Johnson v. Allstate Vehicle and Property Insurance Company, et al

Filing 11

MEMORANDUM OPINION AND ORDER DENYING 5 Opposed MOTION to Remand. Plaintiff's claims against defendant Arnold are DISMISSED without prejudice. Wesley Arnold terminated.(Signed by Judge Gray H Miller) Parties notified.(rkonieczny, 4)

United States District Court
Southern District of Texas

ENTERED
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
HOWARD JOHNSON II,
Plaintiff,
v.
ALLSTATE VEHICLE and PROPERTY
INSURANCE COMPANY, JAMES BURT,
and WESLEY ARNOLD
Defendants.

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July 13, 2017
David J. Bradley, Clerk

CIVIL ACTION H-17-1206

MEMORANDUM OPINION AND ORDER
Pending before the court is plaintiff Howard Johnson II’s motion to remand. Dkt. 5. Having
considered the motion, response, complaint, and the applicable law, the court is of the opinion that
the motion should be DENIED.
I. BACKGROUND
This is an insurance dispute between Johnson and defendants Allstate Vehicle and Property
Insurance Company (“Allstate”), James Burt, and Wesley Arnold (collectively, Defendants). In 2015,
Johnson purchased an Allstate House & Home Policy (the “Policy”), insuring his property at 7691
Ameswood Road, Houston, Texas 77095 (the “Property”). Dkt. 1-1 at 9. Johnson purchased the
Policy from Arnold, who is an insurance agent for Allstate. Id. Johnson alleges that prior to
purchasing the Policy, Arnold represented to him that the Policy included hail and windstorm
coverage. Id. Allstate responds that the Policy plainly covers windstorm and hail damage unless the
damage is to the Property’s interior that is not the result of a storm-created opening. Dkt. 5-4 at 24.

The Policy states:
SECTION 1 – LOSSES WE COVER UNDER COVERAGES A, B AND C:
We will cover sudden and accidental direct physical loss to the property described in
Dwelling Protection-Coverage A, Other Structures Protection-Coverage B or Personal
Property-Coverage C caused by the following, except as limited or excluded in this
policy:
2. Windstorm or hail.
We do not cover:
a)

Loss to covered property inside a building structure, caused by rain,
snow, sleet, sand or dust unless the wind or hail first damages the roof
or walls and the wind forces rain, snow, sleet, sand or dust through the
damaged roof or wall.

Dkt. 5 at 5, Ex. D.
On or about April 17, 2016, the Property sustained damage from a storm.1 Dkt 1-1 at 9.
Johnson submitted a claim to Allstate against the Policy for damage to the Property. Id. at 10.
Allstate then assigned or hired Burt to adjust the claim. Id. On or about September 16, 2016, Burt
inspected Johnson’s Property, and found $190.24 in covered damage.2 Id. at 10. Johnson claims that
Burt’s assessment undervalued the amount of damage to the property and that Burt misrepresented
the cause of damage to the Property. Id. Johnson claims that the damage to the Property is estimated
at $32,551.73. Id.

1

Johnson asserts that the damage to the property includes, but is not limited to the roof, vents,
flashings, windows, window screens, fascia, gutters, downspouts, and HVAC system. Dkt. 1-1 at
9.
2

Johnson asserts that in a partial denial letter dated the same day as the inspection, Burt
claimed that there was no storm-created opening on the roof, and that there were flashing issues and
issues with the siding that appear to be contributing to the interior water damage.
2

On March 14, 2017, Johnson filed suit against Defendants in the 133rd Judicial District Court
of Harris County, Texas. Id. at 1. Johnson asserts causes of action (1) against Arnold for violations
of the Texas Deceptive Trade Practices Act (“DTPA”), the Texas Insurance Code, and common law
fraud; (2) against Allstate for breach of contract, breach of the duty of good faith and fair dealing,
fraud, and violations of the DTPA and Texas Insurance Code; and (3) against Burt for fraud,
negligence, gross negligence, and violations of the DTPA and the Texas Insurance Code. Id. at 13–23
(citing Tex. Bus. & Com. Code Ann. § 17.41–63, § 17.50 (West 2017), Tex. Ins. Code Ann. § 541–
42 (West 2017); Tex. Civ. P. & Rem. Code § 41.001(11)(A)-(B) (West 2017)).
On April 18, 2017, Allstate and Arnold removed the case to federal court on the basis of
diversity jurisdiction. Id. at 1. On May 1, 2017, Johnson filed a motion to remand. Dkt. 5. On May
19, 2017, Defendants responded. Dkt. 10.
II. LEGAL STANDARDS
A.

