Curtis v. Cenlar FSB et al
Filing
39
OPINION & ORDER re: 12 MOTION to Dismiss. filed by Assurant, Inc., American Security Insurance Company. The Assurant defendants' June 7, 2013 motion to dismiss is granted in its entirety. All claims against American Security and Assurant are dismissed. (Signed by Judge Denise L. Cote on 11/12/2013) Copies Mailed By Chambers (djc) Modified on 11/13/2013 (djc).
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
-------------------------------------- X
:
:
THOMAS M. CURTIS,
:
Plaintiff,
:
-v:
:
CENLAR FSB, d/b/a CENTRAL LOAN
:
ADMINISTRATION & REPORTING; CENLAR
:
AGENCY, INC., FEDERAL HOME LOAN
:
MORTGAGE CORPORATION; AMERICAN
:
SECURITY INSURANCE COMPANY; and
:
ASSURANT, INC.,
:
:
Defendants.
:
:
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13 Civ. 3007 (DLC)
OPINION & ORDER
APPEARNACES:
For the plaintiff:
Thomas M. Curtis, proceeding pro se
1385 York Avenue, Suite 32-B
New York, NY 11021
For the defendants Assurant, Inc., and American Security
Insurance Company:
Robert D. Helfand
Jorden Burt
Jorden Burt, LLP
175 Powder Forest Drive, Suite 301
Simsbury, CT 06089
Andrew T. Solomon
Karen E. Abravanel
Sullivan & Worcester, LLP
1633 Broadway
New York, NY 10019
DENISE COTE, District Judge:
On June 7, 2013, defendants Assurant, Inc. (“Assurant”) and
American Security Insurance Company (“American Security”)
(collectively “Assurant defendants”) filed a motion to dismiss
the complaint of pro se 1 plaintiff Thomas M. Curtis (“Curtis”) on
the grounds that Curtis lacks standing to sue them and that he
fails to state a claim upon which relief can be granted.
R. Civ. P. 12(b)(1), 12(b)(6).
Fed.
For the following reasons the
motion to dismiss is granted pursuant to Rule 12(b)(6).
BACKGROUND
This action arises out of a dispute over whether Curtis was
required to purchase wind insurance on a second home located in
West Palm Beach, Florida.
the second home.
In December 2008, Curtis purchased
Curtis’s mortgage is held by co-defendant
Federal Home Loan Mortgage Corporation (“Freddie Mac”) and is
serviced by co-defendant Cenlar, FSB, and/or Cenlar Agency, Inc.
(collectively “Cenlar”).
The Mortgage provides in relevant part
that:
Borrower shall keep the improvements now existing or
hereafter erected on the Property insured against loss by
fire, hazards included within the term ‘extended coverage,’
and any other hazards including, but not limited to,
earthquakes and floods, for which Lender requires
insurance.
1
Mr. Curtis is an attorney.
2
Concurrently with the purchase of the home, Curtis acquired a
homeowners property insurance policy.
coverage for damage caused by wind.
The policy excluded
Curtis renewed the
insurance policy each year thereafter with some modifications,
but he never obtained wind coverage.
In October 2012, Cenlar sent a letter to Curtis informing
him that the terms of his mortgage purportedly required him to
acquire wind insurance.
Curtis responded that wind coverage was
not specifically required by his mortgage and that Cenlar had
accepted his insurance policy for the prior three years.
Following Curtis’s refusal to purchase wind coverage, Cenlar
purchased a policy which included wind coverage on his behalf at
an annual premium of $7,512.91, which was billed to Curtis’s
escrow account.
That policy was issued by American Security, a
co-defendant and movant here.
American Security is a subsidiary
of Assurant, also a co-defendant and movant here.
On April 4, 2013, Curtis filed this complaint against
Cenlar, Freddie Mac, American Security, and Assurant in the
Supreme Court of the State of New York, County of New York.
Curtis makes several claims against the various defendants in
his complaint.
Only one of the claims is alleged against the
two moving Assurant defendants. 2
Curtis claims that an
2
Curtis styles this claim as two different “causes of action”
against the Assurant defendants. But they are both predicated
3
arrangement between Cenlar and the Assurant defendants
improperly inflated the price of the insurance policy placed on
his home by Cenlar.
