Bell et al v. State Farm Lloyds et al

Filing 27

Memorandum Opinion and Order denying as moot Defendant's 17 Rule 12(c) Motion for Judgment on the Pleadings. Defendant's 17 Motion for Summary Judgment is GRANTED in its entirety. (Ordered by Judge Barbara M.G. Lynn on 4/18/2014) (twd)

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION

ROBERT BELL and CHERYL BELL,
Plaintiffs,
v.
STATE FARM LLOYDS,
Defendant.

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No. 3:13-cv-1165-M

MEMORANDUM OPINION & ORDER
Before the Court is the Rule 12(c) Motion for Judgment on the Pleadings and Motion for
Summary Judgment filed by Defendant State Farm Lloyds (“Defendant”) [Docket Entry #17].
The Court need only address Defendant’s Motion for Summary Judgment to resolve the issues
raised, and it therefore DENIES as moot Defendant’s Rule 12(c) Motion for Judgment on the
Pleadings. See Ramirez v. City of Dallas, No. 3:00-CV-2481-D, 2002 WL 32508210, at *2 (N.D.
Tex. Oct. 7, 2002) (Fitzwater, C.J.). For the reasons stated below, Defendant’s Motion for
Summary Judgment is GRANTED.
I.

BACKGROUND

Plaintiffs Robert and Cheryl Bell (“Plaintiffs”) purchased from Defendant an insurance
policy covering property damage to Plaintiffs’ property in Midlothian, Texas. Pls.’ First Am. Pet.
¶¶ 7-9. On June 22, 2012, after a hail and wind storm, Plaintiffs made a claim to Defendant for
damage resulting from the storm. Def.’s Mot., App. at 46; Pls.’ First Am. Pet. ¶ 10. On June 27,
2012, Defendant acknowledged receipt of the claim and commenced an investigation. Def.’s
MSJ, App. at 46, 52. On July 24, 2012, State Farm adjuster Donald Kimberlin inspected
Plaintiffs’ property with Mr. Bell and Plaintiffs’ contractor, Roland Vitullo. Id. at 48. Kimberlin
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determined that Plaintiffs’ roof had been damaged and agreed that replacement was required. Id.
at 52. On August 21, 2012, Vitullo sent a copy of his estimate to Defendant. Defendant requested
additional information. Id.
On September 16, 2012, Defendant received an estimate from a public adjuster hired by
Plaintiffs, Steve Whitehood of H&S Claim Recovery, that was lower than both Vitullo’s estimate
and Defendant’s adjuster’s estimate. Id. at 119-28. On September 21, 2012, Plaintiffs requested
Defendant make a second inspection of their property. On October 6, 2012, Defendant sent
another adjuster, Brandon White, who conducted an inspection with public adjuster Elvis Spoon.
Id. at 51. White estimated $32,907.45 in damages, which exceeded Kimberlin’s estimate. Id.at
50-51. White’s estimate was sent to Plaintiffs. Id. On December 13, 2012, after receiving a
purported “final invoice,”1 for $32,879.33 from the construction firm that did the repair work,
State Farm sent a payment for $32,907.45 less Plaintiffs’ deductible. Id. at 47, 111-12.
On December 12, 2012, Plaintiffs brought suit against Defendant in state court. On
March 19, 2013, Defendant removed the suit to this Court. On July 15, 2013, Plaintiffs filed their
First Amended Petition, asserting claims for breach of contract, breach of the duty of good faith
and fair dealing, violation of Texas Insurance Code provisions concerning unfair claim
settlement practices and prompt payment of claims, and fraud. Pls.’ First Am. Pet. ¶¶ 33-58. On
January 10, 2014, Defendant filed a Rule 12(c) Motion for Judgment on the Pleadings and
Alternative Motion for Summary Judgment.
II.

LEGAL STANDARD

Summary judgment is proper when “the movant shows that there is no genuine dispute as
to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.

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At Robert Bell’s deposition, he stated that all of the work described in the “Final Invoice” had not been completed
when the invoice was submitted. Id. at 10, 104.

