remaining claims fail irrespective of preemption.
7
is to be ascertained by a fair and reasonable construction of the
written words and ... the language used must be accorded its
common, natural, and ordinary meaning and usage where it can be
sensibly applied to the subject matter of the contract.”
Conn.
Light & Power Co. v. Lighthouse Landings, Inc., 900 A.2d 1242, 1253
(Conn. 2006) (citation omitted).
“Similarly, any ambiguity in a
contract must emanate from the language used in the contract rather
than from one party’s subjective perception of the terms.”
1253.
Id. at
(citation omitted).
LaCroix argues that only the third sentence of the Hazard
Provision applies to flood insurance. In support, LaCroix explains
that the third sentence contains specific language regarding flood
insurance that conflicts with the general language in the second
sentence of the Hazard Provision.
The third sentence requires
flood insurance “to the extent required by the Secretary [of HUD],”
whereas
the
second
the
sentence
maintained
in
amounts
requires.”
Compl. Ex. 1 ¶ 4.
states
and
for
that
the
“insurance
periods
shall
that
be
Lender
In response, U.S. Bank argues that
the Hazard Provision is unambiguous and provides it discretion to
determine the applicable amount of flood insurance.
Specific provisions of a contract control when in conflict
with general provisions.
See Kawasaki Kisen Kaisha Ltd. v. Regal-
Beloit Corp., 130 S. Ct. 2433, 2457 (2010).
There is, however, no
conflict or ambiguity within the Hazard Provision.
8
“The first two
sentences [of the Hazard Provision] afford the insurer discretion
to determine the amount of hazard insurance that the mortgagor must
maintain,” and “[t]he third sentence merely specifies the required
minimum coverage for flood insurance.”
Kolbe v. BAC Home Loans
Servicing, L.P., No. 11-10312, 2011 WL 3665394, at *4 (D. Mass.
Aug. 18, 2011) (citation omitted).
But see Wulf v. Bank of Am.,
N.A., 798 F. Supp. 2d 586, 588-89 (E.D. Pa. 2011) (affirming
decision by magistrate judge who found hazard language ambiguous,
but
noting
that
recommendations
briefing).
decision
and
could
was
have
“incongruous”
benefitted
with
from
FEMA
additional
Indeed, such an interpretation aligns with the HUD
requirement that “a special condition ... be included in the
mortgage commitment, to obtain and to maintain NFIP flood insurance
coverage.”
24 C.F.R. § 203.16a(a)(2).
In other words, the third
sentence is required by law and does not limit the amount of flood
insurance that the lender may require.
LaCroix also argues that the first sentence of the Hazard
Provision cannot pertain to flood insurance, because it uses the
specific
reference
language
“including
to “floods
or
fire,”
flooding.”
without
According
a
corresponding
to
LaCroix,
a
contrary interpretation would render superfluous the third sentence
of the Hazard Provision.
argument,
however, is
A necessary implication of LaCroix’s
that the
first
sentence
of
the
Hazard
Provision only applies to fire, and such an interpretation would
9
contradict the immediately preceding language requiring insurance
for “any hazard[], casualt[y], and contingenc[y].”
Compl. Ex. 1
¶ 4; see Christensen v. Harris Cnty., 529 U.S. 576, 583 (2000)
(noting that expression of one example does not suggest exclusion
of
others
when
context
does
not
indicate
exhaustive
list).
Moreover, the plain meaning of this language encompasses “floods or
flooding.”
See Kolbe, 2011 WL 3665394, at *3 (citation omitted);
Custer v. Homeside Lending, Inc., 858 So.2d 233, 247 (Ala. 2003)
(explaining that mortgage language, which included “other hazards,
casualties and contingencies,” covered flooding).5
Therefore, the
plain meaning of the hazard provision provides U.S. Bank discretion
to set the applicable amount of flood insurance, and the complaint
fails to state a claim for breach of contract.
IV.
Covenant of Good Faith and Fair Dealing
“[E]very contract carries an implied duty requiring that
neither party do anything that will injure the right of the other
to receive the benefits of the agreement.”
De La Concha of
Hartford, Inc. v. Aetna Life Ins. Co., 849 A.2d 382, 388 (Conn.
2004)
(citation
and
internal
quotation
marks
omitted).
“To
constitute a breach of [the implied covenant of good faith and fair
dealing], the acts by which a defendant allegedly impedes the
5
Further, it makes sense to omit reference to “floods or
flooding” in the first sentence of the Hazard Provision considering
that only a specific group of properties in SFHA zones are subject
to the NFIA flood-insurance requirement.
10
plaintiff’s right to receive benefits that he or she reasonably
expected to receive under the contract must have been taken in bad
faith.”
