Allstate Construction, Inc. v. Scottsdale Insurance Company

Filing 34

RULING granting 14 Motion to Dismiss. Counts Two and Three of the Amended Complaint are dismissed with prejudice. Signed by Chief Judge Shelly D. Dick on 9/24/2024. (SWE)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA
ALLSTATE CONSTRUCTION, INC.
CIVIL ACTION
VERSUS
23-1312-SDD-EWD
SCOTTSDALE INSURANCE COMPANY
RULING
This matter comes before the Court on the Motion to Dismiss filed by Scottsdale
Insurance Company (“Scottsdale” or the “Defendant”).1 Plaintiff, Allstate Construction,
Inc. d/b/a Allstate Construction Roofing, Inc. (“Allstate” or the “Plaintiff”) filed an
Opposition to which Defendant filed a Reply.2 For following reasons, the motion is
granted.
I.

FACTS AND PROCEDURAL BACKGROUND
Plaintiff alleges the following: A former party to this action, My Le Troung, owned

a “shopping center property” in Baton Rouge, Louisiana (the “Property”).3 The Property
was insured by Defendant.4 On or around August 29, 2021, Hurricane Ida caused
significant damages to the Property.5 These damages were covered by a policy issued
by Defendant (the “Policy”).6 Troung timely reported the loss to Defendant and requested
coverage.7 Troung and Plaintiff complied with all requests, conditions, and demands
pursuant to the Policy.8 Troung executed an Assignment of Insurance Benefits (the

1

Rec. Doc. 14.
Rec. Docs. 23 and 24.
3
Rec. Doc. 11, p. 2.
4
Id. at pp. 2–3.
5
Id. at p. 3.
6
Id.
7
Id.
8
Id.
2

Page 1 of 8

“AOB”) assigning all “assignable rights, benefits, interests, proceeds, and any causes of
action under any applicable insurance policies” to Plaintiff.9
On October 5, 2021, Defendant inspected the property damage, and subsequently
Defendant paid Plaintiff $9,592.32, representing $12,092.32 in actual cash value (“ACV”)
minus the $2,500 policy deductible.10 Plaintiff contends this payment was insufficient to
make meaningful repairs.11 Consequently, Plaintiff “was forced to incur the expense of
retaining legal counsel, an adjusting company, an engineer, and other expenses to
prosecute its claim.”12 On February, 23, 2022, Plaintiff provided Defendant with a partial
proof of loss, a demand for payment, and an estimate of damages.13 On April 20, 2022,
Defendant rejected Plaintiff’s estimate and demand.14 Plaintiff alleges that its estimate of
loss was significantly different than Defendant’s estimate, but Defendant did not issue
supplemental payment nor did Defendant attempt to settle Plaintiff’s claim.15 On June 29,
2022, Plaintiff demanded appraisal and named its appraiser.16 Defendant initially refused
proceeding with an appraisal, but later agreed and named its own appraiser.17 The
appraisal assigned replacement cash value (“RCV”) of $164,011.26 and $150,166.78
ACV.18 The appraisal was “significantly greater” than Defendant’s original estimate of
$17,742.32 RCV, $12,092.32 ACV, and Defendant’s payment of $9,592.32.19

9

Id. at p. 4.
Id. at p. 5.
11
Id.
12
Id. at p. 6.
13
Id.
14
Id.
15
Id. at p. 7.
16
Id.
17
Id.
18
Id.
19
Id. at p. 8.
10

Page 2 of 8

On June 15, 2023, Defendant informed Plaintiff that it “did not owe payment for the
$13,844.48 in recoverable depreciation awarded in the Appraisal Award.”20 That same
day, Defendant paid Plaintiff $138,074.46.21 To date, Plaintiff is awaiting a payment of
$147,666.78 for the Property’s damages.22 Plaintiff alleges inter alia that Defendant failed
to timely and adequately compensate Plaintiff and handled Plaintiff’s claim in bad faith, in
violation of Louisiana Revised Statutes (“La. R.S.”) §§ 22:1892 and 22:1973.23 Defendant
moves to dismiss Plaintiff’s bad faith claims (Counts Two and Three of the Amended
Complaint)24 arguing that the AOB did not provide a right to seek such claims.25
II.

