Curtis v. Cenlar FSB et al

Filing 93

OPINION & ORDER. The plaintiff's August 1, 2014 motion for partial summary judgment is denied and defendants' August 1, 2014 motion for summary judgment is granted in full. The Clerk of Court shall enter judgment for the defendant and close this case. (Signed by Judge Denise L. Cote on 11/5/2014) Copies Mailed By Chambers To Thomas M. Curtis. (gr)

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., and FEDERAL HOME LOAN
:
MORTGAGE CORPORATION,
:
:
Defendants.
:
:
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13cv3007 (DLC)
OPINION & ORDER

APPEARANCES
For Plaintiff
Thomas M. Curtis, proceeding pro se
1385 York Avenue, Suite 32-B
New York, NY 10021
For Defendants Cenlar, FSB, Cenlar Agency, Inc., and Federal
Home Loan Mortgage Corp.
Bradley L. Mitchell
485 Madison Ave., 20th Floor
New York, NY 10022
DENISE COTE, District Judge:
This action arises out of a dispute about the terms of a
mortgage.

Pro se 1 plaintiff Thomas M. Curtis (“Curtis”) filed a

complaint (“Complaint”) on April 4, 2013, seeking a declaration
that under the terms of his mortgage, he was not required to
purchase wind insurance.

Curtis also seeks injunctive relief,

damages, and attorneys’ fees.
1

Mr. Curtis is an attorney.

This Opinion addresses cross-motions for summary judgment
and partial summary judgment.

On August 1, defendants Cenlar

Agency, Inc. (“Cenlar”), Cenlar FSB (collectively “Cenlar”), and
Federal Home Loan Mortgage Corporation (“Freddie
Mac”)(collectively “Defendants”) moved for summary judgment
pursuant to Rule 56, Fed. R. Civ. P.

The same day, Curtis moved

for partial summary judgment on the First through Third Causes
of Action set forth in the complaint (“Complaint”), which seek a
declaration that Curtis was not required to purchase wind
insurance under the terms of his mortgage, and monetary and
equitable relief in connection with the forced-purchase of
insurance.

For the following reasons, the Defendants’ motion

for summary judgment is granted and Curtis’s motion for partial
summary judgment is denied.

BACKGROUND
The following facts are undisputed unless otherwise noted.
In December 2008, Curtis purchased a second home located at 326
Kenilworth Boulevard, West Palm Beach, Florida (“326
Kenilworth”).

In connection with the purchase of 326

Kenilworth, Curtis executed a note (“Note”) in the amount of
$200,000 which was secured by a mortgage (“Mortgage”) on the
real estate and improvements at 326 Kenilworth.
lender was NJ Lenders Corp.

The original

On January 21, 2009, co-defendant
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Freddie Mac purchased the Note and Mortgage.

On August 12, co-

defendant Cenlar became the servicer of the Mortgage.
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. The insurance shall be maintained in the
amounts (including deductible levels) and for the periods
that Lender requires. What lender requires pursuant to the
preceding sentences can change during the term of the Loan.
. . .
If Borrower fails to maintain any of the coverages
described above, Lender may obtain insurance coverage, at
Lender’s option and Borrower’s expense.
(Emphasis added.)
Concurrently with the purchase, Curtis acquired a
homeowner’s property insurance policy.
coverage for damage caused by wind.

The policy excluded

Curtis renewed the policy

every year thereafter with some modifications, but never
obtained wind coverage.

Cenlar did not comment on the lack of

wind coverage until October 2012.
In October 2012, Cenlar sent a letter to Curtis informing
him that the terms of his Mortgage required him to purchase wind
insurance.

In February 2013, Cenlar informed Curtis that if he

did not obtain insurance, Cenlar would do so on his behalf.
Curtis did not purchase wind insurance.
Following Curtis’s failure to purchase wind insurance,
Cenlar purchased a wind insurance policy from Voyager Indemnity
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Insurance Co. (“Voyager Policy”) in 2013 on Curtis’s behalf at
an annual premium of $5,911.29, which was billed to Curtis’s
escrow account.

On April 18, 2014, Curtis paid the premium, but

stated that he retained all rights to sue and recover the
premium if he prevailed in court.

