Latisha Williams v. Fidelity National Insur

Case: 09-31048 Document: 00511262186 Page: 1 Date Filed: 10/13/2010
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
October 13, 2010
No. 09-31048 Lyle W. Cayce
Clerk
LATISHA WILLIAMS; LAWRENCE WILLIAMS,
Plaintiffs–Appellants
v.
CERTAIN UNDERWRITERS AT LLOYD’S OF LONDON,
Defendant–Appellee
Appeal from the United States District Court
for the Eastern District of Louisiana
USDC No. 2:07-cv-04428
Before STEWART, PRADO, and ELROD, Circuit Judges.
PER CURIAM:*
Latisha Williams and Lawrence Williams (“the Williamses”) appeal the
district court’s dismissal of their claims against Certain Underwriters at Lloyd’s
of London (“Lloyd’s”). The Williamses sued Lloyd’s for, inter alia, recovery for
wind and flood damage sustained to their home as a result of Hurricane Katrina
under their mortgagee’s, Homecomings Financial (“Homecomings”), force-placed
flood insurance policy with Lloyd’s (‘the Policy”). The district court dismissed the
*
Pursuant to 5TH CIR . R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR .
R. 47.5.4.
Case: 09-31048 Document: 00511262186 Page: 2 Date Filed: 10/13/2010
Williamses’ claims under Federal Rule of Civil Procedure 12(b)(1) with prejudice
for lack of standing.
On appeal, the Williamses argue that they have standing to sue under the
Policy as third-party beneficiaries. Pointing to specific terms of the Policy, the
Williamses contend that the Policy creates a stipulation pour auturi in their
favor as laid out by Joseph v. Hospital Service District No. 2. of the Parish of St.
Mary, 2005-C-2364 (La. 10/15/06), 939 So. 2d 1206, 1211. Because the Policy
does not manifest a clear intention to benefit the Williamses, we affirm the
district court’s dismissal of the Williamses’ claims against Lloyd’s.
I. FACTUAL AND PROCEDURAL BACKGROUND
The Williamses had homeowner’s insurance on their home in New Orleans
(the “Property”) from Fidelity National Insurance Company (“Fidelity”). The
Williamses also had flood insurance on the Property, which lapsed in June 2005.
As a result of the lapse, Homecomings, the mortgagee, purchased the Policy to
protect its interest in the Property against flood damage. The Policy is a “force-
placed” (also known as “lender-placed”) policy, which insures the lender’s
collateral when the borrower fails to maintain a specific type of insurance. A
force-placed policy allows the lender to protect its exposure on a property up to
the amount of the mortgage on the date of issuance. Here, Homecomings
maintains an umbrella force-placed insurance program with Lloyd’s, which
allows Homecomings to have force-placed coverage on many properties at the
same time.
The Policy lists Homecomings as the sole insured and provides coverage
up to $169,000. The Policy contains three sections that are at issue on appeal.
The first section, which appears in the “Coverage” area of the Policy, reads:
D. TEMPORARY HOUSING EXPENSE
If insured property is a dwelling and a flood loss covered by this
policy makes it unsafe or in poor condition to live in, or if a civil
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authority will not let owner go to and use the dwelling as a result
of flooding to neighboring locations, we cover the reasonable
amount owner paid in renting a temporary dwelling that is
equivalent to owner’s damaged dwelling so that owner’s
household can maintain its normal standard of living. We will not
apply the deductible to this coverage. This coverage is subject to the
following conditions, limitations and exclusions:
1. We will only pay if dwelling is for a single family and it is
owner’s primary home.
2. We will pay owner for the shortest time required to repair or
replace that damaged portion of dwelling that made it
unsafe or in poor condition to live in. If owner permanently
relocates to a new dwelling, we will pay for the shortest time
required to permanently relocate owner’s family to the new
dwelling.
3. This coverage shall continue (even if the coverage that applies
to the described location expires after the date of loss) until
the repair and/or replacement of the damaged portion of the
insured dwelling is completed, or after owner has
permanently relocated.
4. Our limit of liability for this coverage is a maximum of $1,000
for each flood loss or occurrence.
