The first lender force-placed insurance reported in Orlando has been commented on previously on Insurance Claims and Bad Faith Law blog, here and here, for example: Sekula v. Residential Credit Solutions, Inc., No. 6:15-cv-2104-Orl-31KRS, 2016 WL 6650712 (M.D. Fla. November 10, 2016). This time the plaintiffs filed a Second Amended Complaint with their third attempt to state a claim upon which relief can be granted. Actually, their previously alleged claims of breach of contract and breach of the implied covenant of good faith survived motions to dismiss. This time, unlike the previous two times, the plaintiffs alleged that the mortgage servicer was not a party to the plaintiffs' mortgage contract.
The Court dismissed these claims in the Second Amended Complaint because a contract can only be breached by a party to the contract, and under Florida law, the duty of good faith and fair dealing is a kind of breach of contract, not an independent cause of action or claim. Sekula v. Residential Credit Solutions, Inc., No. 6:15-cv-2104-Orl-31KRS, 2016 WL 6650712, at *2-*3 (M.D. Fla. November 10, 2016).
The plaintiffs' third and final claim was alleged against the mortgage servicer and against the insurance company that offered the force-placed insurance policy involved in the case. This was an alleged claim for tortious interference with "the business relationship between themselves and the owner of their mortgage loan."
On their third try at alleging a viable claim for tortious interference in this case, the plaintiffs alleged that "the Defendants knew of" the plaintiffs' relationship with the owner of the mortgage, and that the Defendants interfered with their request for a loan mortgage modification from their lender by "'wrongfully increasing the cost of insurance'[.]"
This was still not legally sufficient to state a tortious interference claim, the Court held. The lender force-placed insurance provider, American Western Home Insurance, defeated the required element of "knowledge" by pointing out "that, based on the allegations of the Second Amended Complaint, its policies were placed pursuant to a master policy[*] between itself and Residential Credit that covered all of the mortgages serviced by Residential Credit." Sekula v. Residential Credit Solutions, Inc., No. 6:15-cv-2104-Orl-31KRS, 2016 WL 6650712, at *4 (M.D. Fla. November 10, 2016) (emphasis supplied, footnote added).
[*]These allegations might have been strengthened and so the claim for tortious interference might have been stronger, had the plaintiffs specifically identified the unique type of "master policy" involved, which appears to have been a "reporting form" policy for a revolving inventory, like all the other lender force-placed insurance policies at issue in the LFPI cases. This is not a typical "master policy" in which the carrier may deny any knowledge of which property was involved, but a "reporting policy" which requires that the properties be reported to the carrier in order to be covered at all.
But then again, this concept may be too complicated to state a claim on account of LFPI practices. "This is a complicated insurance concept transferred to a situation, lender force-placed insurance, where it was never intended to apply." Dennis J. Wall, Lender Force-Placed Insurance Practices, § 3.4 "Commissions Cases," at 69 (American Bar Association 2015).
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