Removal
A defendant may remove an action to federal court in instances where the court would have

original jurisdiction over the case. 28 U.S.C. § 1441 (2012). Subject matter jurisdiction based on
diversity requires that (1) complete diversity exists among the parties, and (2) the amount in
controversy exceeds $75,000. 28 U.S.C. § 1332. A case may be removed despite the presence of a
non-diverse defendant if that defendant has been improperly joined, i.e., without a legal basis to do
so. Hornbuckle v. State Farm Lloyds, 385 F.3d 538, 542 (5th Cir. 2004). As the removing party, the
defendant bears the “heavy burden” of demonstrating improper joinder. Travis v. Irby, 326 F.3d 644,
649 (5th Cir. 2003). To meet this burden, the party seeking removal must demonstrate that “there is
no reasonable basis for the district court to predict that the plaintiff might be able to recover against
the in-state defendant.” McDonal v. Abbott Labs., 408 F.3d 177, 183 (5th Cir. 2005) (citations
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omitted). The statutory right to removal is strictly construed because “removal jurisdiction raises
significant federalism concerns.” Willy v. Coastal Corp., 855 F.2d 1160, 1164 (5th Cir. 1998).
Accordingly, any doubt about the propriety of removal “must be resolved in favor of remand.” Gasch
v. Hartford Accident & Indem. Co., 491 F.3d 278, 281–82 (5th Cir. 2007).
“A non-diverse defendant may be found to be improperly joined if the plaintiff fraudulently
pled the jurisdictional facts or if the removing defendant demonstrates that the plaintiff cannot
establish a cause of action against the non-diverse defendant.” Robinson v. Allstate Tex. Lloyds, No.
H-16-1569, 2016 WL 3745962, at *1 (S.D. Tex. July 13, 2016) (Atlas, J.); see also Int’l Energy
Ventures Mgmt., L.L.C. v. United Energy Grp., Ltd., 818 F.3d 193, 199 (5th Cir. 2013). Here,
Defendants assert only the second basis for improper joinder, which requires the court to determine
whether Johnson has pled any viable claims against Arnold. Smallwood v. Ill. Cent. R.R. Co., 385
F.3d 568, 573 (5th Cir. 2004) (en banc). To establish improper joinder under the second basis, the
court must find that “there is no reasonable basis for the district court to predict that the plaintiff
might be able to recover against an in-state defendant.” Id. Therefore, Defendants have the heavy
burden of establishing that Johnson has failed to meet the federal pleading standard on every claim
asserted against Arnold. Willy, 855 F.2d at 1164 (5th Cir. 1998).
B.

12(b)(6) Standard
To demonstrate that Johnson failed to meet the federal pleading standard, the court performs

a Rule 12(b)(6)-type analysis or by “piercing the pleadings” in a summary judgment-like inquiry.
Smallwood, 385 F.3d at 573–74. In a 12(b)(6)-type analysis, a federal court must look to the original
state court pleading but apply the federal pleading standard. Int’l Energy Ventures Mgmt., 818 F.3d
at 205.