The home for which the

insurance was purchased burned down on June 1. 2

On June 9,

Curtis informed Cenlar of the destruction of the dwelling, and
of what he described as billing discrepancies.

Curtis stated

that he would not make any more payments on his Mortgage until a
court resolved the insurance issue.
Cenlar serviced the Mortgage according to the terms of the
Interim Servicing Master Agreement (“Servicing Agreement”),
which governs the relationship between servicers and Freddie
Mac.

The Servicing Agreement directs servicers to comply with

the provisions of Freddie Mac’s Single Family Guide (“Guide”).
The Guide specifically lists wind as a hazard for which
insurance is required.
Wind insurance in Florida may be difficult to obtain due to
the high rate of hurricanes.

In 2002, the Florida Legislature

created Citizens Property Insurance Corporation (“Citizens”) as
There were two structures on the property, a main house and
guest house. There is some dispute as to whether all of the
structures requiring insurance have been destroyed. Defendant
Cenlar has stated that it will not require wind insurance for
any of the remaining structures. To the extent that this issue
is relevant, it is resolved in favor of the plaintiff for the
purposes of this motion.
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a not-for-profit insurer of last resort for homeowners who could
not otherwise obtain insurance.

Fla. Stat. § 627.351(6).

Curtis has asserted that he could not have obtained wind
insurance on his own for 326 Kenilworth due to the poor
condition of the home, and has submitted expert reports,
prepared in May 2014, to that effect.

For the purposes of this

motion, it is assumed that he could not have purchased wind
insurance from Citizens or another insurance provider. 3

PROCEDURAL HISTORY
Curtis filed the Complaint on April 4, 2013, against
Cenlar, Freddie Mac, Assurant, Inc. (“Assurant”), and Assurant’s
wholly owned subsidiary American Security Insurance Co.
(“American Security”).

Curtis raised five separate claims.

The

first three were brought against only Freddie Mac and Cenlar.
These claims sought a declaration that Curtis was not required
to purchase wind insurance, 4 an injunction precluding Defendants
from holding Curtis in default for failure to pay the insurance
Defendants contend that expert reports submitted by Curtis
indicate at most that the house may not have been insurable as
of May 2014.
3

In the Complaint, Curtis also argues that the purchase of the
Voyager Policy was improper because it insured the property for
more than the value of the remaining principal. Curtis has not
raised this argument either in support of his motion for partial
summary judgment or in opposition to Defendants’ motion for
summary judgment. Accordingly, it is waived.
4

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premium for the Voyager Policy, 5 and damages related to the
purchase of the Voyager Policy by Cenlar.

The fourth and fifth

causes of action were brought against all defendants under the
Florida Deceptive and Unfair Trade Practices Act (“FDUTPA”).
Fla. Stat. §§ 501.201-501.23.

The fourth cause of action

alleges that the price of the Voyager Policy was inflated and in
violation of the FDUTPA.

Id. § 501.204.

The fifth cause of

action requests attorneys’ fees under the FDUTPA.

Id. §

501.2105.
On June 7, 2013, defendants American Security and Assurant
moved to dismiss the FFUTPA causes of action filed against them.
That motion was granted on November 11.

Curtis v. Cenlar FSB,

13cv3007 (DLC), 2013 WL 5995582, at *1 (S.D.N.Y. Nov. 12, 2013).
On August 1, 2014, Defendants moved for summary judgment on
all five causes of action.

The same day, Curtis moved for

partial summary judgment on the first three causes of action.
Curtis essentially argues that the Mortgage does not require him
to purchase wind insurance and, even if it did, Florida law will
not require a borrower to purchase insurance that is
“unobtainable.”

Defendants argue that the FDUTPA claims are

At the time the Complaint was filed, Curtis had yet to pay the
premium for the Voyager Policy and requested injunctive relief
precluding Defendants from holding him in default. On April 18,
Curtis paid the premium to prevent the possibility of being
found in default. In doing so, Curtis reserved the right to
recoup the payment should he prevail in court.
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both barred as a matter of law, and that there are no facts in
the record to support the claims.

Defendants have also raised

mootness concerns as to the claims for declaratory and
injunctive relief, and assert that claims against Freddie Mac
are barred by the Merrill doctrine.
Merrill, 332 U.S. 380 (1947).

