American Southern Insurance Company v. Assurance Resources, Inc. et al
Filing
98
OPINION on Partial Dismissal. (Signed by Judge Lynn N Hughes) Parties notified. (ghassan, 4)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OFStates District Court
TEXAS
United
Southern District of Texas
ENTERED
American Southern Insurance Company,
Plaintiff,
versus
Assurance Resources, Inc., a a!.,
Defendants.
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May 01, 2019
David J. Bradley, Clerk
Civil Action H-I6-1382
Opinion on Partial Dismissal
1.
Background.
]NP Enterprises, lie, and Itzel Camacho settled a claim brought by Camacho against
Enterprises. Camacho brought the claim on behalf ofjesus Hernandez. Hernandez had
worked for Enterprises, and he was killed in a accident in a company car on its business.
American Southern Insurance Company paid the settlement.
Assurance Resources, Inc., issued Enterprises a policy with coverage for Enterprises
by two companies: American and Companion Life Insurance Company. Assurance was
Companion's agent.
American authorized the settlement after Assurance told it that Companion would
not be responsible for the entire settlement. Assurance told American that Companion
would pay more than half of the Camacho settlement. Later, Assurance told American that
Companion would not contribute to the settlement. Assurance said Companion's policy
did not require it to pay. American presumably paid the settlement.
Assurance and American entered an agency in 2010. The agreement had two parts:
general agency and limited agency. Under the general agency, American (a) authorized
Assurance to act as its general agent, and (b) Assurance was required to report losses to
American within 48-hours.
Once terminated, if Assurance was current on all payments owed to American, the
limited agency would become effective for a year. Under the limited agency, unlike the
general agency, Assurance could not manage or settle claims. American does not say it
terminated the general agency, so it governs.
Assurance says American's termination of the general agency became effective in
April
2.013.
Camacho filed against Enterprises in October
2.013.
Assurance did not tell
American about Camacho's claim or another claim against it until] anuary
2015.
By then,
American defaulted on the separate claims. Assurance had accepted service for the claim on
behalf of American, but it did not relay this information to American. Enterprises and
Camacho settled the Camacho claim no earlier than June
2015.
American brings a claim against Assurance on nine legal theories:
Breach of contract
Fraud
Breach of fiduciary duty
Fraud by nondisclosure
Negligence
Negligent misrepresentation
Promissory estoppel
Unjust enrichment
Civil conspiracy
2.
Breach of Contract.
American says Assurance breached its contract by not informing American of the
claims against it by Enterprises or Camacho.
American is entitled to relief for this claim. A valid, enforceable contract existed
between the parties. Under the general agency, Assurance must report any losses to
American within 48-hours. Assurance waited more than a year to report the Camacho
claim.
3.
Breacb of Fiduciary Dury.
American alleged that Assurance breached its fiduciary duty by (a) representing
false information to American about the Camacho and Enterprises lawsuits, and
(b) failing
to analyze coverage properly under the Companion policy. American is not entitled to relief
for this claim.
Under the law of economic loss, tort remedies are not available when a party does
not perform under a contract. r Assurance did not tell American about claims filed against
Southwestern Bell Telephone Co. v. DeLanney, 809 s.w.2d 493,494 (Tex. 1991); Sharyland Water Supp!y
Corp. v. Ci~ of Alton, 354 s.w·3d 407 (Tex. WII).
1
it when it was required to do so. If American paid more than it should have, the source of
its injury is its contract with Assurance.
American says that the only explanation Assurance gave it for why Companion did
not have to pay is that it reasoned Companion's policy did not require it to; however, not
giving an explanation when required to does not mean Assurance did not properly analyze
the policy. American's complaint does not specify whether American paid the settlement.
Assuming American did, if it was already required to pay the settlement under its policy,
it cannot have been injured. Assurance is a third party administrator. No general fiduciary
duty is imposed on Assurance; its only duties are those in the contract. 2 American has not
sufficiently identified a source of Assurance's duty independent of the duties it owed
American under the general agency.
4.
Negligence.
American alleged that Assurance negligently administered the claims in the
Camacho claim by negligently communicating (a) information about the status of the claim
to American, and (b) whether Companion would contribute to the settlement. American
is not entitled to relief for this claim.
Under the general agency, Assurance had a duty to manage, process, and settle
claims to the best of its knowledge, skill, and judgment. If Assurance did not manage the
Camacho claim to the best of its knowledge, skill, and judgment, it breached the general
agency. If American paid more than it thinks it should have because of what Assurance told
it, the source of its injury is its contract with Assurance.
Assurance did not tell American about the Camacho claim. Assurance's duty to tell
American about the Camacho claim does not exist without the general agency. American
has not pleaded an extra-contractual duty it was owed that Assurance breached.
5.
Promissory Estoppel.
American alleged that (a) Assurance made promises to American that Assurance
would act as an agent in American's best interest, (b) it was reasonable and foreseeable that
National Plan Administrators, Inc. v. National Health Insurance, Co., 235 s.w·3d 695, 700
(Tex. 2007).
2
American would rely on this promise, and (c) American relied on Assurance's promise to
its detriment.
Assurance told American that Companion would not contribute to the settlement
after first saying Companion would. American does not specify when the parties settled. It
has not shown whether American relied on Assurance's statement that Companion would
contribute greater than half. American's complaint does not specify whether American paid
the settlement. Assuming American did, if it was already required to pay the settlement
under its policy, it cannot have been injured. The report was not a direct commitment nor
was it a promise of performance of Companion's settlement by Assurance.