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“In considering 12(b)(6) motions, courts generally must 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). 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). “[A] complaint attacked by a Rule 12(b)(6) motion to dismiss
does not need detailed factual allegations, [but] a plaintiff's obligation to provide the ‘grounds’ of his
‘entitle[ment] to relief’ requires more than labels and conclusions, and a formulaic recitation of the
elements of a cause of action will not do.” Twombly, 127 S. Ct. at 1964-65 (citing Sanjuan v. Am.
Bd. of Psychiatry and Neurology, Inc., 40 F.3d 247, 251 (7th Cir. 1994)) (internal citations omitted).
And, “[f]actual allegations must be enough to raise a right to relief above the speculative level.” Id.
at 1965 (supporting facts must be plausible—enough to raise a reasonable expectation). The
supporting facts must be plausible—enough to raise a reasonable expectation that discovery will
reveal further supporting evidence. Id. at 556. If “a complaint shows on its face that it is barred by
an affirmative defense, a court may dismiss the action for failing to state a claim.” Aspen Specialty
Ins. Co. v. Muniz Eng’g, Inc., 514 F. Supp. 2d 972, 980 (S.D. Tex. 2007) (Harmon, J.) (citing Kaiser
Aluminum & Chem. Sales v. Avondale Shipyards, 677 F.2d 1045, 1050 (5th Cir. 1982)). Ultimately,
“if a plaintiff can survive a 12(b)(6) challenge, there is no improper joinder.” Smallwood, 385 F.3d
at 573.
C.

Summary Inquiry Standard
In some cases, a court may use its discretion to further pierce the pleadings and conduct a

summary judgment-type inquiry to “identify the presence of discrete and undisputed facts that would
preclude plaintiff’s recovery against the in-state defendant.” Id. at 573–74. This type of inquiry is
appropriate when the plaintiff has stated a claim but has misstated or omitted facts that would
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determine the propriety of joinder.3 Id. at 573. Additionally, “the focus of the inquiry must be on the
joinder, not the merits of the plaintiff’s case.” Id.; see also Holmes v. Acceptance Cas. Ins. Co., 942
F.Supp. 2d. 637, 644 (E.D. Tex. 2013) (Crone, J.) (“The court, however, must carefully distinguish
an attack on the overall merits of the case from a showing that defendants were improperly joined in
order to defeat diversity.”). In this case, Allstate has presented summary judgment-type evidence in
the form of an affidavit taken from Arnold. Dkt. 10-1. This affidavit disputes Johnson’s allegations
that misrepresentations about the scope of the Policy’s coverage were made. Dkt. 10-1. A summary
judgment-type analysis based on this affidavit is not appropriate here because Arnold’s contradicting
evidence would not serve to identify “discrete and undisputed facts.” Smallwood, 385 F.3d at 573.
Therefore, the court’s inquiry will center on a Rule 12(b)(6)-type analysis to determine if Johnson’s
claims against Arnold meet the federal pleading standard.
III. ANALYSIS
It is undisputed that diversity of citizenship exists between Johnson and defendants Allstate
and Burt. Dkt. 1 at 2; Dkt. 5. Allstate is a foreign organization incorporated pursuant to the laws of
the State of Illinois and does not have its principal place of business in the State of Texas. Dkt. 1 at
2. Burt is an individual resident of Grove, Oklahoma. Id. It is also undisputed that Johnson and
Arnold are both residents of Texas. Id. The parties agree that the amount in controversy exceeds
$75,000. Id. Johnson contends that remand is appropriate because his claims against Arnold, the

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While the court has the discretion to choose between the two tests, “the summary inquiry
is appropriate only to identify the presence of discrete and undisputed facts that would preclude
plaintiff’s recovery against the in-state defendant.” Smallwood, 386 F.3d at 573–74. Examples of
when a summary inquiry is appropriate include: “the in-state doctor defendant did not treat the
plaintiff patient, the in-state pharmacist defendant did not fill a prescription for the plaintiff patient,
a party’s residence was not alleged, or any other factor that can easily be disproved if not true.” Id.
at 574 n.12 (citing Irby, 326 F.3d at 648–49).
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non-diverse defendant, are sufficiently well-pled and thus destroy the court’s subject matter
jurisdiction. Id. at 6–7. Defendants counter that this case should remain in federal court because
Arnold was improperly joined. Dkt. 10. Defendants argue that the claims against Arnold should be
dismissed because (1) Johnson’s claims are conclusory and not sufficient to survive a 12(b)(6)
dismissal, and (2) Johnson’s alleged misrepresentation is not actionable. Dkt. 10. Therefore, the
court will examine the Defendants’ arguments and determine whether “there is no reasonable basis
for the district court to predict that the plaintiff might be able to recover against an in-state
defendant.” Smallwood, 385 F.3d at 573.
A.