Curtis alleges that “Cenlar direct[ed] its
right to contract for property insurance on behalf of lenders
pursuant to mortgage requirements to American Security,” and
that “[t]he actual cost of the insurance thus placed is inflated
by commissions and other remuneration paid to Cenlar.”
He
argues that inflating the price of insurance in this manner
violates the Florida Deceptive and Unfair Trade Practices Act,
which provides that “[u]nfair methods of competition,
unconscionable acts or practices, and unfair or deceptive acts
or practices in the conduct of any trade or commerce are hereby
declared unlawful.”
Fla. Stat. § 501.204(1).
Curtis seeks “not
less than $50,000” in damages, and attorneys fees and a
declaratory judgment.
On May 3, 2013, American Security filed a Notice of Removal
to this Court.
On June 14, 2013, Curtis filed a motion to
remand this case to state court on the ground that this Court
lacked subject matter jurisdiction over the claims.
The motion
to remand was denied in an Opinion and Order of October 3, 2013.
See Curtis v. Cenlar FSB, 13 CIV. 3007 (DLC), 2013 WL 5495554
on identical purportedly improper conduct by the Assurant
defendants, and the only difference between them is that Curtis
seeks damages in one and attorneys fees and a declaratory
judgment in the other. They will be treated as one claim here.
4
(S.D.N.Y. Oct. 3, 2013).
On June 7, 2013, the Assurant
defendants filed this motion to dismiss for lack of standing,
pursuant to Rule 12(b)(1), and for failure to state a claim upon
which relief can be granted, pursuant to Rule 12(b)(6).
At a
June 14 conference Curtis represented that he did not wish to
amend his complaint in response to the motion to dismiss.
DISCUSSION
Although the Assurant defendants bring their motion to
dismiss under both standing and failure to state a claim
theories, their arguments are not properly characterized as
standing arguments.
All of the defendants’ contentions concern
the legal merits of Curtis’s complaint.
They reason that
because Curtis loses on the merits, he has not suffered any
“cognizable injury that is traceable to the acts of the Assurant
defendants and he lacks standing to sue them.”
But this
reasoning would allow any Rule 12(b)(6) motion to be restyled as
a Rule 12(b)(1) standing motion.
While standing and merits
questions frequently overlap, standing is fundamentally about
the propriety of the individual litigating a claim irrespective
of its legal merits, while a Rule 12(b)(6) inquiry is concerned
with the legal merits of the claim itself.
See generally Allen
v. Wright, 468 U.S. 737, 751 (1984) (defining the standing
inquiry as “to ascertain whether the particular plaintiff is
5
entitled to an adjudication of the particular claims
asserted.”).
Here, the defendants are not contending that
Curtis is the wrong individual to bring these legal claims; they
are arguing that the claims are simply not legally cognizable.
Consequently, although “the jurisdictional [standing] issue must
be resolved before the merits issue” in a case, Alliance For
Envtl. Renewal, Inc. v. Pyramid Crossgates Co., 436 F.3d 82, 85
(2d Cir. 2006), the defendants’ arguments are not properly
understood as standing arguments and this motion will be decided
under Rule 12(b)(6).
To survive a motion to dismiss under Fed. R. Civ. P.
12(b)(6), “a complaint must contain sufficient factual matter,
accepted as true, to state a claim to relief that is plausible
on its face.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(citation omitted).
Applying this plausibility standard is “a
context-specific task that requires the reviewing court to draw
on its judicial experience and common sense.”
Id. at 679.
When
considering a motion to dismiss, a trial court must “accept all
allegations in the complaint as true and draw all inferences in
the non-moving party’s favor.”
LaFaro v. New York
Cardiothoracic Group, PLLC, 570 F.3d 471, 475 (2d Cir. 2009).
A
complaint must do more, however, than offer “naked assertions
devoid of further factual enhancement,” and a court is not
“bound to accept as true a legal conclusion couched as a factual
6
allegation.”
Iqbal, 556 U.S. at 678.
