Insurance Lawsuits – Substance Of Allegations

Insurance cases in Federal Court require the pleadings to be substantive.  This is seen in a 2019, decision from the Southern District of Texas, Corpus Christi Division.  The decision is styled, Alvira Blue v. Allstate Vehicle and Property Insurance Company.

Allstate filed a motion with the Court requesting that Blue’s claims for misrepresentation under Texas Insurance Code, Section 541.060(a)(1), be dismissed.

This Court granted the motion and discussed.

Allstate’s motion to dismiss invokes Federal Rules of Civil Procedure 9(b) and 12(b)(6).

Rule 9(b) of the Federal Rules of Civil Procedure requires that a plaintiff state an alleged fraud with particularity. “A dismissal for failure to plead fraud with particularity under Rule 9(b) is treated as a dismissal for failure to state a claim under Rule 12(b)(6).” Rule 9(b) requires that a plaintiff state the who, what, when, where,and how of the alleged fraud. “The frequently stated, judicially-created standard for a sufficient fraud complaint . . . instructs a plaintiff to plead the time, place and contents of the false representation, as well as the identity of the person making the misrepresentation and what that person obtained thereby.”

These pleading standards, while referencing fraud and mistake, apply equally to claims for misrepresentation under the Texas Insurance Code.

The test of pleadings under Rule 12(b)(6) balances a party’s right to redress against the interests of all parties and the court in minimizing expenditure of time, money, and resources devoted to merit less claims.  Federal Rule of Civil Procedure 8(a)(2) requires only “a short and plain statement of the claim showing that the pleader is entitled to relief.”  Furthermore, pleadings must be construed so as to do justice.  The requirement that the pleader show that she is entitled to relief requires more than labels and conclusions, a formulaic recitation of the elements of a cause of action will not do.

Factual allegations are required, sufficient to raise the entitlement to relief above the level of mere speculation.  Those factual allegations must then be taken as true, even if doubtful.  In other words, the pleader must make allegations that take the claim from conclusory to factual and beyond possible to plausible.

Allstate complains that Blue’s allegations regarding misrepresentations in violation of Section 541.060(a)(1) are devoid of factual assertions in violation of the heightened pleading standards of Rule 9(b) and fail the standard of review under Rule 12(b)(6).  Blue’s response stands on the sufficiency of the existing petition, suggesting that the particularity requirements of Rule 9(b) apply only to the allegations of the insured loss: that Allstate issued a policy that covered Blue’s home, which was damaged on or about August 25, 2017, as a result of Hurricane Harvey.

Contrary to Blue’s argument, the heightened pleading standard applies to the substance of the allegations of misrepresentation.  And while Blue generally alleges improprieties in the adjuster’s inspection and appraisal of the damage, the pleading offers no factual details regarding exactly how the inspection was substandard, what damages were not included in the report, what damages were undervalued, and what the adjuster or insurance company stood to gain by such improprieties.  The complaints of misrepresentations are thus formulaic and conclusory.  The Court rejects Blue’s argument that further detail is not required.