The second section, which appears in the “General Conditions” area of the
Policy, states:
A. Insurable Interest and Limit of Liability
This policy provides indirect coverage to owner’s insurable
interest in the insured property which has been pledged as
security for a loan you have made to the owner. Regardless of the
insurable interests of the owner or any other person or persons
in the insured property, you are our sole insured under this
policy. Even if more than one person has an insurable interest
in the insured property, we shall not be liable for more than the
amount of insurance you requested for each specific described
location.
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The third section, which appears in the “Lender-Placed Flood Insurance
Deductible Buy-Back Coverage Endorsement” area of the policy, provides:
A. CONDITIONS
....
1. Insurable Interest. Regardless of the insurable interest
of Owner or any other person or persons in the insured
property, you are our sole insured under this policy and
any benefits payable under this Endorsement will be made
directly to you, for the account of the owner.
The Property sustained damage as a result of Hurricane Katrina and its
aftermath. At the time, the Williamses’ mortgage principal balance was
$142,617.80. Homecomings submitted a flood damage claim to Lloyd’s, and after
an investigation by an independent adjuster, Lloyd’s issued payment to
Homecomings in the amount of $57,244.20. The Williamses allegedly submitted
insurance claims to Fidelity and Lloyd’s and were given loss estimates that were
less than the true value of the damage to their home.
The Williamses sued both Fidelity and Lloyd’s, seeking, inter alia, recovery
from Lloyd’s for flood damage under the Policy.1 Lloyd’s filed a Rule 12(b)(1)
motion to dismiss for lack of standing (the “Motion”). The Williamses failed to
raise the “Temporary Housing Expense” section before the district court. The
district court granted the Motion and dismissed Lloyd’s from the case. The
Williamses timely appealed.
II. JURISDICTION AND STANDARD OF REVIEW
This Court has jurisdiction over the district court’s final judgment under
28 U.S.C. § 1291. This Court reviews de novo a district court’s Rule 12(b)(1)
1
The Williamses’ case against Fidelity proceeded in district court, and seems to have
reached a tentative settlement. See Williams v. Fidelity Ins. Co., No. 07-4428 (E.D. La. May
19, 2010) (order of dismissal).
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dismissal for lack of standing. Cornerstone Christian Sch. v. Univ.
Interscholastic League, 563 F.3d 127, 133 (5th Cir. 2009). A motion to dismiss
under Rule 12(b)(1) “should be granted only if it appears certain that the
plaintiff cannot prove any set of facts in support of his claim that would entitle
him to relief.” Home Builders Ass’n of Miss., Inc. v. City of Madison, 143 F.3d
1006, 1010 (5th Cir. 1998). This Court “must accept as true all material
allegations of the complaint, and must construe the complaint in favor of the
complaining party.” Warth v. Seldin, 422 U.S. 490, 501 (1975).
III. DISCUSSION
To have standing to sue in federal court, a plaintiff must bring a “case or
controversy.” U.S. C ONST. art. III. “This requires more than an abstract legal
dispute.” Donelon v. La. Div. of Admin. Law ex rel. Wise, 522 F.3d 564, 566 (5th
Cir. 2008) (citing Allen v. Wright, 468 U.S. 737, 754 (1984)). To satisfy Article
III’s standing requirement, a plaintiff must allege (1) a “personal injury” that is
(2) “fairly traceable to the defendant’s allegedly unlawful conduct” and (3) “likely
to be redressed by the requested relief.” Allen, 468 U.S. at 751.
A plaintiff has standing to sue under an insurance policy if the plaintiff is
a named insured or an additional named insured, see Joseph v. Hospital Service
District No. 2 of the Parish of St. Mary, 2005-C-2364 (La. 10/15/06); 939 So. 2d
1206, 1211, or if the plaintiff is an intended third-party beneficiary of the policy.
L A. C IV. C ODE A NN. art. 1978 (“A contracting party may stipulate a benefit for
a third person called a third party beneficiary.”). It is undisputed that the
Williamses are neither named insureds nor additional insureds under the Policy.
At issue is only whether the Williamses are third-party beneficiaries.
