United States District Court, E.D. Virginia, Alexandria Division
MEMORANDUM OPINION AND ORDER
O'Grady United States District Judge
matter comes before the Court on Defendant American Modern
Home Insurance Company's (AMHIC) Motion for Summary
Judgment (Dkt. 37) and Defendants OCWEN Loan Servicing, LLC
(OCWEN) and Deutsche Bank National Trust Company's
(Deutsche Bank) Motion for Summary Judgment (Dkt. 39). The
motions are fully briefed and the Court heard oral argument
on January 12, 2018. For the following reasons and for good
cause shown, the Court GRANTS summary
judgment for the Defendants.
Martina and Anthony Simpkins own 6012 Pike Branch Drive,
Alexandria, VA 22310 (the Property). Dkt.45, Exh. 1, ¶
1. Deutsche Bank holds the deed of trust on the Property and
OCWEN services the loan on the Property and have held these
roles since before 2015. Id. ¶¶ 3, 5. On
January 26, 2015, the Simpkins's home insurance through
State Farm Casualty Company lapsed for non-payment.
Id. ¶ 7. Pursuant to the deed of trust, OCWEN
force-placed insurance on the Property through AMHIC.
Id. Force-placed insurance, also known as
lender-placed insurance, insures the lender's collateral
when the borrower fails to maintain insurance, allowing the
lender to protect its exposure on a property up to the amount
of the mortgage on the date of issuance. Williams v.
Certain Underwriters at Lloyd's of London, 398
Fed.Appx. 44, 45 (5th Cir. 2010). OCWEN was the named insured
on the AMHIC policy J Dkt. 40, "Undisputed Material
Facts, " ¶ 11. The AMHIC policy required AMHIC to
pay the lesser of either the "repair or replacement cost
of that part of the building damages using commonly used
building materials" or "the amount actually and
necessarily spent to repair or rep] ace the damaged
building." Id. The policy also provided that
AMHIC would "adjust any loss with [OCWEN] and the
mortgagor" and that AMHIC would "pay [OCWEN] to the
extent of] [OCWEN's] interest in the property, "
with excess benefits to be paid to the mortgagor.
Id. Shortly after the force-placed insurance went
into effect, on February 5, 2015, the Property sustained
substantial fire damage. Dkt. 45, Exh. 1, ¶ 6.
the fire, AMHIC sent an adjuster to estimate repair costs for
the home. Dkt. 40, "Undisputed Material Facts, "
¶ 14. That estimate came out to $192, 938.52, less a $1,
000 deductible. Id. AMHIC also estimated recoverable
depreciation in the amount of $34, 494.74, bringing the total
available funds for repair to the Property to $226, 433.26.
Id. Pursuant to this estimate, AMHIC issued a check
to OCWEN in the amount of $191, 938 52 to cover the costs of
repairs, with the recoverable depreciation available as
needed. See Id. ¶ 15. From these funds, OCWEN
began reimbursing the Simpkins for repairs. Id.
¶ 16. OCWEN agreed to pay for a second opinion adjuster
on behalf of the Simpkins. Id. ¶ 17. That
adjuster never performed work and the Simpkins have not
presented any evidence that they obtained a second opinion on
the costs of repair. In March 2016, Plaintiffs hired Joseph
Mason, a general contractor, to complete the necessary
repairs for $212, 000, less than the $226, 433.26 available.
\See Id. ¶ 21. OCWEN issued $59, 000 in funds
to pay for the beginning of that repair work. A/.|¶ 24.
In September 2016, despite Joseph Mason not going forward
with repairs to the house, OCWEN reimbursed the Simpkins for
approximately $7, 000 in new appliances, which are now stored
in the basement of another of Plaintiffs' residences.
Id. ¶¶ 24, 25, 26. To date, the house hap
not been repaired. Id. ¶ 30. The current cost
of repair to the home, in light of the initial damage and the
three years the home has languished unrepaired, is $414, 590.
See Dkt. 45, Exh. 1, "F. Damages." The
Simpkins owe approximately $513, 000 on the property and the
mortgage account has an arrearage of $27, 000.
list of facts, Plaintiffs seek to add facts pertaining to why
force-placed insurance became necessary based on a premise
that OCWEN had breached the deed of trust by letting the
State Farm policy lapse. However, these facts are immaterial to
the instant case because Plaintiffs never pleaded a breach of
the deed of trust on this ground. It is well established that
Plaintiffs cannot amend their complaint via responsive briefs
at the summary judgment stage. See, e.g., Zee Co. v.
