HOSSAIN v. AMERICAN SECURITY INSURANCE COMPANY et al
Filing
6
MEMORANDUM OPINION. Signed by Chief Judge Jerome B. Simandle on 2/8/2016. (dmr)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
MOHAMMAD HOSSAIN,
HONORABLE JEROME B. SIMANDLE
Plaintiff,
Civil Action No.
15-8138 (JBS/KMW)
v.
AMERICAN SECURITY INSURANCE
COMPANY, JOHN DOES 1-5, and
ABC CORPS 1-3 (Fictitious
Names),
MEMORANDUM OPINION
Defendants.
SIMANDLE, Chief Judge:
This action arises out of the distribution of settlement
proceeds following an insurance claim for damages sustained to
Plaintiff Mohammad Hossain’s (hereinafter, “Plaintiff”) multiunit residential complex (hereinafter, the “property”) on
November 20, 2014.
More specifically, in the aftermath of
severe fire damage, Plaintiff filed a claim against a fire
hazard insurance policy issued by Defendant American Security
Insurance Company (hereinafter, “Defendant”).
In partially
resolving the claim, however, Defendant disbursed an insurance
settlement check to Plaintiff (as the borrower) and to M&T Bank
(as the named insured).
Nevertheless, Plaintiff claims that M&T
Bank holds no mortgage or insurable interest in the property,
and therefore has no right to be listed as a payee on the
insurance check.
As a result, Plaintiff filed (with counsel) an
essentially two-Count “Petition and Order to Show Cause”
(hereinafter, the “Petition”)1 seeking a declaration that M&T
Bank has no interest in the insurance policy, and damages for
Defendant’s “bad faith” refusal to investigate the proper payee
on Plaintiff’s insurance claim.2
Following removal, Defendant now moves to dismiss
Plaintiff’s Petition on the grounds that he lacks standing under
the insurance agreement to sue Defendants (see Def.’s Br. at 713), and because he has not alleged, and cannot allege, that
Defendant violated the terms of the insurance agreement.
id. at 16-18.)
(See
In fact, Defendant claims that it did little
more than issue a settlement check in accordance with the plain
terms of the insurance policy.
(See id. at 3.)
1
Plaintiff has
Plaintiff’s state court Petition included the following
documents: (1) a Notice of Motion for an Order to Show Cause;
(2) the Petition; (3) a Brief in Support of the Petition; (4)
the Certification of Plaintiff with exhibits; (5) the
Certification of Counsel with exhibits; (6) a proposed Order to
Show Cause; and (7) a Proof of Service. In reviewing
Plaintiff’s allegations, the Court has considered these
documents together.
2 In addition, Plaintiff asserted a third Count for “Unknown
Entity Liability,” in which he claims that various fictitious
entities act as “the true insurers of Defendant[]” and are
therefore “responsible” for Defendant’s wrongful conduct.
(Pl.’s Pet. at 5 ¶¶ 1-3.) For the reasons that follow,
Plaintiff’s Petition will be dismissed. This dismissal will,
however, be without prejudice to Plaintiff’s right to identify
these fictitious entities, if any, and to pursue this claim in
his amended pleading.
2
filed no opposition, nor otherwise demonstrated an ongoing
interest in pursuing this litigation.3
This Court has jurisdiction based on diversity of
citizenship, 28 U.S.C. § 1332, and the case was properly removed
to this Court.
The straightforward issues presented by the pending motion
concern whether Plaintiff has standing to pursue his claims,
and, if so, whether he has stated plausible claims for relief.
For the reasons that follow, Defendant’s unopposed motion to
dismiss will be granted.
1.
The Court finds as follows:
Factual and Procedural Background.4
In 2005, Plaintiff
purchased the property through an “initial purchase money
3
The deadline to file opposition expired on December 21, 2015,
and neither Plaintiff nor his counsel have contacted the Court
(or otherwise prosecuted this action) since Defendant’s removal
of this action on November 18, 2015. Indeed, despite service of
the Notice of Removal, the pending motion, and various other
Court documents (including one that specifically directed him to
file an appearance through a member of the Bar of this Court),
counsel for Plaintiff has never even entered an appearance in
this action. [See Docket Items 1-12, 2, & 5-14.]
4 The Court notes, at the outset, that although Plaintiff’s
pleading – a petition, brief, and two support certifications –
sketches out the general contours of his case, it offers little
in terms of clarifying details. Nevertheless, for purposes of
the pending motion, the Court accepts as true the version of
events set forth in Plaintiffs’ Petition, together with its
various exhibits. See Schmidt v. Skolas, 770 F.3d 241, 249 (3d
Cir. 2014); see also ACR Energy Partners, LLC v. Polo N. Country
Club, Inc., ___ F. Supp. 3d ____, Nos. 15-2677 & 15-5324, 2015
WL 6757574, at *1 n.2 (D.N.J. 2015) (same). In addition, the
Court looks to “documents integral to or explicitly relied upon
in the” Petition, along with “undisputedly authentic
document[s]” attached to Defendant’s motion which provide a
3
mortgage” with Wells Fargo Bank.