See Fed. Crop Ins. Corp. v.

Because the purchase of wind

insurance was proper, the Court need not address the issue of
mootness or the Merrill doctrine.

DISCUSSION
Summary judgment may not be granted unless the submissions
of the parties taken together “show that there is no genuine
issue as to any material fact and that the moving party is
entitled to a judgment as a matter of law.”
Civ. P.

Rule 56(c), Fed. R.

The moving party bears the burden of demonstrating the

absence of a material factual question, and in making this
determination the court must view all facts in the light most
favorable to the nonmoving party.

See Anderson v. Liberty

Lobby, Inc., 477 U.S. 242, 247 (1986); Celotex Corp v. Catrett,
477 U.S. 317, 323 (1986); Azrielli v. Cohen Law Offices, 21 F.3d
512, 517 (2d Cir. 1994) (“[T]he court must resolve all
ambiguities and draw all reasonable inferences in favor of the
nonmoving party.”).

When the moving party has asserted facts

showing that the nonmovant’s claims cannot be sustained, the
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opposing party must “set forth specific facts showing that there
is a genuine issue for trial,” and cannot rest on the “mere
allegations or denials” of his pleadings.
Civ. P.

Rule 56(e), Fed. R.

See also Goenaga v. March of Dimes Birth Defects

Found., 51 F.3d 14, 18 (2d Cir. 1995).

“[C]onclusory

statements, conjecture, and inadmissible evidence are
insufficient to defeat summary judgment.”

Ridinger v. Dow Jones

& Co. Inc., 651 F.3d 309, 317 (2d Cir. 2011) (citation omitted).
When the burden of proof at trial would fall on the
nonmoving party, it ordinarily is sufficient for the movant to
point to a lack of evidence on an essential element of the
nonmovant’s claim.

Celotex, 477 U.S. at 322-23; see also

Cordiano v. Metacon Gun Club, Inc., 575 F.3d 199, 204 (2d Cir.
2009).

In that event, the nonmoving party must come forward

with admissible evidence sufficient to raise a genuine issue of
fact for trial in order to avoid summary judgment.

Celotex, 477

U.S. at 322-23.
1. Mortgage Interpretation
Curtis first contends that the Mortgage does not require
him to purchase wind insurance.

In interpreting contracts,

Florida courts follow generally accepted rules of construction,
meaning that contracts are “construed according to their plain

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meaning . . . .” 6

Pfenzer v. Transportation Ins. Co., 29 So.3d

1000, 1005 (Fla. 2010).

When a contract term is inserted for

the benefit of one party, it should be treated as if it was
written by the benefited party and ambiguities are resolved in
favor of the other party.

See Clay v. Girdner, 103 Fla. 135,

145 (1931); Capital City Bank v. Hilson, 59 Fla. 215, 219
(1910).

The contract, however, must actually be ambiguous to

find in favor of the non-benefited party on this basis.
Pfenzer, 29 So.3d at 1005.

Furthermore, “[w]hile ambiguous

language is to be construed against the person using it, [] it
should be given the meaning and effect that will be in accord
with the object in view.”
(1910).

Brown v. Beckwith, 60 Fla. 310, 312

Even in the context of a mortgage, bad bargains will

generally be enforceable provided they are otherwise legal.
Clay, 103 Fla. at 141.
In relevant part, the Mortgage states:
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. . . . What Lender requires pursuant to the
preceding sentences can change during the term of the Loan.
. . .
If Borrower fails to maintain any of the coverages
Curtis argues that Florida law controls this issue. Defendants
have not disputed that assertion. The Mortgage states that it
is to be governed by federal law and the law of the jurisdiction
where the property is located. Accordingly, Florida law will be
applied here.
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described above, Lender may obtain insurance coverage, at
Lender’s option and Borrower’s expense.
(Emphasis added.)
In order for the forced-purchase of wind insurance to be
proper under the Mortgage, two requirements must be met.

First,

Freddie Mac, and Cenlar as its agent, must be able to exercise
the rights of the Lender as described in the Mortgage.

Second,

wind must be included in the Mortgage as “extended coverage” or
as a “hazard . . . for which the Lender requires insurance.”

