Opinion
Civ. No. 99-2926, SECTION "K"(4).
March 31, 2000.
ORDER AND REASONS
Before the court is defendants' Motion for Summary Judgment in the above-captioned matter. The motion, originally set for hearing on January 19, 2000, was reset for hearing on March 15, 2000 at the request of the plaintiff. For the reasons explained below, the court finds that the motion has merit and that summary judgment should be granted.
I. Facts and Background
This action arises out of hurricane damage sustained to an oil platform offshore Plaquemines Parish, Louisiana. The platform was owned by Allied Natural Gas Corporation ("Allied"), an offshore oil and gas production company located in Houston, Texas. In April 1997, Allied procured insurance on the platform in question from defendants, Greg Lary ("Lary"), Enerisk Management Inc. ("Enerisk"), and Unisure Insurance Services, Inc. ("Unisure"). In March 1998, Allied requested that plaintiff, Southern Company Energy Marketing, L.P. ("SCEM"), who held a mortgage on the platform, be named loss payee on the policy. The insurance on the platform was effective from April 25, 1997 through April 25, 1998.
When Allied renewed the policy in April of 1998, it instructed defendants that SCEM was not to be included as a loss payee on the policy. (Defendants' Exhibit I, Affidavit of Charles Sharman). Consequently, SCEM was not a named loss payee on the certificate of insurance when Hurricane Georges damaged the platform on September 27, 1998.
Allied is now in Chapter 7 liquidation and has no meaningful assets. Hence, SCEM brought suit against defendants, who are insurers brokers and/or agents and who procured insurance and/or disbursed proceeds of insurance covering the platform. First, SCEM claims that defendants breached their contract by failing to pay in accordance with the loss payable provision in the certificate of insurance. Next, SCEM alleges that defendants failed to ensure that SCEM was named as loss payee and failed to notify SCEM of nonrenewal of its status as loss payee. Finally, SCEM claims that defendants made representations to the effect that SCEM was a loss payee under Allied's property damage insurance policy and that SCEM detrimentally relied on those representations.
Defendants have filed this Motion for Summary Judgment and argue that SCEM was not loss payee at the time of the platform damage. Furthermore, defendants contend that they owed no duty to provide the loss payee with notice that it would not be included as a loss payee when the policy was renewed in April, 1998.
II. Standard for Motion for Summary Judgment
Rule 56(c) of the Federal Rules of Civil Procedure provides that summary judgment should be granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). The party moving for summary judgment bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of the record which it believes demonstrate the absence of a genuine issue of material fact." Stults v. Conoco, 76 F.3d 651, 656, (5th Cir. 1996), ( citing Skotak v. Tenneco Resins, Inc., 953 F.2d 909, 912-13 (5th Cir. 1992) ( quoting Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). When the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts. The nonmoving party must come forward with "specific facts showing that there is a genuine issue for trial." Matsushita Elec. Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 588 (1986) (emphasis supplied); Tubacex, Inc. v. M/V Risan, 45 F.3d 951, 954 (5th Cir. 1995).
Thus, where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no "genuine issue for trial." Matsushita Elec. Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 588 (1986). Finally, the court notes that the substantive law determines materiality of facts and only "facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242. 248 (1986).
The court now turns to the merits of the arguments with these standards in mind.
III. Analysis
According to the affidavit of Charles Sharman ("Sharman"), President and former General Counsel of Allied, he instructed Lary not to include SCEM as a loss payee after the policy was renewed in April of 1998. SCEM was not named as a loss payee when Hurricane Georges damages the platform. Therefore, defendants contend they are are entitled to summary judgment on plaintiff's claim that defendants breached a contract by failing to pay in accordance with the policy in effect on September 27, 1998.
Plaintiff has alleged that defendants owed a duty to inform SCEM that it would not be included as a loss payee when the policy was renewed in April 1998. Under Texas law, an insurance agent who receives a commission from payment of an insurance policy premium paid by the mortgagee named as loss payee in the policy, knowing that mortgagee paid for coverage, and whose servicing of the policy includes notification to the insured of expiration of nonrenewal of policy has a duty of reasonably attempting to keep the mortgagee informed about policy expiration date and nonrenewal. Horn v. Hedgecoke Ins. Agency, 836 S.W.2d 296 (Tex.App.-Amarillo 1992). While Hedgecoke concerned notifying a loss payee of nonrenewal of the policy in general, it is analogous to the facts before the court. Plaintiff does not allege that it paid any portion of the premium on Allied's policy nor that defendants were aware that any portion of the premium was paid by SCEM. Furthermore, plaintiff does not allege there was privity of contract between SCEM and defendants. Therefore, the court cannot, as a matter of law, find that defendants owed a duty to notify plaintiff of Allied's request that SCEM be removed as loss payee on the policy.
Plaintiff argues that it has been unsuccessful in its attempts at discovering information from the defendants, making summary judgment inappropriate at this time. However, plaintiff is in the unique position to know whether or not it had paid any portion of Allied's policy premium, or whether defendants made any representations that SCEM was still the named loss payee after April 25, 1998. Furthermore, the court has already granted plaintiff one continuance of the hearing on this motion so that it might garner evidence in support of its case. Plaintiff has submitted no affidavits or other evidence which would create a genuine issue of material fact in this case. The court finds that defendants are entitled to summary judgment as a matter of law. Accordingly,
IT IS ORDERED that defendants' Motion for Summary Judgment has merit and is hereby GRANTED.
New Orleans, Louisiana, this 31 st day of March, 2000.