The Assurant defendants bring their motion to dismiss on
two separate grounds.
They rely on the Filed Rate Doctrine and
on the fact that the Florida statute on which Curtis relies does
not apply to insurance companies.
The motion to dismiss is
properly granted on either ground.
A. The Filed Rate Doctrine
The Assurant defendants argue that the “Filed Rate
Doctrine” bars Curtis’s claims that Cenlar and the Assurant
defendants entered into a business arrangement whereby Cenlar
was paid commissions for placing property insurance wherein “the
actual cost of the insurance . . . [was] inflated.”
Curtis does
not respond to the Assurant defendants’ Filed Rate Doctrine
defense in his opposition to their motion to dismiss.
The Second Circuit recognizes the Filed Rate Doctrine:
The filed rate doctrine bars suits against regulated
utilities grounded on the allegation that the rates charged
by the utility are unreasonable. Simply stated, the
doctrine holds that any ‘filed rate’ -- that is, one
approved by the governing regulatory agency -- is per se
reasonable and unassailable in judicial proceedings brought
by ratepayers.
Wegoland Ltd. v. NYNEX Corp., 27 F.3d 17, 18 (2d Cir. 1994).
“[T]wo corresponding interests, one concerned with potential
‘discrimination’ in rates as between ratepayers and the other
concerned with the ‘justiciability’ of determining reasonable
rates, have turned up in Supreme Court decisions discussing the
7
filed rate doctrine.”
Id. at 19.
The Filed Rate Doctrine must
be applied rigorously any time a plaintiff’s claim would require
a court to second guess the reasonableness of a rate set by a
regulated entity:
[T]he doctrine is applied strictly to prevent a plaintiff
from bringing a cause of action even in the face of
apparent inequities whenever either the nondiscrimination
strand or the nonjusticiability strand underlying the
doctrine is implicated by the cause of action the plaintiff
seeks to pursue.
Marcus v. AT&T Corp., 138 F.3d 46, 59 (2d Cir. 1998).
While the Filed Rate Doctrine often arises in the context
of federal regulators, the Second Circuit has said that “the
rationales underlying the filed rate doctrine apply equally
strongly to regulation by state agencies.”
20.
Wegoland, 27 F.3d at
Florida insurance company rates are regulated by the
Florida Office of Insurance Regulation.
See Fla. Stat. §
626.9541(1)(o) (providing that insurance rates in Florida be
“filed and approved by the [Office of Insurance Regulation]”).
District courts in the Second Circuit consistently apply the
Filed Rate Doctrine in the insurance context.
See, e.g.,
Servedio v. State Farm Ins. Co., 889 F. Supp. 2d 450, 453
(E.D.N.Y. 2012); Roussin v. AARP, Inc., 664 F. Supp. 2d 412, 415
(S.D.N.Y. 2009).
Because American Security and Assurant are insurance
providers whose rates are subject to regulation by the Florida
8
Office of Insurance Regulation, Curtis’s claim that the rates
they set are inflated is not cognizable here.
Curtis makes no
argument to override the clear bar set up by the Filed Rate
Doctrine.
Nowhere does he allege that the Assurant defendants
are not insurance companies.
Nor does he argue at any point
that the charge for wind coverage was not a rate applied to him
in Florida subject to regulation by the Florida Office of
Insurance Regulation.
Rather, his complaint centers on the
alleged impropriety of the insurance-pricing conduct of the
Assurant defendants.
Whether the cost of the insurance was
inflated is a question that is non-justiciable under the Filed
Rate Doctrine.
Resolving that question would implicate both the
rate-discrimination concern and the justiciability concern that
underlie the Doctrine.
In light of this bar, Curtis’s complaint
against the Assurant defendants lacks “sufficient factual matter
. . . to state a claim to relief that is [legally] plausible on
its face.”
Iqbal, 556 U.S. at 678.
Nor is Curtis’s complaint saved by his allegations of
improper coordination between American Security and Cenlar.
The
applicability of the Filed Rate Doctrine does not turn on the
conduct underlying the rate setting.
Rather, “it is [the]
judicial determination of a reasonable rate that the filed rate
doctrine forbids.”
