Allegations Of Insurance Company Fraud

When suing an insurance company for insurance fraud, especially in Federal Court, the insured needs to plead with specificity.  This is illustrated in a 2019, opinion from the Southern District of Texas, Laredo Division.  The opinion is styled, Salvador Aviles v. Allstate Fire and Casualty Insurance Company.

Aviles had a homeowners policy with Allstate when he sustained severe wind and/or hailstorm damage.  A disagreement arose as to the extent and amount of damages.

Aviles filed suit in State Court alleging fraud under the Texas Insurance Code, among other causes of action.  Allstate removed the case to Federal Court and thereafter filed a motion for partial dismissal of the fraud claims citing Federal Rules of Civil Procedure, 12(b)(6) and Rule 9(b).

Rule 12(b)(6) requires that a pleading have enough facts to state a claim to which relief is plausible on its face.  Federal Rule 8(a)(2) provides the general requirement for pleadings in Federal Court: Each cause of action must include a short and plain statement of the claim showing that the pleader is entitled to relief.  While the complaint need not contain detailed factual allegations, it must set forth more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.

Rule 9(b) provides that when alleging fraud that a party must allege with particularity the circumstances constituting fraud.  At a minimum the party must allege the particulars of [1] time, [2] place, and [3] contents of the false representations, as well as [4] the identity of the person making the representation and [5] what that person obtained thereby.

Aviles misrepresentation claim are under Texas Insurance Code, Section 541.060(a)(1).

Here, Aviles solely alleges that the adjuster misrepresented to Plaintiff that the wind and/or hail damage to the Property was not covered under the Policy, even though the damage was caused by a covered occurrence.  This conclusory allegation just does not satisfy Rule 9(b) because Aviles does not provide any details as to the “who,what, when, where, and how” of the misrepresentations.  Aviles did not explain what the misrepresentations were or how they distorted the material facts.  Additionally, because he did not offer any non-conclusory facts he cannot satisfy the lesser pleading standard under Rule 8(a).

Allstate’s motion for dismissal of this part of the claim was granted.