     Case: 15-31005   Document: 00513618298     Page: 1   Date Filed: 08/01/2016




        IN THE UNITED STATES COURT OF APPEALS
                 FOR THE FIFTH CIRCUIT    United States Court of Appeals
                                                   Fifth Circuit

                                                                       FILED
                                                                    August 1, 2016
                                 No. 15-31005
                                                                    Lyle W. Cayce
                                                                         Clerk
ALFRED COTTON; RUBBIE COTTON; FIRST AMERICAN BANK AND
TRUST,

             Plaintiffs - Appellees

v.

CERTAIN UNDERWRITERS AT LLOYD'S OF LONDON,

             Defendant - Appellant




                Appeal from the United States District Court
                   for the Eastern District of Louisiana


Before WIENER, CLEMENT, AND COSTA, Circuit Judges.
GREGG COSTA, Circuit Judge:
      Alfred and Rubbie Cotton were among the thousands of Louisianans
whose properties were either damaged or destroyed when Hurricane Isaac
made landfall in August 2012. The Cottons owned seven rental properties in
LaPlace, Louisiana; each was damaged during the storm.
      The Cottons’ properties were covered by both wind and flood insurance.
They had purchased a windstorm policy from Scottsdale Insurance Company.
They had failed to purchase a flood policy, but their mortgage lender, First
American Bank and Trust, wanted to protect its collateral. So First American
obtained a “force-placed” flood policy from Certain Underwriters at Lloyd’s of
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                                    No. 15-31005
London. After the storm, the Cottons and First American filed claims under
their respective policies. Both insurers paid for some damage, but not enough
according to the insureds.
      In October 2013, the Cottons filed suit against Scottsdale, seeking
additional payment for their wind-related damage. Two months later, the
Cottons added Underwriters as a defendant and alleged that they were entitled
to additional payment for flood damage.        Underwriters moved to dismiss,
arguing that the Cottons were not parties to the flood policy and therefore
lacked standing to enforce that policy. The Cottons responded by seeking leave
to file a second amended complaint adding First American—the actual insured
under the flood policy—as a plaintiff. The court granted leave to amend.
      The Cottons ultimately settled their wind claims, which led to Scottsdale
being dismissed. The Cottons’ claim against Underwriters was also dismissed
after the court ruled that because they were “not named insured[s], additional
insured[s], or third-party beneficiaries under the [flood insurance] [p]olicy,”
they could not sue to enforce it.
      That left the claim that was added in the second amended complaint:
First American’s breach of contract claim against Underwriters. Underwriters
sought summary judgment on the merits of that claim, arguing that First
American failed to timely submit a formal proof-of-loss statement and could
not prove that the approximately $232,000 Underwriters already paid was
insufficient to repair the properties’ damage. But the court found that fact
issues precluded summary judgment.
      The week before trial, Underwriters tried again to have First American’s
claims dismissed, this time on procedural grounds. Underwriters argued that
because the Cottons lacked “standing” to sue under the flood policy, the district
court did not have jurisdiction to entertain the Cottons’ motion to file an
amended complaint that added First American as the proper party in interest.
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                                  No. 15-31005
Underwriters also argued that even if the court had jurisdiction to add First
American’s claim, the late date when that was done (February 2015) meant
the claim had prescribed. The district court rejected both arguments. As for
jurisdiction, the court held that because the Cottons had standing to file their
original complaint against Scottsdale, the court had jurisdiction over the case
that allowed the Cottons’ amendment adding an additional party. The court
further found that First American’s claim was timely for two reasons. First,
the policy required First American to sue within twelve months of when
Underwriters denied a claim, which Underwriters did not do until after First
American sued. Alternatively, it concluded that First American’s claim related
back to the filing of the Cottons’ claim against Underwriters, which occurred
within 24 months of the loss in accordance with Louisiana Revised Statutes
Section 22:868(B).
      The case then proceeded to trial at which the jury found in First
American’s favor and awarded additional amounts for each of the properties,
totaling $115,279.33. Underwriters moved for judgment as a matter of law,
but the district court denied the motion.
                                          I.
      Underwriters again challenges the district court’s subject matter
jurisdiction and the timeliness of First American’s claims. It also challenges
the jury’s findings that Underwriters received sufficient notice of First
American’s loss and that the properties suffered damage in excess of the
amount Underwriters already paid under the flood policy.           We start our
analysis, of course, with jurisdiction.
      Underwriters argues that the Cottons lacked standing to bring a claim
under the flood policy, which meant the district court lacked jurisdiction to
allow the amended complaint that brought First American into the case.