The Sufficiency of Johnson’s Claims Against Arnold
Johnson alleges that Arnold’s conduct in selling the Policy to him violates (1) the DTPA, (2)

the Texas Insurance Code, and (3) constitutes a claim for common law fraud. Dkt. 1-1. The court
will (1) examine the elements Johnson needs to allege under the DTPA, the Texas Insurance Code,
and common law fraud and (2) conduct a 12(b)(6) analysis on Johnson’s allegations to determine if
they are sufficient to state a claim.
1. DTPA, Texas Insurance Code, and Common Law Fraud
To state a valid claim under the DTPA, Johnson must show that (1) he is a consumer, (2) that
the defendant engaged in false, misleading, or deceptive acts, and (3) that those acts were a producing
cause of his damages.” Tex. Bus. & Com. Code Ann. § 17.50(a)(1). The DTPA defines a consumer
as “ The DTPA defines a “consumer” as “an individual ... who seeks or acquires by purchase or lease,
any goods or services.” § 17.54(4). “Purchase of an insurance policy is the purchase of a service
within the meaning of the Texas DTPA.” Webb v. UnumProvident Corp., 507 F. Supp. 2d 688, 678
(W.D. Tex. 2005) (citing 3Z Corp v. Stewart Title Guar. Co., 851 S.W.2d 933, 937
(Tex.App.—Beaumont 1993, no writ)). Thus, Johnson is a consumer under the terms of the DTPA
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and can bring suit for any violations of the DTPA connected to his purchase of his Policy.
“Both the Texas Insurance Code and the Texas Deceptive Trade Practices Act permit a private
cause of action against ‘any person’ who commits one of the prohibited acts or practices.” Griggs
v. State Farm Lloyds, 181 F.3d 694, 701 (5th Cir. 1999); see also Tex. Ins. Code Ann. § 541.002(b);
Tex. Bus. & Com. Code Ann. § 17.50. “Texas courts [recognize] that the statutory language is broad
enough to permit in the appropriate circumstances a cause of action against an insurance agent who
engages in unfair or deceptive acts or practices.” Griggs, 181 F.3d at 701 (citing Liberty Mut. Ins.
Co. v. Garrison Contractors, Inc., 966 S.W.2d 482 (Tex. 1998) and State Farm Fire & Cas. Co. v.
Gros, 818 S.W.2d 908 (Tex. App.—Austin 1991, no writ)). Therefore, Arnold, Allstate’s agent, can
be held liable under the DTPA and the Texas Insurance Code.
The DTPA prohibits “the use or employment by any person of a false, misleading, or
deceptive act or practice that is: (1) [a] breach of an express or implied warranty; (2) any
unconscionable action or course of action by any person; [and] (3) the use or employment by any
person of an act or practice in violation of Chapter 541, Insurance Code.” Tex. Bus. & Com. Code
Ann. § 17.50. Furthermore, “[the DTPA] enumerates various, nonexclusive, conduct that can
constitute false, misleading, or deceptive practices — the so called ‘laundry list violations’ contained
in [section] 17.46(b).”4 Tsao, 2017 WL 746451, at *8.