Under Louisiana law, a contract for the benefit of a third party is called
a “stipulation pour autrui.” Paul v. La. State Emps.’ Grp. Benefit Program, 99-
0897 (La. App. 1 Cir. 5/12/00), 762 So. 2d 136, 140; see also B LACK’S L AW
D ICTIONARY 1551 (9th ed. 2009) (translating “stipulation pour autrui” as a
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stipulation “for other persons”). Although article 1978 specifies that stipulations
pour autrui may exist, “[t]he code provides no analytic framework for
determining whether” one exists in any given situation. Joseph, 939 So. 2d at
1211.
Instead, “the code has left to the jurisprudence the obligation to develop
the analysis to determine when a third party beneficiary contract exists on a
case by case basis.” Id. at 1212. When a court performs this determination,
“[e]ach contract must be evaluated on its own terms and conditions in order to
determine if the contract stipulates a benefit for a third person.” Id. A court
should consider “three criteria for determining whether contracting parties have
provided a benefit for a third party.” Id. These criteria are whether “1) the
stipulation for a third party is manifestly clear; 2) there is certainty as to the
benefit provided the third party; and 3) the benefit is not a mere incident of the
contract between the promisor and the promisee.” Id.
A. Waiver
The Williamses argue for the first time in their reply brief on appeal that
language in the “Temporary Housing Expense” section of the Policy supports the
finding of a stipulation pour auturi such that they have standing to sue under
the Policy. The Williamses argued in their opening brief only that the “Insurable
Interest and Limit of Liability” and “Conditions / Insurable Interest” sections
gave them standing. Similarly, in the district court the Williamses only argued
that the “Insurable Interest and Limit of Liability” and “Conditions / Insurable
Interest” sections gave them standing and did not argue that the “Temporary
Housing Expense” section gave them standing. In its order granting Lloyd’s
motion to dismiss for lack of standing, the district court did not reference the
“Temporary Housing Expense” section.
“[A]rguments not raised before the district court are waived and cannot be
raised for the first time on appeal.” Martco Ltd. P’ship v. Wellons, Inc., 588 F.3d
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864, 877 (5th Cir. 2009) (citing LeMaire v. La. Dep’t of Transp. & Dev., 480 F.3d
383, 387 (5th Cir. 2007)). Furthermore, Federal Rule of Appellate Procedure
28(a) states that an appellant’s opening brief “must contain . . . the argument,
which must contain . . . appellant’s contentions and the reasons for them, with
citations to the authorities and parts of the record on which the appellant relies
. . . .” An appellant’s “[f]ailure to satisfy the requirements of Rule 28 as to a
particular issue ordinarily constitutes abandonment of the issue.” United States
v. Miranda, 248 F.3d 434, 443 (5th Cir. 2001).
The Williamses “Temporary Housing Expense” argument fails to overcome
either bar. While our review is of the entire Policy, Lloyd’s would be prejudiced
if we entertained this eleventh-hour argument. As this case does not involve
“‘substantial public interests,’” Hatley v. Lockhart, 990 F.2d 1070, 1073 (5th Cir.
1993) (quoting Cont’l Ins. Cos. v. Ne. Pharm. & Chem. Co., 842 F.2d 977, 984
(8th Cir. 1988)), we decline to exercise our “discretion to consider issues not
raised in the briefs.” Hatley, 990 F.2d at 1073.
B. Stipulation Pour Autrui
There is no presumption of a stipulation pour autrui; the party claiming
a stipulation pour autrui bears the burden of showing that one exists. Joseph,
939 So. 2d at 1212. “The most basic requirement of a stipulation pour autrui is
that the contract manifests a clear intention to benefit the third party; absent
such a clear manifestation, a party claiming to be a third party beneficiary
cannot meet his burden of proof.” Id.
The Williamses do not, and cannot, satisfy their burden of showing that
the Policy manifests a clear intent to benefit them. The Policy is intended to
benefit one party and one party only: Homecomings. The Policy clearly and
unambiguously states, “Regardless of the insurable interests of the owner [the
Williamses] . . . in the insured property, you [Homecomings] are our sole insured
under this policy.” (emphases omitted). Further, to obviate any possible
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ambiguity, the Policy specifies that Homecomings is Lloyd’s “sole insured under
this policy” and that benefits paid will be “made directly to” Homecomings.
The Policy contains some language that, if viewed in isolation, might
indicate a stipulation for the Williamses. For example, the Policy states that it
“provides . . . coverage to owner’s [the Williamses’] insurable interest.”
