Lumpkins v. Balboa Insurance
812 F. Supp. 2d 1280
N.D. Okla.2011Background
- Plaintiffs Debrah and Steve Lumpkins claim a water loss to their home and seek insurance benefits under a policy issued by Meritplan and Balboa.
- The policy at issue is the Risk Based Protection Policy, issued March 5, 2009, naming GMAC Mortgage, LLC as the insured.
- The policy is a lender-placed insurance arrangement; GMAC holds the mortgage and is the primary beneficiary of the policy.
- Defendants allegedly used an untrained adjuster and delayed paying emergency services and restoration costs claimed by Plaintiffs.
- Plaintiffs argue they are third-party beneficiaries entitled to breach of contract and bad faith claims under the policy.
- The court limits consideration to the four corners of the policy and a Notice of Lender-Placed Insurance, denying extrinsic evidence.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are Lumpkins third-party beneficiaries to the policy? | Lumpkins argue policy language and intent confer beneficiary rights. | Policy expressly shields GMAC as insured; no obligation to Plaintiffs. | No; plaintiffs are not third-party beneficiaries. |
| Does May v. Mid-Century Ins. Co. control the outcome? | May supports third-party beneficiary status under similar loss-pay provisions. | May is distinguishable; policy expressly limits benefits to GMAC. | May controls; plaintiffs not third-party beneficiaries. |
| Is Balboa vicariously liable for Meritplan’s actions? | Balboa should be vicariously liable for Meritplan’s handling of the claim. | No direct liability to Plaintiffs since policy and payment rights run to GMAC. | Plaintiffs' vicarious liability claims fail. |
Key Cases Cited
- May v. Mid-Century Ins. Co., 151 P.3d 132 (Okla. 2006) (third-party beneficiary rights depend on contract's intent and benefits to third party)
- Shebester v. Triple Crown Insurers, 974 F.2d 135 (10th Cir. 1992) (third-party beneficiary status may attach despite not being named)
- Roach v. Atlas Life Ins. Co., 769 P.2d 158 (Okla. 1989) (bad faith rights for beneficiaries under insurance contracts)
- In re Katrina Canal Breaches Litig., 495 F.3d 191 (5th Cir. 2007) (contracts central to claims; court can consider incorporated documents on dismissal)