Dallas Fort Worth Insurance Lawyer Blog
Insurance lawyers learn real quick the difference between a case being litigated in Federal Court versus State Court. This is illustrated in a 2021 opinion from the Western District of Texas, San Antonio Division. It is styled, Craig Janssen v. Allstate Vehicle & Property Insurance Company.
This is a claim for damages to Janssen’s property caused by a hailstorm. Janssen asserts that he suffered damages, that Allstate is his insurer, and that after filing a claim, Allstate failed to properly inspect, investigate, and assess damages and wrongfully denied and underpaid the covered damages. Janssen filed a lawsuit in State Court for various violations, including damages under the Texas Insurance Code, Section 541.060 and Section 542. Allstate had the lawsuit removed to Federal Court.
Federal Rule of Civil Procedure 8, requires that a Defendant be given fair notice of the claim and the grounds upon which the plaintiff relies. To satisfy this pleading requirement, at a minimum, a plaintiff must provide a short and plain statement of each cause of action asserted to show entitlement to relief under Rule 8(a)(2). This pleading standard does not require detailed factual allegations but does demand more than conclusory allegations of wrongdoing.
Factual allegations supporting fraud or causes of action based in fraud, however, must meet stricter pleading standards under Federal Rule 9(b). Federal Rule 9(b) requires a party to “state with particularity the circumstances constituting fraud or mistake.” This required particularity for such pleading varies from case to case, but at a minimum, requires allegations of the particulars of time, place, and contents of the false representations, as well as the identity of the person making the misrepresentation and what he obtained thereby. More precisely, Federal Rule 9(b)’s particularity requirement compels that “the who, what, when, where, and how be laid out.” 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 Rule 9(b)’s requirements.
Allstate contends Janssen’s claims of common law fraud or misrepresentation and for misrepresentation in violation of the Insurance Code Section 541.060(a)(1) are insufficient to satisfy Rule 9(b)’s particularity requirement, and should be dismissed. Review of the factual allegations supporting Janssen’s causes of action of fraud, violations of Texas Insurance Code, and the Texas Deceptive Trade Practices Act reveals the state court Petition does not allege facts with sufficient particularity to support these causes of action. Instead, Janssen asserts merely conclusory allegations, stating: Allstate insured the subject property; Janssen’s property was damaged by a covered wind/hailstorm; Allstate failed to properly investigate the claim and damage, and; Allstate misrepresented that certain damage was not covered and thereby denied and underpaid the claim for covered damage.
Janssen does not plead with particularity what acts or statements Allstate committed or made that were fraudulent, who committed or made fraudulent or misleading statements, or why such alleged statements or actions were fraudulent. The allegations of misleading statements relate to Janssen’s basic contention that Allstate wrongfully failed to pay the damage claim pursuant to the policy terms. Such conclusory allegations fail “the who, what, when, where and how” relative to the Allstate’s alleged fraudulent representations or concealed material facts.
Because alleged violations of the Texas Insurance Code and the DTPA and those asserting fraud, fraudulent concealment or negligent misrepresentation are subject to Federal Rule 9(b)’s particularity requirements, and Janssen’s causes of action of common law fraud, violations of Texas Insurance Code Sections 541 and 542, and violation of the Texas DYPA fall short, these causes of action may be dismissed.
Here, the Court allowed Janssen to replead.