Bad Faith Insurance And Pleadings

Bad Faith insurance claims often involve allegations of some sort of fraud by the insurance company and / or the adjuster handling the claim.  The Southern District of Texas, McAllen Division, issued an opinion recently dealing with allegations of fraud against an insurance company.  The opinion is styled, Cesarea Trevino v. Allstate Vehicle And Property Insurance Company.

After a hail/windstorm event, Trevino filed a claim with Allstate for alleged property damage.  Trevino sued for Texas Insurance Code violations regarding misrepresentation, among other things, and in response, Allstate filed a partial motion to dismiss the misrepresentation claims.

In reviewing Allstate’s motion to dismiss, the Court pointed out that Federal Rule of Civil Procedure, Rule 9(b) imposes a heightened set of pleading requirements when the claim in question is grounded in fraud. The Fifth Circuit Court of Appeals has ruled that Rule 9(b) requires “specificity as to the statements (or omissions) considered to be fraudulent, the speaker, when and why the statements were made, and an explanation why they are fraudulent.”  Rule 9(b) applies by its plain language to all averments of fraud, whether they are part of a claim of fraud or not and therefore applies to statutory claims which are based on allegations of fraud.  Claims alleging violations of the Texas Insurance Code are subject to the requirement of 9(b).

A reading of this case is necessary to understand the specifics but understanding the way the courts look at these requirements is necessary to prevent a case or pleading being dismissed on a Rule 9(b) motion.  It is sufficient here to say that the pleadings by Trevino were insufficient to meet the pleading requirements necessary to satisfy Rule 9(b) when part of a claim for misrepresentation by an insurance company in that the only factual parts of the pleading were the identity of the policy and claim number, the date of the alleged loss, and the relationship of the parties.