Allegations Of Fraud Against An Insurance Company

Allegations of fraud against an insurance company must be specific when a case is in Federal Court.  This is illustrated in a recent case from the Western District of Texas, San Antonio Division.  The case is styled, Maria Quintero v. Allstate Vehicle And Property Insurance Company.

The claim against Allstate arises from a hail and windstorm that is alleged to have caused property damage to Maria.  The assertion is that Allstate breached the insurance contract, misrepresentation, and fraud arising under the Texas Insurance Code.

Allstate filed a motion to dismiss based on Maria’s failure to satisfy the heightened pleadings standards under Rule 9(b) and the general pleading standards under Rule 8.

Maria did not respond to the motion to dismiss.

To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.  A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.  Although a complaint does not need detailed factual allegations, the allegations must be enough to raise a right to relief above the speculative level.  The allegations pleaded must show more than a sheer possibility that a defendant has acted unlawfully.

A claim should not be dismissed unless the court determines that it is beyond doubt that the plaintiff cannot prove a plausible set of facts that support the claim and would justify relief.

The U.S. Fifth Circuit has clarified that Rule 9 requires the plaintiff to plead the “who, what, when, where, and how” of the alleged fraud.

Allstate challenges the sufficiency of Maria’s allegations as to her misrepresentation and fraud claims arising under the Texas Insurance Code.  The requirements of Rule 9(b) apply to all cases where the gravamen of the claim is fraud even though the theory supporting the claim is not technically termed fraud.”  Texas district courts apply the heightened pleading requirements of Rule 9(b) to claims under the Texas Insurance Code where such claims are “substantively identical” to a claim of fraud.

The only factual allegation regarding any misrepresentation contained in Maria’s Amended Complaint is that Allstate sent Maria two letters (dated August 6, 2018 and March 26,2019) misrepresenting the extent of damage to her property and that the policy at issue provided coverage for some but not all of the damage.  Maria contends that this conduct constituted knowing and reckless false representations in violation of Section 541.060(a) of the Texas Insurance Code.  Although Maria identifies the date of the alleged misrepresentations, she does not provide any other details regarding the misrepresentation.  Nor does she attach the letters.  In short, Maria’s allegations are too vague and conclusory to satisfy the heightened pleading standard as set forth in Rule 9(b) and the related case law.

Allstate’s motion to dismiss was granted.