ROGER W. DEMAY AND JANICE B. DEMAY, APPELLANTS,
v.
DEPENDABLE INSURANCE COMPANY, A FOREIGN INSURANCE COMPANY AUTHORIZED TO DO BUSINESS IN FLORIDA, APPELLEE

Fla. 2d DCA | 1994-05-11
No. 93-02957
DANAHY, A.C.J., and QUINCE, J„ concur.
638 So. 2d 96 Florida District Court of Appeal, Second District (1994) Positive Treatment
Cited by 3 cases

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Synopsis

The DeMays, listed as loss payees on an insurance policy for a vessel they sold to Holly Jo Finch, appealed the dismissal of their complaint against the insurer. The court held that loss payees named in an ordinary loss payable clause have third-party beneficiary standing to sue the insurer, even though they are subject to defenses the insurer could raise against the named insured.

Holding

Loss payees named in an ordinary loss payable clause have third-party beneficiary standing to bring an action against the insurer, although they remain subject to any defenses the insurer could assert against the named insured.

Headnotes

[1] A loss payee clause in an insurance policy, even if it does not invalidate the lienholder's interest by the mortgagor's actions, confers third-party beneficiary standing…

[2] A loss payee under an insurance policy is subject to any defenses the insurer may assert against the named insured.

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Key Quotes

“such a loss payee clause has been construed to confer upon the loss payee third-party beneficiary standing to bring an action against the insurer”

Establishes the core legal principle that loss payees have standing despite the clause not creating independent contractual rights

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Facts & Procedural History

The DeMays sold a vessel to Holly Jo Finch and retained a secured creditor interest, documented with the U.S. Coast Guard. They required Finch to obta…

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Topics
Third-Party Beneficiary Standing Declaratory Judgment

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Opinion of the Court
PARKER, Judge.

PARKER, Judge.

Roger W. DeMay and Janice B. DeMay (DeMays) appeal an order of the trial court dismissing their complaint against Dependable Insurance Company (Dependable) with prejudice. We reverse because the trial court erred in dismissing their complaint with prejudice on the grounds that the De-Mays lacked standing as loss payees to bring a third-party beneficiary action against Dependable on an insurance policy issued to Holly Jo Finch.

The DeMays sold a vessel to Holly Jo Finch. Under the sale, the DeMays were secured creditors and were listed as such on the U.S. Coast Guard documentation. The DeMays also received a promissory note from Finch. The DeMays’ complaint asserted that under the transaction, the DeMays required Finch to obtain a marine policy fisting them as additional insureds. Finch obtained the policy from Dependable but named the DeMays in the policy as “loss payees.” The loss payee clause provides: “loss, if any, under the policy shall be payable to the named insured and the following loss payee(s) as their interests may appear.”

The vessel was subsequently destroyed by fire. When Finch sought to collect on the policy, Dependable refused payment alleging fraud and misrepresentation by Finch. The DeMays and Finch filed suit for declaratory judgment against Dependable seeking to have their rights determined under the policy. Dependable filed a motion to dismiss claiming the DeMays lacked standing and that they failed to state a cause of action as loss payees. The trial court dismissed the DeMays’ complaint with prejudice.

The loss payee clause under the policy at issue is commonly referred to as the “ordinary,” “open-mortgage clause” or “simple” loss payable clause. See 10A Mark S. Rhodes, Couch On Insurance 2d § 42:682, at 723-24 (rev. ed. 1982). As Dependable points out, such a clause without language to the effect that the interest of the lienholder shall not be invalidated by any act or neglect of the mortgagor, does not create a contract between the insurer and the loss payee and does not give the loss payee any rights greater than those to which the insured is entitled. See Nat’l Casualty Co. v. Gen. Motors Acceptance Corp., 161 So. 2d 848 (Fla. 1st DCA 1964). Thus, the DeMays are subject to any defenses Dependable might assert against Finch. Although the DeMays are subject to those defenses, such a loss payee clause has been construed to confer upon the loss payee third-party beneficiary standing to bring an action against the insurer. See Community Bank of Homestead v. Am. States Ins. Co., 524 So. 2d 1154 (Fla. 3d DCA 1988); Leasing Service Corp. v. Am. Motorist Ins. Co., 496 So. 2d 847 (Fla. 4th DCA 1986), review denied, 508 So. 2d 13 (Fla.1987). The trial court, therefore, erred in dismissing the De-Mays’ complaint with prejudice on that ground.

Reversed and remanded.

DANAHY, A.C.J., and QUINCE, J„ concur.

Cases With Similar Vibessemantic neighbors from the corpus

Citator

Cited By

  • Carvel v. Godley, 939 So. 2d 204 (Fla. 4th DCA 2006)
    …ss terms. A known beneficiary is owed the same duty and is entitled to the same remedy as the party to a contract. First Am. Title Ins. Co. v. First Title Serv. Co. of the Fla. Keys Inc., 457 So. 2d 467, 473 (Fla.1984); DeMay v. Dependable Ins. Co., 638 So. 2d 96, 97 (Fla. 2d DCA 1994). Based on these general principles, the estate has standing to call for an accounting, just as Agnes herself would have. This result is in accord with analogous principles, such as that intended third party beneficiaries of t…
  • Secured Realty Inv. Fund, Ltd., III v. Highlands Ins. Co., 678 So. 2d 852 (Fla. 3d DCA 1996)
    …hat ‘loss, if any, is payable to B. as his interest shall appear’, or uses other equivalent words, merely identifying the person who may collect the proceeds.” 5A Appleman, Insurance Law and Practice, § 3401 (1970); see DeMay v. Dependable Ins. Co., 638 So. 2d 96 (Fla. 2d DCA 1994); Independent Fire Ins. Co., 517 So. 2d at 59. A union, standard, or New York clause, on the other hand, provides, in addition to the above quoted provision, language to the effect that “the owner/mortgagor’s acts or neglect will n…
  • Worldwide Aeronautical Indus., Inc. v. Lloyd's Underwriters, 734 So. 2d 1092 (Fla. 2d DCA 1999)
    …a country that was expressly excluded by the terms of the cover note. It also argues that the Lienholders lack standing to maintain their action because they are not identified as insureds in the cover note, citing DeMay v. Dependable Insurance Co., 638 So. 2d 96 (Fla. 2d DCA 1994). They argue that the question before the trial court was whether there was evidence in the cover note itself, or anywhere else in the record, to show that the lienholders were either parties to, or third-party beneficiaries of CZX…

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