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56(a). If a reasonable jury could return a verdict for the non-moving party, then there is a
genuine issue of material fact. Gates v. Tex. Dep’t of Protective & Regulatory Servs., 537 F.3d
404, 417 (5th Cir. 2008) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)).
Where the summary judgment movant will not have the burden of proof at trial, the movant
bears the initial burden of identifying those portions of the record that demonstrate the absence
of a genuine issue of material fact, but is not required to negate elements of the nonmoving
party’s case. See Celotex Corp. v. Catrett, 477 U.S. 317, 323-25 (1986); Lynch Props., Inc. v.
Potomac Ins. Co., 140 F.3d 622, 625 (5th Cir. 1998). Once the movant carries its initial burden,
the burden shifts to the nonmovant to show that summary judgment is inappropriate, by
designating specific facts beyond the pleadings that prove the existence of a genuine issue of
material fact. See Fed. R. Civ. P. 56(a); Anderson, 477 U.S. at 250; Fields v. City of S. Houston,
Tex., 922 F.2d 1183, 1187 (5th Cir. 1991).
For determination of a summary judgment motion, “factual controversies are construed in
the light most favorable to the nonmovant, but only if both parties have introduced evidence
showing that a controversy exists.” Lynch Props., 140 F.3d at 625 (citation omitted). A mere
“scintilla of evidence” will not meet the nonmovant’s burden. Little v. Liquid Air Corp., 37 F.3d
1069, 1076 (5th Cir. 1994) (en banc) (per curiam). Rather, the non-moving party must “set forth
specific facts showing the existence of a ‘genuine’ issue concerning every essential component
of its case.” Morris v. Covan World Wide Moving, Inc., 144 F.3d 377, 380 (5th Cir. 1998). The
court is not to assume “in the absence of any proof . . . that the nonmoving party could or would
prove the necessary facts,” and is to grant summary judgment “in any case where critical
evidence is so weak or tenuous on an essential fact that it could not support a judgment in favor
of the nonmovant.” Little, 37 F.3d at 1075.

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“Rule 56 does not impose upon the district court a duty to sift through the record in
search of evidence to support a party’s opposition to summary judgment,” and “[a] failure on the
part of the nonmoving party to offer proof concerning an essential element of its case necessarily
renders all other facts immaterial and mandates a finding that no genuine issue of fact exists.”
Adams v. Travelers Indem. Co. of Conn., 465 F.3d 156, 164 (5th Cir. 2006) (internal quotation
marks omitted); Tranman, Inc. v. Griffin, No. 3:11-CV-1046-M, 2013 WL 944502, at *3-4 (N.D.
Tex. Mar. 12, 2013) (Lynn, J.); Enis v. Bank of Am., N.A., No. 3:12-CV-0295-D, 2013 WL
1721961, at *2 (N.D. Tex. Apr. 22, 2013) (Fitzwater, C.J.).
III.

ANALYSIS

Under Local Rule 7.1(e), Plaintiffs’ response to Defendant’s Motion was due by January
31, 2014, but Plaintiffs did not file a timely response. Although Plaintiffs’ failure to respond does
not permit the Court to enter a “default” summary judgment, the Court is permitted to accept
defendant’s evidence as undisputed. Eversley v. MBank Dallas, 843 F.2d 172, 174 (5th Cir.
1988); Reeves v. Mkt. Ctr. Mgmt. Co., Ltd., No. 3:13-CV-2436-D, 2014 WL 764145, at *1-2
(N.D. Tex. Feb. 26, 2014) (Fitzwater, C.J.); Stiltz v. Humana Inc., No. 3:10-CV-02088-M, 2011
WL 3510898, at *1 n.1 (N.D. Tex. Aug. 9, 2011) (Lynn, J.).
Plaintiffs’ failure to respond means that where Defendant has pointed to the absence of
evidence to support elements of Plaintiffs’ claim, Plaintiffs have not designated specific facts to
prove the existence of a genuine issue of material fact. “A summary judgment nonmovant who
does not respond to the motion is relegated to her unsworn pleadings, which do not constitute
summary judgment evidence.” Bookman v. Shubzda, 945 F. Supp. 999, 1002 (N.D. Tex. 1996)
(Fitzwater, C.J.) (citing Solo Serve Corp. v. Westowne Assocs., 929 F.2d 160, 165 (5th Cir.
1991)); see also Larry v. White, 929 F.2d 206, 211 n.12 (5th Cir. 1991) (“Unsworn pleadings,

