Rodrigues v. American Security Insurance Company et al

Filing 48

DECISION AND ORDER terminating 27 Report and Recommendations.; granting 38 Motion to Dismiss for Failure to State a Claim; granting 39 Motion to Dismiss for Failure to State a Claim; terminating 4 Motion to Dismiss for Failure to State a Claim; terminating 11 Motion to Dismiss for Failure to State a Claim; terminating 11 Motion for Summary Judgment (Clerk to close case.). Signed by Hon. Michael A. Telesca on 5/21/19. (JMC)-CLERK TO FOLLOW UP-

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
__________________________________
ELDER TOLEDO RODRIGUES,
Plaintiff,
1:17-cv-00337-MAT
DECISION AND ORDER

-vAMERICAN SECURITY INSURANCE
COMPANY, et al.,
Defendants,
__________________________________
INTRODUCTION

Before the Court is the Amended Complaint filed by pro se
plaintiff Elder Rodrigues (“Rodrigues” or “Plaintiff”). Rodrigues
seeks payment of insurance proceeds in connection with a fire that
occurred

at

558

lender-placed

Fargo

policy

Avenue,

issued

by

Buffalo,

New

defendant

York

American

under

a

Security

Insurance Company (“ASIC”) to Plaintiff’s mortgagee, defendant
Green

Tree

Servicing

LLC

(collectively

with

defendant

Ditech

Financial LLC, “Ditech”). ASIC and Ditech have filed renewed
Motions to Dismiss the Amended Complaint. For the reasons discussed
below, ASIC’s and Ditech’s motions are granted, and the Amended
Complaint is dismissed with prejudice.
FACTUAL BACKGROUND
Rodrigues purchased a house at 558 Fargo Avenue in Buffalo,
New York in 2006 and obtained a mortgage on June 29, 2006, in the
amount of $52,500.

Under the terms of the mortgage agreement,

Rodrigues was obligated to obtain property insurance. The mortgage
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agreement provided that if Rodrigues failed to obtain property
insurance then the lender could choose to do so at his expense.
(Dkt. No. 4-3 at 7-8.) Under those circumstances, any coverage that
the lender purchased would cover the lender’s interest without any
guarantee that it would cover Rodrigues. The proceeds of the
insurance policy would be used “to repair or restore the damaged
property” unless it was

not economically feasible to do so.

The

record reveals that Rodrigues failed to make mortgage payments
beyond July 2007 and, at approximately the same time, stopped
paying for property insurance.

Plaintiff filed for personal

bankruptcy in the Northern District of California on September 9,
2008 and received a Chapter 7 bankruptcy discharge.
at 5.)

(Dkt. No. 21

The Bankruptcy Court determined that Rodrigues’ personal

obligations to the Fargo Avenue house totaled $52,256.00.
The policy in effect issued by American Security Insurance
Company controls the parties’ interests in the provision that “if
a mortgagee is named in this policy, any loss payable under the
policy shall be paid to the mortgagee and you “property owner” as
interests appear.”

(Dkt. Nos. 18-3 and 14.)

was

named

listed

as

a

insured,

the

Although Rodrigues

policy

contained

time

limitations as to when an action may be brought by any party under
the terms of the policy to two years from the date of the loss.
PROCEDURAL HISTORY
In an R&R dated November 22, 2017, Magistrate Judge Hugh B.
Scott recommended that Defendants’

motions to dismiss Plaintiff’s

Complaint seeking the insurance proceeds be granted. (Dkt. Nos. 4,

2

11.) In his well-reasoned, thorough R&R, Magistrate Judge Scott
recognized that (1) the Complaint was time-barred under the ASIC
policy’s suit limitations clause, and (2) the Complaint failed to
state a claim upon which relief can be granted. In particular, that
the insurance proceeds under Section 5 of the policy would go to
Ditech to pay down the amount of the mortgage if repair or
restoration was not economically feasible. Since the City of
Buffalo’s decision to conduct an emergency demolition of the
property, Ditech was left with no option but to receive the
insurance proceeds of $40,000 to pay down the mortgage balance
which is being held in escrow.

With the limits of the policy paid

out and no assets remaining at the demolition site of the Fargo
Avenue

property,

(Dkt. No. 13 at 49.)
making

payment

“as

Ditech

cancelled

any

further

coverage.

