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Catlin Syndicated Ltd. v. Ramuji, LLC

United States District Court, N.D. Alabama, Middle Division

April 8, 2019

RAMUJI, LLC, et al., Defendants.



         This matter comes before the court on a motion for summary judgment filed by a set of parties that the court will refer to as the Underwriters. (Doc. 237). The Underwriters are Plaintiff Catlin Syndicated Limited (“Catlin”) and Third Party Defendants Syndicate 1414 at Lloyd's, Syndicate 5820 at Lloyd's, Syndicate 727 at Lloyd's, and Syndicate 1861 at Lloyd's. (Doc. 237; see also Doc. 188 at 15- 16).

         As background, Defendant Ramuji, LLC owned and operated a motel. It had a mortgage on the property through Defendant Peoples Independent Bank (“PIB”). PIB, in turn, obtained a mortgage protection insurance policy through Intervenor Great American Assurance Company (“Great American”). The mortgage protection insurance policy provided that if, in the event of any loss or damage to the motel, PIB did not receive “acceptable hazard insurance” from Ramuji, Great American would cover the loss or damage. Although Ramuji had a commercial insurance policy from the Underwriters covering the motel, the commercial insurance policy did not list PIB as a beneficiary until after a fire destroyed the motel. As a result, PIB made a claim to Great American under the mortgage protection insurance policy. Great American has issued a reservation of rights letter but has not yet paid or denied the claim.

         Against that backdrop, Catlin-one of the Underwriters-filed this lawsuit against Ramuji and PIB, spawning a host of counterclaims, third party claims, and crossclaims, including Great American's third party claims as an intervenor. Because Great American's obligation to pay PIB under its mortgage protection insurance policy depends on whether the Underwriters pay PIB under Ramuji's commercial insurance policy, Great American requests a declaratory judgment that (1) it need not cover PIB's claim because the Underwriters must cover PIB's claim; (2) the Underwriters are estopped from denying PIB's claim; and (3) the Underwriters “are liable” to Great American. (Doc. 93 at 9-10). The Underwriters have now moved for summary judgment on those requests for declaratory judgment. (Doc. 237).

         Because the court's earlier rulings preclude all of Great American's claims against the Underwriters, the court WILL GRANT the motion for summary judgment and WILL ENTER SUMMARY JUDGMENT in favor of the Underwriters and against Great American.

         I. BACKGROUND

         In deciding a motion for summary judgment, the court “draw[s] all inferences and review[s] all evidence in the light most favorable to the non-moving party.” Hamilton v. Southland Christian Sch., Inc., 680 F.3d 1316, 1318 (11th Cir. 2012) (quotation marks omitted).

         1. Facts

         Ramuji owns a motel located in Boaz, Alabama. (See Doc. 237 at 4; Doc. 243 at 2). Ramuji obtained insurance on the property through its insurance agent, Randy Jones & Associates, and the agent's employee Jon Pair. (Doc. 127-1 at 9- 10, 97). Because of the type of insurance Ramuji was seeking, Randy Jones & Associates had to work with another insurance broker, which in turn contacted the Underwriters' managing general agent, which issued a commercial insurance policy to Ramuji. (Doc. 127-1 at 87, 100; Doc. 127-3 at 3, 14 Doc. 127-5 at 26- 27; Doc. 192-1 at 10; see also Doc. 237 at 5-6; Doc. 243 at 2). Great American concedes that Randy Jones & Associates and Mr. Pain were not agents of the Underwriters, but instead agents of Ramuji. (See Doc. 2376 at 4-5 ¶¶ 2-3; Doc. 243 at 2).

         PIB has been the mortgagee of Ramuji's property since 2004 (doc. 46 at 27- 26), but the commercial insurance policy that Ramuji obtained from the Underwriters did not list PIB as the mortgagee of the property. (See Doc. 90-7 at 5-6; Doc. 192-1 at 11). Meanwhile, PIB obtained mortgage protection insurance from Great American, “insur[ing] [PIB] against direct loss or damage to property in which [PIB has] . . . a mortgagee interest” if “acceptable hazard insurance has been cancelled or has not been received from the mortgagor . . . .” (Doc. 93-1 at 3) (emphasis omitted). “Acceptable hazard insurance” is “insurance on the described location naming [PIB] as mortgage holder and meeting [PIB's] requirements set forth in the mortgage agreement.” (Id.) (emphasis omitted). The policy also provides that “[i]f the property is covered by [Ramuji's] acceptable hazard insurance, this insurance shall not apply and shall not contribute to the payment of any loss.” (Id. at 11) (emphasis omitted). Finally, the policy provides that, if Great American makes a payment to PIB, Great American may require an assignment of PIB's rights of recovery, making Great American PIB's subrogee. (Id. at 11).

         After a fire on April 2, 2016, destroyed the motel, Ramuji made a claim to the Underwriters under its commercial insurance policy. (Doc. 144 at 15; see also Doc. 237 at 9; Doc. 243 at 2). On April 25, 2016, through Randy Jones & Associates, Ramuji asked to add PIB to the policy as a mortgagee effective at the inception of the policy. (Doc. 127-5 at 13-15). The Underwriters' agent informed Ramuji that it could not retroactively add PIB as a mortgagee, but it added the bank by endorsement effective April 25, 2016. (Id. at 14; see Doc. 90-7 at 60-61). The Underwriters eventually denied Ramuji's fire loss claim. (See Doc. 46 at 5).

         According to Great American's complaint, at some point PIB notified Great American of the April 2 fire at the motel and made a claim under the mortgage protection insurance policy. (Doc. 93 at 7 ¶ 19). Great American has issued a reservation of rights letter stating that it will cover PIB's claim only if the Underwriters' policy does not cover PIB. (Id. at 8 ¶ 22).

         2. Relevant Procedural History

         Catlin filed this lawsuit, seeking in relevant part a declaratory judgment that PIB does not have standing to present a claim under Ramuji's insurance policy. (Doc. 1 at 10-11). Great American moved to intervene because a determination about PIB's coverage under the Underwriters' insurance policy would dictate whether PIB is covered under Great American's mortgage protection insurance policy. (Doc. ...

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