Williams, Mullen, Clarke & Dobbins, P.C., 871
F.Supp.2d 498, 507 n. 21 (E.D.Va.2012).
judgment will be granted where, viewing the facts in a light
most favorable to the non-moving party, there remains no
genuine issue of material fact. Fed. R. Civ. Pro. 56(c);
Marlow v. Chesterfield Cty. Sch. Bd. 749 F.Supp.2d
417, 426 (E.D. Va. 2010). A party opposing a motion for
summary judgment must respond with specific facts, supported
by proper documentary evidence, showing that a genuine
dispute of material fact exists and that summary judgment
should not be granted in favor of the moving party.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250
(1986). Conclusory assertions of state of mind or motivation
are insufficient. Goldberg v. B. Green & Co.,
836 F.2d 845, 848 (4th Cir. 1988). As the Supreme Court has
held, "the mere existence of some alleged
factual dispute between the parties will not defeat an
otherwise properly supported motion for summary judgment; the
requirement is that there be no genuine issue of
material fact." Bouchat v. Baltimore Ravens
Football Club, Inc., 346 F.3d 514, 519 (4th Cir. 2003)
(quoting Anderson v. Liberty Lobby, Inc., 447 U.S.
242, 247-248 (1986)) (emphasis in original).
allege breach of contract against all Defendants and breach
of duties imposed by the deed of trust against OCWEN and
Deutsche Bank for failing to submit the highest and best
claim for restoration and repair of the Property. In their
opposition to the instant motions, Plaintiffs raise a third
claim that OCWEN breached the deed of trust by failing to
timely remit insurance payments from the mortgage escrow
account. Dkt. 45, p. 15. In arguing that OCWEN was properly
put on notice of this claim, counsel for the plaintiffs, in
oral argument, noted Paragraph 12 of the Amended Complaint,
which reads in relevant part, "On or about January 26,
2015, Plaintiffs' insurance with State Farm Mutual
Insurance covering the property lapsed..." See
Dkt. 13, ¶ 12. However, this statement, contained in the
Amended Complaint's "Statement of Facts, " is
woefully insufficient to have put Defendants on notice that |
they were defending such a claim. The claim not properly
pleaded, the Court will not address it here.
prove breach of contract, Plaintiffs must show 1) a legally
enforceable obligation of Defendants to Plaintiffs, 2) breach
of that obligation, and 3) damage arising from the breach.
Filak v. George, 267 Va. 612, 614 (2004). It is
uncontested that Plaintiffs were not named parties to the
force-placed insurance contract. Nonetheless, Plaintiffs may
have standing to sue for breach of that contract as
third-party beneficiaries if the parties to the contract
clearly and definitely intended to confer a benefit upon
Plaintiffs that was more than merely incidental. William
v. AES Corp., 28 F.Supp.3d 553, 569 (E.D. Va. 2014).
Third-party beneficiary status is manifested by the clear and
definite intent of both parties. Copenhaver v.
Rogers, 238 V. 361, 367 (1989); Valley Landscape
Co., Inc. v. Rolland, 218 Va. 257, 259-6o (1977).
contend that four key undisputed material facts demonstrate
that they are third-party beneficiaries. First, a
force-placed insurance policy provision state:? that losses
will be adjusted with both the mortgagor and the named
insured. Dkt. 45, pp. 8-9. Second, a force-placed insurance
policy provision entitles the mortgagor to insurance proceeds
paid in excess of the balance of the loan. Id., p.
9. Third, William Heed, an AMHIC employee, stated in his
deposition that the contract "co-benefits" the
mortgagor. Id. And fourth, Derrick Raleigh, an OCWEN
employee, stated in his deposition that the force-placed
insurance "might or might not protect borrower's
equity in the property or the contents of the property
against any risk ...". Id., pp. 10-11.
Plaintiffs additionally contend that an unnamed OCWEN
representative stated to Ms. Simpkins, "don't worry,
we have you covered" after the fire. Id.
facts demonstrate that Plaintiffs are merely incidental
beneficiaries, not third-party beneficiaries, of the
force-placed insurance contract. Force-placed insurance
policies insure the lender's collateral. Williams v.
Certain Underwriters at Lloyd's of London, 398
Fed.Appx. 44, 45 (5th Cir. 2010). The deposition testimony
that Plaintiffs could "co-benefit" from the
force-placed insurance policy is plainly accurate, as the
named insured's interest in restoring the value in the
collateral happens to mirror Plaintiffs' interest in