Grand Treviso Condominium Association Inc v. Fireman's Fund Insurance Company
Filing
32
MEMORANDUM OPINION AND ORDER: Because Grand Treviso adequately pled its breach of contract, breach of the duty of good faith and fair dealing, Texas Insurance Code, and Insurance Code-based DTPA claims, the Court denies FFIC's 23 motion to dis miss these claims. However, because Grand Treviso did not adequately plead its claims based on sections 17.46(b)(5) and 17.46(b)(7) of the DTPA, the Court grants FFIC's motion to dismiss these claims. Further, the Court grants Grand Treviso leav e to amend its complaint within 30 days of this Order. If Grand Treviso does not amend its complaint within 30 days, the Court will dismiss its claims based on sections 17.46(b)(5) and 17.46(b)(7) of the DTPA with prejudice without further notice. (Ordered by Chief District Judge David C Godbey on 1/28/2025) (agc)
IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
GRAND TREVISO CONDOMINIUM
ASSOCIATION, INC.,
Plaintiff,
v.
FIREMAN’S FUND INSURANCE
COMPANY, et al.,
Defendants.
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Civil Action No. 3:24-CV-01403-N
MEMORANDUM OPINION AND ORDER
This Order addresses Defendant Fireman’s Fund Insurance Company’s (“FFIC”)
motion to dismiss [23]. For the following reasons, the Court grants in part and denies in
part the motion.
The Court further grants Plaintiff Grand Treviso Condominium
Association, Inc. (“Grand Treviso”) leave to amend its complaint following this Order.
I. ORIGINS OF THE DISPUTE
This is an insurance contract dispute. Grand Treviso is a homeowner’s association
comprised of owners of the Grand Treviso Condominiums in Irving, Texas. Pl.’s Second
Am. Compl. ¶ 6 [20]. Grand Treviso alleges that the condominiums “suffered substantial
damage” while insured by FFIC. Id. The alleged damage includes cracking of balcony
fascia; corrosion of the metal railings of balconies; water-induced deterioration of framing
components; deterioration of sealant beads at control joints, material transition locations,
and penetrations; cracking and staining of mortar joints; and deformation of roof soffit
MEMORANDUM OPINION AND ORDER – PAGE 1
panels. Id. ¶ 7. Grand Treviso asserts that these “issues were all caused by losses covered
by the insurance policy issued by Defendants: construction, lack of maintenance, faulty
repairs, defective materials, [and] storms.” Id. ¶ 8. Further, Grand Treviso pleads that the
insurance policy was “in effect during the applicable time period when the damage
occurred that provided insurance coverage for damage to the property.” Id. ¶ 9.
After filing a claim with FFIC, Grand Treviso alleges that FFIC performed an
investigation that had a predetermined outcome of denying the claim and then denied the
claim in its entirety even though the policy covered the damage. Id. ¶¶ 6, 29(c)–(d).
Grand Treviso is suing FFIC for breach of contract, breach of the duty of good faith
and fair dealing, violations of the Texas Insurance Code, and violations of the Texas
Deceptive Trade Practices-Consumer Protection Act (“DTPA”).1 Id. ¶¶ 10–15, 22–37.
FFIC now moves to dismiss all Grand Treviso’s claims, arguing that Grand Treviso fails
to sufficiently plead its claims against FFIC. See generally Def.’s Mot. [23].
II. RULE 12(B)(6) LEGAL STANDARD
When deciding a Rule 12(b)(6) motion to dismiss, a court must determine whether
the plaintiff has asserted a legally sufficient claim for relief. Blackburn v. City of Marshall,
42 F.3d 925, 931 (5th Cir. 1995). A viable complaint must include “enough facts to state
a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S.
544, 570 (2007). To meet this “facial plausibility” standard, a plaintiff must plead “factual
content that allows the court to draw the reasonable inference that the defendant is liable
1
Grand Treviso also brought claims against Defendants Columbia Casualty Company,
CNA Insurance, and Columbia Insurance Company but has since dropped those claims.
MEMORANDUM OPINION AND ORDER – PAGE 2
for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A court generally
accepts well-pleaded facts as true and construes the complaint in the light most favorable
to the plaintiff. Gines v. D.R. Horton, Inc., 699 F.3d 812, 816 (5th Cir. 2012). But a
plaintiff must provide “more than labels and conclusions, and a formulaic recitation of the
elements of a cause of action will not do.” Twombly, 550 U.S. at 555. “Factual allegations
must be enough to raise a right to relief above the speculative level . . . on the assumption
that all the allegations in the complaint are true (even if doubtful in fact).” Id. (citations
omitted).
In ruling on a Rule 12(b)(6) motion, a court generally limits its review to the face
of the pleadings, accepting as true all well-pleaded facts and viewing them in the light most
favorable to the plaintiff. See Spivey v. Robertson, 197 F.3d 772, 774 (5th Cir. 1999).
