Suing Insurance Company In Federal Court

When insurance lawyers file a lawsuit that ends up in federal court, they have to make sure that the pleadings in the complaint will satisfy federal court pleading guidelines or they will end up being kicked out of court.  This is illustrated in a case from the Southern District of Texas, Houston Division.  It is styled, 9520 Homestead, LLC v. Westchester Surplus Lines Insurance Company.

This lawsuit arises from an allegation by 9520 that Westchester’s adjuster conducted a substandard investigation and inspection of 9520’s property after the property was damaged in a hurricane.  Based on the substandard investigation, the adjuster’s report undervalued the claim and failed to include all of the damages and thus, Westchester violated various sections of the Texas Insurance Code.

Under Rule 8 of the Federal Rules of Civil Procedure, a pleading must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.”  The complaint need not contain detailed factual allegations, but it must include more than an unadorned, the-defendant-unlawfully-harmed-me accusation.

When a complaint does not meet the pleading requirements of Rule 8, Rule 12(b)(6) authorizes dismissal of a civil action for failure to state a claim upon which relief can be granted.  To survive a motion to dismiss, the complaint must articulate the plaintiffs grounds for entitlement to relief-including factual allegations that when assumed to be true raise a right to relief above the speculative level.  Stated otherwise, in order to withstand a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim for relief that is plausible on its face.  A claim for relief is plausible on its face when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.

When ruling on a 12(b)(6) motion, the Court may consider the complaint, its proper attachments, documents incorporated into the complaint by reference, and matters of which a court may take judicial notice.  The Court does not resolve any disputed fact issues. Instead, the Court assumes all well-pleaded facts contained in the complaint are true. The Court will not, however accept as true conclusory allegations, unwarranted factual inferences, or legal conclusions.  Similarly, legal conclusions masquerading as factual conclusions need not be treated as true.  Although all well-pleaded facts are viewed in the light most favorable to the plaintiff, the Court will not strain to find inferences favorable to the plaintiff.   Therefore, to avoid a dismissal for failure to state a claim, a plaintiff must plead specific facts.

Here, 9520’s Complaint recites eleven alleged violations of Chapter 541 Texas Insurance Code but does not contain any specific facts supporting these allegations.  9520 does not provide any facts describing the specific misrepresentation made by Westchester, when the misrepresentation was made, the specific policy provision or insurance claim item that was subject to the alleged misrepresentation, and that Westchester knew the alleged misrepresentation was false when made to 9520. Thus, 9520 fails to identify the who, what, when, and where of the alleged bad faith as required by the heighted pleading standard of Rule 9(b).

As a result Westchester’s Motion to Dismiss 9520’s claims is granted.