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Because this argument depends on showing an absence of subject matter
jurisdiction, Underwriters needs to show a lack of Article III standing.
      “Standing,” however, is a label used to describe different things in the
law. It can describe whether a party has a right to sue under a contract.
Novartis Seeds, Inc. v. Monsanto Co., 190 F.3d 868, 871 (8th Cir. 1999) (R.
Arnold, J.).   That concept of standing, which as the Supreme Court has
explained is really an issue of “contract interpretation” that goes to the merits
of a claim, Perry v. Thomas, 482 U.S. 483, 492 (1987), is “entirely distinct from
‘standing’ for purposes of Article III.” Novartis Seeds, 190 F.3d at 871 (noting
that the argument that plaintiff did not have right to enforce license agreement
because of an assignment did not go to jurisdiction); see also Perry, 482 U.S. at
487, 492 (explaining that a contention that plaintiffs “were ‘not parties’ to
[an] . . . agreement” did not raise an issue of jurisdictional standing);
Cornhusker Cas. Co. v. Skaj, 786 F.3d 842, 850–51 (10th Cir. 2015) (rejecting
attempt to classify question whether nonparties to an insurance agreement
could invoke waiver and estoppel against insurance company as question of
jurisdictional standing).
      To have that Article III standing, a plaintiff must allege that it has been
injured, that the defendant caused the injury, and that the requested relief will
redress the injury. Lujan v. Defs. of Wildlife, 504 U.S. 555, 560–61 (1992). The
Cottons’ claim against Underwriters seems to meet that constitutional
requirement. They own the properties that Underwriters insured against a
flood risk. Underwriters has refused to pay additional amounts allegedly owed
under the insurance policy. A ruling against Underwriters would, at least
indirectly, compensate the Cottons. Indeed, the initial payments Underwriters
made on the flood policy before suit inured to the Cottons’ benefit when First
American credited those payments against the Cottons’ loan balance. We thus