Renaissance Mgmt. Co. v. Conn. Hous. Fin. Auth., 915 A.2d
290, 298 (Conn. 2007) (alteration in original).
“Bad faith in
general implies both actual or constructive fraud, or a design to
mislead or deceive another, or a neglect or refusal to fulfill some
duty or some contractual obligation, not prompted by an honest
mistake as to one’s rights or duties, but by some interested or
sinister motive.”
19 Perry St., LLC v. Unionville Water Co., 987
A.2d 1009, 1025 (Conn. 2010) (citation omitted).
“Bad faith means
more than mere negligence; it involves a dishonest purpose.”
Id.
at 1025-26 (citation omitted).
LaCroix alleges several breaches of the covenant of good faith
and
fair
dealing,
including
charges
for
worthless
coverage,
backdated coverage, receipt of kickbacks, excessive coverage and
misrepresentation of flood-insurance requirements.
A.
Worthless Coverage
LaCroix first argues that U.S. Bank charged him for coverage
that was not provided.
In support, LaCroix explains that both
notices of force-placed coverage stated that “THIS INSURANCE WILL
NOT PROVIDE AN AMOUNT OF COVERAGE GREATER THAN THE NET AMOUNT YOU
OWE ON THE MORTGAGE.”
Compl. Exs. 5, 8.
As such, LaCroix argues
that the policies were worthless to the extent that they, in
conjunction with the Condominium Policy, exceeded the outstanding
11
principal balance of the Mortgage.
The court disagrees.
First,
the statement is true, neither policy provides a coverage amount
greater than LaCroix’s mortgage.
Further, boilerplate language in
the Mortgage cannot be understood to override the specific, stated
amount of coverage. See id. Ex. 5 (“Amount of Coverage: $64,488”);
id. Ex. 8 (“Amount of Coverage: $93,814”); see also Shiftlet v.
Allstate
Ins.
Co.,
451
F.
Supp.
2d
763,
774
(D.S.C.
2006)
(“Plaintiff may claim damages in the amount of the contractually
stated amount of coverage indicated on the face of the Policy
....”). Therefore, no “worthless” coverage existed, and this claim
fails.
B.
Backdated Coverage
LaCroix next argues that it was improper for U.S. Bank to
purchase backdated flood insurance. Policy I was dated January 27,
2010, and backdated to January 1, 2010.
See Compl. Ex. 5.
Similarly, Policy II was dated December 15, 2010, and backdated to
November 9, 2010.
See id. Ex. 8.
Backdating policies, however,
ensures that the property is continuously covered in the event that
a loss occurs during a period of insufficient coverage.
See Webb
v. Chase Manhattan Mortg. Corp., No. 2:05-cv-0548, 2008 WL 2230696,
at *19 (S.D. Ohio May 28, 2008).
Moreover, the backdating was for
a period of less than two months, and such a practice cannot allow
12
a plausible inference of a “design to mislead” or “involve[] a
dishonest purpose.”
19 Perry St., LLC, 987 A.2d at 1025-26.
Therefore, dismissal of this claim is warranted.
C.
Receipt of Kickbacks
LaCroix next argues, “[o]n information and belief,” that U.S.
Bank received kickbacks or commissions when force placing his
policies.
outlining
insurance.
In
the
support,
LaCroix
procedures
that
attaches
banks
an
take
internet
when
force
article
placing
The article neither identifies U.S. Bank nor LaCroix’s
insurance provider, American Security Insurance Company (ASIC).6
See Compl. Ex. 11.
Also, LaCroix explains that ASIC is alleged to
have paid commissions to other lenders.
See Hofstetter v. Chase
Home Fin., LLC, No. C 10-01313, 2011 WL 1225900, at *3 (N.D. Cal.
Mar.
31,
2011).
In
response,
U.S.
Bank
argues
that
such
allegations fail under Twombly.
The Eighth Circuit Court of Appeals has yet to address whether
a pleading based on “information and belief” is sufficient to state
a claim. Other courts reach different conclusions. Compare Arista
Records, LLC v. Doe 3, 604 F.3d 110, 120 (2d Cir. 2010) (“The
Twombly plausibility standard, which applies to all civil actions,
does not prevent a plaintiff from pleading facts alleged ‘upon
information and belief’ where the facts are peculiarly within the
6
At oral argument, LaCroix explained that ASIC
subsidiary of an insurance company discussed in Exhibit 11.
is no corresponding allegation in the complaint.
13
is a
There
possession and control of the defendant.”) (citations omitted); and
Frerck v. Pearson Educ., Inc., No. 11-cv-5319, 2012 WL 1280771, at
*3
(N.D.
Ill.
Apr.
