A federal court in Oklahoma granted summary judgment sua sponte to an insured finding valid a post-loss assignment of the insured’s rights and duties, if any, under a Lender Placed and Foreclosed Policy of Insurance. ABAB, Inc. v. Starnet Ins. Co., 2014 WL 5448887 (W.D. Okla. Oct. 22, 2014).
The district court had previously found the insured, as the purchaser of a shopping mall that caught fire, had an insurable interest in the mall at the time of the loss. After the fire, the insured assigned any rights it may have, including any right to payment of insurance proceeds. The assignee sued the insurer to enforce its rights and duties pursuant to the assignment. The assignee and insurer raised no dispute as to the validity of the terms of the assignment of the insurance claim and proceeds. Instead, the parties disputed whether the terms of the policy precluded the assignment altogether. The policy provided under the “Transfer of Your Rights and Duties” section that “[y]our rights and duties under this policy may not be transferred without our written consent….” The court held that the policy precluded only pre-loss, not post-loss, assignments. The court found that under Oklahoma law, allowing an insured to assign the right to pre-loss coverage would force the insurer to protect an insured with whom it had not contracted, one who might present a greater level of risk than the insured. But, where the claim has already matured, the “subject” of the assignment is a recognized “chose in action” against the insurer. Therefore, the court found the assignment enforceable and valid under the terms of the policy.