(Smith Cert. at ¶ 14.)
Following refinancing with various financial institutions, on
April 4, 2014 (id. at ¶¶ 15-17), J.P. Morgan Chase Bank,
National Association (hereinafter, “J.P. Morgan”) assigned all
of its rights in Plaintiff’s mortgage to Bayview Loan Servicing
(hereinafter, “Bayview Servicing”).
(Id. at ¶¶ 17-18.)
As a
clear basis for Plaintiff’s claims. In re Rockefeller Ctr.
Props., Inc. Sec. Litig., 184 F.3d 280, 287 (3d Cir. 1999)
(citations omitted). For that reason, the Court considers, as
it must, Defendant’s insurance policy (a document Plaintiff
explicitly relies upon in his pleading), as well as the
undisputedly authentic documents evidencing Bayview Servicing’s
retention of M&T Bank as the servicer for Plaintiff’s mortgage
(a document which, again, informs the circumstances described in
Plaintiff’s pleading), and those documents that explain the
issuance by Defendant of a lender-placed hazard insurance
policy. See Inacio v. State Farm Fire & Cas. Co., No. 14-4953,
2015 WL 457049, at *1 n.2 (D.N.J. Feb. 3, 2015) (considering
policy documents, among other documents concerning the same
policy and property at issue in the complaint, in connection
with a motion to dismiss). Indeed, although Plaintiff takes the
position that M&T Bank has no “secured interest” in the property
(a position equally recognized by Defendant), Plaintiff readily
acknowledges in his Petition that M&T Bank took some part in the
issuance of the hazard policy. (Pl.’s Pet. at ¶ 8 (explaining
that M&T Bank “is listed as an insured” on Defendant’s insurance
policy); Pl.’s Pet. Br. at 3-5 (“Defendant had listed M & T as
an insured, but it has never had any recorded interest in any
mortgage nor any other ownership interest in the property.”).)
Even more, at least one of Plaintiff’s own documents identifies
M&T Bank as the insured party. (See, e.g., Ex. A to Smith Pet.
Cert.) The documents attached to Defendant’s motion, in turn,
explain and clarify the circumstances otherwise alluded to
Plaintiff’s pleading, especially those concerning the
origination of the insurance policy relied upon by Plaintiff.
(See, e.g., Exs. H & I to Def.’s Br.) As a result, and based
upon Plaintiff’s own allegations, the Court finds them
appropriate for consideration in connection with the pending
dismissal motion.
4
result of these assignments, Bayview Servicing acted as “the
owner of the mortgage” at all times relevant to this litigation,
including at the time of the fire.
(Smith Cert. at ¶ 22.)
Following this assignment, however, it selected M&T Bank “to
service” Plaintiff’s loan on its behalf, and as a result, M&T
Bank began accepting mortgage payments from Plaintiff effective
February 15, 2014.
2.
(Ex. I to Def.’s Br.)
On June 26, 2014, M&T Bank advised Plaintiff that “it
ha[d] been at least 60 days since [his hazard insurance] policy
expired or canceled.”
(Ex. H to Def.’s Br.)
As a result, M&T
Bank secured a “lender-placed hazard insurance policy” for the
property, with an effective date of February 15, 2015, and with
a coverage amount “equal to the outstanding principal balance of
[Plaintiff’s] loan.”
(Id.)
The declarations for the “lender-
placed,” or “Mortgagee’s Interest Protection,” insurance policy,
in turn, identified “M&T BANK ITS SUCCESSORS AND/OR ASSIGNS” as
the “NAMED INSURED,” listed Plaintiff as the “BORROWER,” and
described the covered property as 22 S. Nashville Avenue,
Ventnor City, New Jersey 08406 (e.g., Plaintiff’s property).
(Id. (emphasis in original).)
The endorsements to the policy
then explained, as relevant here, that all loss payments would
“be made payable to the named insured and the borrower as their
interests appear, either by a single instrument or by separate
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instruments payable respectively to the named insured and the
borrower, at [Defendant’s] option.”
3.
(Id.)
On November 20, 2014, a fire at the property left
Plaintiff’s units “unlivable.”
(Pl.’s Pet. Cert. at ¶ 3.)
As a
result, Plaintiff filed an insurance claim with Defendant, and
hired a public adjuster “to assist in the adjustment of the
loss.”
(Id. at ¶ 4.)
