Claim Denial Law Firms – Proper Pleadings

Insurance lawyers can tell a client that proper pleadings, especially in Federal Court, are essential to being able to have a day in Court.  This is illustrated in a 2020, opinion from the Eastern District of Texas, Sherman Division.  It is styled, Albion Investments, Inc. v. Travelers Casualty Insurance Company of America.

Albion owned property that was insured by Travelers insurance.  Albion filed a claim with Travelers for property damage after a storm struck the property with hail and high winds.  The claim was ultimately denied based on the amount of damages falling below the deductible of the policy.

Albion filed suit alleging that Travelers did not conduct a thorough investigation of the claim, failed to account for all of the damages covered, failed to fairly evaluate and adjust the claim, failed to perform its contractual duty to compensate Albion under the policy, made misrepresentations to Albion regarding the damages to the Property and whether it was covered, failed to make an attempt to settle the claim in a prompt and fair manner, and failed to explain why full payment was not being made.

Albion retained counsel, and Albion’s counsel sent a Texas Insurance Code 542A Notice and demand letter to Travelers.

A lawsuit was filed in State Court and Travelers removed the case to Federal Court and filed a Motion to Dismiss.  Albion amended the complaint alleging breach of contract, violations of the Texas Insurance Code, DTPA claims, and a claim for breach of duty of good faith and fair dealing.  Travelers responded by filing a Rule 12(b)(6) Motion to Dismiss.

The Federal Rules of Civil Procedure 8(a)(2) requires that each claim in a complaint include a “short and plain statement… showing that the pleader is entitled to relief.”  Each claim must include enough factual allegations to raise a right to relief above the speculative level.

A Rule 12(b)(6) motion allows a party to move for dismissal of an action when the complaint fails to state a claim upon which relief can be granted.  When considering a motion to dismiss under Rule 12(b)(6), the Court must accept as true all well-pleaded facts in the plaintiff’s complaint and view those facts in the light most favorable to the plaintiff.  The Court may consider the complaint, any documents attached to the complaint, and any documents attached to the motion to dismiss that are central to the claim and referenced by the complaint.   The Court must then determine whether the complaint states a claim for 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.  But where the well-pleaded facts do not permit the Court to infer more than the mere possibility of misconduct, the complaint has alleged—but it has not shown that the pleader is entitled to relief.

First, the Court should identify and disregard conclusory allegations, for they are not entitled to the assumption of truth.  Second, the Court considers the factual allegations in the complaint to determine if they plausibly suggest an entitlement to relief.  This standard simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence of the necessary claims or elements.  This evaluation will be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.

Thus, 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.

Travelers also moves to dismiss Albion’s extra-contractual claims under Federal Rule of Civil Procedure 9(b).  Rule 9(b) states, “in alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake.  Malice, intent, knowledge, and other conditions of a person’s mind may be alleged generally.”

Rule 9(b)’s particularity requirement generally means that the pleader must set forth the “who, what, when, where, and how” of the fraud alleged.  A plaintiff pleading fraud must specify the statements contended to be fraudulent, identify the speaker, state when and where the statements were made, and explain why the statements were fraudulent.  The goals of Rule 9(b) are to provide defendants with fair notice of the plaintiffs’ claims, protect defendants from harm to their reputation and goodwill, reduce the number of strike suits, and prevent plaintiffs from filing baseless claims.  Courts are to read Rule 9(b)’s heightened pleading requirement in conjunction with Rule 8(a)’s insistence on simple, concise, and direct allegations.  However, this requirement does not reflect a subscription to fact pleading.  Claims alleging violations of the Texas Insurance Code and the DTPA and those asserting fraud, fraudulent inducement, fraudulent concealment, and negligent misrepresentation are subject to the requirements of Rule 9(b).  When the parties have not urged a separate focus on the negligent misrepresentation claims, the Fifth Circuit has found negligent misrepresentation claims subject to Rule 9(b) in the same manner as fraud claims.  Failure to comply with Rule 9(b)’s requirements authorizes the Court to dismiss the pleadings as it would for failure to state a claim under Rule 12(b)(6).

After reciting the law as stated above, the Court denied Travelers motions.

Contact Information