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Rice v. Standard Guaranty Insurance Co.

United States District Court, E.D. Missouri, Eastern Division

November 14, 2016

AMIE RICE, Plaintiff,
v.
STANDARD GUARANTY INSURANCE COMPANY, et al., Defendants.

          MEMORANDUM AND ORDER

          RONNIE L. WHITE UNITED STATES DISTRICT JUDGE.

         This matter is before the Court on Defendants LoanCare, LLC and Freedom Mortgage Corporation's Joint Motion to Dismiss Plaintiffs Third Amended Complaint (ECF No. 33) and Standard Guaranty Insurance Company's Motion to Dismiss Plaintiffs Third Amended Complaint (ECF No. 35).[1] These matters are fully briefed and ready for disposition.

         BACKGROUND[2]

         On April 5, 2016, Plaintiff Amie Rice filed her Third Amended Complaint ("TAC"). (ECF No. 32). In her TAC, Plaintiff claims to be the owner of the property located at 902 Robert Avenue, Ferguson, Missouri. (TAC, ¶6). Defendant Standard Guaranty Insurance Company ("Standard Guaranty") issued a force-placed policy of homeowners insurance, Policy No. MLR626019500 ("the Policy"). (TAC, ¶12). The Policy provided commercial and homeowner's insurance coverage for the Property. (TAC, ¶13).

         On January 8, 2014, while the Policy in effect, the Property was damaged due to a storm and high winds which caused the house to be uninhabitable. (TAC, ¶12). Freedom and/or LoanCare took $31, 924.77 of the monies paid by Standards and used those funds to pay off the Deed of Trust. (TAC, ¶27). Plaintiff alleges that this action by Freedom and/or LoanCare in paying off the Deed of Trust prevented Plaintiff from engaging any contractor to repair her home. (TAC, ¶28).

         Plaintiff brings a lawsuit for breach of contract against Standard Guaranty (Count I), for vexatious refusal against Defendant Standard Guaranty (Count II), breach of contract/tortious interference against Freedom Mortgage (Count III), and breach of contract/tortious interference against LoanCare, LLC ("LoanCare") (Count IV).

         DISCUSSION

         I. Breach of Contract Against Standard Guaranty

         To state a claim for breach of contract under Missouri law, Plaintiff "must establish the existence of a valid contract, the rights of plaintiff and obligations of defendant under the contract, a breach by defendant, and damages resulting from the breach." Gillis v. Principia Corp., No. 15-2968, 2016 WL 4205934, at *4 (8th Cir. Aug. 10, 2016) (citing Lucero v. Curators of Univ. of Mo., 400 S.W.3d 1, 5 (Mo.Ct.App. 2013)).

         Standard contends that there was no breach of contract because the Policy was force placed, and Plaintiff has no interest in the Policy, as she is not a named insured or an additional insured. Standard notes that the Certificate of Insurance (attached to the TAC) indicates that Freedom Mortgage c/o LoanCare is the insured under the Policy. (ECF No. 36 at 4). Plaintiff was not an additional insured. (ECF No. 36 at 4). Because Plaintiff was not an insured, Standard states that Plaintiff cannot maintain an action for breach of contract, given that there was no contract between Plaintiff and Standard. (ECF No. 36 at 4).

         In response, Plaintiff asserts that she has pled a third-party interest to the insurance contract. Plaintiff maintains that she has received a benefit from that contract, specifically the amount of the damages agreed to be paid by the insurance company over and above the amount due on the Mortgage. Plaintiff notes that the Policy insures the real property for $218, 000, which is in excess of the value of the loan alleged to have been secured by the Deed of Trust, and no language in it limits the Policy amount to the financial interest of the Mortgagee. Plaintiff contends that the Policy insures the real property, and not just the financial interests of the Defendants. (ECF No. 38 at 7).

         The Court holds that Plaintiffs claim for breach of contract fails as a matter of law. Missouri courts have expressly stated the requirements for a third-party beneficiary:

A third-party beneficiary is one who is not privy to a contract or its consideration, but who may nonetheless maintain a cause of action for breach of the contract." Trout v. General Security Services Corp. 8 S.W.3d 126, 132 (Mo.App. 1999); see also L.A.C. v. Ward Parkway Shopping Center Co. 75 S.W.3d 247, 260 (Mo. banc 2002). Only a third party for whose primary benefit the parties contracted may maintain an action to enforce a contract; a third party may not recover if that party "is only incidentally, indirectly or collaterally benefited by the contract." Trout 8 S.W.3d at 132. The terms of a contract must clearly and directly express the contracting parties' intent for the third party to benefit from the contract. L.A. C 75 S.W.3d at 260; Trout 8 S.W.3d at 132.

Kester v. Kester, 108 S.W.3d 213, 226 (Mo.Ct.App. 2003). The Court holds Plaintiff cannot maintain a claim for breach of contract because there is no clear and direct language indicating that Plaintiff is a beneficiary as a matter of law. Freedom and LoanCare obtained the policy to protect their interests in the Property, not for the primary benefit of Plaintiff. The Certificate of Insurance expressly states that it benefits Freedom and LoanCare, but does not ...


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