United States District Court, W.D. Texas, Waco Division
JEFFREY C. MANSKE UNITED STATES MAGISTRATE JUDGE
the Court is Crawford's Motion to Dismiss pursuant to
Federal Rule of Civil Procedure 12(b)(6). ECF No. 37. The
parties have consented to the jurisdiction of the undersigned
in accordance with the provisions of 28 U.S.C. § 626(c),
Federal Rule of Civil Procedure 73, and the Local Rules of
the United States District Court for the Western District of
Texas. See ECF Nos. 15, 16 and 18.
suit involves an insurance claim for damages to
Plaintiff's property. Philadelphia Indemnity Insurance
Company (“Philadelphia”) issued a Builder's
Risk insurance policy to Spring Street Apartments Waco, LLC
(“Plaintiff”) for Plaintiff's apartment
complex known as The Hype Apartments (the
“Property”), which includes coverage from May 7,
2013, to May 7, 2014 (the “Policy”). See
Pl.'s Am. Compl. ¶¶ 7-8, ECF No. 29. On April
15, 2014, Plaintiff submitted a claim to Philadelphia for
roof and water damage sustained on at least 25 buildings on
the Property. Id. ¶¶ 10, 13. Plaintiff
claims the damage resulted from severe weather, including
damage sustained from winds and strong gusts, which occurred
on March 28, 2014, and from a hailstorm that occurred on
April 14, 2014. Id. ¶¶ 9-10.
response to Plaintiffs claim, Philadelphia engaged Crawford
& Company (“Crawford”), a national claim
adjusting firm, to investigate and adjust Plaintiffs reported
loss. Id. ¶ 11. Based on the adjuster's
inspection of the Property, Crawford retained engineers to
further inspect the Property. See Id. ¶ 12. The
engineers put forth their findings from the inspection in a
report referred to as the “Donan Report.”
Id. Plaintiff asserts that the Donan Report
contained numerous deficiencies. Id. ¶¶
parties attempted mediation in May 2015, but were unable to
resolve their dispute. Counterclaim ¶¶ 119-20.
Plaintiff filed suit in state court on June 30, 2016, and
Philadelphia removed to this Court for diversity of
citizenship pursuant to 28 U.S.C. § 1332(a). ECF No. 1.
On January 5, 2017, Crawford filed a Motion to Dismiss
Plaintiffs claims against it pursuant to Federal Rule of
Civil Procedure 12(b)(6). ECF No. 37. Plaintiff responded.
Crawford replied. For the reasons stated below, the Court
construes Crawford's Motion as a Motion for Judgment on
the Pleadings pursuant to Federal Rule of Civil Procedure
12(c), grants Crawford's Motion, and dismisses all
Plaintiffs claims as to Crawford.
TIMELINESS OF CRAWFORD'S MOTION
initial matter, Plaintiff asserts in its Response that
Crawford's Motion to Dismiss should be denied as
untimely. Pl.'s Resp. at 5. Crawford replies that its
Motion to Dismiss is not untimely pursuant to Federal Rule of
Civil Procedure 12(h)(2), which provides that a motion for
“[f]ailure to state a claim upon which relief can be
granted” may be raised by a motion under Rule 12(c).
Def.'s Reply at 1-2 (citing Fed. R. Civ. P.
12(h)(2)). The undersigned agrees with Crawford.
Fifth Circuit addressed this precise issue in Jones v.
Initially, we must address the validity of the procedure that
the district court followed upon receiving the appellees'
12(b) motion. The district court treated the appellees'
motion to dismiss for failure to state a claim, filed after
the answer, as a motion for judgment on the pleadings under
Fed.R.Civ.P. 12(c). Because a rule 12(b) motion must be filed
before responsive pleadings, the appellees' motion was
untimely. Rule 12(c) motions, however, may be filed after the
pleadings are closed. Such motions will be treated as a
motion for judgment on the pleadings based on a failure to
state a claim on which relief may be granted. Thus, the
district court did not err when it construed the
defendants' motion as one for judgment on the pleadings.
See National Ass'n of Pharmaceutical Mfrs. v. Ayerst
Laboratories, 850 F.2d 904, 909 n. 4 (2d Cir. 1988).