16,
2012)
(collecting
cases
that
allow
“information and belief” pleading), with Harmon v. Unisys Corp.,
356 F. App’x 638, 641 (4th Cir. 2009) (“conclusory allegations”
made upon “information and belief” are “insufficient to defeat a
motion to dismiss”); and Solis v. City of Fresno, No. 1:11-CV00053, 2012 WL 868681, at *8 (E.D. Cal. Mar. 13, 2012) (“In the
post-Twombly and Iqbal era, pleading on information and belief,
without more, is insufficient to survive a motion to dismiss for
failure to state a claim.”); and Bright v. Evonik Cyro, LLC, No.
3:11-cv-00180, 2012 WL 811221, at *2-3 (E.D. Ark. Mar. 12, 2012)
(same).
The court need not answer the specific question of whether
“information and belief” pleading is sufficient to state a claim
for relief, because LaCroix’s complaint contains no factual support
underlying the allegation that U.S. Bank profited from the forceplaced policy. Alleging that nonparty ASIC has engaged in kickback
schemes
with
other
lenders,
without
specific
facts
regarding
LaCroix’s insurance policy or U.S. Bank’s protocol regarding forceplaced insurance, is purely speculative and not sufficient to state
a
claim
for
relief.
Therefore,
warranted.
14
dismissal
of
this
claim
is
D.
Excessive Coverage
LaCroix
also
argues
that
U.S.
Bank
provided
excessive
coverage. As already discussed, the Mortgage allowed insurance “in
the amounts and for the periods that [U.S. Bank] requires.” Compl.
Ex. 1 ¶ 4.
E.
Therefore, dismissal of this claim is warranted.
Misrepresentation of Flood-Insurance Requirements
1.
Letter Dated November 16, 2009
The first notice of insufficient coverage stated that “[t]he
coverage
amount
insufficient
to
Protection Act.”
on
meet
[your]
the
flood
insurance
requirements
of
Compl. Ex. 3.
the
policy
Flood
...
is
Disaster
Further, the notice stated: “You
should, at your expense, maintain flood insurance in an amount at
least equal to the lesser of: (1) The replacement cost of your
dwelling; [or] (2) The maximum available under the National Flood
Insurance Program, currently $250,000.00.”
Id.
LaCroix argues
that the FDPA only requires flood insurance up to the outstanding
principal balance of the loan, and thus U.S. Bank misrepresented
federal law.
The court disagrees.
Since LaCroix’s flood insurance coverage was less than the
outstanding principal balance on the Mortgage, it was proper for
the first paragraph of the November 16, 2009, notice to state that
LaCroix’s flood insurance was less than that required by law.
Compare id. ¶ 23 (Condominium Policy Coverage: $69,387.50), with
id. ¶ 29 (Outstanding Principal Balance: $103,600).
15
Further, it
was
acceptable
for
replacement value.
law.
U.S.
Bank
to
request
flood
insurance
at
U.S. Bank did not claim to represent federal
Instead, it stated that LaCroix “should, at [his] expense,
maintain flood insurance in an amount at least equal to ... [t]he
replacement cost” of his condominium.
Id. Ex. 3 (emphasis added).
This permissive recommendation is acceptable given that the FDPA
only sets a minimum coverage requirement. 42 U.S.C. § 4012a(b)(1).
Indeed,
FEMA
Guidelines7
explain
that
insuring
a
condominium
building to its full replacement value “is the correct way to
insure a residential condominium building against flood loss.”8
See FEMA, Nat’l Flood Insurance Program, Mandatory Purchase of
Flood
Insurance
Guidelines].9
Guidelines
46
(2007)
[hereinafter
FEMA
Thus, U.S. Bank did not misrepresent federal law in
its November 16, 2009, letter.
7
Agency guidelines are not “controlling upon courts by
reason of their authority, [but they] do constitute a body of
experience and informed judgment to which courts and litigants may
properly resort for guidance.” Meritor Sav. Bank v. Vinson, 477
U.S. 57, 65 (1986)
8
LaCroix argues that this language only applies to
condominium buildings and not individual units.
This argument
fails, because if each unit is not insured to its full replacement
value, it would be impossible to insure the “building” at
replacement value.
9
The
FEMA
Guidelines
are
http://www.fema.gov/library/viewRecord.do?id=2954.
16
found
at
2.
Letter Dated January 3, 2011
Lacroix also argues that U.S. Bank misrepresented federal
flood insurance requirements in its January 3, 2011, letter.
Specifically, U.S. Bank stated that “flood insurance coverage for
a condominium unit must be equal to the replacement cost of the
building divided by the number of units in the building.”
9.
Id. Ex.
LaCroix argues that FEMA only requires insurance up to the
outstanding balance of the loan.
