United States District Court, E.D. Texas, Marshall Division
MEMORANDUM OPINION AND ORDER
GILSTRAP, UNITED STATES DISTRICT JUDGE
the Court is Defendant Schiff Hardin, LLP's
(“Schiff”) Motion to Dismiss Plaintiff Ironshore
Europe DAC's (“Ironshore”) First Amended
Complaint (Dkt. No. 17) (“the Motion”). Having
considered the same, and for the reasons set forth herein,
the Motion is GRANTED-IN-PART and
November 2014, Ironshore issued an insurance policy to Dorel
Juvenile Group, Inc. (“Dorel”). (Dkt. No. 10
¶ 2.) On May 13, 2015, Dorel was sued by Nicole and
Cameron Hinson on behalf of their minor child who was injured
in a car accident involving a product manufactured by Dorel.
See Hinson v. Dorel Juvenile Group, Inc., No.
2:15-cv-713-JRG-RSP, Dkt. No. 1 (E.D. Tex. May 13, 2015). In
this underlying case, Dorel was represented by Schiff, the
defendant in the instant case. (Dkt. No. 10 ¶ 2.)
representing Dorel, Schiff regularly communicated with
Ironshore. Id. at ¶ 3. Specifically, Ironshore
was concerned that if the Hinson case resulted in an
award or settlement in excess of $6 million, then Ironshore
might have to pay out on its insurance policy with Dorel.
Id. at ¶ 19. Against this backdrop, Ironshore
alleges that on several occasions Schiff misled Ironshore
into believing it was unlikely the Hinson case would
result in any exposure for Ironshore. See, e.g., Id.
at ¶ 20 (“At various times during the Lawsuit,
Schiff misrepresented to Ironshore that a settlement within
Ironshore's policy limits was
‘unwarranted.'”). Ironshore also alleges that
Schiff withheld other critical information about developments
in the lawsuit. For example, Ironshore alleges that
“Schiff falsely represented that the last offer of
settlement received from Plaintiffs was $6.5 million”
when in reality the Hinson Plaintiffs had expressed
a willingness to settle for as little as $3.25 million.
Id. at ¶ 48. Ironshore further alleges that
“Schiff's various misrepresentations led Ironshore
to believe that the Ironshore Policy was not at risk. Thus,
Ironshore did not associate in the defense of the
lawsuit.” Id. at ¶ 20. Had Ironshore been
given an accurate picture of the Hinson case,
Ironshore alleges it “would have exercised its right to
settle the case . . . [or] paid the Plaintiffs to release all
claims.” Id. at ¶ 49. Instead, the case
went to trial and the jury awarded the Hinson
Plaintiffs $34 million. Id. at ¶ 46. This
verdict, being in excess of $6 million, would have required
Ironshore to pay out on its policy with Dorel. Id.
at ¶¶ 46-47. After eventually settling with the
Hinson Plaintiffs after trial, Ironshore filed this
case against Schiff. Id. Defendant has now moved to
dismiss Ironshore's negligent misrepresentation claim,
which is the only claim in this case.
federal court hears state law claims based on diversity
jurisdiction, it generally applies the substantive law of the
state in which it sits. See, e.g., Gilbane Bldg. Co. v.
Admiral Ins. Co., 664 F.3d 589, 593-94 (5th Cir. 2011);
Erie R. Co. v. Tompkins, 304 U.S. 64, 78 (1938). For
example, if there is precedent from that state's highest
court, or other binding authority interpreting such
precedent, that authority controls with respect to questions
of state law. Gilbane, 664 F.3d at 593-594;
Motiva Enterprises, LLC v. St. Paul Fire & Marine
Ins. Co., 445 F.3d 381, 385 (5th Cir. 2006)
(“Under Erie, we are, of course, obliged to
decide questions of state law as we believe the state supreme
court would decide the issue.”). To the extent there is
uncertainty about a question of state law, federal courts
must make an “Erie guess” as to how the
state's highest court would decide the question.
Gilbane, 664 F.3d at 593-594. Generally, this
“Erie guess” is based on “cases
that, while not deciding the issue, provide guidance as to
how the [state high court] would decide the question.”
