Seneca Insurance Company Inc v. Emerald Management, LLC et al
Filing
32
MEMORANDUM OPINION AND ORDER re: 30 MOTION, 24 MOTION to Dismiss, 31 MOTION to Supplement Counterclaims, or Alternative Motion to Amend Counterclaims. The court ORDERS that plaintiff's motion to dismiss be and is hereby granted. De fendants' request for declaratory relief and is hereby dismissed without prejudice, same having been withdrawn. Defendants' motion to supplement counterclaims or alternatively to amend be, and is hereby denied. (Ordered by Judge John McBryde on 12/2/2016) (npk)
"''''~"'~
l----t:-.S-.O-i-S-T.R-.'-C-·T-C-O-t'-,R-r--.......
I . .•. NORTIIEI{N IW;YRICTOfIEXAS
"'"t \
FILED
II
r
I
IN THE UNITED STATES DISTRICT C~URT
IIC - 2 2016
NORTHERN DISTRICT OF TEXAS !
L._··· .......•..................
.i
FORT WORTH DIVISION
I
CUR":, U.S. DISTHiCTCOlUI
\4;
SENECA INSURANCE CO., INC.,
§
-;;;.
.__.
...
?
..
(':"·~"'i' ~_/._"",
__
.
~_,,,_~._~_~~_,_....,,,
_.~,,,
§
Plaintiff,
VS.
§
§
§
NO. 4:16-CV-294-A
§
EMERALD MANAGEMENT, LLC, ET AL.,§
Defendants.
§
§
MEMORANDUM OPINION AND ORDER
Came on for consideration the amended motion of plaintiff,
Seneca Insurance Co., Inc., to dismiss counterclaims of
defendants, Emerald Management, LLC, and Landmark, LLC. The
court, having considered the motion, defendants' response, the
reply, the record, and applicable authorities, finds that the
motion should be granted.
1.
Nature of the Case and Counterclaims
On April 26, 2016, plaintiff filed its original complaint
for declaratory jUdgment alleging: Plaintiff issued an insurance
policy covering certain commercial property to defendants for the
policy period of July 6, 2013 through July 6, 2014
(the
"policy"). The policy provides limits of $6,057,408 with a coinsurance requirement of 100%. The policy also includes a
windstorm/hail deductible of $25,000. On September 30, 2015,
defendants tendered a claim for damages to the insured property
"
that allegedly occurred on or about April 3, 2014. Plaintiff
investigated the claim, issued a reservation of rights letter,
and requested an examination under oath pursuant to the policy's
provisions, but defendants did not respond.
Plaintiff seeks declaratory judgment that the insurance
policy it issued to defendants does not provide coverage for the
loss made the basis of defendants' claim. Plaintiff also seeks a
declaration that defendants failed to comply with policy
conditions precedent to coverage.
On May 20, 2016, defendants filed their answer and
counterclaims. Plaintiff filed a motion to dismiss the
counterclaims. Defendants responded and filed amended
counterclaims, making the first motion to dismiss moot.
In their amended pleading, defendants assert claims for
declaratory jUdgment, breach of contract, noncompliance with the
Texas Insurance Code regarding settlement practices (Tex. Ins.
Code
§
541.060(a)), noncompliance with the Texas Insurance Code
regarding prompt paYment of claims (Tex. Ins. Code
§
542.056 &
.058), violation of the Texas Deceptive Trade Practices-Consumer
Protection Act, Tex. Bus. & Com. Code
bad faith.
2
§§
17.41-.63
("DTPA"), and
II.
Grounds of the Motion
As defendants note, the motion is one for partial dismissal
as plaintiff does not challenge the counterclaim for breach of
contract. As for the remaining claims, plaintiff asserts that
defendants have not alleged an independent injury that would
support extra-contractual damages; the extra-contractual damages
claims do not meet the heightened pleading requirements of Fed.
R. Civ. P. 9; and, defendants' counterclaim for declaratory
judgment is superfluous.
III.
Applicable Legal Principles
Rule 8(a) (2) of the Federal Rules of Civil Procedure
provides, in a general way, the applicable standard of pleading.
It requires that a complaint contain "a short and plain statement
of the claim showing that the pleader is entitled to relief,"
Fed. R. Civ. P. 8(a) (2),
"in order to give the defendant fair
notice of what the claim is and the grounds upon which it rests,"
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)
quotation marks and ellipsis omitted).
(internal
Although a complaint need
not contain detailed factual allegations, the "showing"
contemplated by Rule 8 requires the plaintiff to do more than
simply allege legal conclusions or recite the elements of a cause
3
of action.
Twombly, 550 U.S. at 555 & n.3.