6.
Fraud.
American alleged that:
(a) Assurance fraudulently represented to American that Companion would
contribute to the settlement without a full analysis of the Companion policy's
coverage or any evidence supporting an exclusion under it;
(b) Assurance knew what it told American about Companion contributing was
false;
(c) Assurance said what it said to induce American into settling the Camacho
claim;
(d) American reasonably relied upon what Assurance said to its detriment; and
(e) this reliance injured American.
American is not entitled to relief for this claim. Under the general agency,
Assurance had a duty to manage, process, and settle claims to the best of its knowledge,
skill, and judgment. If Assurance did not manage the Camacho claim to the best of its
knowledge, skill, and judgment by not fully analyzing Companion's coverage, it breached
the general agency. If American paid more than it should have because of what Assurance
told it, the source of its injury is its contract with Assurance.
American says Assurance was Companion's agent, and Assurance never gave
American a report about why it thought Companion's coverage exempted it from the
settlement. American figures a lack of explanation means Assurance's analysis was false.
Not fully analyzing coverage is different than knowing the information to be false. American
has also not shown whether it relied on Assurance's statements about what Companion
told it. American is a corporation. Corporations do not rely on information. People rely on
information. American has not said who relied on the information. American does not
specify when the parties settled. It has not shown whether American relied on Assurance's
reporting that Companion would contribute greater than half. American's complaint does
not specify whether American paid the settlement. AssumingAmerican did, if it was already
required to pay the settlement under its policy, it cannot have been injured.
7.
Fraud by Nondisclosure.
American alleged fraud by nondisclosure because (a) Assurance owed American a
duty to disclose information about the Camacho claim and Assurance did not disclose this
information, (b) the nondisclosure mislead American, and (c) American paid when it was
not obliged to pay. American is not entitled to relief for this claim.
The general agency required Assurance to report all losses to American within 48hours after it received notice of the loss. Assurance waited longer than 48-hours to tell
American about the Camacho claim. If American paid more than it should have because of
what Assurance did not tell it, the source of its injury is its contract with Assurance.
American has not established that it settled - only that Enterprises and Camacho
agreed upon a settlement. Without settling, the nondisclosure could not have mislead
American. Even if they settled, if American was already required to pay under its policy, it
cannot have been injured.
8.
Negligent Misrepresentation.
American alleged that Assurance (a) failed to exercise reasonable care or
competence in obtaining the information it communicated to American, and (b) American
relied on the Assurance's message that Companion would pay part of the settlement.
American is not entitled to relief for this claim.
Under the general agency, Assurance had a duty to manage, process, and settle
claims to the best of its knowledge, skill, and judgment. If Assurance did not manage the
Camacho claim to the best of its knowledge, skill, and judgment by changing what it told
American concerning Companion, it breached the contract. If American paid more than it
should have because of what Assurance told it, the source of its injury is its contract with
Assurance.
American says that Assurance did not provide it a copy of its analysis for why the
Companion coverage did not apply and that its analysis was false. American argues a causal
connection. However, one does not prove the other. Telling someone something at one
time and something else at another time does not mean what the person said before was
true and later false. It only shows that the person's position changed. Assurance first told
American that Companion would pay. Later it told American that Companion would not
have to pay based on an exclusion in its policy. This change does not establish whether
Assurance was wrong about Companion's policy. American has not pleaded facts showing
how Assurance's judgment about Companion's policy was wrong.
9.
Unjust Enrichment.
American alleged that Assurance was unjustly enriched because American paid
Assurance or that Assurance provided services to American's detriment. American is not
entitled to relief for this claim.
Unjust enrichment is a remedy for quasi-contract. If there is an express contract,
there cannot be unjust enrichment. 3 American complains Assurance was unjustly enriched
under the terms of the general or limited agreement. American shows a contract already
covers American's complaint. American does not allege an injury outside of the contract
it entered into with Assurance. Assurance did not trick American into anything.
10.
Civil Conspiracy.
American alleged that Assurance participated in a civil conspiracy because
Assurance, along with its president and others, held the common purpose of being enriched
by receiving income while avoiding payment of the claim. This bathtub conspiracy claim
has no merit.
American says that Companion did not contribute because its coverage did not
obligate it to. This is a contract claim, not a conspiracy.
I I .
Conclusion.
This case is based on American relaying something that someone else said.Under
the contract, Assurance was the general and limited agent of American. While the parties
3
Fortune Products Co.
'V.
Conoeo, Inc.,
52
s.w.3d 67I, 684 (Tex.
-6-
2000).
disagree on the date the general agency was terminated, the court must accept American's
contention that Assurance was the general agent in October
2.013.
Because the contract
requires Assurance to notify American of any losses within 48-hours, and because
Assurance did not notify American, the breach of contract claim survives.
While American's complaint omits facts to support claims for securities fraud and
racketeering, it uses the same facts to allege nine legal theories. The facts do not support
securities fraud or racketeering, nor is American Southern Insurance Company able to
support the eight other theories against Assurance Resources, Inc. American's claims of (a)
breach of fiduciary duty; (b) negligence; (c) promissory estoppel; (d) fraud; (e) fraud by
nondisclosure;
(D negligent misrepresentation; (g) unjust enrichment; and (h) civil
conspiracy must be dismissed.
Signed on
Aprh~, 2.019, at Houston, Texas.
Lynn N. Hughes
United States DistrictJudge
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