Fraud Allegations And Federal Court

Insurance lawyers in the Dallas / Fort Worth area can tell you that when alleging fraud against an insurance company, agent, or adjuster, that the allegations for Federal Court have to be very specific. These specifics are discussed in a recent opinion from the U.S. District Court, Western District of Texas, Austin Division. The style of the case is, Bige, Inc. v. Penn-America Insurance Company; Specialty Insurance Managers, Inc.; Eric Kehs. When the allegations are not properly pleaded in the lawsuit papers, the insurance attorneys will seek the Federal Court to dismiss the lawsuit in what is called a Rule 12(b)(6) motion. In discussing the requirements in Federal Court for allegations of Fraud, the opinion said the following:
When evaluating a motion to dismiss for failure to state a claim under Rule 12(b)(6) the complaint must be liberally construed in favor of the plaintiff and all facts pleaded therein must be taken as true. Although Federal Rule of Civil Procedure 8 mandates only that a pleading contain a “short and plain statement of the claim showing that the pleader is entitled to relief,” this standard demands more than unadorned accusations, “labels and conclusions,” “a formulaic recitation of the elements of a cause of action,” or “naked assertions” devoid of “further factual enhancement.” Rather, a complaint must contain sufficient factual matter, accepted as true, to “state a claim to relief that is plausible on its face.” The Supreme Court has made clear this plausibility standard is not simply a “probability requirement,” but imposes a standard higher than “a sheer possibility that a defendant has acted unlawfully.” The standard is properly guided by “two working principles.” First, although “a court must accept as true all of the allegations contained in a complaint,” that tenet is inapplicable to legal conclusions” and “threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Second, “determining whether a complaint states a plausible claim for relief will . . . be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Thus, in considering a motion to dismiss, the court must initially identify pleadings that are no more than legal conclusions not entitled to the assumption of truth, then assume the veracity of well-pleaded factual allegations and determine whether those allegations plausibly give rise to an entitlement to relief. If not, “the complaint has alleged-but it has not ‘shown’-‘that the pleader is entitled to relief.'”
Pleading fraud as a cause of action requires pleading “with particularity” pursuant to Federal Rule of Civil Procedure 9(a). Fifth Circuit precedent interprets Rule 9(b) strictly, requiring the plaintiff to “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.”
In addition, “Rule 9(b) applies by its plain language to all averments of fraud, whether they are part of a claim of fraud or not.” However, “other than in the situations expressly enumerated in rule 9(b), e.g., allegations of actual fraud, plaintiffs must satisfy only the minimal requirements of rule 8(a).”
This Court then went on to discuss how the above rules applied to the facts of the case.