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memoranda, or the like are not, of course, competent summary judgment evidence.”). As Federal
Rules of Civil Procedure 56(e)(2) and (3) provide, “If a party fails . . . to properly address
another party’s assertion of fact as required by Rule 56(e), the court may . . . consider the fact
undisputed for purposes of the motion [and] grant summary judgment if the motion and
supporting materials—including the facts considered undisputed—show that the movant is
entitled to it[.]”
A.

Breach of Contract
Under Texas law, a breach of contract claim requires proof of four elements: “(1) the

existence of a valid contract; (2) performance or tendered performance by the plaintiff; (3)
breach of the contract by the defendant; and (4) damages sustained as a result of the breach.”
Narvaez v. Wilshire Credit Corp., 757 F. Supp. 2d 621, 628 (N.D. Tex. Dec. 29, 2010) (Lynn, J.)
(citing Aguiar v. Segal, 167 S.W.3d 443, 450 (Tex. App.—Houston 2005, no pet.)).
Defendant has pointed to an absence of evidence in support of the third and fourth
elements of Plaintiffs’ breach of contract claim. Plaintiffs’ contractor estimated Plaintiffs’
damages at $32,879.33, an estimate Robert Bell agreed with at his deposition, and Defendant’s
adjuster estimated Plaintiffs’ damage at $32,907.45. Def.’s MSJ, App. at 76-77 (Robert Bell
Dep. 94:21-96:25), 94 (Vitullo’s estimate), 104-105 (State Farm Statement of Loss containing
estimate). Defendant paid Plaintiffs $32,907.45 less their deductible, proving that there was no
breach and that Plaintiffs suffered no damages. Id. at 47, 61-62 (Robert Bell Dep. 43:6-44:17),
111-12. There is no evidence that Plaintiffs were owed more by Defendant. The Court, therefore,
GRANTS Defendant summary judgment with respect to this claim.

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B.

Breach of the Duty of Good Faith and Fair Dealing
Plaintiffs allege that Defendant breached the duty of good faith and fair dealing by failing

to adequately and reasonably investigate and evaluate Plaintiffs’ claim. Texas law imposes on an
insurer “a common law duty to deal fairly and in good faith with its insured in the processing and
payment of claims.” Aleman v. Zenith Ins. Co., 343 S.W.3d 817, 822 (Tex. App.—El Paso 2011,
no pet.) (citing Republic Ins. Co. v. Stoker, 903 S.W.2d 338, 340 (Tex. 1995)). If an insurer knew
or should have known that it was reasonably clear that a claim was covered, it will be liable if it
denies that claim. Id. Failure to reasonably investigate a claim can also constitute a breach of the
duty of good faith and fair dealing. Id. Whether “a reasonable insurer under similar
circumstances would have delayed or denied payment of the claim” is determined by an
objective standard. Id.
For Plaintiffs to prevail on their bad faith claim, there must be a genuine issue of material
fact that Defendant “commit[ted] some act, so extreme, that would cause injury independent of
the policy claim” or “fail[ed] to timely investigate . . . [Plaintiffs’] claim.” Stoker, 903 S.W.2d at
341; Aranda v. Ins. Co. of N. Am., 748 S.W.2d 210, 214 (Tex.1988); see also United Serv. Auto.
Ass’n v. Gordon, 103 S.W.3d 436, 442 (Tex. App.—San Antonio 2002, no pet.) Evidence that
“merely shows a bona fide dispute about the insurer’s liability on the contract does not rise to the
level of bad faith.” Transp. Ins. Co. v. Moriel, 879 S.W.2d 10, 17 (Tex. 1994).
There is no evidence of an act by Defendant that is so extreme that it caused injury to
Plaintiffs independent of the Plaintiffs’ claims under the policy. To the contrary, the evidence
shows that Defendant paid Plaintiffs under the policy, and that any further disagreement between
the parties is a bona fide dispute as to the proper amount of payment for damage suffered by
Plaintiffs. See Def.’s MSJ, App. at 72-73 (Robert Bell Dep. 85:15-86:23) (stating that he could

