United States District Court, S.D. Texas, Houston Division
MEMORANDUM OPINION AND ORDER
H. MILLER SENIOR UNITED STATES DISTRICT JUDGE
before the court is plaintiff AmGuard Insurance Company's
(“AmGuard”) motion to dismiss defendant
BancorpSouth Bank's (“Bancorp”)
counterclaims. Dkt. 30. Bancorp responded. Dkt. 38. Having
considered the motion, response, and applicable law, the
court is of the opinion that AmGuard's motion (Dkt. 30)
should be GRANTED.
2014, Bancorp extended defendant Lone Star Legal Aid
(“Lone Star”) a $1.2 million line of credit
secured by a Real Estate Deed of Trust (“Deed of
Trust”) granting Bancorp an interest in Lone Star's
principal office building (“Building”) located at
1415 Fannin Street in Houston, Texas. Dkt. 38 at 2-3.
Deed of Trust requires Lone Star to maintain property
insurance on the Building that both named Bancorp as a loss
payee and included a standard mortgage clause. Dkt. 38-1 at
7. Lone Star, through its insurance broker and co-defendant
BXS Insurance, Inc. (“BXSI”), obtained an
insurance policy from AmGuard covering the Building and other
Lone Star properties for the period between June 10, 2017 and
June 10, 2018 (“Policy”). Dkt. 26 at 6. The
Policy included a standard mortgage clause and named Bancorp
as both loss payee and mortgage holder. Id.; Dkt. 38
at 10. The mortgage clause provides that if AmGuard denies a
claim “because of [Lone Star's] acts or because
[Lone Star] failed to comply with the terms of the policy,
[Bancorp] will still have the right to receive loss payment,
” subject to certain conditions precedent. Dkt. 26-1 at
about August 28, 2017, the Building suffered fire and water
damage that Bancorp alleges rendered the building
uninhabitable. Dkt. 26 at 6-7. Lone Star filed a loss claim
with AmGuard for coverage under the Policy. Dkt. 38 at 8.
AmGuard denied Lone Star's claim because the Building did
not have an automatic sprinkler system, which the Policy
required, and therefore Lone Star did not comply with the
terms of the Policy. Id. at 7.
Star owed Bancorp approximately $1.1 million at the time of
the fire. Dkt. 38 at 11. On July 5, 2018, Bancorp and Lone
Star extended their credit agreement at which point the
outstanding debt equaled $0. Dkt. 38-1 at 26.
filed this suit against Lone Star, Bancorp, and BXSI seeking
a declaration of the rights and obligations of the parties
under the Policy. Dkt. 1. Bancorp and BXSI answered and filed
counterclaims against AmGuard seeking declaratory relief, and
claiming breach of contract, breach of the duty of good faith
and fair dealing, and violations of the Texas Insurance Code.
Dkt. 26. AmGuard now moves to dismiss Bancorp's
counterclaims, arguing that Bancorp has no standing to bring
its counterclaims. Dkt. 30.
Rule 12(b)(1), a party can seek dismissal of an action for
lack of subject matter jurisdiction. Fed.R.Civ.P. 12(b)(1).
“In determining whether the court has subject matter
jurisdiction, [it] must accept as true the allegations set
forth in the complaint.” Crane v. Johnson, 783
F.3d 244, 251 (5th Cir. 2015) “[A] trial court has the
power to dismiss for lack of subject matter jurisdiction on
any one of three separate bases: (1) the complaint alone; (2)
the complaint supplemented by undisputed facts evidenced in
the record; or (3) the complaint supplemented by undisputed
facts plus the court's resolution of disputed
standing is a question of subject matter jurisdiction.
Norris v. Causey, 869 F.3d 360, 366 (5th Cir. 2017).
“To establish Article III standing, a plaintiff must
show[:] (1) an injury in fact; (2) a sufficient causal
connection between the injury and the conduct complained of;
and (3) a likelihood that the injury will be redressed by a
favorable decision.” Crane, 783 F.3d at 251.
contends that AmGuard's denial of Lone Star's claim
for coverage breached contractual, common law, and statutory
duties owed to Bancorp. Dkt. 26. AmGuard seeks dismissal of
Bancorp's counterclaims for lack of standing because
Bancorp has no injury of which to compain. Dkt. 30 at 4-5.
AmGuard asserts Bancorp has no injury because the Policy only
covers Bancorp's “financial interest” in the
Building and Bancorp's relevant financial interest was
extinguished when Bancorp and Lone Star renewed their credit
agreement on July 5, 2018 and acknowledged no outstanding
debt. Dkt. 30. In response, Bancorp argues that it suffered
injury to its secured interest in the Building. Dkt. 26.
purpose of the loss-payable clause in an insurance policy is
to protect the security interest of the mortgagee who has
advanced money to others. . . .” Smith v. Tex.
Farmers Ins. Co., 82 S.W.3d 580, 584 (Tex. App.-San
Antonio 2002, pet. denied) (citing Helmer v. Tex. Farmers
Ins. Co., 632 S.W.2d 194, 196 (Tex. App.-Fort Worth
1982, no writ)). “The policy, in case of loss or damage
to the property, will pay to the extent of the
mortgagee's interest in the property whatever that amount
is so that the mortgagee, who has advanced money on the
property, will be protected.” Helmer, 632
S.W.2d at 196. When no indebtedness between an insured and
its mortgagee exists, no indebtedness or liability runs to
the mortgagee from the insurance company. Id.;
Campagna v. Underwriters at Lloyd's London, 549