However, a court may also consider documents outside of the pleadings if they fall within
certain limited categories.
First, a “court is permitted . . . to rely on ‘documents
incorporated into the complaint by reference, and matters of which a court may take judicial
notice.’” Dorsey v. Portfolio Equities, Inc., 540 F.3d 333, 338 (5th Cir. 2008) (quoting
Tellabs, Inc. v. Makor Issues & Rts., Ltd., 551 U.S. 308, 322 (2007)). Second, a “written
document that is attached to a complaint as an exhibit is considered part of the complaint
and may be considered in a 12(b)(6) dismissal proceeding.” Ferrer v. Chevron Corp., 484
F.3d 776, 780 (5th Cir. 2007). Third, a “court may consider documents attached to a
motion to dismiss that ‘are referred to in the plaintiff’s complaint and are central to the
plaintiff’s claim.’” Sullivan v. Leor Energy, LLC, 600 F.3d 542, 546 (5th Cir. 2010)
(quoting Scanlan v. Tex. A&M Univ., 343 F.3d 533, 536 (5th Cir. 2003)). Finally, in
MEMORANDUM OPINION AND ORDER – PAGE 3
“deciding a 12(b)(6) motion to dismiss, a court may permissibly refer to matters of public
record.” Cinel v. Connick, 15 F.3d 1338, 1343 n.6 (5th Cir. 1994); see also, e.g., Funk v.
Stryker Corp., 631 F.3d 777, 783 (5th Cir. 2011) (stating, in upholding district court’s
dismissal pursuant to Rule 12(b)(6), that the “district court took appropriate judicial notice
of publicly-available documents and transcripts produced by the FDA, which were matters
of public record directly relevant to the issue at hand”).
III. THE COURT GRANTS IN PART AND DENIES IN PART FFIC’S MOTION TO DISMISS
A. Grand Treviso States a Breach of Contract Claim
Under Texas law, the elements of a breach of contract claim are “(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 by the plaintiff as a result of the
breach.” Mullins v. TestAmerica, Inc., 564 F.3d 386, 418 (5th Cir. 2009) (quoting Aguiar
v. Segal, 167 S.W.3d 443, 450 (Tex. App. — Houston [14th Dist.] 2005, pet. denied)).
Here, first, Grand Treviso alleges that it “entered into a contract for insurance with
Defendant FFIC to cover ‘physical loss or damage’” to the property. Pl.’s Second Am.
Compl. ¶ 12. Second, Grand Treviso pleads that it fulfilled its performance by paying
insurance premiums to FFIC. Id. ¶ 13. Third, Grand Treviso asserts that FFIC breached
the contract by denying its claim for the damage to the property even though the contract
covered the damage. Id. ¶ 14. And fourth, Grand Treviso alleges that it suffered damages
in the amount of the damage to the property as a direct result of FFIC’s breach. Id.
Accordingly, Grand Treviso has pled facts supporting each element of its breach of contract
claim. FFIC argues that Grand Treviso must also identify the policy it is claiming coverage
MEMORANDUM OPINION AND ORDER – PAGE 4
under, the temporal term of the policy, and the policy provision detailing the applicable
coverage. See Def.’s Mot. 4–5. The Court disagrees; at this stage, Grand Treviso is only
required to adequately plead facts as to each element of a contract claim, which the Court
holds Grand Treviso has done.
B. Grand Treviso States a Breach of the Duty of Good Faith and Fair Dealing Claim
An insurer breaches its duty of good faith and fair dealing by denying or delaying
payment of a claim when the insurer’s liability has become reasonably clear. See State
Farm Fire & Cas. Co. v. Simmons, 963 S.W.2d 42, 44 (Tex. 1998). Here, Grand Treviso
alleges that FFIC “engaged in unreasonable insurance practices by misrepresenting and
failing to honor the terms of the insurance policies.” Pl.’s Second Am. Compl. ¶ 34.
Further, it pleads that FFIC’s denial of its claim “is unreasonable and Defendant FFIC
knew or should have known that its actions were unreasonable.” Id. This is sufficient for
Grand Treviso to state a claim for breach of the duty of good faith and fair dealing.