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not answer the question of what specifically Defendant had done wrong in its investigation or
what it should have done instead); Mag-Dolphus, Inc. v. Ohio Cas. Ins. Co., 906 F. Supp. 2d
642, 649 (S.D. Tex. 2012) (holding there was no extreme act where defendant had promptly paid
plaintiffs even though plaintiffs alleged that defendant had undervalued their loss); see also State
Farm Fire & Cas. Co. v. Simmons, 963 S.W.2d 42, 44 (Tex. 1998). Nor does the evidence
support a claim that Defendant failed to timely investigate Plaintiffs’ claim. Defendant began its
investigation five days after Plaintiffs notified Defendant of their claim, and at his deposition,
Mr. Bell conceded that Defendant promptly inspected Plaintiffs’ property. Def.’s MSJ, App. at
69 (Robert Bell Dep. 74:6-10). The Court, therefore, GRANTS Defendant summary judgment
on Plaintiffs’ claim for bad faith.
C.

Unfair Settlement under Texas Insurance Code § 541
Plaintiffs assert that Defendant (1) misrepresented material facts relating to coverage, in

violation of Tex. Ins. Code § 541.060(a)(1); (2) failed to attempt to effectuate a fair settlement of
the claim, in violation of Tex. Ins. Code § 541.060(a)(2)(A); (3) failed to provide Plaintiffs with
a prompt and reasonable explanation of its resolution of the claim, in violation of Tex. Ins. Code
§ 541.060(a)(3); (4) failed to affirm or deny coverage within a reasonable time, in violation of
Tex. Ins. Code § 541.060(a)(4); and (5) refused to pay the full extent Plaintiffs’ claim without
conducting a reasonable investigation in violation of Tex. Ins. Code § 541.060(a)(7).
Extra-contractual damages under the Texas Insurance Code are “reserved for cases in
which an insurer knew its actions were false, deceptive, or unfair.” Minnesota Life Ins. Co. v.
Vasquez, 192 S.W.3d 774, 775 (Tex. 2006). Although claims under the Texas Insurance Code
“are individual causes of action which do not depend on each other for support, Texas courts
have clearly ruled that these extra-contractual tort claims require the same predicate for recovery

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as bad faith causes of action in Texas.” Rooters v. State Farm Lloyds, 428 Fed. App’x 441, 44748 (5th Cir. 2011) (quotation omitted); Bailey v. State Farm Lloyds, No. H-00-3638, 2001 WL
34106907, at *6 (S.D. Tex. Apr. 12, 2001) (finding that “the Texas Insurance Code and the
DTPA are largely codifications of extant common law requirements [and thus] . . . . [u]nder
Texas law, extra-contractual tort claims brought under the Texas Insurance Code and the DTPA
require the same predicate for recovery as a common law claim for bad faith”). Because
Plaintiff’s claim for breach of the duty of good faith and fair dealing fails, and because Plaintiffs’
Texas Insurance Code claims are essentially the same as that claim, they must also fail as a
matter of law. See id. Thus, the Court GRANTS summary judgment for Defendant on these
claims.
D.

