University Baptist Church v. Lexington Ins Co

Filing 32

Amended Memorandum Opinion and Order..the motion of York granted, pltf's claims against York dismissed. The only deft in this action is Lexington Insurance Company. (Ordered by Judge John McBryde on 5/23/2018) (wrb)

cmfrzr- -··· 1

1·---t1s~DiSr1ucT
\ NORTHERNDISTF.TCTOFTEX:'.:.:

I
j

r·

-i

1

IN THE UNITED STATES DISTRidT COU,T. MAY 2 3 2018 !
NORTHERN DISTRICT OF TEJtAS
.
_J
FORT WORTH DIVIS ION
CLEI~i(~u.s. DISTl\lCT COURT
By

Deputy

UNIVERSITY BAPTIST CHURCH
FORT WORTH,

§
§
§
§

vs.

§

NO. 4:17-CV-962-A

§
§
LEXINGTON INSURANCE COMPANY
AND YORK RISK SERVICES GROUP, INC.,§
§

Defendants.

§

AMENDED
MEMORANDUM OPINION
and
ORDER
(This amended memorandum opinion and order
is effective May 16, 2018, and replaces
in its entirety the memorandum opinion and
order signed in this action on May 16, 2018.)
Came on for consideration in the above-captioned action the
motion to dismiss filed by defendant York Risk Services Group,
Inc.

("York") .

The court, having considered the motion, the

response of plaintiff, University Baptist Church of Fort Worth,
thereto, York's reply, the entire record, including the
supplemental authority submitted by plaintiff, and the applicable
legal authorities, finds that the motion should be granted.

i

I
_.I

§

Plaintiff,

'

I.

Plaintiff's Amended Complaint
The following is an abbreviated form of the allegations
against York in plaintiff's live pleading, Plaintiff's Amended
Complaint:
York was hired by defendant Lexington Insurance Company
("Lexington") to adjust the alleged loss sustained to plaintiff's
property following a hail and wind storm on March 17, 2016.
Doc. 1 19 at 2, ,, 7-8.

York, in turn, assigned one of its

employees, Kevin Forman ("Forman"), to examine the property and
adjust the loss.

Id., , 8.

On September 14, 2016, Lexington

sent documentation to plaintiff indicating that the undisputed
loss and agreed scope of costs for replacement of the roof was
$586,040.20.

Id. at 3, , , 9 & 11.

Also in September, after

concerns arose about whether plaintiff's commercial property
complied with the necessary code requirements, Forman retained a
third party to inspect the roof and address the code upgrade
issues.

Id.,

, 13.

Forman notified plaintiff on September 26, 2016, that
plaintiff would be receiving a copy of an engineering report from
the engineer retained by the third party, and a related invoice

'The "Doc. " reference is to the number assigned to the referenced item on the docket in this
action, No. 4: l 7-CV-962-A.
2

from Jeff Eubank Roofing ("JE Roofing"), and requested that
plaintiff forward those items to Forman upon receipt for the
purpose of developing with plaintiff an agreed scope for the
additional improvements required.'

Id., , 14.

On November 23,

2016, JE Roofing submitted to Forman a code upgrade bid of
$285,798.00

Id., , 16.

In December 2016 and January 2017 Forman

discussed with JE Roofing the proposed cost of the code upgrade
project.

Id. at 4, , , 18-19.

The decision was made that "the

cost of re-decking the main chapel" would be conducted on a "time
and material" basis,
Id., , 19.

"due to the uniqueness of the project."

Forman sent JE Roofing the forms to be used for

tracking time and materials with instructions that in order to
avoid any concerns or misunderstandings, the forms were to be
returned within two days of the applicable activity.

Id., ,

20.

On February 28, 2017, Forman sent an email to plaintiff that
read:
I have informed the carrier that [the third-party]
has verified that the changes being made to the decking
of the main church for the installment of new tile is
being required and enforced by the city of Fort Worth.
Code upgrade costs are indemnified once incurred when
they fall under this city of FT. Worth enforcement. Due
to the uniqueness of the operation and since it hasn't
been done before, this is why we are tracking the costs
in this way as agreed with JE Roofing.

2

The email read, in pertinent pa1t: "When you receive a copy of the engineering repmt and
related invoice ... , please forward me a copy for review so we can develop an agreed scope for the
additional decking required." Id.,~ 14. (emphasis removed).

3

Id. at 4, , 22.

Before York's approval was given for the work to

begin, JE Roofing had already begun replacing the roof.
5, , 24.

Id. at

JE Roofing, which was the roofing contractor, regularly

submitted to York the invoices or forms as required by York.
Id., , 2 3 .
On April 28, 2017, Plaintiff received an invoice that
included seven weeks of "Extras" charges in the amount of
$582,944.75.