Jones v. Greninger, 188 F.3d 322, 324 (5th Cir.
Crawford filed its Motion to Dismiss after filing its answer.
See ECF No. 37. Because 12(b) motions must be filed
before responsive pleadings, Crawford's 12(b)(6) motion
is untimely. See Jones, 188 F.3d at 324. However,
because 12(c) motions may be filed after the pleadings are
closed, untimely 12(b)(6) motions may be treated as motions
for judgment on the pleadings. Id. Therefore, the
undersigned construes Crawford's Motion as a Motion for
Judgment pursuant to Federal Rule of Civil Procedure 12(c).
Federal Rule of Civil Procedure 12(c)
may be dismissed for failure to state a claim upon which
relief can be granted upon the filing of a motion for
judgment on the pleadings. Fed.R.Civ.P. 12(c). “A
motion for judgment on the pleadings under Rule 12(c) is
subject to the same standard as a motion to dismiss under
Rule 12(b)(6).” Ackerson v. Bean Dredging LLC,
589 F.3d 196, 209 (5th Cir. 2009). The “inquiry focuses
on the allegations in the pleadings and not whether the
plaintiff actually has sufficient evidence to succeed on the
well-pleaded facts are viewed in the light most favorable to
the plaintiff, but the plaintiff must allege facts that
support the elements of the cause of action in order to make
a valid claim. Hale v. King, 642 F.3d 492, 498 (5th
Cir. 2011) (quoting City of Clinton v. Pilgrim's
Pride Corp., 632 F.3d 148, 152-53 (5th Cir. 2010)).
“To survive a motion to dismiss, a complaint must
contain sufficient factual matter, accepted as true, to
‘state a claim to relief that is plausible on its
face.'” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550
U.S. 544, 570 (2007)). A claim is facially plausible when it
contains factual content that “allows the court to draw
the reasonable inference that the defendant is liable for the
misconduct alleged.” Iqbal, 556 U.S. at 678
(see Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556
initial matter, there is no dispute that the “wrongful
conduct of an insurance adjuster can give rise to personal
liability even if [it] is in a subordinate relationship with
the insurance carrier.” Okenkpu v. Allstate Texas
Lloyd's, No. CIV.A. H-11-2376, 2012 WL 1038678, at
*7 (S.D. Tex. Mar. 27, 2012) (citing Gasch v. Hartford
Accident and Indemnity Co., 491 F.3d 278, 282-83 (5th
Cir. 2007) (holding that Texas law “clearly authorizes
Article 21.21 [541.060] actions against insurance adjusters
in their individual capacities.”). Rather, the issue
before the Court is whether Plaintiff's Amended Complaint
sufficiently pleads a reasonable factual basis for recovery
against Crawford. In order to sufficiently plead a cause of
action against an insurance adjuster, a plaintiff must allege
“specific actionable conduct by the adjuster and
distinguish claims against the adjuster from generic,
conclusory, statute-tracking claims against the
insurer.” Mt. Olive Missionary Baptist Church v.
Underwriters at Lloyd's, London, No. CV H-16-234,
2016 WL 4494439, at *3 (S.D. Tex. Aug. 26, 2016) (citing
Okenkpu, 2012 WL 1038678, at *7 (collecting cases)).
Federal Rule of Civil Procedure 9(b)
Federal Rules of Civil Procedure dictate that “in all
averments of fraud or mistake, the circumstances constituting
fraud or mistake shall be stated with particularity.”
Fed.R.Civ.P. 9(b). Rule 9(b) “prevents nuisance suits
and the filing of baseless claims as a pretext to gain access
to a ‘fishing expedition.'” United States
ex rel. Grubbs v. Kanneganti, 565 F.3d 180, 191 (5th
Cir. 2009). The goals of Rule 9(b) are to “provide[ ]
defendants with fair notice of the plaintiffs' claims,
protect[ ] defendants from harm to their reputation and
goodwill, reduce[ ] the number of strike suits, and prevent[
] plaintiffs from filing baseless claims then attempting to
discover unknown wrongs.” Grubbs, 565 F.3d at
190 (citing Melder v. Morris, 27 F.3d 1097, 1100
(5th Cir. 1994)).
plaintiff pleading fraud must “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.” Herrmann Holdings Ltd.
v. Lucent Techs. Inc., 302 F.3d 552, 564- 65 (5th Cir.