Following “dealings” with the public
adjuster, on February 13, 2015, Defendant issued a $163,601.83
insurance settlement check, listing both Plaintiff and M&T Bank
as the payees.5
(Id. at ¶ 6; see also Smith Pet. Cert. at ¶ 7;
Ex. A to Smith Pet. Cert.)
Counsel for Plaintiff, Keith T.
Smith, Esq., contacted Defendant and asked that it “reissue the
check” to Plaintiff only, because “M&T Bank had no interest and
no mortgage.”
(Smith Pet. Cert. at ¶ 8.)
Nevertheless, based
upon the terms of its insurance policy, Defendant “refuse[d] to
re-issue the original check and any supplemental check for [the]
loss” in Plaintiff’s name only.
(Id. at ¶ 9.)
As a result,
Plaintiff claims that he has been unable to make necessary
repairs, and that the City of Ventnor has “threaten[ed] to raze
the remaining building.”6
(Pl.’s Pet. at 3 ¶ 10.)
5
Despite the amount of the insurance settlement Defendant,
Plaintiff’s public adjuster “estimated the loss at $485,451.91.”
(Id. at ¶ 5 (citing Ex. A to Pl.’s Pet. Cert.).)
6 Plaintiff’s Petition provides no detail concerning M&T Bank’s
position on the check.
6
4.
Against that backdrop, on October 30, 2015, Plaintiff
filed the pending Petition (with counsel) in New Jersey state
court, seeking essentially a declaration that M&T Bank has “no
interest in the [insurance] policy,” and asserting that
Defendant acted “in bad faith by refusing to investigate” the
proper payee under the insurance policy.
(Id. at 4 ¶ A, 4 ¶ 3.)
Defendant removed the Petition to this federal court on November
18, 2015 [see Docket Item 1], and the pending motion to dismiss
followed.
5.
[See Docket Item 4.]
As explained above, Defendant takes issue with
Plaintiff’s Petition on the grounds that he lacks standing to
pursue his claims and because he purportedly fails, in any
event, to state plausible claims for relief.
Def.’s Br. at 7-18.)
6.
(See generally
The Court will address each issue in turn.
Standard of Review Applicable to Defendant’s Standing
Challenges.
“Article III of the United States Constitution
limits the jurisdiction of federal courts to Cases and
Controversies, U.S. Const. Art. III, § 2.”
Constitution Party
of Pa. v. Aichele, 757 F.3d 347, 357 (3d Cir. 2014) (internal
quotations and citation omitted).
Measured against this rubric,
the concept of standing concerns “the constitutional power of a
federal court to resolve a dispute.”
Graden v. Conexant Sys.
Inc., 496 F.3d 291, 295 (3d Cir. 2007) (citation omitted).
order to establish Article III standing, a plaintiff must
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In
demonstrate “‘(1) an [actual, concrete, and particularized]
injury-in-fact, (2) a sufficient causal connection between the
injury and the conduct complained of, and (3) a likelihood that
the injury will be redressed by a favorable decision.’”
Finkelman v. Nat’l Football League, ___ F.3d ____, No. 15-1435,
2016 WL 158507, at *4 (3d Cir. Jan. 14, 2016) (citations
omitted); see also Neale v. Volvo Cars of N. Am., LLC, 794 F.3d
353, 358–59 (3d Cir. 2015) (same).
In order to survive a motion
to dismiss for lack of standing, as here, a plaintiff “‘must
alleged facts that affirmatively and plausibly suggest that it
has standing to sue.’”
Finkelman, ___ F.3d ____, 2016 WL
158507, at *5 (citation omitted).
7.
Discussion.
Here, Defendant takes the position that
Plaintiff cannot demonstrate a qualifying injury, nor a
sufficient causal connection between his claimed injury and
alleged damages, because it disbursed the settlement proceeds
“exactly according to the terms of the Policy.”
10-13 (emphasis in original).)
(Def.’s Br. at
Stated differently, Defendant
argues that Plaintiff’s claims, at their core, present little
more than a challenge to the manner in which Defendant
“properly” disbursed the insurance settlement proceeds.
10.)
(Id. at
In that way, Defendant essentially takes the position that
Plaintiff lacks constitutional standing because his claims lack
merit.
Defendant’s position, however, misses the mark.
8
8.
Unlike a Rule 12(b)(6) dismissal analysis, a
constitutional standing inquiry is not directed at assessing
whether a plaintiff presents plausible and/or facially
meritorious claims.
Rather, the inquiry focuses, as explained
above, on whether the plaintiff suffered “‘personal and
individual’” harm, caused (indirectly or otherwise) by “the
defendant’s challenged conduct” (whether wrongful or not).
Freeman v. Corzine, 629 F.3d 146, 153 (3d Cir. 2010) (citations
omitted).
Plaintiff in this instance easily meets this minimum
threshold, even though the Court finds his claims otherwise
subject to dismissal.
