Praetorian moved to dismiss. It argued that its policy was a lender-placed homeowners' insurance that identified Bank of America ("BOA") as the named insured and Ms. Joseph as the borrower, that she did not have standing to sue under the policy, and that she was seeking a money judgment in direct derogation of BOA's rights under the policy.

The Praetorian Policy

The declarations page of the policy provided:

The contract of insurance is only between the NAMED INSURED and Praetorian Insurance Company. There is no contract of insurance between the BORROWER and Praetorian Insurance Company. The insurance purchased is intended for the benefit and protection of the NAMED INSURED, insures against LOSS only to the dwelling and OTHER STRUCTURES on the DESCRIBED LOCATION, and may not sufficiently protect the BORROWER'S interest in the property. No coverage is provided for contents, personal effects, additional living expense, fair rental value or liability.

It also stated:

13. LOSS Payment. WE will adjust each LOSS with YOU and will pay YOU. If the amount of LOSS exceeds YOUR insurable interest, the BORROWER may be entitled, as a simple LOSS payee only, to receive payment for any residual amount due for the LOSS, not exceeding the lesser of the applicable Limit of Liability indicated on the NOTICE OF INSURANCE and the BORROWER'S insurable interest in the damaged or destroyed property on the DATE OF LOSS. Other than the potential right to receive such payment, the BORROWER has no rights under this RESIDENTIAL PROPERTY FORM. 

Section 627.405, Florida Statutes, provides:

(1) No contract of insurance of property or of any interest in property or arising from property shall be enforceable as to the insurance except for the benefit of persons having an insurable interest in the things insured as at the time of the loss.

(2) "Insurable interest" as used in this section means any actual, lawful, and substantial economic interest in the safety or preservation of the subject of the insurance free from loss, destruction, or pecuniary damage or impairment.

(3) The measure of an insurable interest in property is the extent to which the insured might be damnified by loss, injury, or impairment thereof.

Fla. Stat. § 627.405 (emphasis added).

The District Court's Decision

The district court dismissed Ms. Joseph's complaint.

In its decision, the district court ruled that a homeowner's insurable interest in his or her home did "not automatically confer standing to sue on a lender-placed homeowner's insurance policy." In the district court's opinion, the "unambiguous language" of the Praetorian policy governed and the policy "clearly" did not confer standing to sue on Ms. Joseph as a third-party beneficiary or omnibus beneficiary.

The district court added that even if Ms. Joseph did have standing, she did not have the right to recover directly from Praetorian under the policy because the "loss payment" provision was clear and this was "not one of the limited circumstances" in which Ms. Joseph could recover because the loss exceeded BOA's insurable interest in the property.

Accordingly, the district court dismissed Ms. Joseph's complaint because she did not have the right to sue under the policy.

The case is Joseph v. Praetorian Ins. Co., No., 17-61237-CIV-DIMITROULEAS (S.D. Fla. Feb. 20, 2018).