If

both of the requirements are met, Cenlar was entitled, under the
terms of the Mortgage, to obtain coverage at Curtis’s expense.
Each requirement will be addressed in turn.
The “Lender” is listed in the Mortgage as NJ Lenders Corp.
The Mortgage does not explicitly provide that the Lender’s
rights under the Mortgage may be exercised by a successor.

The

Mortgage does provide, however, that it may be “sold one or more
times without prior notice to the Borrower” and makes other
references to the “Lender’s successors and assigns.”

Taken as a

whole, the Mortgage anticipates that the Mortgage may be sold
and the loan servicer, who acts on behalf of the Lender, may
change.

The Mortgage assumes that the rights of the Lender will

travel to its successors, and it would be illogical to assume
otherwise.

No party has argued that the term “Lender” as used

in the Mortgage does not apply to Freddie Mac.

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The next issue is whether the Mortgage’s provision that
“hazards included within the term ‘extended coverage,’ and any
other hazards including, but not limited to, earthquakes and
floods, for which Lender requires insurance” applies to wind
insurance.

“Extended coverage” refers to “[a] policy provision

that insures against hazards beyond those covered (or excluded)
in the basic policy.”

Black’s Law Dictionary (9th ed. 2009).

A

standard homeowner’s policy in Florida will provide coverage for
basic perils, including fire, extended coverage, vandalism, and
theft.

Wind peril is included within the definition of

“extended coverage.”

Plaintiff’s own expert report concedes

that the term “extended coverage” encompasses wind insurance.
Furthermore, wind insurance is also encompassed by the
Mortgage provision referring to “any other hazard . . . for
which the Lender requires insurance.”

The word “hazard” refers

to a “danger or peril” and in the insurance context specifically
refers to the “risk or probability of loss.”
Dictionary (9th ed. 2009).

Black’s Law

The Mortgage is worded broadly to

include any and all “hazards.”

At the very least, this

provision unambiguously refers to perils that commonly cause
damage to property.

Wind is undoubtedly such a peril,

particularly in Florida.

See Fla. Stat. § 627.351(6)

(establishing an insurer of last resort after national insurance
carriers stopped offering coverage due to high rates of
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hurricane damage); Fla. Stat. § 627.712 (requiring wind
insurance as part of a homeowner’s policy unless the property is
located in an excluded area); see also 12 C.F.R. § 1024.31
(“Hazard insurance means insurance on the property securing a
mortgage loan that protects the property against loss caused by
fire, wind, flood, earthquake, theft, falling objects, freezing,
and other similar hazards for which the owner or assignee of
such loan requires insurance.”).

Wind is thus a hazard for

which the Lender may require insurance.
The Lender, Freddie Mac, required wind insurance.

The

Servicing Agreement provides that Cenlar will service the
Mortgage on Freddie Mac’s behalf.

Among other things, the

Servicing Agreement requires that Cenlar service the Mortgage in
conformity with the Guide.

The Guide states that, “[f]or as

long as Freddie Max owns an interest in a Mortgage, the []
Servicer must ensure that the Mortgaged Premises are covered by
insurance meeting [specified] requirements.”

The Guide further

specifies that:
[I]nsurable improvements on the Mortgaged Premises
must be insured for loss or damage from . . .
windstorm . . . . If any of the preceding perils
(e.g., windstorm) is excluded from the primary
insurance policy, coverage of the excluded peril
must be picked up through a secondary insurance
policy
. . . .
(Emphasis added.)

Freddie Mac thus exercised its rights under

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the Mortgage to require wind insurance.
Because the Lender may require wind insurance under the
Mortgage, and did require such insurance, Cenlar, as the
Lender’s agent, was permitted to obtain insurance on Curtis’s
behalf when Curtis failed to do so.

Curtis is not entitled to

damages relating to the purchase of insurance or injunctive
relief precluding Defendants from holding him in default for
failure to pay for the cost of the premium.

Similarly, Curtis’s

request for a declaration that he was not required to purchase
wind insurance is denied.
Curtis’s main argument is that, as a matter of law, the
Mortgage cannot be read to require insurance that is
“unobtainable” by the borrower.

This argument fails.