LAW AND ANALYSIS
A. Rule 12(b)(6) Motion to Dismiss Standard
When deciding a Rule 12(b)(6) motion to dismiss, “[t]he ‘court accepts all wellpleaded facts as true, viewing them in the light most favorable to the plaintiff.’”26 The Court
may consider “the complaint, its proper attachments, documents incorporated into the
complaint by reference, and matters of which a court may take judicial notice.”27 “To
survive a Rule 12(b)(6) motion to dismiss, the plaintiff must plead ‘enough facts to state
a claim to relief that is plausible on its face.’”28

20

Id.
Id.
22
Id.
23
Id. at pp. 8–9.
24
Plaintiff filed suit on September 18, 2023. Rec. Doc. 1. Plaintiff filed its First Amended Complaint (the
“Amended Complaint”) on October 11, 2023. Rec. Doc. 11. The Amended Complaint is the operative
complaint.
25
Rec. Doc. 14.
26
In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007) (quoting Martin K. Eby Constr. Co.
v. Dallas Area Rapid Transit, 369 F.3d 464, 467 (5th Cir. 2004)).
27
Wolcott v. Sebelius, 635 F.3d 757, 763 (5th Cir. 2011).
28
In re Katrina Canal Breaches Litig., 495 F.3d at 205 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544,
570 (2007)).
21

Page 3 of 8

In Twombly, the United States Supreme Court set forth the basic criteria necessary
for a complaint to survive a Rule 12(b)(6) motion to dismiss. “While a complaint attacked
by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a
plaintiff’s obligation to provide the grounds of his entitlement to relief requires more than
labels and conclusions, and a formulaic recitation of the elements of a cause of action will
not do.”29 A complaint is also insufficient if it merely “tenders ‘naked assertions’ devoid of
‘further factual enhancement.’”30 However, “[a] claim has facial plausibility when the
plaintiff pleads factual content that allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.”31 In order to satisfy the plausibility
standard, the plaintiff must show “more than a sheer possibility that a defendant has acted
unlawfully.”32 “Furthermore, while the court must accept well-pleaded facts as true, it will
not ‘strain to find inferences favorable to the plaintiff.’”33 On a motion to dismiss, courts
“are not bound to accept as true a legal conclusion couched as a factual allegation.”34
B. Assignment of Rights
Recently, several federal court decisions have addressed whether an assignment
of rights unambiguously includes the right to seek bad faith claims under La. R.S.
§§22:1973 and/or 22:1892.35

29

Twombly, 550 U.S. at 555 (2007) (internal citations and brackets omitted).
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal citations and brackets omitted).
31
Id.
32
Id.
33
Taha v. William Marsh Rice Univ., 2012 WL 1576099, at *2 (S.D. Tex. 2012) (quoting Southland Sec.
Corp. v. INSpire Ins. Sols., Inc., 365 F.3d 353, 361 (5th Cir. 2004)).
34
Twombly, 550 U.S. at 555 (quoting Papasan v. Allain, 478 U.S. 265, 286 (1986)).
35
See Chiartano v. State Farm Fire & Cas. Ins. Co., 2024 WL 3105011(E.D. La. June 24, 2024); Cat 5
Glob., LLC v. Occidental Fire & Cas. Co. of N. Carolina, 2024 WL 169649, (E.D. La. Jan. 16, 2024); Allstate
Constr., Inc., d/b/a Allstate Constr. Roofing, Inc, as assignee of vina cleaners LLC. v. Ohio Sec. Ins. Co.,
2024 WL 3796164 (M.D. La. Aug. 13, 2024); I Say I Say I Say, LLC v. Auto. Ins. Co. of Hartford, Conn.,
2024 WL 3639526 (E.D. La. Aug. 2, 2024).
30