Section 15 of the insurance policy controlled
interests

appear”

which

independent insurable interest as the mortgagee.

gave

Ditech

an

Apart from that

determination, the record reveals that Rodrigues did not comply
with the insurance policy language requiring that litigation about
coverage was to commence “within two years after the occurrence
causing loss or damage.”

(Dkt. No. 11-13 at 10.) The fire which

destroyed the Fargo Avenue property occurred on June 2, 2014.
Rodrigues had until June 2, 2016 to commence litigation; instead he
belatedly filed suit in State Court on February 22, 2017.
United States District Judge Lawrence J. Vilardo issued a
Decision and Order on July 9, 2018, agreeing with the careful and
thorough analysis in Judge Scott’s R&R and finding that Plaintiff’s

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Objections and Reply did nothing more than raise generalized
assertions about the merits of his Complaint and the leniency he
deserves as a pro se litigant. In light of the Second Circuit’s
case law stating that “[a] pro se complaint should not be dismissed
without the [c]ourt granting leave to amend at least once when a
liberal reading of the complaint gives any indication that a valid
claim might be stated[,]” Nielsen v. Rabin, 746 F.3d 58, 62
(2d Cir. 2014) (internal quotation marks and citation omitted),
Judge Vilardo allowed Rodrigues until August 31, 2018, to file an
amended complaint correcting the deficiencies noted by Judge Scott
in his R&R. The permission to amend was without prejudice to
Defendants filing renewed motions to dismiss.
Rodrigues timely filed his Amended Complaint. (Dkt. No. 37.)
Ditech filed its Motion to Dismiss (Dkt. No. 38) and ASIC filed its
Motion to Dismiss (Dkt. No. 39) on September 14, 2018. Rodrigues
filed a Response in Opposition (Dkt. No. 42). ASIC filed a Reply
(Dkt. No. 43, amended by Dkt. No. 44). Ditech filed a Reply (Dkt.
No. 45).1 The matter was transferred to the undersigned on May 15,
2019.
F.R.C.P. 12(B)(6) STANDARD
Under Rule 12(b)(6), while a complaint need not include
detailed factual allegations, a claim must be plausible on its
face. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 547 (2007). It must

1

On March 22, 2019, Ditech filed a Notice of Bankruptcy Filing and
Imposition of Automatic Stay (Dkt. No. 46), indicating that it had commenced
Chapter 11 bankruptcy proceedings in the Bankruptcy Court for the Southern
District of New York.

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describe the claim in sufficient detail to give each defendant
notice of what the claim is and the grounds upon which it rests.
Id. at 555. A claim has “facial plausibility when the plaintiff
pleads factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “[A]lthough a court
must

accept

as

true

all

of

the

allegations

contained

in

a

complaint, that tenet is inapplicable to legal conclusions, and
threadbare recitals of the elements of a cause of action, supported
by mere conclusory statements, do not suffice.” Harris v. Mills,
572 F.3d 66, 72 (2d Cir. 2009).
DISCUSSION
As Defendants argue, Rodrigues still has not managed to a
plausible claim for relief. The Amended Complaint “merely cobbles
together documents that were previously before this Court and found
by the Court to fail to state a claim.” (Dkt. No. 44, 5 of 11).
Moreover, Rodrigues has not demonstrated that his claims are timely
under the policy.
First, the Court finds that Rodrigues has failed to state a
claim for breach of contract.

Where, as here, the policy is issued

to a mortgagee and mortgagor “as their interests may appear,” then
the mortgagee obtains a vested legal interest in the contract.
EverHome Mortg. Co. v. Charter Oak Fire Ins. Co., No. 07-CV-98 RRM
RML, 2012 WL 868961, at *5 (E.D.N.Y. Mar. 14, 2012) (citing
McDowell v. St. Paul Fire & Mar. Ins. Co., 207 N.Y. 482, 485
(1913)). “The insurance is for the mortgagee’s benefit to the
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extent of the debt, and the mortgagee may recover from an insurer
up to his secured interest.” Id. (citing Associates Commercial
Corp. v. Nationwide Mut. Ins. Co., 748 N.Y.S.2d 792, 793 (2d Dep’t
2002) (noting that insurer, once given notice of creditor’s claim
under a policy requiring payment to the insured and creditor “as
their interests appeared,” paid the insured “at its peril and
assumed

the

hazard

of

resisting”

creditor’s

claim)