Wegoland Ltd., 27 F.3d at 21.
And
proceeding with Curtis’s complaint against the Assurant
9
defendants would require the Court to conduct that prohibited
inquiry.
As the Second Circuit held in the fraud context,
“[t]he fact that the remedy sought can be characterized as
damages for fraud does not negate the fact that the court would
be determining the reasonableness of rates.”
Id. (emphasis and
citation omitted).
Curtis does not bring any claims against American Security
and Assurant that are not predicated on the allegedly inflated
insurance rates.
Consequently, Curtis’s claims against the
Assurant defendants must be dismissed as non-justiciable
pursuant to Rule 12(b)(6).
B. The Florida Deceptive and Unfair Trade Practices Act does
not apply to insurance companies.
Although the Filed Rate Doctrine is independently
sufficient to require Curtis’s claims against the Assurant
defendants to be dismissed, it is also true that the Florida
Deceptive and Unfair Trade Practices Act (“FDUTPA”), Fla. Stat.
§ 501.204, upon which Curtis bases all of his claims against the
Assurant defendants, does not apply to insurance companies.
Curtis’s complaint against those defendants would thus have to
be dismissed on that basis alone.
Although the Assurant
defendants raise this issue in their motion, Curtis offers no
response in his opposition.
The codified FDUTPA statute expressly provides that the law
10
“does not apply to . . . [a]ny person or activity regulated
under laws administered by . . . The Office of Insurance
Regulation.”
Fla. Stat. § 501.212.
Because insurance companies
in Florida are regulated by that Office, district courts have
held that “FDUTPA does not apply to insurance companies.”
Zarrella v. Pac. Life Ins. Co., 755 F. Supp. 2d 1218, 1226 (S.D.
Fla. 2010) (“Pacific Life is an insurance company, so FDUTPA
does not apply to claims against Pacific Life.
Accordingly,
because Plaintiffs' allegations cannot support this claim as a
matter of law, the Court will dismiss Plaintiffs' FDUTPA claim
with prejudice.”); see also Crichton v. Golden Rule Ins. Co.,
576 F.3d 392, 397 (7th Cir. 2009) (affirming a district court’s
ruling that FDUTPA does not apply to insurance companies as
“manifestly correct.”).
Curtis’s complaint against the Assurant defendants is
predicated on their allegedly improper insurance rate setting
conduct.
Nowhere in his complaint does Curtis suggest that the
Assurant defendants are not companies involved in insurance
“activity” in the meaning of the FDUTPA insurance exclusion. 3
Fla. Stat. § 501.212; see also W.S. Badcock Corp. v. Myers, 696
So. 2d 776, 782 (Fla. Dist. Ct. App. 1996) (setting out the
criteria under Florida law for a company to be subject to
3
It is worth emphasizing that one of the defendants is named
American Security Insurance Company.
11
regulation under the Florida Insurance Code”).
In fact, Curtis
notes in his Complaint that “the Insurance Department of Cenlar
is in fact run by or staffed by American Security.” (emphasis
added).
Consequently, Curtis’s claims against the Assurant
defendants must be dismissed on this second ground as well.
Curtis contends that this motion is governed by New York
state procedural law, and that the Assurant defendants’
declarations in support of their motion to dismiss are
procedurally improper.
But, all actions in United States courts
are governed by the Federal Rules of Civil Procedure.
See Fed.
R. Civ. P. 1; see also generally Erie R. Co. v. Tompkins, 304
U.S. 64 (1938). 4
4
Curtis is correct, however, that the declarations submitted by
the Assurant defendants in support of their motion to dismiss
cannot be considered in adjudicating this Rule 12(b)(6) motion.
12
CONCLUSION
The Assurant defendants’ June 7, 2013 motion to dismiss is
granted in its entirety.
All claims against American Security
and Assurant are dismissed.
SO ORDERED:
Dated:
New York, New York
November 12, 2013
____________________________
DENISE COTE
United States District Judge
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Copy mailed to:
Thomas M. Curtis
Attorney At Law
1385 York Avenue, Suite 32-B
New York, NY 10021
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