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Johnson maintains that Arnold’s representations about the Policy violate four specific
provisions of section 17.46 of the DTPA: (1) “causing confusion or misunderstanding as to the
source, sponsorship, approval, or certification of goods or services;” (2) “representing that goods or
services have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities which
they do not have or that a person has sponsorship, approval, status, affiliation, or connection which
the person does not;” (3) “representing that an agreement confers or involves rights, remedies, or
obligations which it does not have or involve, or which are prohibited by law;” (4) “representing that
a guaranty or warranty confers or involves rights or remedies which it does not have or involve.”
Dkt. 1-1 at 22 (citing Tex. Bus. & Com. Code Ann. § 17.46).
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Section 541.051 of the Texas Insurance Code prohibits “mak[ing], issu[ing], or circulat[ing],
or caus[ing] to be made, issued, or circulated an estimate, illustration, circular, or statement
misrepresenting with respect to a policy issued or to be issued: (1) the terms of the policy; [or] (2) the
benefits or advantages promised by the policy.” Tex. Ins. Code Ann. § 541.051(1)(a)–(b).
Johnson also alleges that all of Arnold’s acts, omissions, or failures were committed
“knowingly” and “intentionally” as defined by the DTPA and the Texas Insurance Code. Dkt.1-1 at
23.
Finally, the elements of fraud under Texas law are: “(1)a [material] misrepresentation that (2)
the speaker knew to be false or made recklessly (3) with the intention to induce the plaintiff’s
reliance, followed by (4) actual and justifiable reliance (5) causing injury.” Rio Grande Royalty Co.
v. Energy Transfer Partners. L.P., 620 F.3d 465, 468 (5th Cir. 2010).
2. 12(b)(6) Analysis
Johnson’s allegations must feature more than labels and conclusions. See Twombly, 550 U.S.
at 555 (“Courts ‘are not bound to accept as true a legal conclusion couched as a factual allegation.’”)
(quoting Papasan v. Allain, 478 U.S. 265, 286, 106 S. Ct. 2932 (1986)). The bulk of Johnson’s
allegations against Arnold merely tracks the statutory language of the relevant provisions of the
DTPA and the Texas Insurance Code without alleging any case-specific facts. See, e.g., Dkt. 1-1 at
22 (“By Arnold’s acts and omissions, failures, and conduct, Arnold violated sections 17.46(b)(2) and
17.46(b)(5) of the DTPA; Arnold’s violations include causing confusion as to the policy benefits and
representing that the Policy had benefits or characteristics that it did not possess;” “The conduct, acts,
omissions, and failures of Arnold are unfair practices in the business of insurance in violation of
section 17.50(a)(4) of the DTPA.”); see also Mt. Olive Missionary Baptist Church v. Underwriters
at Lloyd’s London, No. CV H–16–234, 2016 WL 4494439, at *3 (S.D. Tex. Aug. 26, 2016) (Miller,
9

J.) (citing Okenkpu v. Allstate Texas Lloyd’s, CV H–16–234, 2016 WL 4494439, at *7 (S.D. Tex.
Mar. 27, 2012) (Harmon, J.) (collecting cases)). Johnson’s formulaic recitation of the statutory
language in these allegations is insufficient to fulfill his obligation to provide the grounds on which
he is entitled to relief. Twombly, 550 U.S. at 555.
Nonetheless, after separating the legal conclusions, one factual allegation remains which the
court must assume is true for the purpose of this analysis: When Arnold sold the Policy to Johnson,
Arnold misrepresented that the Policy afforded benefits in the form of payment for hail and wind
damages, when it did not. Dkt. 1-1 at 16–18. The court will assume this is true and determine
whether it “plausibly give[s] rise to an entitlement to relief.” Iqbal, 556 U.S. at 678–79.
Because Johnson’s remaining claim is based on a misrepresentation, he “must state with
particularity the circumstances constituting fraud or mistake.” Fed. R. Civ. P. 9(b); Dorsey v.
Portfolio Equities, Inc., 540 F.3d 333, 339 (5th Cir. 2008). “Put simply, Rule 9(b) requires the
complaint to set forth the ‘who, what, when, where, and how’ of the events at issue.” Dorsey, 540
F.3d 339. Johnson’s claims alleging misrepresentation in violation of the DTPA and the Texas
Insurance Code are also subject to the heightened pleading requirements of Rule 9(b). Lone Star
Ladies Inv. Club v. Schlotzsky’s, Inc., 238 F.3d 363, 368 (5th Cir. 2001) (“Rule 9(b) applies by its
plain language to all averments of fraud, whether they are part of a claim of fraud or not.”) (citations
omitted).
Defendants refer the court to Waters v. State Farm Mutual Auto Insurance Co., 158 F.R.D.
107 (S.D. Tex. 1994) (Harmon, J.) to argue that Johnson’s claims of misrepresentation or common
law fraud against Arnold are conclusory because Johnson’s pleadings fail to specify a time, place, or
the content of any alleged misrepresentation. Dkt. 1 at 5. In Waters, the insured sued his insurer and
the insurer’s agent who had written the insured’s policy to recover benefits. Id. at 108. In addition,
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the insured alleged fraud and violations of the DTPA and of the Texas Insurance Code. Id. The
insured merely alleged that the insurer’s agent made a misrepresentation about the benefits of an
insurance policy when the agent sold the policy to the insured. Id. The insured’s counsel stated in
a letter that he did not know of any evidence linking the insurance agent to a material
misrepresentation, but that he suspected the evidence would show that the insurance agent had made
a misrepresentation. Id. The Waters court found this allegation insufficient and that more specific
facts were required for a claim of fraud under Rule 9(b). Id.
By contrast, Johnson does not merely plead that Arnold made a general misrepresentation
about the policy’s coverage, as was the case in Waters. Id. Johnson specifically alleges that when
he purchased his Policy, Arnold misrepresented to him that the Policy included hail and windstorm
coverage for the his home; yet, once Allstate interpreted the Policy, coverage was largely denied.
Dkt. 1-1. Johnson claims that the denial damaged him because he did not receive his expected
insurance payment. Dkt.1-1 at 9. Johnson’s allegations are more specific because they identify who
made the misrepresentation, the contents of the misrepresentation, and why the misrepresentation was
false. Johnson does not expressly allege time and place in his complaint, but it is fair to infer that this
alleged misrepresentation took place when Johnson purchased the Policy at Arnold’s place of
business. Dkt. 1-1; See U.S. ex. rel. Grubbs v. Kanneganti, 565 F.3d 180, 188 (5th Cir. 2009)
(quoting Williams v. WMX Techs., Inc., 112 F.3d 175, 178 (5th Cir. 1997)) (“‘Rule 9(b)’s ultimate
meaning is context-specific,’ and thus there is no single construction of Rule 9(b) that applies in all
contexts.”).
B.