Page 4 of 8

In Cat 5 Global, LLC v. Occidental Fire and Casualty Company of North Carolina,
decided by the Eastern District of Louisiana, a non-party owned property that sustained
damage from Hurricane Ida.36 The property owner assigned its insurance benefits to the
plaintiff.37 The plaintiff then sued the insurer alleging claims for statutory bad faith
penalties.38 The insurer moved for dismissal because the assignment of rights did not
include the right to raise claims for bad faith penalties.39 Citing the Western District of
Louisiana in Frisbie v. State Farm Fire & Casualty Company,40 the court found that “under
Louisiana law, the assignment of the right to bring an extra-contractual, statutory claim
for bad faith penalties must be expressly provided for in the act of assignment.”41 The
Eastern and Western Districts reasoned that bad faith claims do not arise from the
insurance contract itself, but rather from an insurer’s violation of its statutory duties.42 In
Cat 5 Global, the assignment of rights provided that “any and all other insurance rights,
benefits and proceeds shall continue to belong to the [property owner].”43 The Eastern
District found that this language did not expressly assign the plaintiff a right to seek
statutory bad faith penalties, and dismissed the assignee’s bad faith claim.44
Most recently, this District considered an analogous action in Allstate Construction,
Inc. et al v. Ohio Security Insurance Company.45 The Court relied on the Louisiana
Second Circuit Court of Appeal’s decision in Johno v. Doe, which distinguished an

36

2024 WL 169649.
Id. at *1.
38
Id.
39
Id.
40
Id. (citing 2023 WL 6284272 (W.D. La. Sept. 26, 2023)).
41
Id. (citing Frisbie, 2023 WL 6284272, at *3).
42
Id. (citing Johno v. Doe, 2015-0737 (La. App. 4 Cir. 3/9/16), 187 So. 3d 581, 585, writ denied, 2016-0777
(La. 6/17/16), 192 So. 3d 769).
43
Id. at *2.
44
Id.
45
2024 WL 3796164 (M.D. La. Aug. 13, 2024).
37

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assignment of a contractual claim from an assignment of a statutory claim.46 This Court
concluded that an insurer’s duties under the statutes are “separate and distinct from its
duties under the insurance contract,”47and therefore, “any language indicating relief under
the bad-faith statutes must be explicitly expressed.”48 The assignment of benefits in Ohio
Security Insurance provided the following:
The undersigned is the Assignor/Owner/Agent for the Property listed below
and has/have certain rights to insurance contracts and policies on the
Property (hereinafter “Assignor”). Assignor hereby assigns any and all
insurance rights, benefits, interests, proceeds, and any causes of action
under any applicable insurance policies to Allstate Construction Inc.
(hereinafter “Assignee” and/or “Company”) for services rendered or to be
rendered by the Company. By executing this Agreement, Assignor intends
for all rights, benefits, and proceeds for services rendered by the Company
for the repair, restoration, and mitigation against future damage to the
Property. 49
The Court found that this provision did not expressly include language pertaining
to the bad faith penalty statutes.50 Consequently, the plaintiff’s bad faith claims were
dismissed.51
C. Analysis
The Court finds that Defendant’s motion must be granted. Plaintiff in the instant
case is also the plaintiff in Ohio Security Insurance. The assignment of benefits herein is
identical to the one in Ohio Security Insurance.52 The AOB in this case did not expressly
assign the right to pursue statutory bad faith claims.

46

See Id. (explaining that the state court distinguished the plaintiff’s contractual claims from the insured’s
statutory duties).
47
Id. (citing Durio v. Horace Mann Ins. Co., 11-0084, p.18 (La. 10/25/11),74 So.3d 1159, 1170) (in which
the Supreme Court of Louisiana explained that “[t]he duties of an insurer under the statute ‘are separate
and distinct from its duties under the insurance contract.’”).
48
Id. (citing Franks v. Liberty Pers. Ins. Co., 2023 WL 2309819 at *2 (W.D. L.A. Mar. 1, 2023)).
49
Ohio Sec. Ins., 2024 WL 3796164, at *3.
50
Id. at *4.
51
Id. at *5.
52
Rec. Doc. 14-4, p. 1.

