Protectors Insurance & Financial Services LLC

Filing 20

MEMORANDUM AND ORDER GRANTED 16 MOTION to Dismiss and Motion for More Definite Statement(Signed by Judge Nancy F. Atlas) Parties notified.(sashabranner, )

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
PROTECTORS INSURANCE AND
FINANCIAL SERVICES, LLC,
Plaintiff,
v.
LEXINGTON INSURANCE CO.,
Defendant.

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CIVIL ACTION NO. H-12-3469

MEMORANDUM AND ORDER
This case is before the Court on the Motion to Dismiss Fraud Claims (“Motion
to Dismiss”) [Doc. # 16] filed by Defendant Lexington Insurance Company
(“Lexington”).

Plaintiff Protectors Insurance and Financial Services, LLC

(“Protectors”), neither filed a Response in opposition to the Motion to Dismiss nor
requested an extension of time to do so. Having carefully considered the record and
the applicable legal authorities, the Court grants the Motion to Dismiss.
I.

BACKGROUND
In September 2009, Plaintiff was sued by a third party in Georgia state court for

acts allegedly covered by the Insurance Agents Errors & Omissions Coverage Policy
(“Policy”) between Plaintiff as the insured and Defendant as the insurer. Plaintiff
hired a law firm to represent it in the Georgia lawsuit. In April or May 2010, Plaintiff

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notified Defendant of the Georgia lawsuit. Plaintiff alleges that it understood that the
matter would be reviewed and Defendant would likely reimburse Plaintiff for its legal
expenses in the Georgia lawsuit.
Plaintiff filed this lawsuit on November 29, 2012, alleging that Defendant failed
to pay in full the legal expenses incurred in the Georgia lawsuit. Plaintiff asserted a
breach of contract claim, as well as claims of bad faith, fraud, breach of fiduciary
duty, violation of the Texas Deceptive Trade Practices Act (“DTPA”), a violation of
the Texas Insurance Code, and a claim for unjust enrichment. Defendant filed a
Motion to Dismiss [Doc. # 5], asserting inter alia that the fraud-based claims failed
to comply with the pleading requirements of Rule 9(b) of the Federal Rules of Civil
Procedure.
In response to the Motion to Dismiss, Plaintiff filed a First Amended Complaint
[Doc. # 10]. In the First Amended Complaint, Plaintiff asserted the same causes of
action as in the Original Complaint, and added claims for quantum meruit and
promissory estoppel.

After the pleading was discussed at the initial pretrial

conference, Plaintiff filed its Second Amended Complaint [Doc. # 14] on April 26,
2013. In the Second Amended Complaint, Plaintiff asserted all the causes of action
contained in the First Amended Complaint.

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Defendant filed its Motion to Dismiss the fraud-based claims, asserting again
that the claims were not pled with the particularity required by Rule 9(b). Plaintiff
filed no opposition to the Motion to Dismiss.
II.

STANDARD FOR MOTION TO DISMISS FRAUD-BASED CLAIMS
Rule 9(b) of the Federal Rules of Civil Procedure requires that “[i]n all

averments of fraud or mistake, the circumstances constituting fraud or mistake shall
be stated with particularity.” FED. R. CIV. P. 9(b); see Leatherman v. Tarrant Cty.
Narcotics Intelligence Unit, 507 U.S. 163, 168-69 (1993); Hart v. Bayer Corp., 199
F.3d 239, 247 n.6 (5th Cir. 2000). In particular, the pleadings should “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.” Southland
Securities Corp. v. INSpire Ins. Solutions, Inc., 365 F.3d 353, 362 (5th Cir. 2004); see
also Shandong Yinguang Chem. Indus. Joint Stock Co., Ltd. v. Potter, 607 F.3d 1029,
1032 (5th Cir. 2010) (“Put simply, Rule 9(b) requires the who, what, when, where,
and how to be laid out.”). Rule 9(b) requires a plaintiff to allege the existence of facts
sufficient to warrant the pleaded conclusion that fraud has occurred. See In Re Haber
Oil Co., 12 F.3d 426, 439 (5th Cir. 1994). Rule 9(b)’s pleading requirements apply
not only to fraud claims, but to claims that are based on alleged misrepresentations.

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See Frith v. Guardian Life Ins. Co. of Am., 9 F. Supp. 2d 734, 742 (S.D. Tex. 1998)
(citing Williams v. WMX Techs., Inc., 112 F.3d 175, 177-78 (5th Cir. 1997)).
III.

ANALYSIS
Plaintiff’s bad faith and DTPA claims (Count 2) are based in part on alleged

misrepresentations.

See Second Amended Complaint [Doc. # 14], ¶¶ 35-36.

Plaintiff’s fraud claim (Count 3) is based on misrepresentations. See id., ¶ 39, ¶ 41.
Similarly, Plaintiff in Count 5 of the Second Amended Complaint asserts an alleged
violation of the Texas Insurance Code based on alleged misrepresentations. See id.,
¶ 46. Each of these claims, to the extent based on misrepresentations, must comply
with the pleading requirements of Rule 9(b).
Plaintiff fails to identify any allegedly false statements made by Defendant.
Instead, Plaintiff alleges that Defendant “led [its representative] to reasonably
conclude that Defendant, after a prompt review of the Lawsuit, would in fact fully
reimburse Plaintiff of all expenses associated with the defense of the Lawsuit.” See
id., ¶ 8.

Having failed in three separate pleadings to identify with adequate

particularity a false statement by Defendant, and having failed to file any opposition
to the Motion to Dismiss identifying with particularity any false statement, the fraudbased claims are dismissed.

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IV.

CONCLUSION AND ORDER
Plaintiff has failed to allege its fraud-based claim with the particularity required

by Rule 9(b), and has failed to file any opposition to Defendant’s Motion to Dismiss
those claims. As a result, it is hereby
ORDERED that Defendant’s Motion to Dismiss Fraud Claims [Doc. # 16] is
GRANTED. Plaintiff’s fraud and Insurance Code claims, and Plaintiff’s bad faith
and DTPA claims to the extent they are based on alleged misrepresentations, are
DISMISSED WITH PREJUDICE.
SIGNED at Houston, Texas, this 19th day of June, 2013.

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