Actionable Misrepresentation
Second, the Defendants also argue that the alleged misrepresentation is not actionable.

Defendants argue that there was no affirmative misrepresentation and Johnson’s reliance on Arnold’s
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alleged misrepresentation was not justifiable due to the express terms of the Policy.5 Defendants do
not expressly identify what “affirmative misrepresentations” Johnson failed to allege, but the court
will examine (1) whether there was a misrepresentation which induced Johnson to purchase the
policy, and (2) whether Johnson’s reliance on the misrepresentation about the scope of windstorm and
hail coverage was justifiable.
1. Inducement
“Before any misrepresentation can be said to be actionable, it must have induced the
purchase.” Tsao, 2017 WL 746451, at *9. Here, the court finds that Johnson’s claim is too vague to
meet his burden of specificity under Rule 9(b) because there are no allegations suggesting that
Johnson relied on Arnold’s misrepresentation in connection with Johnson’s decision to purchase the
Policy. Johnson argues that whether Arnold actually made misrepresentations, whether the Policy
actually did include windstorm and hail coverage, and whether he might actually recover from Arnold
are all immaterial questions. Dkt. 5 at 6 (citing to Sanders v. Sentry Insurance a Mutual Insurance
Co., No. 5:16-CV-00164-C (N.D. Tex. Aug. 23, 2016)). In Sanders, another insurance case that
joined an insurance agent for misrepresentation, the court granted an motion to to remand. Dkt. 5,
Ex. C. However, in Sanders, the plaintiff alleged that but for the insurance agent’s misrepresentation
about the scope of the insurance policy, the plaintiff would not have purchased the policy. Id.; see
Dkt. 5-3 at 5 (emphasis added). A but-for allegation connecting the defendant’s deceptive conduct
with the consumer transaction is absent in Johnson’s complaint. Dkt. 1-1. The bare allegation that

