Richard v. Fin. of Am. Mortgs., LLC

WILSON P. RICHARD, Plaintiff, v. FINANCE OF AMERICA MORTGAGES, LLC, et al., Defendants.

3:18-CV-559

UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF PENNSYLVANIA

May 3, 2019

(JUDGE MARIANI)

MEMORANDUM OPINION

I. INTRODUCTION

Presently before the Court is Magistrate Judge Carlson's Report and Recommendation ("R&R") (Doc. 78) regarding Defendant Great American Assurance Company's ("Great American's") and Defendant QBE Insurance Corporation's ("QBE's") respective motions to dismiss Plaintiff Wilson P. Richard's ("Richard's") complaint for failure to state a claim upon which relief can be granted under Fed. R. Civ. P. 12(b)(6) (Doc. 44, Doc. 75).¹ For the reasons stated below, the Court will adopt the R&R, grant the motions to dismiss, and direct Richard to file an amended complaint within 28 days if he wishes to maintain this action against QBE.

II. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

Richard's lawsuit alleges various claims under federal and state law against his mortgage lender/servicer, Defendants Finance of America Mortgage, LLC ("Finance of America") and Ocwen Loan Servicing, LLC ("Ocwen"), and two home insurance companies, Great American and QBE. (Doc. 69). The claims arise from damages caused by the failure of water pipes or fixtures that Richard alleges occurred at his home in Jim Thorpe, Pennsylvania. (Id. ¶¶ 25, 33). Richard asserts that the Defendants are liable for these damages, although his theory of liability for each Defendant differs. He contends that his problems began in or around December 2015 with the failure of Finance of America/Ocwen to pay his hazard insurance premiums to QBE, his home insurance company, from his mortgage escrow. (Id. ¶ 20). He then alleges that he believes that his insurance agent, Progressive Insurance,² and/or QBE "sent a notice of cancellation or non-renewal to OCWEN and/or FINANCE OF AMERICA and to Richard at his previous address which was 3425 Linden Place, Apartment 1J, Flushing, New York, 14354 despite the fact that they were aware Richard had moved to the [Jim Thorpe premises]." (Doc. 69 ¶ 21). As a result, Richard alleges he did not receive a notice of cancellation or non-renewal of his QBE insurance policy. (Id. ¶ 22). Finance of America/Ocwen never paid the renewal premium on the QBE insurance policy and instead obtained forced-placed insurance coverage with Great American (the "forced-placed insurance policy" or "Great American policy"), which commenced on February 1, 2016. (Id. ¶ 23). Richard alleges he was not informed of theintent of Finance of America to purchase the forced-placed insurance until March 1, 2016. (Id. ¶ 24). The forced-placed insurance policy, attached to the complaint, lists Finance of America as the insured party, not Richard, and states that the policy does not "provide coverage for the interest or equity of the mortgagor. This is creditor placed insurance, protecting your [Finance of America's] mortgagee interest, subject to policy terms and conditions." (Doc. 674 at 1 (emphasis in original)).

On March 15, 2016, a water pipe ruptured in Richard's home, resulting in what Richard alleges was over $50,000 in damages. (Id. ¶ 25). Richard asserts that this damage was covered by the forced-placed insurance policy, that Finance of America "authorized Richard to submit a claim on its behalf" under the Great American policy, and that Richard's counsel submitted such a claim for $6,240.16 for mold remediation in June 2016. (Id. ¶¶ 26-28). Part of Richard's support for his allegation that he was permitted to submit claims on behalf of Finance to America is a July 13, 2016 letter attached to his complaint sent from Great American's claims administrator, Seattle Specialty Insurance Services, to Richard's counsel that states that "[u]nfortunately, we will be unable discuss [sic] the outcome of our investigation [of the claim] with you as Finance of America Mortgage LLC is the named insured on this policy." (Doc. 67-5 at 1).

Richard asserts that Great American made payment to Richard in the amount of $2,773.30 (Doc. 69 ¶ 29), but also admits that Great American paid Finance of America, and then Finance of America submitted a check for $2,773.30 to Richard (id. ¶ 31, Doc. 67-6 (copy of check from Finance of America to Richard)). In February 2017, Finance ofAmerica submitted a second check to Richard for $6,240.16 from monies Great American submitted to Finance for America. (Doc. 69 ¶ 32, Doc. 67-7).