Id., , 25.

Plaintiff asked Forman several days

later to confirm in writing that the insurance would "provide the
funds for the work required by the engineer."

Id.

On July 11,

2017, plaintiff, through the church's pastor, informed Lexington
"that its prior inquiries about the status of the claim had gone
unresponded to."

Id., , 28.

The pastor, in the email he sent to

Lexington "recalled a conversation [the pastor] had with Forman
in which Forman stated that he was 'alarmed at the skyrocketing
costs for the repairs and implied that the church could
potentially be responsible.'"

Id.

The pastor also informed

Lexington at this time that it had not received weekly updates
regarding progress on the re-decking, that plaintiff "endured
increased exposure to the roof and the church itself," and that
plaintiff had instructed JE Roofing to cease work on the roof.
Id., at 5-6, ,

28.

JE Roofing charged $864,148.49 in "time and

4

materials" related to the code upgrade for plaintiff's property.
Id., at 6, , 32.
"Defendants failed and refused to pay [p]laintiff an
appropriate amount for losses and damages caused to [p]laintiff's
property by an occurrence covered under their contract of
insurance."

Id., , 37.

Plaintiff was required to take out a

loan to pay for "the extra work" performed by
,

JE

Roofing.

Id. ,

33.
Plaintiff's claims against York are alleged in sections X,

XI, and XII of the amended complaint.

In section X, plaintiff

alleged that York violated section 541. 060 (a) (2) (A) of the Texas
Insurance Code by failing •to attempt in good faith to effectuate
a prompt, fair, and equitable settlement of Plaintiff's claims
even though Defendant Lexington's liability had become reasonably
clear," id. at 12, ,
by •refus[ing]

78; that York violated section 541.060(a) (3)

to pay Plaintiff's claim without conducting a

reasonable investigation with respect to the claim," id. at 13,
, 80; and, that York violated section 541.060(a) (1) by
•misrepresent[ing] material facts or policy provisions related to
coverage, " id.

,

81.

In section XI, plaintiff alleged that, as

authorized by section 541.151 of the Texas Insurance Code,
plaintiff is bringing a private action for violations of the
Texas Deceptive Trade Practices Act ( "DTPA") , sections 17.41 et

5

~of

the Texas Business & Commerce Code.

Plaintiff, as a

"consumer," as defined by the DTPA, relied on the acts and
practices enumerated in section XI to its detriment.

York

represented that an agreement confers or involves rights,
remedies, or obligations which it does not have or involve, that
York employed an act or practice in violation of chapter 541 of
the Texas Insurance Code, and that its services were of a
particular standard, quality, or grade, when they were of
another.

All of those "acts were a producing cause of

Plaintiff's damages for which Plaintiff now sues."
~

Id. at 14,

In section XII, plaintiff made a promissory estoppel claim

90.

against York, alleging that York is estopped from claiming that
plaintiff is not entitled to proceeds that were expended to bring
plaintiff's roof into compliance with the City of Fort Worth
Building Codes, and concluding with the following assertion:
By overseeing the adjustment of the Plaintiffs
claim, Defendant York represented that it would adjust
the claim fairly and properly. Defendant York also
promised to prepare and present an "agreed scope" for
the repairs to Plaintiffs roof. Defendant York knew or
should have known that Plaintiff would rely on this
promise by Defendant York. Plaintiff relied to its
detriment on the promises of Defendant York to properly
monitor the work of Jeff Eubank Roofing and to provide
an agreed scope.
94.

95. The detrimental reliance by Plaintiff on the
promises of Defendant York were a producing cause of
damages to Plaintiff for which Plaintiff now sues.

Id.,

~~

94-95.

6

II.
Grounds of the Motion
York moves to dismiss plaintiff's claims against it on the
grounds that

(1) plaintiff failed to allege in its amended

complaint the necessary "who, what, where, when, and how" of
York's purported statutory violations,

(2) plaintiff failed to

allege that plaintiff suffered any extra-contractual damages as a
result of York's actions, and (3) plaintiff's promissory estoppel
claim fails as a matter of law.
III.
Applicable Pleading Standards
A.

Rule B(a)
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. B(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
quotation marks and ellipsis omitted) .

(2007)

(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

7

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. Igbal,

("While legal conclusions can provide

the framework of a complaint, they must be supported by factual
allegations.") .
Moreover, to survive a Rule 12 (b) (6) motion to dismiss for
failure to state a claim, the facts pleaded must allow the court
to infer that the plaintiff's right to relief is plausible.
Igbal, 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.
679.