(further

citations omitted)).
ASIC has shown that it properly remitted the insurance policy
proceeds to Ditech in accordance with the policy’s mortgage clause.
Rodriguez does not dispute that the policy’s mortgage clause
compelled ASIC to pay the proceeds to Ditech, instead arguing that
he is a “first party beneficiary entitled to proceeds in the
policy” because “[d]efendants could not have obtained any insurance
without [Plaintiff’s] ownership interest,” and which “ownership
interest gives [Plaintiff] that right as a beneficiary.” (Dkt.
No. 42 at 3). Plaintiff cites no policy language or legal authority
in support of his assertion that he is entitled to the proceeds of
the policy. Rather, the policy explicitly requires ASIC to pay
proceeds to Ditech and Plaintiff “as interests appear,” i.e., first
to Ditech up to the amount of the mortgage and then to Plaintiff.
(Dkt. No. 11-13; citation omitted).
Plaintiff’s suggestion that he is entitled to recovery for
clean-up costs under the policy similarly fails to rebut ASIC’s
showing that he has failed to state a breach of contract claim
because debris

removal

is

included

6

in

the

policy’s

limit of

liability applying to the damaged property. (Dkt. No. 42, p. 8 of
11 (citations omitted). Here, the amount of the mortgage exceeded
the policy limit, ASIC complied with the terms of the policy, and
Plaintiff has failed to state a claim for breach of contract.
Second, Plaintiff fails to state a plausible fraud claim.
There are several grounds on which to dismiss the fraud claim, but
most fundamentally, it is indistinguishable from his breach of
contract claim. A cause of action for fraud fails where, as here,
the claimed fraud relates to an alleged breach of contract. E.g.,
Carle Place

Union

Free

Sch.

Dist. v. Bat-Jac

Constr.,

Inc.,

28 A.D.3d 596, 598-99 (2d Dept. 2006) (“A cause of action to
recover damages for fraud does not lie when the only fraud charged
relates to a breach of contract[.]”) (citation omitted) Here,
Plaintiff’s fraud claim is premised on ASIC’s purported failure to
adhere to the terms of the policy; it does not allege that ASIC
breached

promises

“extraneous”

or

“collateral”

to

the

policy

itself. See, e.g., D.S. America (East), Inc. v. Chromagrafx Imaging
Systems, Inc., 873 F. Supp. 786, 796 (E.D.N.Y. 1995) (dismissing
fraud claim because it “state[s] nothing more than breaches of
promises of future performance that constitute the express terms of
the

contract,

not

promises

collateral

or

extraneous

to

the

contract”).
Third, Rodrigues’s conclusory allegations of violations of the
New York Insurance Law (“N.Y. Ins. L.”) fail to state a claim upon
which relief can be granted. N.Y. Ins. L. § 2601 does not provide
for a private right of action for violation of that statute.

7

Rocanova v. Equitable Life Assur. Soc. of U.S., 83 N.Y.2d 603, 614
(1994). Rodrigues likewise has no plausible claim under N.Y. Ins.
L. § 3401 which provides that “[n]o contract or policy of insurance
on property made or issued in this state, or made or issued upon
any property in this state, shall be enforceable except for the
benefit of some person having an insurable interest in the property
insured.” Contrary to Rodrigues’s contention, Ditech did have an
insurable interest in the premises up to its secured interest which
exceeded the policy limits. See id. (“In this article, ‘insurable
interest’

shall

include

any

lawful

and

substantial

economic

interest in the safety or preservation of property from loss,
destruction or pecuniary damage.”).
Finally, the Court rejects Rodrigues’s request for permission
to file another amended complaint. It is well settled that leave to
amend may properly be denied for, among other things, “repeated
failures to cure deficiencies” and the “futility of amendment.”
Ruotolo v. City of New York, 514 F.3d 184, 191 (2d Cir. 2008)
(citation

omitted).

Here,

Rodrigues’s

Amended

Complaint

regurgitates, nearly verbatim, the original Complaint’s defective
allegations. After review of the extensive record, including the
R&R and the parties’ briefing, the Court is convinced there is
simply no possibility that Rodrigues can state a viable, timely
claim for relief. Accordingly, any amendment would be futile, and
permission to amend further is denied.

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CONCLUSION
For the foregoing reasons, the Motion to Dismiss filed by ASIC
and the Motion to Dismiss filed by Ditech are granted. The Amended
Complaint is dismissed with prejudice. The Clerk of Court is
directed to close this case.
ALL OF THE ABOVE IS SO ORDERED.
S/Michael A. Telesca
__________________________
MICHAEL A. TELESCA
United States District Judge
Dated:

Rochester, New York
May 21, 2019

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