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National Security Fire & Casualty Insurance Co. v. Townsend

United States District Court, N.D. Mississippi, Greenville Division

September 17, 2018




         This declaratory judgment action is before the Court on National Security Fire & Casualty Insurance Company's motion for summary judgment. Doc. #35.


         Summary Judgment Standard

         Under Rule 56 of the Federal Rules of Civil Procedure, “[s]ummary judgment is proper only when the record demonstrates that no genuine issue of material fact exists and the movant is entitled to judgment as a matter of law.” Luv N' Care, Ltd. v. Groupo Rimar, 844 F.3d 442, 447 (5th Cir. 2016). “A factual issue is genuine if the evidence is sufficient for a reasonable jury to return a verdict for the non-moving party, and material if its resolution could affect the outcome of the action.” Burton v. Freescale Semiconductor, Inc., 798 F.3d 222, 226 (5th Cir. 2015) (internal quotation marks omitted). On a motion for summary judgment, a court must “consider the evidence in the light most favorable to the nonmoving party and draw all reasonable inferences in its favor.” Edwards v. Cont'l Cas. Co., 841 F.3d 360, 363 (5th Cir. 2016).

         In seeking summary judgment, “[t]he moving party 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.” Nola Spice Designs, L.L.C. v. Haydel Enters., Inc., 783 F.3d 527, 536 (5th Cir. 2015) (internal quotation marks and alterations omitted). If the moving party satisfies this burden, “the non-moving party must go beyond the pleadings and by her own affidavits, or by the depositions, answers to interrogatories, and admissions on file, designate specific facts showing that there is a genuine issue for trial.” Id. (internal quotation marks omitted).

         A motion for summary judgment cannot be granted merely because it is unopposed. Hibernia Nat. Bank v. Administracion Cent. Sociedad Anonima, 776 F.2d 1277, 1279 (5th Cir. 1985); see L.U. Civ. R. 7(b)(3)(E) (“If a party fails to respond to any motion, other than a dispositive motion, within the time allotted, the court may grant the motion as unopposed.”). Summary judgment can only be granted “if the motion and supporting materials--including the facts considered undisputed--show that the movant is entitled to it ….” Fed.R.Civ.P. 56(e)(3); see Vasudevan v. Adm'rs of Tulane Ed. Fund, 706 Fed. App'x 147, 152 (5th Cir. 2017) (affirming grant of summary judgment on unopposed motion where supporting materials showed movant entitled to it).

[I]f the moving party fails to establish by its summary judgment evidence that it is entitled to judgment as a matter of law, summary judgment must be denied-even if the non-movant has not responded to the motion. But where the movant's summary judgment evidence does establish its right to judgment as a matter of law, the district court is entitled to grant summary judgment, absent unusual circumstances.

McDaniel v. S.W. Bell Tel., 979 F.2d 1534, 1992 WL 352617, at *1 (5th Cir. 1992) (unpublished table decision) (internal citations omitted) (citing John v. State of Louisiana (Bd. of Trs. for State Colls. & Univs.), 757 F.2d 698, 708 (5th Cir. 1985)).


         Relevant Factual & Procedural History

         On or about November 15, 2016, Jeffery Townsend applied for homeowner's insurance coverage from National Security Fire & Casualty Insurance Company for a residence located at 5681 County Road 92 in Greenwood, Mississippi (“Property”). Doc. #35-2 at 1; Doc. #35-3 at 33-34. In his application, Townsend made several representations, including that (1) he had “full unconditional ownership” of the Property, certifying that he “own[ed] title in fee simple to any land upon which an insured building is located;” (2) no one “with a financial interest in [the] property [had] been convicted for arson, fraud, or other property crime within the last 10 years;” (3) he paid $40, 000.00 for the Property; and (4) he purchased the Property on June 2, 2015. Doc. #35-2 at 1-2. Based on Townsend's application, National Security issued to Townsend homeowner's insurance policy number 1353067-783868 (“Policy”) effective November 15, 2016, to November 15, 2017. Doc. #35-1 at 1.

         On January 29, 2017, a fire destroyed the Property, rendering it a total loss. Doc. #35-9 at 1; see Doc. #35-3 at 21. While investigating the claim, National Security discovered “a number of inconsistencies” in Townsend's application. Doc. #35-8 at 2. Specifically, in Townsend's April 10, 2017, examination under oath, he admitted that (1) he did not have full ownership of the Property; (2) Demetrius Nellum and/or Nina Olugu was the record owner of the Property at the time he completed the application; (3) he paid $34, 000.00 for the Property; and (4) he acquired title to the Property from Olugu through an “Owner Financing Mortgage Contract” that was executed September 1, 2016. Doc. #35-3 at 65-66, 99-102; see Doc. #35-10 at 1. Consequently, on May 11, 2017, National Security returned to Townsend all of the premiums he paid on the Policy and declared the Policy “void as of its date of issuance.” Doc. #35-11 at 1.

         Also on May 11, 2017, National Security filed a complaint for declaratory relief in this Court against Townsend seeking a judgment declaring the Policy “void ab initio” because of material misrepresentations by Townsend in his insurance application, and that it owes no further duty to Townsend. Doc. #1 at 4. After being granted an extension of time to respond to the complaint, Townsend filed his “Affirmative Defenses and Response to Motion for Declaratory Judgment” on June 30, 2017. Doc. #6; Doc. #7. On September 21, 2017, with leave of the Court, National Security filed an amended complaint adding Nellum and Olugu as defendants. Doc. #18. The amended complaint seeks a declaration that Townsend's misrepresentations rendered the Policy voidable, and that National Security, having properly voided the Policy, owes no further duty to Townsend, Nellum, or Olugu. Id. at 6.

         Townsend never answered the amended complaint.[1] Nellum was served on September 25, 2017, but never answered the amended complaint.[2] Doc. #22 at 2. On October 30, 2017, Olugu answered[3] the amended complaint and asserted a “Counterclaim for Declaratory Judgment” against National Security seeking (1) a declaration that she does not have a mortgage interest in the Property and (2) “reasonable attorney's fees and costs incurred to defend herself” because National Security “failed to adequately investigate this matter” before adding her as a defendant. Doc. #25 at 5-6. National Security answered Olugu's counterclaim on November 16, 2017. Doc. #26.

         During the course of discovery, Townsend served his initial disclosures in which he admitted that “[w]hen the application was executed by defendant Townsend, Mr. Nellum was the record owner of the property.” Doc. #35-5 at 2. Thereafter, National Security filed a motion for summary judgment.[4] Doc. #35. Olugu responded on March 16, 2018, Doc. #43; National Security replied one week later, Doc. #45. Neither Townsend nor Nellum responded to National Security's motion for ...

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