IDS Property Casualty Insurance Company v. Lu et al
ORDER granting 43 Motion for Partial Summary Judgment as to CitiMortgage. Signed by US District Judge Terrence W. Boyle on 4/30/2017. (Stouch, L.)
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
IDS PROPERTY CASUALTY INSURANCE
MIN LU, YING YING YANG, and
This cause comes before the Court on defendant CitiMortgage's motion for partial
summary judgment. [DE 43]. The motion is fully briefed and ripe for disposition. For the
following reasons, defendant's motion is granted.
This is a declaratory judgment action that arose from an insurance dispute. Defendants Lu
and Yang ("homeowners") lived together in Cary, North Carolina. The homeowners had an
insurance policy from plaintiff, and left their home on December, 2013, for a trip out of the
country. Their anticipated return date was late January, 2014. On January 12, 2014, via webcam,
the homeowners discovered that there was water damage in the residence. After disputing the
coverage of its insurance policy with the homeowners, plaintiff filed the instant suit for
declaratory judgment stating that it does not owe the homeowners for the water damage losses at
issue as such loss is not covered by the insurance policy.
Defendant CitiMortgage is a mortgagee on the property concerned in this matter. It has a
security interest in the property via a Deed of Trust executed by the homeowners. Section 5 of
that Deed of Trust obligates homeowners to maintain insurance, in part, for the benefit of
CitiMortgage and protection of the collateral. Section. 5 of the Deed of Trust requires that "any
insurance proceeds ... shall be applied to restoration or repair of the Property, if the restoration
or repair is economically feasible and Lender's security is not lessened. During such repair and
restoration period, Lender shall have the right to hold such insurance proceeds until Lender has
had an opportunity to inspect such Property to ensure the work has been completed to Lender's
satisfaction[.]" [DE 49-1].
Plaintiffs insurance policy with defendant homeowners specifically lists defendant
CitiMortgage as a mortgagee for the insured property. [DE 52-1] Additionally, the Policy
contains an endorsement entitled, "ADDITIONAL INTERESTS, Residence Premises," which
specifically names defendant CitiMortgage in the Schedule and states, "In addition to the
Mortgagee(s) shown in the Declarations or elsewhere in this policy, the persons or organizations
named in the Schedule above also have an interest in the residence premises." [DE 52-2].
Further, the Policy contains a "Mortgage Clause," which provides, "If a mortgagee is named in
this policy, any loss payable under Coverage A or B will be paid to the mortgagee and you, as
interests appear." [DE 53-3].
Consequently, at the initiation of this suit plaintiff joined defendant CitiMortgage as a
necessary party under Rule 19 of the Federal Rules of Civil Procedure due to CitiMortgage's
secured interest in the property and its potential interest in the outcome of this litigation under
defendant homeowner's insurance policy with plaintiff.
Defendant CitiMortgage then filed the instant motion for partial summary judgment,
contending that it is no longer a necessary party and should be dismissed from the litigation. [DE
43]. CitiMortgage states that it has conducted an inspection of the property and is satisfied that
all of the repairs and remediation required by its Deed of Trust with defendant homeowners have
already been performed. Id. CitiMortgage states that there is no basis for it retaining possession
over or administering any insurance proceeds that defendant homeowners may receive for work
already completed on the property. Id. Accordingly, CitiMortgage disclaimed its interest in the
receipt of any potential insurance funds for the loss in this case and requested that it be dismissed
from the litigation. Id.
Plaintiff filed a response, indicating that it does not necessarily oppose defendant
CitiMortgage' s motion, but seeking clarification that, if CitiMortgage is in fact no longer a
necessary party due to its· disclaimer of interest in any potential insurance proceeds, that the
Court's ruling clarify that CitiMortgage is prevented or estopped from asserting any claims
against plaintiff in the future relating to this controversy. [DE 52].
A motion for summary judgment may not be granted unless there are no genuine issues
of material fact for trial and the movant is entitled to judgment as a matter oflaw. Fed. R. Civ. P.
56(a). This Court has reviewed the pleadings and evidence in support of the motion, and all
responses, and hereby determines that there is no genuine issue of material fact necessary to
decide the motion and that defendant CitiMortgage is entitled to judgment. While CitiMortgage
may have been a necessary party to this proceeding at the outset because of its security interest in
the property at issue, CitiMortgage stated that it is satisfied the property has been restored from
the loss in this case and has therefore disclaimed any interest in insurance proceeds that may
benefit defendant homeowners for that loss. As there appears to be no dispute with these facts,
the Court finds that CitiMortgage has made a judicial admission that they disclaim all interests
and are completely satisfied concerning the controversy of this action. Based on this
determination, the Court concludes that CitiMortgage 'is no longer a necessary party to this
litigation and, otherwise having its interest in the litigation already met, should be dismissed with
prejudice from the matter.
For the foregoing reasons, defendant CitiMortgage's motion for partial summary
judgment [DE 43] is GRANTED. Accordingly, CitiMortgage shall be DISMISSED WITH
PREJUDICE from this litigation. This dismissal does not affect any covenants otherwise
applicable under the Deed of Trust or loan documents between CitiMortgage and defendants Lu
and Yang, and this dismissal is without prejudice to the contentions of the remaining parties or
the validity and finality of any of any order, judgment, or settlement entered into between
plaintiff and defendants Lu and Yang in this case.
SO ORDERED, this
JO day of April, 2016.
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