SOUTHERN DISTRICT JUDGE REJECTS INSURED’S ATTEMPT TO RENEW CHALLENGE TO VALIDITY OF INSURANCE CHECK INCLUDING MORTGAGEE

A prior final judgment precluded a subsequent action concerning the disposition of a settlement check made payable to the insureds and the insureds’ mortgagee, a federal judge ruled last Tuesday.  In Campos v. Ocwen Loan Servicing, LLC, Civ. No. H-13-2062, 2013 WL 6514317 (S.D. Tex. Oct. 14, 2013), District Judge Ewing Werlein held a prior ruling of Judge Keith Ellison precluded the plaintiffs’ declaratory judgment action concerning whether a check in payment of a Hurricane Ike insurance claim belonged entirely to the plaintiffs.  Judge Ellison had ruled against the plaintiffs on motion to dismiss a previous lawsuit in which the plaintiffs sought to prevent foreclosure based on an erroneous description of the property in the operative lien.  Judge Ellison had given leave to the plaintiffs to amend their pleadings, but they did not, and the judgment became final.

In the subsequent case, the plaintiffs changed the focus from foreclosure to entitlement to insurance proceeds, but the underlying issue remained the same — the plaintiffs were challenging the validity of the lien on the property due to a flawed description of the property.  Thus, the doctrine of res judicata precluded Plaintiff’s suit, and Judge Werlein entered an order dismissing the suit with prejudice.