St. Matthews United Methodist Church v. Philadelphia Indemnity Insurance Company

Filing 11

MEMORANDUM AND ORDER granting 3 Motion to Dismiss. Plaintiff shall file an Amended Complaint by 8/15/11.(Signed by Judge Nancy F. Atlas) Parties notified.(TDR)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
ST. MATTHEWS UNITED
METHODIST CHURCH,
Plaintiff,
v.
PHILADELPHIA INDEMNITY
INSURANCE COMPANY,
Defendant.

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CIVIL ACTION NO. H-11-2036

MEMORANDUM AND ORDER
This case is before the Court on the Motion to Dismiss or, in the Alternative,
Motion for More Definite Statement and, Verified Motion for Abatement (“Motion”)
[Doc. # 3] filed by Defendant Philadelphia Indemnity Insurance Company
(“Philadelphia”), to which Plaintiff St. Matthews United Methodist Church (“St.
Matthews”) filed a Response [Doc. # 10]. Having reviewed the full record, the Court
grants the Motion to Dismiss but will allow Plaintiff an opportunity to replead.
Plaintiff’s property was damaged during Hurricane Ike. Defendant’s records
reflect that on February 27, 2009, Plaintiff submitted a Sworn Proof of Loss for
$94,906.59, which Defendant paid.1

On July 10, 2009, Plaintiff submitted a

Supplemental Proof of Loss in the amount of $37,652.34, reflecting the additional cost
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Plaintiff has not disputed the accuracy of Defendant’s records.

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for replacing the roof rather than repairing it. On July 14, 2009, Defendant issued
payment to Plaintiff for the additional amount. Plaintiff demanded an appraisal as
provided for under the insurance policy. Plaintiff and Defendant agreed upon an
appraisal umpire, who issued an appraisal award in Plaintiff’s favor. Defendant paid
the full amount of the appraisal award. Plaintiff then demanded an additional payment
of approximately $77,000.00, which Defendant did not pay.
Plaintiff filed this lawsuit in Texas state court alleging breach of contract and
“statutory and common law bad faith.” Plaintiff seeks damages in the amount of
$454,887.00, plus attorney’s fees. Defendant removed the case to federal court and
filed the pending Motion.
A motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil
Procedure is viewed with disfavor and is rarely granted. Harrington v. State Farm
Fire & Cas. Co., 563 F.3d 141, 147 (5th Cir. 2009). The complaint must, however,
contain sufficient factual allegations, as opposed to legal conclusions, to state a claim
for relief that is “plausible on its face.” See Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949
(2009).
In this case, Plaintiff alleges that Defendant failed to pay the full amount
requested by Plaintiff and that Defendant refused to pay for asbestos abatement “even
though the policy does not contain an asbestos exclusion.” It appears this is the basis

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for the breach of contract claim, but there are no factual allegations that suggest that
the insurance policy would be breached if Defendant simply refused to pay all
amounts requested by Plaintiff. Similarly, there is no allegation that Defendant denied
any payments based on an “asbestos exclusion.” Plaintiff has failed to allege a factual
basis for a breach of contract claim.
Plaintiff’s allegations similarly fail to support a bad faith claim. Plaintiff
alleges that the appraisal umpire “was nothing more than a Philadelphia proxy,” but
there are no factual allegations to support that conclusory assertion. Indeed, in the
Response, Plaintiff concedes that the allegation is speculation but argues that
discovery may reveal something to support it.
Plaintiff has failed to allege a factual basis for its breach of contract and bad
faith claims. When a plaintiff’s complaint fails to state a claim, however, the court
should generally give the plaintiff a chance to amend the complaint under Rule 15(a)
before dismissing the action with prejudice. See Great Plains Trust Co. v. Morgan
Stanley Dean Witter & Co., 313 F.3d 305, 329 (5th Cir. 2002). The Court concludes
that Plaintiff should be given an opportunity to amend the complaint, but Plaintiff may
not plead a claim for which it has no good faith factual basis. See FED. R. CIV. P.
11(b). Plaintiff will also be permitted to amend the complaint again, if needed, by a
date to be set by the Court at the initial pretrial conference on September 6, 2011,

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which deadline will be after initial disclosures and some discovery. Accordingly, it
is hereby
ORDERED that Defendant’s Motion to Dismiss [Doc. # 3] is GRANTED. On
or before August 15, 2011, Plaintiff shall file an Amended Complaint that satisfies
federal pleading requirements and complies with Rule 11 of the Federal Rules of Civil
Procedure.
SIGNED at Houston, Texas, this 25th day of July, 2011.

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