C. Rule 9(b) Does Not Apply to Grand Treviso’s Extracontractual Claims
FFIC next argues that Grand Treviso’s Insurance Code and DTPA claims are subject
to Rule 9(b), Def.’s Mot. 9–10, which requires a plaintiff to plead allegations of fraud or
mistake with particularity. See FED. R. CIV. P. 9(b) (“In alleging fraud or mistake, a party
must state with particularity the circumstances constituting fraud or mistake.”). But this
Court has previously considered and rejected this argument. See, e.g., Abbey on Preston
H.O.A. v. Admiral Ins. Co., 2013 WL 12137742, at *2 (N.D. Tex. 2013) (Godbey, J.);
Recovery Res. Couns. v. ACE Am. Ins. Co., 2018 WL 3548912, at *2–3 (N.D. Tex. 2018)
(Godbey, J.). In Abbey, the Court held that “Rule 9(b)’s stringent pleading requirements
MEMORANDUM OPINION AND ORDER – PAGE 5
should not be extended to causes of action not enumerated therein.” 2013 WL 12137742
at *2 (quoting Am. Realty Tr., Inc. v. Hamilton Lane Advisors, Inc., 115 F. App’x. 662, 668
(5th Cir. 2004) (unpub.) and citing Gen. Elec. Cap. Corp. v. Posey, 415 F.3d 391, 396–97
(5th Cir. 2005)). The Court noted that “a motion to dismiss under Rule 9(b) can result in
the dismissal of claims other than fraud only in extraordinary circumstances.” Id. at *2.
And the Court further stated:
Where averments of fraud are made in a claim in which fraud is not an
element, an inadequate averment of fraud does not mean that no claim has
been stated. The proper route is to disregard averments of fraud not meeting
Rule 9(b)’s standard and then ask whether a claim has been stated.
Id. (quoting Lone Star Ladies Inv. Club v. Schlotzky’s, Inc., 238 F.3d 363, 368 (5th Cir.
2001)).
Here, however, Grand Treviso does not allege fraud.
And although
misrepresentation is an element of Grand Treviso’s DTPA and Insurance Code claims,
fraud is not. See generally TEX. BUS. & COMM. CODE §§ 17.46, 17.50; TEX. INS. CODE §§
541.060, 541.151. Accordingly, Rule 9(b) does not govern the claims. See Abbey, 2013
WL 12137742, at *2; see also Kennard v. Indianapolis Life Ins. Co., 420 F. Supp. 2d 601,
609 (N.D. Tex. 2006) (declining to apply Rule 9(b) where plaintiff did not allege fraud).
D. Grand Treviso States Insurance Code-Based DTPA Claims
but Does Not State Stand-Alone DTPA Claims
The DTPA grants consumers a cause of action for damages caused by, among other
things, false, misleading, or deceptive acts or practices. See TEX. BUS. & COM. CODE §
17.50(a). To allege a DTPA claim, a consumer must plead that the defendant violated a
MEMORANDUM OPINION AND ORDER – PAGE 6
specific provision of the DTPA, that the consumer detrimentally relied on the said act or
practice, and that the violation was a producing cause of the consumer’s injury. See id.
Grand Treviso claims that FFIC violated sections 17.46(b)(5) and 17.46(b)(7) of the
DTPA (the “stand-alone DTPA claims”) as well as section 17.50(a)(4) of the DTPA
through its violations of the Texas Insurance Code (the “Insurance Code-based DTPA
claims”). Pl.’s Second. Am Compl. ¶ 29. For the stand-alone DTPA violations, Grand
Treviso alleges that FFIC violated the DTPA
in that the insurance policy represents in the policy that it will pay for
physical loss or damage to the property and in Defendant FFIC’s denial of
the claim represented that the insurance policy did not provide coverage for
the physical loss or damage suffered by Plaintiff;
Id. ¶ 29(a)–(b). For the Insurance Code-based DTPA claims, Grand Treviso alleges that
FFIC violated the Insurance Code and DTPA by (1) denying the claim even though the
damage is covered; and (2) conducting an investigation with a predetermined outcome. Id.
¶ 29(c)–(d).
1. The Stand-Alone DTPA Claims — FFIC argues that Grand Treviso’s standalone DTPA claims fail because they constitute, at best, a mere breach of contract.
Def.’s Mot. 8. Indeed, an “allegation of a mere breach of contract, without more, does not
constitute a false, misleading or deceptive act in violation of the DTPA.” Crawford v. Ace
Sign, Inc., 917 S.W.2d 12, 14 (Tex. 1996) (citations omitted). Further, “representations
that one will fulfill a contractual duty which one later fails to perform does not constitute
misrepresentation, but rather the breach of a contractual duty.” Metro. Life Ins. Co. v.
Haden & Co., 1998 WL 648603, at *7 (5th Cir. 1998) (unpub.) (citing Formosa Plastics
MEMORANDUM OPINION AND ORDER – PAGE 7
Corp. USA v. Presidio Eng’rs & Contractors, Inc., 960 S.W.2d 41, 46 (Tex. 1998)). Here,
Grand Treviso explains that the misrepresentation allegations are “based upon the very
language of the policy itself.” Pl.’s Resp. 9 [26]. FFIC’s representation in the policy that
it would fulfill its contractual duty — which Grand Treviso alleges it did not fulfill — does
not constitute a misrepresentation forming the basis for a DTPA claim, but instead a breach
of a contractual duty. See Haden, 1998 WL 648603, at *7. Thus, the Court holds that
Grand Treviso’s pleadings do not support claims under sections 17.46(b)(5) and
17.46(b)(7) of the DTPA.