FEMA Guidelines require that flood insurance “on a condominium
unit be at the minimum the lowest of, but may exceed ... [t]he
outstanding balance of the loan.”
FEMA Guidelines 46.
Although
the outstanding balance method is the minimum, FEMA recommends that
lenders “requir[e] that condominium
their full [replacement cost value].”
buildings be insured ... to
Id. at 47; see also id. at
46 (“[T]he correct way to insure a residential condominium building
against flood loss” is to obtain replacement value coverage.).
As an initial matter, the court has already determined that
U.S. Bank had the contractual right to require LaCroix to retain
flood insurance at replacement value, and doing so cannot be bad
faith.
Moreover, the January 3, 2011, letter is merely a response
to LaCroix’s question about why U.S. Bank required additional
insurance.
This mere explanation cannot be viewed as fraudulent.
17
The operative act, force placing insurance in accordance with the
Mortgage, was not in bad faith. Therefore, dismissal of this claim
is warranted.
V.
Unjust Enrichment
LaCroix next raises a claim for unjust enrichment.
To state
a claim for unjust enrichment, a plaintiff must show: “(1) that the
defendants were benefited, (2) that the defendants unjustly did not
pay the plaintiffs for the benefits, and (3) that the failure of
payment was to the plaintiffs’ detriment.”
Vertex Inc. v. City of
Waterbury, 898 A.2d 178, 188 n.12 (Conn. 2006) (citation omitted).
The basis for LaCroix’s unjust enrichment claim is that U.S. Bank
retained improper kickbacks and commissions in conjunction with
purchase of force-placed insurance.
As already discussed, these
allegations fail under Twombly. Therefore, dismissal of this claim
is warranted.
VI.
Fiduciary Duty
LaCroix next raises a claim for breach of fiduciary duty.
“A
fiduciary or confidential relationship is characterized by a unique
degree of trust and confidence between the parties, one of whom has
superior knowledge, skill or expertise and is under a duty to
represent the interests of the other ....” Cadle Co. v. D’Addario,
844 A.2d 836, 847 (Conn. 2004).
Specifically, LaCroix argues that U.S. Bank breached its
fiduciary duty by purchasing unwanted flood insurance, profiting
18
from the purchase of flood insurance and purchasing backdated
insurance.
See Compl. ¶ 74.
Even assuming that a fiduciary
relationship exists between the parties, LaCroix’s claim fails. As
already discussed, U.S. Bank did not breach the Mortgage and both
the kickback and backdated-policy arguments fail.
Therefore,
dismissal of LaCroix’s fiduciary duty claim is warranted.
VII.
CUTPA
Under CUTPA “[n]o person shall engage in unfair methods of
competition and unfair or deceptive acts or practices in the
conduct of any trade or commerce.”
Conn. Gen. Stat. § 42-110b(a).
To determine whether a practice violates CUTPA, a court considers:
“(1)
whether
the
practice,
without
necessarily
having
been
previously considered unlawful, offends public policy as it has
been established by statutes, the common law, or otherwise ...;
(2) whether it is immoral, unethical, oppressive, or unscrupulous;
[and] (3) whether it causes substantial injury to consumers (or
competitors or other businessmen).” Monetary Funding Grp., Inc. v.
Pluchino,
867 A.2d
841,
413
(Conn. App.
Ct.
2005)
(citation
omitted).
“A practice may be unfair because of the degree to which
it meets one of the criteria or because to a lesser extent it meets
all three.”
Naples v. Keystone Bldg. & Dev. Corp., 990 A.2d 326,
337 (Conn. 2010) (citation omitted).
LaCroix argues a violation of CUTPA based on U.S. Bank’s
alleged breach of contract.
Because U.S. Bank did not breach the
19
Mortgage,
dismissal
Connecticut
has
of
set
this
forth
claim
a
is
warranted.
three-part
Moreover,
substantial
injury
criterion: “(1) [the injury] must be substantial, (2) it must not
be outweighed by any countervailing benefits to consumers or
competition that the practice produces; and (3) it must be an
injury
that
consumers
themselves
could
not
reasonably
have
avoided.” Hartford Elec. Supply Co. v. Allen–Bradley Co., 736 A.2d
824, 843 (Conn. 1999) (citation omitted).
The insurance conferred
a benefit on LaCroix, and he could have avoided any alleged injury
by
purchasing
his
own
flood
insurance.
Therefore,
for this
additional reason, dismissal of this claim is warranted.
CONCLUSION
Accordingly, based on the above, IT IS HEREBY ORDERED that the
defendant’s motion to dismiss [ECF No. 4] is granted.
LET JUDGMENT BE ENTERED ACCORDINGLY.
Dated:
June 20, 2012
s/David S. Doty
David S. Doty, Judge
United States District Court
20
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