(emphasis omitted). This language might seem to imply that the Policy is
intended to benefit the Williamses. But viewed in context, this language refers
to the Williamses’ insurable interest only as a means of identifying the coverage
to Homecomings, with no thought of a benefit to the Williamses: “This policy
provides indirect coverage to owner’s insurable interest in the insured property
which has been pledged as security for a loan you have made to the owner.”
(emphases omitted). This language specifies that the coverage is indirect
(provided for Homecomings, rather than for the Williamses), and that the Policy
covers the Property qua security for a loan provided by Homecomings. The
Property itself is not important; the Property is only important in its capacity as
collateral used to secure Homecomings’s loan.
Likewise, the Policy says that “benefits . . . will be made . . . for the account
of the owner.” The Williamses rely heavily on this language, arguing that, as the
“owners,” it shows that the Policy explicitly contemplates a benefit to them. This
interpretation, while plausible when reading selected portions of this sentence
in isolation, is not viable when reading the sentence as a whole: “Regardless of
the insurable interest of Owner [the Williamses] or any other person or persons
in the insured property, you [Homecomings] are our [Lloyd’s] sole insured under
this policy and any benefits payable under this Endorsement will be made
directly to you [Homecomings], for the account of the owner [the Williamses].”
The Williamses attempt to analogize to Lee v. SafeCo Insurance Co. of
America, No. 08-1100, 2008 WL 2622997 (E.D. La. July 2, 2008). However, Lee
is distinguishable because the policy language in Lee is materially different from
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the language in the instant case. In Lee, AMC held a mortgage on Lee’s New
Orleans property. Id. at *1. AMC acquired an insurance policy on Lee’s
property from GICA. Id. at *3. Asserting that the property was damaged by
Hurricanes Katrina and Rita, Lee submitted a claim to GICA. Id. at *1. After
GICA refused to pay, Lee filed suit. Id. GICA filed a Rule 12(b)(1) motion to
dismiss for lack of standing, arguing that Lee did not have an insurance contract
with GICA and was not a third-party beneficiary to AMC’s policy. Id.
AMC’s policy with GICA stated, “‘Amounts payable in excess of your
[AMC’s] interest will be paid to the “borrower” [Lee] unless some other person
is named by the “borrower” to receive payment.’” Id. at *4 (emphasis supplied
by district court). The district court found that “[t]his provision clearly
stipulates that the portion of any loss payment exceeding the value of AMC’s
interest in the property will be paid directly to Lee, as the ‘borrower’ under the
Policy.” Id. Accordingly, the statement was “clear and unambiguous, and
therefore manifest[ed] the clear intention of [AMC and GICA] to provide this
benefit to” Lee. Id. (quotation omitted). The district court denied GICA’s motion
to dismiss for lack of standing. Id. at *1.
Unlike in Lee, where AMC’s contract with GICA clearly envisioned a
benefit to Lee—the payment of any amount in excess of AMC’s interest in the
property—in the instant case, the Policy does not envision a benefit to the
Williamses. The Policy refers to “the account of” the Williamses not to describe
a benefit to the Williamses like the one provided in Lee, but merely to
distinguish the “Williams” account from the myriad other accounts which
Homecomings has with Lloyd’s.
At the time of the storm the Williamses had a principal mortgage balance
of $142,617.80 and the policy limit was $169,000, so that a payment to the fullest
extent of the policy limit would have resulted in $26,382.20 more than the
outstanding mortgage balance. The Policy, however, does not have a provision
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like the one in Lee that specified any excess payment would be given to Lee
herself. Even assuming that any potential additional benefit might go to the
Williamses, the language in the Policy falls well below the requisite finding of
a “manifestly clear stipulation” to create a stipulation pour autrui.
IV. CONCLUSION
By failing to raise the argument until their Reply brief on appeal, the
Williamses waived their argument that the “Temporary Housing Expense”
section gives them standing to pursue a claim under the Policy. The Policy does
not contain a stipulation pour autrui in the Williamses’ favor because it does not
manifest a clear intent to benefit the Williamses. The district court therefore
properly dismissed their claims against Lloyd’s for lack of standing.
AFFIRMED.
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