2. The Insurance Code-Based DTPA Claims — Next, FFIC argues that Grand
Treviso’s Insurance Code-based DTPA claims fail because Grand Treviso simply recites
the statute and does not make factual allegations detailing representations, acts, or
omissions that fall under the cited provisions. Def.’s Mot. 8. The Court disagrees. For the
provisions of the Insurance Code that Grand Treviso alleges FFIC violated, Grand Treviso
both quotes the provision and provides factual allegations of how FFIC violated that
provision. See Pl.’s Second. Am Compl. ¶ 29(c)–(d). Grand Treviso’s factual allegations
include that FFIC “denied the claim in its entirety despite the fact that loss or damage is
covered under the insurance policy” and “conducted an investigation that had a
predetermined outcome of denying the claim under the policy.” Id. Construing the
complaint in the light most favorable to Grand Treviso, the Court holds that these
allegations are sufficient to state plausible Insurance Code-based DTPA claims.
MEMORANDUM OPINION AND ORDER – PAGE 8
E. Grand Treviso Does Not Allege a Concurrent Cause of Damage
Lastly, FFIC argues that Grand Treviso fails to state a claim because “it does not
segregate damages or plead any specificity as to which Defendant caused what damages,”
as required by the concurrent-causes doctrine.2 Def.’s Mot. 10. “Under this doctrine,
‘when covered and non-covered perils combine to create a loss, the insured is entitled to
recover only that portion of damage caused solely by the covered peril.’” Advanced
Indicator & Mfg., Inc. v. Acadia Ins. Co., 50 F.4th 469, 476–77 (5th Cir. 2022) (quoting
Dall. Nat’l Ins. Co. v. Calitex Corp., 458 S.W.3d 210, 222 (Tex. App. — Dallas 2015, no
pet.)). Accordingly, the insured must “produce evidence which will afford a reasonable
basis for estimating the amount of damage or the proportionate part of damage caused by
a risk covered by the insurance policy.” Calitex, 458 S.W.3d at 222–23 (quoting Travelers
Indem. Co. v. McKillip, 469 S.W.2d 160, 163 (Tex. 1971) and citing Wallis v. United Servs.
Auto. Ass’n, 2 S.W.3d 300, 304 (Tex. App. — San Antonio 1999, pet. denied)).
Here, the Court determines that the concurrent-causes doctrine does not apply to
Grand Treviso’s claims because Grand Treviso alleges that all its losses are covered by its
insurance policy with FFIC. See Pl.’s Second Am. Compl. ¶ 8 (“These issues were all
caused by losses covered by the insurance policy issued by Defendants.”). Further, even
if Grand Treviso had pled that noncovered perils contributed to its losses, the concurrentcauses doctrine relates to sufficiency of evidence, not sufficiency of pleadings, and FFIC
2
To the extent FFIC bases this argument on the fact that Grand Treviso did not
differentiate damages between Defendants, the Court rejects this argument as moot as
Grand Treviso has dismissed all other Defendants from the case.
MEMORANDUM OPINION AND ORDER – PAGE 9
does not provide any examples of courts dismissing claims at the Rule 12(b)(6) stage for
failure to specifically segregate damages. See, e.g., Calitex, 458 S.W.3d at 222–23
(reviewing grant of summary judgment based on concurrent causes); Seahawk Liquidating
Tr. v. Certain Underwriters at Lloyds London, 810 F.3d 986, 994 (5th Cir. 2016)
(reviewing judgment based on concurrent causes following bench trial). Accordingly, the
Court declines to dismiss Grand Treviso’s claims on this basis.
CONCLUSION
Because Grand Treviso adequately pled its breach of contract, breach of the duty of
good faith and fair dealing, Texas Insurance Code, and Insurance Code-based DTPA
claims, the Court denies FFIC’s motion to dismiss these claims. However, because Grand
Treviso did not adequately plead its claims based on sections 17.46(b)(5) and 17.46(b)(7)
of the DTPA, the Court grants FFIC’s motion to dismiss these claims. Further, the Court
grants Grand Treviso leave to amend its complaint within 30 days of this Order. If Grand
Treviso does not amend its complaint within 30 days, the Court will dismiss its claims
based on sections 17.46(b)(5) and 17.46(b)(7) of the DTPA with prejudice without further
notice.
Signed January 28, 2025.
___________________________
David C. Godbey
Chief United States District Judge
MEMORANDUM OPINION AND ORDER – PAGE 10
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