2002); see Williams v. WMX Tech. Inc., 112
F.3d 175, 177 (5th Cir. 1997); see also United States ex
rel. Williams v. Bell Helicopter Textron, Inc., 417 F.3d
450, 453 (5th Cir. 2005) (quoting United States, ex rel.
Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899,
903 (5th Cir. 1997) (Rule 9(b)'s particularity
requirement generally means, “at a minimum . . . that a
plaintiff set forth the ‘who, what, when, where, and
how' of the alleged fraud.”).
“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 the requirements of Rule
9(b).” Frith v. Guardian Life Ins. Co. of Am.,
9 F.Supp.2d 734, 742 (S.D. Tex. 1998); see Berry v.
Indianapolis Life Ins. Co., No. 3:08-CV-0248-B, 2010 WL
3422873, at *14 (N.D. Tex. Aug. 26, 2010) (“[W]hen the
parties have not urged a separate focus on the negligent
misrepresentation claims, the Fifth Circuit has found
negligent misrepresentation claims subject to Rule 9(b) in
the same manner as fraud claims.”) (internal quotations
and citations omitted).
courts are to read Rule 9(b)'s heightened pleading
requirement in conjunction with Rule 8(a)'s insistence on
“simple, concise, and direct” allegations.
Williams, 112 F.3d at 178. However, this requirement
“does not ‘reflect a subscription to fact
pleading.'” Grubbs, 565 F.3d at 186.
Failure to comply with Rule 9(b)'s requirements
authorizes the Court to dismiss the pleadings as it would for
failure to state a claim under Rule 12(b)(6). United
States ex rel. Williams v. McKesson Corp., No.
3:12-CV-0371-B, 2014 WL 3353247, at *3 (N.D. Tex. July 9,
2014) (citing Lovelace v. Software Spectrum, Inc.,
78 F.3d 1015, 1017 (5th Cir. 1996)).
moves to dismiss Plaintiff's claims of: (1) negligence;
(2) breach of contract; (3) breach of good faith and fair
dealing; (4) Deceptive Trade Practices Act
(“DTPA”) violations; (5) Texas Insurance Code
(“TIC”) and unfair insurance practices; and (6)
common law negligent misrepresentation and fraud.
See Def.'s Mot. Dismiss at 4-6, 13. Plaintiff
does not contest and voluntarily agrees to dismiss its claims
of: (1) negligence; (2) breach of contract; and (3) breach of
good faith and fair dealing against Crawford. Pl.'s Resp.
at 6 n. 2. Therefore, the Court will focus on the remaining
claims in Crawford's Motion.
Deceptive Trade Practices Act
alleges that Crawford violated numerous DTPA provisions;
specifically, §§ 17.46(b)(5); 17.46(b)(7);
17.46(b)(12); 17.46(b)(14); 17.46(b)(20); 17.46(b)(24);
17.50(a)(3); and 17.50(a)(4) of the Texas Business and
Commerce Code. Pl.'s Am. Compl. ¶ 44. Crawford
argues that Plaintiff's DTPA claims: (1) fail to state a
claim pursuant to Rule 12(b)(6); (2) fail to meet the
specificity requirement of rule 9(b); and (3) fail to allege
detrimental reliance. See generally Def.'s Mot.
Federal Rule of Civil Procedure 12(b)(6)
asserts that Plaintiff's allegations: (1) fail to allege
specific actionable conduct by the adjuster; (2) fail to
provide an explanation of how Crawford's alleged conduct
violated the DTPA or damaged Plaintiff; and (3) are nothing
more than a mere formulaic recitation of DTPA provisions.
Def.'s Mot. Dismiss at 6. The undersigned agrees.
specific actionable conduct
order to sufficiently plead a cause of action against an
insurance adjuster, a plaintiff must allege “specific
actionable conduct by the adjuster and to distinguish claims
against the adjuster from generic, conclusory,
statute-tracking claims against the insurer.” Mt.