Thus, while a court
must accept all of the factual allegations in the complaint as
true, it need not credit bare legal conclusions that are
unsupported by any factual underpinnings.
556 U.S. 662, 679 (2009)
See Ashcroft v. Iqbal,
("While legal conclusions can provide
the framework of a complaint, they must be supported by factual
allegations.") .
Moreover, to survive a motion to dismiss for failure to
state a claim under Rule 12(b) (6), the facts pleaded must allow
the court to infer that the plaintiff's right to relief is
plausible.
Iqbal, 556 U.S. at 678.
To allege a plausible right
to relief, the facts pleaded must suggest liability; allegations
that are merely consistent with unlawful conduct are
insufficient. Id. In other words, where the facts pleaded do no
more than permit the court to infer the possibility of
misconduct, the complaint has not shown that the pleader is
entitled to relief. Id. at 679. "Determining whether a complaint
states a plausible claim for relief .
[is] a context-specific
task that requires the reviewing court to draw on its jUdicial
experience and common sense."
Id.
Rule 9(b) sets forth the heightened pleading standard
imposed for fraud claims: "In alleging fraud or mistake, a party
must state with particularity the circumstances constituting
4
fraud or mistake." The Fifth Circuit requires a party asserting
fraud to "specify the statements contended to be fraudulent,
identify the speaker, state when and where the statements were
made, and explain why the statements were fraudulent." Hermann
Holdings, Ltd. v. Lucent Techs., Inc., 302 F.3d 552, 564-65
(5 th
Cir. 2002) (internal quotations and citations omitted). Succinctly
stated, Rule 9(b) requires a party to identify in its pleading
"the who, what, when, where, and how" of the events constituting
the purported fraud. Dorsey v. Portfolio Equities, Inc., 540 F.3d
333, 339
(5 th Cir. 2008). Claims alleging violations of the Texas
Insurance Code are sUbject to the requirements of Rule 9(b).
Frith v. Guardian Life Ins. Co. of Am.,
9 F. SUpp. 2d 734, 742
(S . D. Tex. 1998).
IV.
Analysis
Plaintiff first says that defendants have not alleged any
facts that would support extra-contractual damages. The court
agrees. There can be no recovery for extra-contractual damages
for mishandling claims unless the complained of acts or omissions
caused an injury independent of those that would have resulted
from a wrongful denial of policy benefits. Parkans Int'l LLC v.
Zurich Ins. Co., 299 F.3d 514, 519
(5th Cir. 2002). In other
words, the manner in which the claim was investigated must be the
5
proximate cause of the damages alleged. provident Am Ins. Co. v.
Castaneda, 988 S.W.2d 189, 198-99 (Tex. 1998). Here/ defendants
have not alleged such a separate injury.l
The court need not address the remaining grounds of the
motion/ although it does note that defendants' claims are
deficient in other respects. For example/ an essential element of
a prompt payment claim is that the plaintiff received all of the
information to which it was entitled before expiration of a time
limit for payment of the claim. Tracy v. Chubb Lloyds Ins. Co.,
No. 4:12-CV-042-A/ 2012 WL 2477706/ at *7
(N.D. Tex. June 28/
2012); Jimenez v. Allstate Texas Lloyd/s/ No. 4:10-CV-4385/ 2012
WL 360096/ at *5
(S.D. Tex. Feb. 2/ 2012). Defendants have not
alleged facts to make out such a claim.
The court notes that defendants agree that their declaratory
judgment count should be withdrawn. 2
The court ORDERS that plaintiff's motion to dismiss be/ and
is hereby/ granted/ and defendants' counterclaims for
noncompliance with the Texas Insurance Code regarding settlement
practices (Tex. Ins. Code
§
541.060(a)) / noncompliance with the
Texas Insurance Code regarding prompt payment of claims (Tex.
lThe court notes that defendants have pending a motion for leave to supplement their
counterclaims to allege additional damages arising from their need to refinance the property. Such
damages do not arise from the claims handling itself, but from the denial of the claim.
2Defendants also recognize that the allegation regarding "illusory" contract is without merit.
6
Ins. Code
§
542.056 & .058)
I
violation of the DTPA I and bad faith
bel and are herebYI dismissed.
The court further ORDERS that defendants
request for
I
declaratory relief bel and is herebYI dismissed without
prejudice l same having been withdrawn.
The court further ORDERS that defendants
motion to
I
supplement counterclaims or alternatively to amend bel and is
herebYI denied.
The court determines that there is no just reason for delay
in l and hereby directs l entry of final judgment as to the
dismissal of said counterclaims.
SIGNED December 2
1
2016.
.
/
D~s~ct
f
,
7
Judge
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?