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Defendants also argue that even if Johnson’s claims are sufficiently specific, representations
that “everything is covered” are not actionable.” Dkt. 10 at 7–11. Johnson never alleged that Arnold
said “everything is covered,” so the court will not consider this argument. Dkt. 1-1.
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Arnold misrepresented the scope of Johnson’s windstorm and hail coverage is not sufficient to show
that the misrepresentation induced the purchase. See Tsao, 2017 WL 746451, at *9.
2. Justifiable Reliance
Furthermore, under Texas Law, the claimant must show his reliance on the alleged
misrepresentation was justifiable. Lewis v. Bank of Am. NA, 343 F.3d 540, 546 (5th Cir. 2003)). “A
fraud plaintiff ‘cannot recover if he blindly relies upon a misrepresentation the falsity of which would
be patent to him if he had utilized his opportunity to make a cursory examination or investigation.’”
Lewis, 343 F.3d at 546 (quoting Field v. Mans, 516 U.S. 59, 70–71, 116 S.Ct. 437 (1995)).
Therefore, reliance “upon an oral representation that is directly contradicted by the express,
unambiguous terms of a written agreement between the parties is not justified as a matter of law.”
Mae v. U.S. Prop. Sols., LLC, No. CIV.A. H-08-3588, 2011 WL 66161, at *6 (S.D. Tex. Jan. 10,
2011) (Miller, J.) (quoting DRC Parts & Accessories, L.L.C. v. VM Motori, S.P.A., 112 S.W.3d 854,
858 (Tex. App–Houston [14th Dist.] 2002, pet. denied) (internal quotations omitted)).
Defendants argue that because Johnson’s policy expressly covers windstorm and hail damage
(though with an exclusion for interior damage that is not the result of a storm-created opening) that
Johnson’s reliance on Arnold alleged representation is barred. Dkt. 10 at 7. Indeed, Johnson makes
no allegation that Arnold made an affirmative misrepresentation about the meaning of the Policy’s
windstorm and hail exclusion.

See Wyly v. Integrity Ins. Sols., 502 S.W.3d at 909, 912

(Tex.App.—Houston [14th Dist.] 2016, no pet.) (holding that an insured is deemed to know the
contents of the insured’s insurance policy unless the insured alleges an affirmative misrepresentation
that would conflict with those terms). Therefore, because there is no alleged misrepresentation about
the meaning of the Policy’s windstorm and hail exclusion and the terms of the Policy expressly cover
windstorm and hail damage, Johnson’s reliance on Arnold’s misrepresentation is unjustifiable.
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Defendants also cite the“mistaken belief” rule to argue Johnson’s reliance on Arnold’s alleged
misrepresentation are unactionable. Dkt. 10. “In the absence of some specific misrepresentation . . .
a policyholder’s mistaken belief about the scope or availability of coverage is not generally actionable
under the DTPA.” Moore v. Whitney–Vaky, 966 S.W.2d 690, 692 (Tex.App.—San Antonio 1998,
no pet.). Johnson does not allege any specific facts about why Arnold’s misrepresentation warped
his understanding of the express terms of the policy or of the exclusion to windstorm and hail
coverage. Dkt. 1-1.
In sum, Johnson’s allegations feature more details than a general allegation of
misrepresentation. Yet, Johnson’s misrepresentation allegations are not actionable because: (1) the
bare allegation that Arnold misrepresented the scope of Johnson’s windstorm and hail coverage is not
sufficient to show that Arnold’s misrepresentation induced the purchase, and (2) because there is no
alleged misrepresentation about the meaning of the Policy’s windstorm and hail exclusion and the
terms of the Policy expressly cover windstorm and hail damage. Therefore, Johnson’s reliance on
Arnold’s alleged misrepresentation is unjustifiable. Therefore, as currently pled, Johnson’s original
petition fails to state any actionable claims for common-law fraud, misrepresentation under the
DTPA, or misrepresentation under the Texas Insurance Code against Arnold.
Accordingly, the court finds that Defendants have met their heavy burden to show that Arnold
was improperly joined because Johnson fails to state a claim against Arnold. Therefore, the court has
“no reasonable basis to predict” that Johnson might be able to recover against Arnold. Smallwood,
385 F.3d 573. Johnson’s claims against Arnold are DISMISSED WITHOUT PREJUDICE. Because
there is complete diversity between Arnold and defendants Allstate and Burt, Johnson’s motion to
remand is DENIED.

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IV. CONCLUSION
Based on the foregoing, Johnson’s motion to remand (Dkt. 5) is DENIED and Johnson’s
claims against Arnold are DISMISSED WITHOUT PREJUDICE.
Signed at Houston, Texas on July 13, 2017.

___________________________________
Gray H. Miller
United States District Judge

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