Id. at

"Determining whether a complaint states a plausible claim

for relief .

[isl a context-specific task that requires the

reviewing court to draw on its judicial experience and common
sense.

B.

11

Id.

Rule9(b)
Rule 9(b) of the Federal Rules of Civil Procedure sets forth

the heightened pleading standard imposed for fraud claims: "In

8

alleging fraud or mistake, a party must state with particularity
the circumstances constituting 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 (5th 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 (5th 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), as are claims alleging violations of the

DTPA, id. at 742-43; see also Berry v. Indianapolis Life Ins.
Co., 608 F. Supp. 2d 785, 800

(N.D. Tex. Mar. 11, 2009).
IV.

Analysis
Plaintiff has failed to meet the Rule 8 (a) (2) pleading
standard as defined by the Supreme Court in Twombly and Iqbal as
to any of its claims against York.

Its allegations as to those

claims are mere legal conclusions that are unsupported by factual

9

underpinnings.

As to the alleged statutory violations, plaintiff

recites in its pleading only the elements of causes of action,
not the factual bases of those elements.

There are no facts

alleged that would allow the court to infer that plaintiff has a
right to relief against York under any of its three alleged
causes of action.

While plaintiff has a section in its complaint

headed "Facts," and recites under that heading things certain
persons did or failed to do in relation to plaintiff's roof
replacement and its insurance coverage with Lexington, doc. 19 at
2-7, ,, 5-37, when plaintiff states in a conclusory way the
precise claims plaintiff is making against York, plaintiff does
not provide any enlightenment by way of factual allegations as to
which, if any, of the facts set forth under the "Facts" heading
are pertinent to, or support, plaintiff's claims against York.
Id. at 12-14, ,, 77-95.

The reader of the pleading is left to

speculate on that subject.
Moreover, to whatever extent plaintiff is making a claim or
claims against York based on representations allegedly made by a
representative of York, plaintiff fails to comply with the Rule
9(b) requirements, as they have been defined by the Fifth
Circuit, that the pleading specify the statements contended to be
false,

identify the speaker, state when and where the statements

were made, and explain why the statements were fraudulent.

10

In

other words, plaintiff has failed to satisfy the who, what, when,
where, and how of the events constituting the alleged
misrepresentations or false statements.
As discussed below, there are other reasons why plaintiff's
allegations against York fail to state a claim upon which relief
may be granted.
A.

Texas Insurance Code Claims (the Section X Claims)
There is no allegation from which the conclusion could be

reached that section 541. 060 (a) (2) (A) has any potential
applicability to York.

An adjusting firm, such as York is,

cannot be held liable under that section because it is neither
the insurer nor someone with settlement authority on behalf of
the insurer.

See Lopez v. United Prop. & Cas. Ins. Co., 197 F.

Supp. 3d 944, 950

(S.D. Tex. July 11, 2016) (noting that "[t]he

majority of federal courts that have addressed [section
541.060(a) (2) (A)] have found that [it] applies only to insurers,
and that it does not apply to adjusters"); see also McClelland v.
Chubb Lloyd's Ins. Co., No. 5:16-CV-00108, 2016 WL 5791206, at *3
(W.D. Tex. Sept. 30, 2016); Merritt Buffalo Events Ctr., L.L.C.
v. Cent. Mut. Ins. Co., No. 3:15-CV-3741-D, 2016 WL 931217, at *4
(N.D. Tex. Mar. 11, 2016); Mainali Corp. v. Covington Specialty
Ins. Co., No. 3:15-CV-1087-D, 2015 WL 5098047, at *4 (N.D. Tex.
Aug . 3 1 , 2 0 15 ) .

11

The next section of the Texas Insurance Code upon which
plaintiff relies is section 541.060(a) (3).

The case law makes

clear that it cannot form the basis of a claim in a case such as
this against an adjusting company, such as York.
F. Supp. 3d at 950
§

See Lopez, 197

("[A]n adjuster cannot be held liable under

541.060(a) (3) because an adjuster has no obligation to provide

a policyholder a reasonable explanation of the basis in the
policy for the insurer's denial of a claim, or offer of a
compromise settlement of a claim."

(citations and quotation marks

omitted)); see also McClelland, 2016 WL 5791206 at *3
541. 060 (a) (3)

(Section

•is similarly inapplicable to adjusters because,

just as adjusters do not have the authority to affirm or deny
coverage, they have 'no obligation to provide a policyholder a
reasonable explanation of the basis in the policy for the
insurer's denial of a claim, or offer of a compromise settlement
of a claim'" (quoting Mainali Corp., 2015 WL 5098047 at *4)).
similarly, plaintiff's reliance on section 541.060(a) (7) as
basis for a claim against York is equally misplaced.