Prompt Payment under Texas Insurance Code § 542
Plaintiffs assert that Defendant failed to (1) timely acknowledge Plaintiffs’ claim, in

violation of Tex. Ins. Code § 542.055; (2) accept or deny Plaintiffs’ entire claim within the
statutorily mandated time, in violation of Tex. Ins. Code § 542.056; and (3) meet its obligations
to make payment of a claim, in violation of Tex. Ins. Code § 542.058. Defendant emphasizes the
absence of evidence of any failure by Defendant to comply with the deadlines in Sections
542.055, 542.056, and 542.058. These sections set out specific time requirements, but there is no
evidence they were not met. Defendant presented evidence that Plaintiffs notified it of their
claim on June 22, 2012, and that Defendant acknowledged receipt and commenced an
investigation on June 27, 2012, within the fifteen day time limit required. Def.’s MSJ, App. at
46, 52. Defendant, through its adjuster, inspected Plaintiffs’ property on July 24, 2012, and
provided an estimate on the same date, and Mr. Bell conceded that the inspection was prompt, as
required by the Texas Insurance Code. Def.’s MSJ, App. at 69 (Robert Bell Dep. 74:6-10).

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Defendant also presented evidence that it paid Plaintiffs within the statutory time limit.
Tex. Ins. Code § 542.058; Id. at 47, 61-62 (Robert Bell Dep. 43:6-44:17), 111-12. After
Plaintiffs requested a second inspection, Defendant conducted one promptly, and after the
estimate was revised and increased, Defendant paid the appropriate statutory penalty in
accordance with the prompt payment provisions of Tex. Ins. Code § 542. Def.’s MSJ, App. at
49-52. Accordingly, there is no evidence that Defendant violated these provisions of the Texas
Insurance Code. Thus the Court GRANTS Defendant summary judgment on these claims.
E.

Fraud Claim
Plaintiffs allege Defendant made a misrepresentation to them when it allegedly

represented that only a certain amount of the damage to Plaintiffs’ roof was covered under the
policy. Pls.’ First Am. Pet. ¶ 21. Under Texas law, Plaintiffs must prove the following to
establish common law fraud: “(1) the defendant made a representation to the plaintiff; (2) the
representation was material; (3) the representation was false; (4) when the defendant made the
representation the defendant knew it was false or made the representation recklessly and without
knowledge of its truth; (5) the defendant made the representation with the intent that the plaintiff
act on it; (6) the plaintiff relied on the representation; and (7) the representation caused the
plaintiff injury.” Shandong Yinguang Chem. Indus. Joint Stock Co. v. Potter, 607 F.3d 1029,
1032–33 (5th Cir. 2010) (citing Ernst & Young, L.L.P. v. Pac. Mut. Life Ins. Co., 51 S.W.3d 573,
577 (Tex. 2001)).
There is no proof of statements by Defendant containing misrepresentations of the
policy’s terms, nor is there any evidence to establish that any representation by Defendant as to
the amount of coverage under the policy was false or relied upon by Plaintiffs. To the contrary,
Plaintiffs have alleged that in response to Defendant’s initial estimate of Plaintiffs’ damages,

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Plaintiffs contested the estimate and sought and received a reevaluation, and after receiving a
revised estimate and payment, Plaintiffs filed suit. Plaintiffs’ own allegations and actions
undercut their fraud claim as a matter of law. Even assuming that Defendant made such false
representations, Plaintiffs have not presented evidence that Defendant knew such statements
were false, and thus this claim must fail. Barrios v. Great Am. Assur. Co., No. H-10-3511, 2011
WL 3608510, at *5 (S.D. Tex. Aug. 16, 2011). Accordingly, the Court GRANTS Defendant’s
motion for summary judgment on this claim. See Mag-Dolphus, Inc. v. Ohio Cas. Ins. Co., 906
F. Supp. 2d 642, 651 (S.D. Tex. 2012).
IV.

CONCLUSION

For the reasons set out above, Defendant’s Motion for Summary Judgment is
GRANTED in its entirety. See Ramirez v. City of Dallas, No. 3:00-CV-2481-D, 2002 WL
32508210, at *2 (N.D. Tex. Oct. 7, 2002) (Fitzwater, C.J.). A separate judgment will be entered
dismissing Plaintiffs’ claims.
SO ORDERED.
April 18, 2014.
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BARBARA M. G. LYNN
UNITED STATES DISTRICT JUDGE
NORTHERN DISTRICT OF TEXAS

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