Page 6 of 8

Plaintiff’s arguments do not overcome this deficiency. Plaintiff argues that when a
contract’s provision raises doubt, it must be interpreted “in light of the nature of the
contract, equity, usages, the conduct of the parties before and after formation, and of
other contracts of a like nature between the parties,” relying on Louisiana Civil Code
articles 2045 and 2046.53 Plaintiff argues that Troung intended to assign Plaintiff the right
to seek bad faith claims.54 But, “whether a contract is clear or ambiguous is a question of
law”55 and here, the Court finds that the AOB is unambiguous hence the Court need not
undertake these additional considerations.56
Plaintiff argues that the Court should use parol evidence to discern the parties’
intent with the AOB.57 The Court rejects this argument. Plaintiff made this argument and
relied on the same case law in Ohio Security Insurance.58 In that case, the Court reasoned
that, “when the words of a contract are clear and explicit and lead to no absurd
consequences, no further interpretation may be made in search of the parties’ intent. The
meaning and intent of the parties must be sought within the four corners of the document
and cannot be explained or contradicted by parol evidence.”59 Further, the Court found
that the cases relied on by Plaintiff did not concern nor address statutory bad faith
penalties.60 Because the AOB is unambiguous, the Court need not consider parol
evidence.

53

Rec. Doc. 23, p. 3.
Id. at p. 4.
55
Angus Chem. Co. v. Glendora Plantation, Inc., 782 F.3d 175, 180 (5th Cir. 2015) (quoting Sims v.
Mulhearn Funeral Home, Inc., 956 So.2d 583, 590 (La. 2007)).
56
See La. Civ. Code Ann. art. 2046 (“When the words of a contract are clear and explicit and lead to no
absurd consequences, no further interpretation may be made in search of the parties' intent.”).
57
Rec. Doc. 23, p. 4.
58
2024 WL 3796164, at *5.
59
Id. (quoting Tolar v. Tolar, 25,935 (La.App.2d Cir. 6/22/94), 639 So.2d 399, 401).
60
See Id (discussing Shreveport Great Empire Broad., Inc. v. Chicoine, 528 So. 2d 633 (La. Ct. App. 1988)
and Bossier Orthopedic Clinic v. Durham, 32, 543 (La. App. 2 Cir. 12/15/99), 747 So. 2d 731, and finding
54

Page 7 of 8

Finally, Plaintiff argues that the cases Defendant relies on are distinguishable to
the facts herein.61 Defendant relies on Johno, Franks v. Liberty Personal Insurance
Company, and In re Katrina Canal Breaches Consolidated Litigation.62 Plaintiff contends
that the AOB includes much broader language than any of the assignment provisions at
issue in these cases.63 This argument is unconvincing. The Court has explained that the
proper inquiry is whether an assignment of benefits explicitly assigns the right to seek
bad faith claims. Thus, a broad provision that nonetheless fails to overtly assign the right
to seek bad faith claims is insufficient to overcome a motion to dismiss. Accordingly,
Defendant’s motion is granted.
III.

CONCLUSION
For the aforementioned reasons, Defendant’s Motion to Dismiss64 is hereby

GRANTED. Counts Two and Three of the Amended Complaint65 are dismissed with
prejudice.

IT IS SO ORDERED.
Signed in Baton Rouge, Louisiana, on this ____
24th Day of September, 2024.

S

________________________________
SHELLY D. DICK
CHIEF DISTRICT JUDGE
MIDDLE DISTRICT OF LOUISIANA

that neither case considered the use of parol evidence when analyzing ambiguous assignments of rights
claims pertaining to bad faith penalty statutes).
61
Rec. Doc. 23, p. 5.
62
Rec. Doc. 14-2, pp. 7–8 (citing Johno, 187 So.3d 58; Franks, 2023 WL 2309819, at *2; and In re Katrina
Canal Breaches Consol. Litig., 2011 WL 13205919, at *10).
63
Rec. Doc. 23, p. 5.
64
Rec. Doc. 14.
65
Rec. Doc. 11, pp. 12–14.

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