9.
Indeed, as the “BORROWER” on the insurance policy and
a named payee on the disputed settlement check, Plaintiff’s
allegations show, at a minimum, that he has suffered “‘a
palpable and distinct harm’” on account of his inability to
perform necessary property repairs (based, presumably, upon his
inability to cash the settlement check without the endorsement
of M&T Bank).
Id.
This alleged harm, in turn, plainly resulted
from the manner in which M&T Bank disbursed the settlement
proceeds, even if, again, that disbursement occurred consistent
with the terms of the policy.
10.
Against this backdrop, the Court finds Plaintiff’s
allegations sufficient to meet the low bar imposed by federal
constitutional standing jurisprudence.
9
See The Pitt News v.
Fisher, 215 F.3d 354, 360 (3d Cir. 2000) (emphasis in original)
(citations omitted) (explaining that, in order to “demonstrate
its standing to sue, a plaintiff must only allege that [it]
ha[s] suffered sufficient injury to comply with Article III's
“case or controversy”) requirement”); Geisenberger v. Gonzales,
346 B.R. 678, 681 (E.D. Pa. 2006) (citations omitted)
(explaining that the standing “hurdle is not a high one”).
Nevertheless, the Court still finds Plaintiff’s Petition subject
to dismissal for failure to state a plausible claims for relief,
as now explained.
11.
Standard of Review Applicable to Defendant’s
Plausibility Challenges.
Under Federal Rule of Civil Procedure
12(b)(6), the court must generally accept as true the factual
allegations of the plaintiff’s claims, and construe all
“reasonable inferences” in the light most favorable to the
plaintiff.
Revell v. Port Auth. of N.Y., N.J., 598 F.3d 128,
134 (3d Cir. 2010); see also Fleisher v. Standard Ins. Co., 679
F.3d 116, 120 (3d Cir. 2012) (same).
Nevertheless, the “well-
pled factual allegations” must be sufficient to demonstrate a
plausible “entitlement to relief.”
Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S.
544, 570 (2007)); see also Umland v. PLANCO Fin. Serv., Inc.,
542 F.3d 59, 64 (3d Cir. 2008).
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12.
Discussion.
Plaintiff’s Petition requires no complex
inquiry, because his allegations, even accepted as true, prove
plainly insufficient to state plausible claims for relief.
Indeed, although dressed in different terms (one for declaratory
judgment and the other for bad faith), the two Counts of
Plaintiff’s Petition rest upon one fatally flawed premise,
namely, the notion that Defendant somehow violated the terms of
the insurance policy, by disbursing a check in the name of a
party (here, M&T Bank) with supposedly no relationship to
Plaintiff’s property or to the insurance policy itself.
(See
generally Pl.’s Pet.)
13.
In that way, though, Plaintiff’s claims, as presently
fashioned, reflect either a misunderstanding of the plain mutual
rights and obligations of Defendant, M&T Bank, and Plaintiff, or
simply a disregard for the realities of this arrangement.
Indeed, the insurance policy names, on its face, M&T Bank as the
“NAMED INSURED” and lists Plaintiff as the “BORROWER.”
to Def.’s Br.)
(Ex. H
The insurance policy then explains that loss
payments “will be made payable to the named insured and the
borrower as their interests appear.”
(Id. (emphasis added).)
In other words, the check would, as occurred here, be disbursed
to M&T Bank as the “Insured” and Plaintiff as the “Borrower.”
(Ex. A to Smith Pet. Cert.)
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14.
In view of the clear dictates of the insurance policy,
Plaintiff has not alleged any policy violation by Defendant,
much less provided any factual support for a bad faith claim or
for his position that M&T Bank should not have been included on
the disbursement check.
Indeed, Plaintiff’s claims entirely
ignore the policy provisions, as well as unambiguous
identification of M&T Bank as the “Named Insured,” all as
confirmed by the undisputed documents referenced in the Petition
herein.7
(See generally Pl.’s Pet.)
In light of these pleading
deficiencies, Defendant’s unopposed motion to dismiss will be
granted for failure to state a claim.8
15.
An accompanying Order will be entered.
February 8, 2016
Date
s/ Jerome B. Simandle
JEROME B. SIMANDLE
Chief U.S. District Judge
7
Nor, for that matter, has Plaintiff come forward with any
additional explanation in opposition to the pending motion.
8 The Court has serious doubts concerning whether any amount of
pleading supplementation and/or discovery would add life to
Plaintiff’s claims. Nevertheless, the Court leaves open the
possibility that additional allegations may bring into focus the
basis, if any, for Plaintiff’s challenges to Defendant’s
settlement disbursement. For that reason, the Court will permit
Plaintiff, if desired, to file an amended pleading within
fourteen (14) days, addressing the many deficiencies noted
herein.
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