Those who

can be held liable under that section •are the insurance company
or the individual at the insurance company who refuses to pay the
claim, not the individual responsible for conducting the
investigation."

Messersmith v. Nationwide Mut. Fire Ins. Co.,

10 F. Supp. 3d 721, 725

(N.D. Tex. 2014); see also McClelland,

12

2016 WL 5791206 at *3; Meritt Buffalo Events Ctr., L.L.C., 2016
WL 931217 at *4.
Plaintiff fares no better in its attempt to base a claim
against York based on section 541.060 (a) (1).

For a

representation contemplated by that section to be actionable,
"[t]he misrepresentation must be about the details of a policy,
not the facts giving rise to a claim for coverage."

Messersmith,

10 F. Supp. 3d at 724; see also Meritt Buffalo Events Ctr.,
L.L.C., 2016 WL 931217 at *4.

Plaintiff does not identify which

specific facts give rise to this purported violation, or which
policy provision York might have misrepresented.

Instead,

plaintiff relies on the previously listed factual allegations,
leaving the court and defendants to speculate as to which
specific facts might give rise to any liability under
541.060(a) (1).

In other words, plaintiff has not alleged such a

claim with the specificity required by Rule 9.

Because plaintiff

failed to clearly identify the requisite "who, what, when, where,
and how" of any purported violation related to any of the
statements it alleges York, or York through Forman, made, such
claim should be dismissed.

Dorsey, 540 F.3d at 339.

Moreover, none of the statements alleged by plaintiff, if
the court were to guess which of York's statements was intended
to support plaintiff's section 541.060(a) (1) claim, involves the

13

details of the policy.

Messersmith, 10 F. Supp. 3d at 724

(defendant must represent that plaintiff "would receive a
particular kind of policy that it did not receive• or "denied
coverage against loss under specific circumstances that it
previously had represented would be covered.").
Thus, plaintiff has not stated a claim against York for
violation of any part of
B.

§

541.060 of the Texas Insurance Code.

Deceptive Trade Practices Act Claims (the Section XI Claim)
Plaintiff's complaint next alleged claims against York for

violations of the DTPA.

The DPTA provides recourse to consumers

who are victims of "[f]alse, misleading, or deceptive acts or
practices in the conduct of any trade or commerce• to recover for
such clams.

Tex. Bus. & Com. Code

§

17.46(a).

The elements of a

DTPA claim are: "(1) the plaintiff is a consumer;

(2) the

defendant engaged in false, misleading, or deceptive acts; and
(3) these acts constituted a producing cause of the consumer's
damages•.

Hugh Symons Group, plc v. Motorola, Inc., 292 F.3d

466, 468 (5th Cir. 2002).

C~aims

under the DTPA are subject to

the heightened pleading requirements of Rule 9(b).

Berry v.

Indianapolis Life Ins. Co., 608 F. Supp. 2d 785, 800 (N.D. Tex.
Mar . 11 , 2 0 0 9 ) .

14

Plaintiff specifically alleged that plaintiff violated
sections 17.46(b) (7) and (b) (12), and section 17.50(a) (4) by:
a.

[Representing] that [York's] services were of a
particular standard, quality, or grade, when they
were of another.

b

[Representing] that an agreement confers or
involves rights, remedies, or obligations which it
does not have or involve.

c.

[Employing] an act or practice in violation of the
Texas Insurance Code, Chapter 541, as more
specifically enumerated in Section VII, above.

Doc. 19 at 13, ,, 87-89.

These statements, taken together,

demonstrate another instance where plaintiff has failed to point
to the specific factual allegations supporting its claims.
Plaintiff merely cited the statutory language and left it up to
the court's and the defendants' imagination as to what factual
allegations support plaintiff's claims.

Plaintiff's attempt to

cross-reference or incorporate by reference section VII of the
amended complaint fairs no better, as that section of the amended
complaint consists solely of conclusory allegations against
Lexington.

Plaintiff has not identified the "who, what, when,

where, and how" of the purported violations.
339.

Dorsey, 540 F.3d at

Even speculating which facts might apply, the court finds

that plaintiff has failed to state any claim against York.

15

C.

Promissory Estoppel Claim (the Section XII Claim)
Plaintiff finally urges the court in its complaint that

"York is estopped from claiming that Plaintiff is not entitled to
proceeds that were expended to bring Plaintiff's roof into
compliance with City of Fort Worth Building Codes."
14,

~

Doc. 19 at

93.
"Although promissory estoppel is normally a defensive

theory,

it is an available cause of action to a promisee who

relied to his detriment on an otherwise unenforceable promise."
Frost Crushed Stone Co., Inc. v. Odell Greer Constr. Co,, 110
S.W.3d 41, 44

(Tex. App,-Waco 2002, no pet.) (citing Wheeler v.