Also in February 2017, Richard alleges he "sustained a second loss when the faucet in the kitchenette on the second floor of the premises ruptured, causing additional damage to the premises" in the amount of nearly $25,000. (Doc. 69 ¶ 33). In September 2017, Richard asserts that he "again made a claim on behalf of FINANCE OF AMERICA with GREAT AMERICAN." (Id. ¶ 34). Richard complains that both the full amount of the March 2016 and February 2017 damages should have been covered by the Great American policy, but Great American refused to fully compensate him. (Id. ¶¶ 63-66).

Richard asserts a breach of contract claim against QBE (Count III), alleging that QBE failed to notify him that his original home insurance policy had been cancelled or not renewed. (Id. ¶¶ 55-59). He also asserts breach of contract (Count IV) and bad faith (Count V) claims against Great American, styled as claims being brought "individually and on behalf of Finance of America," for failure to cover in full his losses from the damages incurred in March 2016 and February 2017. (Id. ¶¶ 60-70).

Great American filed its motion to dismiss Richard's complaint on June 13, 2018. (Doc. 44). Great American argues that Richard does not have standing to bring claims against Great American because he is not a party to the forced-placed insurance policy, which only insures Finance of America's interest in the Jim Thorpe premises. (Doc. 45 at 5-11). Richard responds that he is a third-party beneficiary of the Great American insurance policy and that Great American should be equitably estopped from arguing that he does nothave standing to bring his claim because Great American "induced Richard by its actions to believe that he had authority to bring a claim under the policy of insurance." (Doc. 60 at 9-13).

QBE filed its motion to dismiss Richard's complaint on June 14, 2018 (Doc. 47) and after Richard amended his complaint a second time, filed a substantively identical motion to dismiss on November 26, 2018 (Doc. 75). QBE argues that Richard has failed to state a claim upon which relief can be granted because it is undisputed that QBE mailed the notice of cancellation of the QBE insurance policy to Richard's Flushing, NY address on file with QBE. (Doc. 75-2 at 5-6). Richard responds that he properly alleged in his complaint that QBE failed to provide the required notice and that QBE knew or should have known that Richard had moved from Flushing to Jim Thorpe because Richard's insurance agent, Progressive Insurance, knew of his relocation. (Doc. 77 at 11-13).

Magistrate Judge Carlson issued an R&R on January 7, 2019 that largely adopts the arguments set forth by Great American and QBE in their motions to dismiss. (Doc. 78). The R&R recommends granting both Great American's and QBE's motions to dismiss and affording Richard an opportunity to amend his complaint, but only with respect to his claims against QBE. (Id. at 25). Richard timely filed Objections to the R&R with respect to the R&R's recommendations related to Great American's motion to dismiss. (Doc. 82). These Objections restate the arguments Richard originally raised against the motion to dismiss.Great American timely filed a response to the Objections, reiterating its same arguments. (Doc. 85).³

III. LEGAL STANDARD

A District Court may "designate a magistrate judge to conduct hearings, including evidentiary hearings, and to submit to a judge of the court proposed findings of fact and recommendations for the disposition" of certain matters pending before the Court. 28 U.S.C. § 636(b)(1)(B). If a party timely and properly files a written objection to a Magistrate Judge's Report and Recommendation, the District Court "shall make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made." Id. at § 636(b)(1)(C); see also Fed. R. Civ. P. 72(b)(3); M.D. Pa. Local Rule 72.3; Brown v. Astrue, 649 F.3d 193, 195 (3d Cir. 2011). "If a party does not object timely to a magistrate judge's report and recommendation, theparty may lose its right to de novo review by the district court." EEOC v. City of Long Branch, 866 F.3d 93, 99-100 (3d Cir. 2017). However, "because a district court must take some action for a report and recommendation to become a final order and because the authority and the responsibility to make an informed, final determination remains with the judge, even absent objections to the report and recommendation, a district court should afford some level of review to dispositive legal issues raised by the report." Id. at 100 (internal citations and quotation marks omitted).

A complaint must be dismissed under Federal Rule of Civil Procedure 12(b)(6) if it does not allege "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007). "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, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009).

"While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555 (internal citations, alterations, and...