In making

this argument, Curtis relies primarily on Clay v. Girdner, 100
Fla. 135 (1931).
Clay concerned a mortgage where the borrower was required
to insure his property for no less than $37,500.

Id. at 139.

The borrower was unable, despite making every effort to increase
the amount of coverage, to insure the property for that amount.
Id.

The Florida Supreme Court found that the lender could not

foreclose on the property or accelerate the debt for a failure
to obtain the requisite level of insurance.
In relevant part, Clay states:

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Id. at 145.

If the defendant, after repeated trials, was unable to
induce any company to insure the property in the
amount provided by the mortgage, would such failure
constitute such a default as would give legal
authority to the complainant to declare all amounts
due and proceed to foreclose?
Such a clause having been inserted for the
benefit of the mortgagees it should, under the general
rule, be strictly construed against them. It would
seem therefore that any covenant in a mortgage to keep
the property insured in a given amount, in the absence
of a clear provision to the contrary, should be
construed to mean that the mortgagor will procure it
if obtainable and that such covenant is contingent
upon the ability to procure the stated amount.
Id. at 145.
The holding of Clay is inapplicable to this case.

Clay

dealt with an acceleration clause that was triggered when the
borrower defaulted by failing to obtain insurance after repeated
attempts to do so.

This is not the situation here.

Curtis has

not submitted any evidence indicating that, following Cenlar’s
request that he obtain wind insurance in October 2012, he took
any steps to obtain such insurance or seek out an evaluation by
Citizens to determine his eligibility for wind insurance. 7

But,

more significantly, Cenlar did not threaten to foreclose on
Curtis’s property or accelerate the mortgage for failure to
purchase insurance.
Curtis’s expense.

Rather, Cenlar obtained a policy at
Florida law does not preclude a lender from

The allegations in the Complaint indicate that Curtis never
sought an evaluation for wind insurance following Cenlar’s
letter in October 2012. His expert reports addressed to the
insurability of the house were not prepared until May 2014.
7

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purchasing insurance for a borrower when the borrower fails to
do so.

While Florida law does, as plaintiff correctly notes,

permit wind insurance to be excluded from standard policies in
particular areas, Fla. Stat. Ann. § 627.712, this has no bearing
on whether a mortgage may require a supplemental policy that
covers wind peril and Curtis has not cited any law suggesting
otherwise.
Curtis also contends that the Servicing Agreement and Guide
do not modify the terms of his Mortgage, and thus the
requirement that properties covered by the Guide be insured
against wind damage does not apply to him.
the mark.

This argument misses

The Mortgage itself, as described above, permitted

the Lender to dictate the types of insurance for the property.
The Servicing Agreement and Guide are evidence that the Lender,
Freddie Mac, did require wind insurance.

Freddie Mac was

entitled, under the terms of the Mortgage, to require and obtain
such insurance.

That Freddie Mac elected to exercise this right

does not reflect any alteration to the terms of the Mortgage.
II. Florida Deceptive and Unfair Trade Practices Act
Curtis contends that the claims under the FDUPTA survive,
at least as to Cenlar.

Summary judgment in Cenlar’s favor,

however, is appropriate because Curtis has not provided evidence
to raise a genuine issue of material fact requiring resolution
at trial.
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Curtis has not produced any evidence whatsoever to support
his claims under the Florida Deceptive and Unfair Trade
Practices Act.

The basis for these claims, as outlined in the

Complaint, was the existence of a relationship between Cenlar
and Assurant that led to the inflation of the cost of insurance.
Curtis has not produced any evidence to support these
allegations.

In response to Defendants’ motion for summary

judgment, Curtis takes no position as to whether the claim is
barred as a matter of law as to Freddie Mac and states only that
the claim is not barred as to Cenlar.

Accordingly, Curtis has

failed to raise a genuine issue of material fact and summary
judgment is entered in Defendants’ favor.

CONCLUSION
The plaintiff’s August 1, 2014 motion for partial summary
judgment is denied and Defendants’ August 1, 2014 motion for
summary judgment is granted in full.

The Clerk of Court shall

enter judgment for the Defendants and close this case.

Dated:

New York, New York
November 5, 2014
____________________________
DENISE COTE
United States District Judge

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