Olive, 2016 WL 4494439, at *3 (internal citations
omitted). Here, Plaintiff's factual allegations are not
pleaded with enough specificity to distinguish particular
facts from legal conclusions. For example:
it is entitled to recover under DTPA Sections 17.46(b)(12)
and (20), as well as 17.50(a)(2) because Defendants breached
an express warranty that damage caused by a severe wind event
would be covered under the subject insurance policies.
this allegation merely states a conclusion that the Policy
expressly covered wind damage.
actionable, Defendant's failure to disclose must have
been “intended to induce the consumer into a
transaction into which the consumer would not have entered
had the information been disclosed.” See DTPA
§ 17.46(b)(24) (Vernon Supp. 2001), cited in Texas
v. Am. Blastfax, Inc., 164 F.Supp.2d 892, 901
(W.D. Tex. 2001). Plaintiff alleges:
Defendants' collective actions constitute violations of
the Deceptive Trade Practices Act (“DTPA”),
including but not limited to Sections 17.46(b)(12),
17.46(b)(14), 17.46(b)(20), 17.46(b)(24), and Section and
17.50(a)(4) of the Texas Business and Commerce Code.
Pl.'s Am. Compl. ¶ 44. Noticeably absent from
Plaintiff's Amended Complaint is any specific discussion
of the information Crawford failed to disclose. Not only did
Plaintiff fail to specifically describe the information,
Plaintiff failed to allege what it would have done had
Defendant disclosed that information.
Section 17.50(a)(3), Plaintiff alleges:
Defendants' actions, as described herein, were
unconscionable in that they took advantage of Plaintiff's
lack of knowledge, ability, and experience to a grossly
Pl.'s Am. Compl. ¶ 50. However, Plaintiff's
allegations merely state a conclusion without identifying any
specific acts by Crawford that took advantage of
Plaintiff's knowledge, ability, or experience to an
addition, Plaintiff's allegations merely track the
statutory language of sections 17.46(b)(5) and 17.46(b)(7) of
the DTPA without alleging any case specific facts. Section
17.46(b)(5) prohibits “representing that goods or
services have sponsorship, approval, characteristics,
ingredients, uses, benefits, or quantities which they do not
have or that a person has a sponsorship, approval, status,
affiliation, or connection which the person does not.”
Tex. Bus. & Com. Code Ann. § 17.46(b)(5) (West).
Here, Plaintiff alleges that Defendants represented to
Plaintiff that the Policy and Defendants' adjusting and
investigat[ing] services had characteristics or benefits that
they actually did not have, which entitles Plaintiff to
recover under DTPA Section 17.46(b)(5). Pl.'s Am. Compl.
17.46(b)(7) prohibits “representing that goods or
services are of a particular standard, quality, or grade, or
that goods are of a particular style or model, if they are of
another.” Tex. Bus. & Com. Code Ann. §
17.46(b)(7) (West). Here, Plaintiff alleges that it is
entitled to recover under DTPA Section 17.46(b)(7) because
Defendants represented to Plaintiff that the Policy and
Defendants' adjusting and investigat[ing] services were
of a particular standard, quality, or grade when they were of
another. Pl.'s Am. Compl. ¶ 47.
absent from Plaintiff's Amended Complaint is any specific
description of conduct that Crawford allegedly engaged in.
Specifically, Plaintiff's Amended Complaint is void of
allegations as to specific miscalculations Crawford's
agent made in his/her report, or what specific damages were
not covered and why. The specific allegations mirror those
against Philadelphia. Thus, the allegations specified against
Crawford are insufficient for Plaintiff to state a cause of
Plaintiff's sweeping allegations as to all
“Defendants” fail to allege and distinguish
specific conduct against Crawford, the insurance adjuster,
from the insurer. Because Plaintiff fails to allege specific
actionable conduct by the adjuster, distinguishable from the
claims against the insurer, it fails to state a claim upon
which relief can be granted.
proximate cause and damages
Plaintiff fails to provide an explanation of how
Crawford's alleged conduct violated the DTPA or
caused Plaintiff damage. In order to state a valid
claim under the DTPA, Plaintiff must show that: (1) it is a
consumer under the DTPA with respect to its claim against
Crawford; (2) Crawford committed a false, misleading, or
deceptive act under § 17.46(b) of the DTPA,
breached an express or implied warranty, or engaged in an
unconscionable action or course of action; and (3) these acts
were the producing cause of Plaintiff's actual damages.
