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Montoya v. State Farm Mutual Automobile Insurance Co.

United States District Court, W.D. Texas, San Antonio Division

August 29, 2017

AMANDA MONTOYA AND DEANDRA MONTOYA, Individually and as Assignees and Successors in Interest of Araceli Lianas Acosta as Representative of the Estate of Andrew Acosta, Deceased Plaintiffs,
v.
STATE FARM MUTUAL AUTOMOBILE INSURANCE CO., Defendant.

          MEMORANDUM OPINION

          Royce C. Lamberth, United States District Judge

          I. INTRODUCTION

         This is a lawsuit arising out of a car accident between Andrew Acosta, who was insured by State Farm Mutual Automobile Insurance Company, and a car driven by Amanda Montoya. Plaintiffs, the Montoyas, sued State Farm on behalf of Acosta's estate for breach of contract, breach of the duty of good faith and fair dealing, violations of the Texas Insurance Code, and violations of the Deceptive Trade Practices Act. Before the Court is defendant State Farm Mutual Automobile Insurance Company's motion for judgment on the pleadings, ECF No. 16. Having considered the motion, plaintiffs' response, ECF No. 17, defendant's reply, ECF No. 18, and in light of this Court's previous memorandum opinion that the Montoyas' lack standing to bring DTPA and Insurance Code claims, ECF No. 14, this Court will grant the motion and issue judgment on the pleadings.

         II. BACKGROUND

         This case arises out of a straightforward car accident, but it presents a deceptively complicated posture that is set out in more detail in this Court's October 12, 2016 Memorandum Opinion, ECF No. 14. However, the Court will recite the basic facts here. On December 8, 2007, the Montoyas were injured when a car driven by Andrew Acosta, who apparently was intoxicated, collided with theirs. Mr. Acosta died. State Farm settled the claims of all victims of the accident except the Montoyas: $25, 000.00 to Kristopher Ramirez, a passenger in Acosta's vehicle who also died, and amounts totaling $6, 530.00 and $3, 545.00 to two other victims respectively. The Montoyas refused to accept a $14, 925.00 settlement offer, which was the remaining amount available within the $25, 000 per person, $50, 000 per occurrence limit in Acosta's policy. The Montoyas sued the Acosta estate and obtained a judgment for $542, 933.67. Later, the Montoyas entered a covenant not to execute on that judgment with the Acosta estate. As part of the covenant not to execute, the Acosta estate assigned its rights against State Farm for contractual or extra-contractual claims arising out of the handling of the accident to the Montoyas.

         The Montoyas then sued State Farm and Jeff Frey, the attorney representing the Acosta estate in the claim. Standing in the shoes of Andrew Acosta, the Montoyas sued State Farm and Mr. Frey for breach of contract, breach of the duty of good faith and fair dealing, violations of the Texas Insurance Code, and violations of the Deceptive Trade Practices Act. The Montoyas seek to recover for themselves actual damages and mental anguish damages suffered by Acosta, as well as additional exemplary damages based on State Farm's failure to settle the Montoyas' lawsuit against Acosta within the policy limits, which supposedly exposed the Acosta estate to a trial and judgment beyond the policy limits.

         Plaintiffs originally filed this suit in state court, and State Farm removed the case to federal court based on diversity jurisdiction. State Farm argued that Mr. Frey, who was a citizen of Texas like the Montoyas, should not be considered in the diversity analysis because he was improperly joined. This Court previously determined that Frey was improperly joined because he could not be held liable as a claims adjuster, and because the Montoyas lacked standing to sue for violations of the DTPA or Insurance Code. ECF No. 14. Specifically, this Court found that Texas law does not allow the assignment of claims for violations of the Texas Insurance Code or the DTPA. Thus, this Court found that the Montoyas lacked standing to assert claims against Frey because their standing was based on an invalid assignment of those causes of action. Id. This Court dismissed Frey from the case, but did not address the claims against State Farm.

         Defendant State Farm now moves for judgment on the pleadings, seeking dismissal of the claims for breach of the duty of good faith and fair dealing, violations of the DTPA, and violations of the Insurance Code. Regarding the claim for breach of the duty of good faith and fair dealing, State Farm argues that that as a matter of law plaintiffs have failed to even allege a critical element of the Stowers duty: a demand for a settlement within policy limits. Mot. 6, ECF No. 16. Further, State Farm argues that the Insurance Code and DTPA claims should be dismissed because those causes of action are not assignable, citing this Court's prior memorandum opinion. Mot. 7.

         III. LEGAL STANDARD

         Federal Rule of Civil Procedure 12(c) states that "[a]fter the pleadings are closed but within such time as not to delay the trial, any party may move for judgment on the pleadings." Fed.R.Civ.P. 12(c). "A motion brought pursuant to Rule 12(c) is designed to dispose of cases where the material facts are not in dispute and a judgment on the merits can be rendered by looking to the substance of the pleadings and any judicially noticed facts." Great Plains Trust Co. v. Morgan Stanley Dean Witter & Co., 313 F.3d 305, 312 (5th Cir. 2002). The central issue is very similar to that of a 12(b)(6) motion: whether, in the light most favorable to plaintiff, the complaint states a valid claim for relief. Id.

         A complaint must allege sufficient facts that, accepted as true, state a claim to relief that is plausible on its face. Bell Ail. v. Twombly, 550 U.S. 544, 570 (2007); Ashcroft v. Iqbal, 556 U.S. 662, 677-78 (2009). Similarly, under a Rule 12(c) motion, a court must accept the nonmovant's allegations as true and must view the facts alleged, and any reasonable inferences therefrom, in the light most favorable to the nonmoving party. Great Plains, 313 F.3d at 312; see also Cash v. C I. R., 580 F.2d 152, 154 (5th Cir. 1978). Pleadings are therefore construed liberally, and judgment is only appropriate if the material facts are undisputed and only questions of law as to whether relief is plausible remain. Id.

         IV. ANALYSIS

         State Farm seeks dismissal of the plaintiffs' claim for breach of the duty of good faith and fair dealing, as well as the claims for violation of the Texas Insurance Code and DTP A. The Court will analyze them separately.

         A. Breach of Good ...


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