White, 398 S.W.2d 93, 96-97 (Tex. 1965)).
of a promissory estoppel claim are:

The requisite elements

(1) a promise,

foreseeability of reliance thereon by the promisor,

(2)
(3)

substantial reliance by the promisee to his detriment.
MetroplexCore, L.L.C. v. Parsons Transp., Inc., 743 F.3d 964, 977
(5th Cir. 2014); see also English v. Fischer, 660 S.W.2d 521, 524
(Tex. 1983); Frost Crushed Stone Co., Inc., 110 S.W.3d at 44.
To support its promissory estoppel claim, plaintiff alleges
that (1) York worked directly with JE Roofing to the exclusion of
plaintiff,

(2) plaintiff relied on York to adjust the claim

properly and to monitor the costs associated with roof
replacement,

( 3) York "promised to prepare and present an 'agreed

16

scope'" for plaintiff's roof repair,

(4) York knew or should have

known plaintiff would rely on this promise,

(5) plaintiff relied

to its detriment on York's promise, and (6) such reliance was the
producing cause of plaintiff's damages.

Doc. 19 at 14, , , 93-95.

York argues that plaintiff "has not sufficiently alleged a
'definite, unconditional promise' by York," "has []

failed to

allege that it substantially relied on any promise by York, much
less that its reliance was both reasonable and justified," or
that plaintiff materially changed its position in reliance on
York's promise.

Doc. 21 at 15-16.

York further challenges

plaintiff's pleadings on the grounds that, among other things,
plaintiff is attempting to use promissory estoppel "despite the
presence of related contractual agreements."

Id. at 16.

A promissory estoppel claim requires a "definite,
unconditional promise," Elite Ctr. for Minimal Invasive Surgery,
LLC v. Health Care Serv. Corp., 221 F. Supp. 3d 853, 863

(S.D.

Tex. 2016), that is "sufficiently specific and definite so that
it would be reasonable and justified for the promisee to rely on
it."

Davis v. Tex. Farm. Bureau Ins., 470 S.W.3d 97, 108

App.-Houston [1st Dist.] 2015, no pet.).

(Tex.

And, the promisee's

reliance on the promise must be "reasonable and justified."
Addicks Serve., Inc. v. GGP-Bridgeland, LP, 596 F.3d 286, 300
(5th Cir. 2010).

17

Having reviewed plaintiff's pleadings, the court is
satisfied that plaintiff has failed to state an affirmative
promissory estoppel claim against York.

The nearest to a promise

alleged by plaintiff is that York said it would •prepare and
present an 'agreed scope'" for plaintiff's roof repair.
at 14, , 94.

Doc. 19

Apparently, this •promise• was made when Forman

sent an email stating,

"[w]hen you receive a copy of the

engineering report and related invoice from Jeff Eubank Roofing,
please forward me a copy for review so we can develop an agreed
scope for the additional decking required."
supra at 2 n. 2.

Doc. 19 at 4, , 14;

Such statement is too vague and indefinite to

constitute a promise to satisfy plaintiff's pleading requirement
on this claim.

Elite Ctr. for Minimal Invasive Surgery, LLC,

221 F. Supp. 3d at 863.

And, the remaining elements of the

promissory estoppel claim have been alleged in a conclusory
manner, without factual underpinnings to support them.
Plaintiff also urges in its response to York's motion that
paragraphs 20, 21, 22, at 25 of the amended complaint allege
promises York made to plaintiff.

Doc. 23 at 9.

However, a

review of plaintiff's amended complaint does not point to any of
these statements as promises supporting its promissory estoppel
claim against York.

Even if it did, plaintiff has not alleged

18

that it relied on those statements to its detriment, nor that
such reliance was foreseeable by defendant.
For these additional reasons, the court finds that plaintiff
has failed to plead a promissory estoppel claim.

v.
Order
Therefore, for the foregoing reasons,
The court ORDERS that the motion of York be, and is hereby,
granted, and plaintiff's claims against York be, and are hereby,
dismissed.
The court determines that there is no just reason for delay
in, and hereby directs, entry of final judgment as to the
dismissal of plaintiff's claims against York.
The court further ORDERS that from this point forward, the
only defendant in this action is Lexington and the style of this
case is "University Baptist Church of Fort Worth, Plaintiff, v.
Lexington Insurance Company, Defendant."
SIGNED May 23, 2018, effective Ma

y

f

18

ict Judge