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                                   No. 15-31005
do not view the fact that the Cottons were not a named insured in the policy
covering property they owned as a defect that goes to Article III standing.
      We recognize, however, that Williams v. Certain Underwriters at Lloyd’s
of London, 398 F. App’x 44 (5th Cir. 2010), treated a similar problem as one of
constitutional standing. But in addition to being nonprecedential, Williams
predated a more recent Supreme Court case that reiterated that “the question
whether a plaintiff states a claim for relief ‘goes to the merits’ in the typical
case, not the justiciability of a dispute, and conflation of the two concepts can
cause confusion.” See Bond v. United States, 564 U.S. 211, 219 (2011) (citation
omitted).   Contrary to that clarification, Williams based its “no standing”
holding on a Louisiana case that treated the issue as one of failure to state a
claim. See 398 F. App’x at 47 (citing Joseph v. Hosp. Serv. Dist. No. 2 of Par.
of St. Mary, 939 So. 2d 1206, 1215 (La. 2006) (finding that the alleged breach
of a contract between a hospital and a medical corporation did not create a
cause of action in favor of individual doctors affiliated with the medical
corporation because the contract did not create a stipulation pour autrui in
favor of the doctors)).
      In light of Williams, however, we will also explain why, even if the
Cottons lacked constitutional “standing” to bring a claim against Underwriters
under the flood policy, there was still subject matter jurisdiction over this case
that authorized the district court to grant the Cottons’ request to amend their
pleadings by adding an additional plaintiff. The reason is the jurisdiction that
undoubtedly existed over the Cottons’ claim against Scottsdale which was still
pending when amendment was sought. That makes this case much different
from those in which we have disallowed amendment because jurisdiction was
lacking over the entire case from its inception. In Summit Office Park, Inc. v.
United States Steel Corp., 639 F.2d 1278, 1279–80 (5th Cir. 1981), for example,
indirect purchasers of reinforced steel bars brought antitrust claims. When an
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                                  No. 15-31005
intervening Supreme Court decision held that indirect purchasers such as
Summit had no standing under the antitrust laws, the district court refused to
allow the plaintiff to amend its complaint to substitute two direct purchasers
as plaintiffs. Id. at 1280. We affirmed, explaining that because “there was no
plaintiff before the court with a valid cause of action, there was no proper party
available to amend the complaint.” Id. at 1282. In contrast, the diversity suit
between the Cottons and Scottsdale vested the court with jurisdiction to rule
on the motion to amend the complaint adding First American’s claim against
Underwriters. See In re FEMA Trailer Formaldehyde Prods. Liab. Litig., 2008
WL 4899455, at *3 (E.D. La. Nov. 12, 2008) (finding that because a first
amended complaint set forth sufficient allegations to establish standing as to
several of the original plaintiffs, those plaintiffs had standing to amend the
complaint in order to add additional plaintiffs, defendants, and claims).
                                       II.
      Fully satisfied with the district court’s jurisdiction to allow the filing of
the complaint adding First American’s claim that was tried against
Underwriters, we turn now to Underwriters’ other arguments.
      We hold that First American’s claim was timely. The policy provides
that suit must be filed within twelve months from the date Underwriters
mailed the insured notice of a claim denial. Underwriters asserts it never
received a supplemental proof-of-loss claim.          That means the earliest
Underwriters could have denied the claim was when it filed its May 2015
answer to the second amended complaint.
      We also find that there was adequate evidence to support the jury’s
findings that Underwriters received satisfactory proof of loss to support First
American’s claim for additional recovery. Louisiana’s requirements for proofs
of loss are flexible, focusing on notice. Anco Insulations, Inc. v. Nat’l Union
Fire Ins. Co. of Pittsburgh, Pa., 787 F.3d 276, 286 (5th Cir. 2015) (noting in its
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interpretation of Louisiana satisfactory proof of loss law that “[s]o long as the
insurer obtains sufficient information to act on the claim, the manner in which
it obtains the information is immaterial”); La. Bag Co. v. Audubon Indem. Co.,
999 So. 2d 1104, 1119–20 (La. 2008) (“[P]roof of loss is a flexible requirement
to advise an insurer of the facts of the claim, and . . . it need not be in any
formal style.”) (internal quotation marks omitted). The jury was entitled to
find that sufficient notice in the proof of loss forms and repair estimates an
adjuster faxed to Underwriters. The forms provided a calculation for the
claimed damages that included information such as the actual cash value of
the structure, the cost of the repairs or replacement, and the applicable
depreciation. The repair estimates contained a detailed itemization of the
repairs needed for each property. The jury was entitled to find those forms to
provide sufficient notice.
      The jury also had sufficient evidence from which to conclude that
Underwriters’ presuit payments were inadequate to repair the properties to
their pre-Hurricane Isaac condition. Underwriters suggests that it is only
required to pay “the Actual Cash Value of the damage” to the property, which
it contends is the cost of repairing the damage less depreciation. This a blatant
misreading of its own policy.      The policy provides that First American is
insured up to the lesser of “[t]he actual cash value . . . of the property . . .” or
“[t]he amount it would cost to repair or replace the property . . . .” (emphasis
added). That latter amount focusing on the cost of repair, which in this case
was lower than the value of the entire property, was thus a proper basis on
which the jury could calculate the amount owed on the policy.
                                       ***
       The judgment is AFFIRMED.




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