Elton Porter Marine Insurance Agency Inc v. Markel American Insurance Company et al

Filing 17

ORDER GRANTING IN PART DENYING IN PART 4 MOTION to Dismiss (Signed by Judge Gray H. Miller) Parties notified.(rkonieczny)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
ELTON PORTER MARINE
INSURANCE AGENCY ,
Plaintiff,
v.
MARKEL AMERICAN INSURANCE
COMPANY and AMERICAN
UNDERWRITING MANAGERS
AGENCY , INC.,
Defendants.

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CIVIL ACTION H-11-4432

O RDER
Pending before the court is a motion to dismiss filed by defendants Markel American
Insurance Company and American Underwriting Managers Agency, Inc. (collectively,
“Defendants”). Dkt. 4. Upon consideration of the motion, responses, and the applicable law,
Defendants’ motion to dismiss is GRANTED IN PART and DENIED IN PART.
I. BACKGROUND
Plaintiff, Elton Porter Marine Insurance Agency (“Elton Porter”), is an independent insurance
agency that specializes in all types of marine insurance. Dkt. 1-1. Elton Porter entered into a
Producer Agreement on or about April 1, 2007 with American Underwriting Managers Agency, Inc.
(“American”) to produce business to be insured by Markel American Insurance Company
(“Markel”). Id. The Producer Agreement authorized Elton Porter to (a) solicit proposals or
applications; (b) bind insurance policies and endorsements; (c) issue insurance policies and
endorsements; and (d) evaluate renewals within the limits of coverage. Dkt. 6. On January 18, 2011,
Markel gave notice to Elton Porter that the Producer Agreement between Elton Porter, Markel, and

American would be terminated on March 31, 2011. Dkt. 4, Ex. C. Elton Porter then filed suit in the
151st District Court of Harris County, Texas, generally alleging multiple causes of action against the
Defendants. Dkt. 1-1. Defendants removed the case to this court. Dkt. 1. Elton Porter brings
claims for (1) breach of contract; (2) tortious interference with contract; (3) misapplication of
fiduciary property; and (4) violation of the Texas Free Enterprise and Antitrust Act. Dkt. 1-1. As
part of its breach of contract claim, Elton Porter advances five theories: (a) improper termination
of the Producer Agreement; (b) continued solicitation of the policies; (c) continued renewal of the
policies; (d) use of the records of the policies to solicit individual policyholders for the sale of
insurance without the approval of Elton Porter; and (e) interference with the relationship between
Elton Porter and the insured. Id.
II. ANALYSIS
Defendants seek dismissal pursuant to Federal Rule of Civil Procedure 12(b)(6), asserting
that Elton Porter has failed to state a claim upon which relief can be granted on its claims for breach
of contract and violation of the Texas Free Enterprise and Antitrust Act. Dkt. 4.
A.

Legal Standard
Federal Rule of Civil Procedure 12(b)(6) allows dismissal if a plaintiff fails to state a claim

upon which relief may be granted. FED . R. CIV . P. 12(b)(6); Aschroft v. Iqbal, 566 U.S. 662, 129
S. Ct. 1937, 1949 (2009). In considering Rule 12(b)(6) motions, courts accept the factual allegations
contained in the complaint as true. Kaiser Aluminum & Chem. Sales, Inc. v. Avondale Shipyards,
Inc., 677 F.2d 1045, 1050 (5th Cir. 1982). Generally, the court does not look beyond the face of the
pleadings when determining whether the plaintiff has stated a claim under Rule 12(b)(6). Spivey v.
Robertson, 197 F.3d 772, 774 (5th Cir. 1999). However, a contract that is attached to a defendant’s
motion to dismiss is properly considered if it was referred to in the complaint and is central to the
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plaintiff’s claims. In Re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007) (quoting
Causey v. Sewell Cadillac-Chevrolet, Inc., 394 F.3d 285, 288 (5th Cir. 2004); Collins v. Morgan
Stanley Dean Witter, 224 F.3d 496, 498-99 (5th Cir. 2000)). In order to survive a motion to dismiss,
the complaint must contain sufficient factual matter, accepted as true, to "state a claim to relief that
is plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 547, 127 S. Ct. 1955 (2007).
B.

Analysis
Defendants deny engagement in any wrongful conduct as alleged. Dkt. 6. They argue that

the Producer Agreement between the parties was properly terminated in accordance with the terms
of the Agreement. Dkt. 4. Section 10(v) of the Producer Agreement allows for termination of the
contract by either party when written notice of termination is given not less than sixty (60) days prior
to the effective date of termination. Dkt. 3. Elton Porter and the Defendants agree that Markel gave
notice of termination on January 18, 2011 to take effect on March 31, 2011. Dkt. 6. Elton Porter
points to no terms of the contract or applicable law which would require the Defendants to show
cause before exercising their termination rights under §10(v) of the Producer Agreement.
Accordingly, termination was proper under the plain language of the Producer Agreement. Elton
Porter’s theory of breach of contract by improper termination fails. However, Elton Porter has
alleged four (4) other theories of breach of contract which the Defendants’ motion to dismiss does
not address. Accordingly, Defendants’ motion to dismiss the breach of contract claim is DENIED.
Defendants also contend that Elton Porter’s claims pursuant to the Texas Free Enterprise and
Antitrust Act (“the Act”) should be dismissed because their alleged conduct does not constitute
anticompetitive behavior in violation of the Act. Dkt. 4. The Act is to be construed “in harmony
with federal judicial interpretations of comparable federal antitrust statutes.” TEX . BUS. & COM .
CODE ANN . § 15.04 (Vernon 2011). To survive a Rule 12(b)(6) motion to dismiss, a complaint need
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not contain detailed factual allegations, but it must state grounds for entitlement to relief beyond
mere conclusions which raise the right to relief above the speculative level. Twombly, 550 U.S. at
555. Elton Porter’s original petition does not state the underlying facts that give rise to Defendants’
alleged attempt to monopolize or conspiracy to monopolize in violation of the Act. See Dkt. 1-1.
Elton Porter’s response to the Defendants’ motion to dismiss alleges additional facts in support of
the claim. Dkt. 9. However, it is insufficient to allege further facts in the response to the motion to
dismiss; the factual matter must be contained in the pleadings themselves. The Fifth Circuit has held
that leave to amend is to be granted liberally unless the party has acted in bad faith or if granting
leave to amend would cause prejudice. Jebaco, Inc. v. Harrah’s Operating Co., Inc., 587 F.3d 314,
322 (5th Cir. 2009). Accordingly, Defendants’ motion to dismiss the claim alleging violations of
the Texas Free Enterprise and Antitrust Act is GRANTED. This claim is dismissed without
prejudice to amend to plead violations of the Act in sufficient detail in compliance with the Twombly
standard on or before August 30, 2012, as set forth in the Scheduling Order. Dkt. 15.
III. CONCLUSION
Defendants’ motion to dismiss the breach of contract claim is DENIED. Defendants’ motion
to dismiss the claim alleging violation of the Texas Free Enterprise and Antitrust Act is GRANTED.
Elton Porter’s claim for violation of the Texas Free Enterprise and Antitrust Act is dismissed without
prejudice to amend before August 30, 2012.
Signed at Houston, Texas on June 6, 2012.

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Gray H. Miller
United States District Judge
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