Brittan Commc'ns Int'l Corp. v. Sw. Bell Tel.
Co., 313 F.3d 899, 907 (5th Cir. 2002) (citing Brown
v. Bank of Galveston, N.A., 963 S.W.2d 511, 513 (Tex.
1998)). Here, Plaintiff's Amended Complaint provides:
[a]s a direct and proximate cause of Defendants'
collective acts and conduct, Plaintiff has been damaged in an
amount in excess of the minimum jurisdictional limits of this
Court, for which Plaintiff now sues . . . . All of the above-
described acts, omissions, and failures of
Defendants are a direct and proximate cause of
Pl.'s Am. Compl. ¶¶ 52-53 (emphasis added).
formulaic recitation of the statutory language and failure to
distinguish particular facts from legal conclusions is
insufficient to fulfill its obligations to provide grounds on
which it is entitled to relief. See Twombly, 550
U.S. at 555 (“[A] plaintiff's obligation to provide
the ‘grounds' of his ‘entitle[ment] to
relief' requires more than labels and conclusions, and a
formulaic recitation of the elements of a cause of action
will not do.”); see also Papasan v. Allen, 478
U.S. 265, 286 (1986) (“[O]n a motion to dismiss, courts
‘are not bound to accept as true a legal conclusion
couched as a factual allegation.'”). Thus,
Plaintiff fails to allege any specific conduct to state a
claim for DTPA violations against Crawford that is plausible
on its face. Def.'s Mot. Dismiss at 7.
Federal Rule of Civil Procedure 9(b).
Plaintiff pleaded sufficient facts to meet the pleading
standard set forth in Iqbal and Twombly,
Plaintiff's DTPA claims fail to meet the pleading
standards required by Rule 9(b) of the Federal Rules of Civil
Procedure. Claims made under the DTPA for misrepresentation
are subject to the heightened pleading requirements of Rule
9(b). See Lone Star Ladies Inv. Club v.
Schlotzsky's Inc., 238 F.3d 363, 368 (5th Cir. 2001)
(“Rule 9(b) applies by its plain language to all
averments of fraud, whether they are part of a claim of fraud
or not.”); see also Frith, 9 F.Supp.2d at 742
(“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 the requirements of Rule
9(b).”). “At a minimum, Rule 9(b)
requires allegations of the particulars of time, place, and
contents of the false representations, as well as the
identity of the person making the representation and what he
obtained thereby.” Turner v. AmericaHomeKey,
Inc., No. 3:11-CV-0860-D, 2011 U.S. Dist. LEXIS 91173,
2011 WL 3606688, at *2 (N.D. Tex. Aug. 16, 2011).
argues that Plaintiffs DTPA allegations against it fail to
identify: (1) the content of any alleged misrepresentation by
Crawford; (2) the time and place of any alleged
misrepresentation; (3) who made the misrepresentation: (4) to
whom the misrepresentation was made; and (5) what the maker
of the misrepresentation allegedly obtained thereby.
Def.'s Mot. Dismiss at 8. In response, Plaintiff points
to paragraphs 11, 12, 29, 30, and 32 of its Amended Complaint
to support its contention that its pleading sufficiently
meets Rule 9(b)'s context-specific standard. Pl.'s
Resp. at 7-8. Specifically, Plaintiff alleges in paragraph 11
that Crawford was assigned to adjust Plaintiffs claim and did
adjust it by investigating, processing, evaluating, approving
and/or denying, in whole or in part, the claim. Id.
(citing Pl.'s Am. Compl. ¶ 11).
Plaintiff also points to paragraphs 12, 29, 30, and 32 of its
Amended Complaint. Pl.'s Resp. at 7-8. Plaintiff alleges
that Crawford, while adjusting, improperly evaluated the
extensive losses, completed a substandard inspection of the
property, retained an inadequate engineer, failed to conduct
a fair investigation, failed to properly request ...