Hail Damage And Lawsuits

Hail damage lawsuits can be tough when in Federal Court.  Special attention has to be given to the way the lawsuit is drafted.  This is illustrated in a 2017, opinion issued by the Northern District, Dallas Division.  The case is styled, McKinney Square Properties No. 1 Ltd. v. Seneca Insurance Company, Inc.

McKinney filed a lawsuit against Seneca alleging hail storm damage that occurred about June 9, 2015.  McKinney alleges they filed a claim as soon as possible after the storm when a leak was detected.  Seneca denied the claim.

McKinney alleges that Seneca refused to provide the names of the individuals who inspected the property, a copy of the engineering report, and Seneca negligently damaged roof tiles during the inspection of the property.

Seneca filed a Rule 12(b)(6) motion to dismiss on the negligent and negligent misrepresentation claims.

When a court reviews a case under a Rule 12(b)(6) motion, it accepts all well-pleaded facts as true and views them in a light most favorable to the plaintiff.  The Court will not, however accept as true, conclusory allegations, unwarranted inferences, or legal conclusions.

Claims sounding in fraud must also satisfy the heightened pleading standard set out in Rule 9(b), which requires a party alleging fraud or mistake to state with particularity the circumstances constituting fraud or mistake.  The Fifth Circuit has applied the heightened pleading requirement of Rule 9(b) to both fraud and negligent misrepresentation claims, when the claims are based on the same alleged facts.

The Fifth Circuit has succinctly summarized Texas law on this issue:

Although the law has imposed a duty on the insurer to act in good faith and deal fairly with the insured, there is no duty beyond the contract itself.  In order for a tort duty to arise out of a contractual duty, i.e. negligent failure to perform a contract, the liability must arise independent of the fact that a contract exists between the parties.  If a defendant’s conduct is actionable only because it breaches the parties’ agreement …, the claim is solely contractual in nature.  In fact, in absence of the duty to act in good faith and deal fairly the only other duty imposed on an insurance company, under Texas law, is the duty to exercise ordinary care and prudence in considering an offer of settlement within the policy limits.  In essence, Texas law does not recognize a cause of action for negligent claims handling.

McKinney argues that the negligence claim does not arise out of acceptance or adjustment of the claim.  McKinney argues the negligence claims arises out of the failure of a Seneca agent to use ordinary care when the agent is inspecting the roof.

The Court agreed with McKinney and denied Seneca’s Rule 12(b)(6) motion to dismiss.

As to the Rule 9(b) motion, the Court reached the opposite conclusion.  Under these heightened pleading standards, McKinney fails to identify any specific statements made by Seneca or one of its agents, or explain how the allegedly false statements were negligently made.  Further, the complaint fails to identify any specific agent who made the alleged misrepresentation.

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