Id. (internal quotations omitted). These cases can
include decisions from lower state courts or others who have
ventured a similar Erie guess. Id.
spite of these general choice-of-law rules, Parties to a
contract may also specify that a particular state's laws
should govern the interpretation of their agreement through
what is often called a forum-selection clause. In these
circumstances, interpretation of the agreement is guided by
the substantive law of the chosen forum state. See, e.g.,
Barnett v. DynCorp Int'l, L.L.C., 831 F.3d 296,
301-302 (5th Cir. 2016) (explaining that federal law controls
question of the enforceability of forum-selection clauses,
while interpretation of such clauses is governed by the law
of the chosen forum).
regardless of whether state law controls questions of
substantive law or contract interpretation, “federal
courts sitting in diversity apply . . . federal procedural
law.” Gasperini v. Ctr. for Humanities, Inc.,
518 U.S. 415, 427 (1996); Taylor v. Bailey Tool Mfg.
Co., 744 F.3d 944, 947 (5th Cir. 2014) (federal
procedural rules apply once a case has been removed).
Motions to Dismiss for Failure to State a
motion to dismiss under Federal Rule of Procedure 12(b)(6)
should be granted when a complaint fails to state a plausible
claim for relief even where all well-pleaded facts are
accepted as true and viewed in the light most favorable to
the plaintiff. Bustos v. Martini Club, Inc., 599
F.3d 458, 461 (5th Cir. 2010); Brand Coupon Network,
L.L.C. v. Catalina Mktg. Corp., 748 F.3d 631, 633 (5th
Cir. 2014) (applying 12(b)(6) framework to case removed from
state court). In considering such a motion, a court may
rely on “the complaint, any documents attached to the
complaint, and any documents attached to the motion to
dismiss that are central to the claim and referenced by the
complaint.” Lone Star Fund V (U.S.) L.P. v.
Barclays Bank PLC, 594 F.3d 383, 387 (5th Cir. 2010).
“[M]atters or theories raised in a response are not
part of the pleadings” and thus do not supplement the
allegations in the complaint. Lohr v. Gilman, No.
3:15-CV-1931-L, 2017 WL 1178259, at *11 (N.D. Tex. Mar. 30,
law recognizes that “as a general rule, attorneys are
immune from civil liability to non-clients for actions taken
in connection with representing a client in
litigation.” Cantey Hanger, LLP v. Byrd, 467
S.W.3d 477, 481 (Tex. 2015) (internal quotation marks
omitted). This immunity allows attorneys “to advise
their clients and interpose any defense or supposed defense,
without making themselves liable for damages.”
Id. (quoting Kruegel v. Murphy, 126 S.W.
343, 345 (Tex. Civ. App.-Dallas 1910, writ ref'd));
Renfroe v. Jones & Assocs., 947 S.W.2d 285, 287
(Tex. App.-Forth Worth 1997, writ denied) (“An attorney
may assert any of his client's rights without being
personally liable for damages to the opposing party.”).
Without such an immunity, an attorney would face an
“inevitable conflict” in “balanc[ing] his
own potential exposure against his client's best
law has also long recognized that an attorney may be liable
for negligent misrepresentation under Section 552 of the
Restatement of Torts where a third party, even a non-client,
justifiably relies on the attorney's misrepresentations.
McCamish, Martin, Brown & Loeffler v. F.E. Appling
Interests, 991 S.W.2d 787, 792-794 (Tex. 1999). The duty
imposed in this context is “limited, ” and it
arises “only when (1) the attorney is aware of the
non-client and intends that the non-client rely on the
representation; and (2) the non-client justifiably relies on
the attorney's representation of a material fact.”
Blankinship v. Brown, 399 S.W.3d 303, 309-310 (Tex.
App.-Dallas 2013) (citing McCamish, 991 S.W.2d at
794). Liability under McCamish is further limited by
the same principles that constrain the tort of negligent
misrepresentation. For example, negligent misrepresentation
applies to misstatements of existing facts rather than
predictions that simply turn out to be wrong. See, e.g.,
Moncrief Oil Int'l Inc. v. OAO Gazprom, 481 F.3d
309, 314 (5th Cir. 2007) (“[T]he complaint alleged a
misstatement of a future event, rather than misstatement of
an already existing fact. It therefore fails as a negligent
misrepresentation claim . . . .”).
argues that because the misrepresentations identified by
Plaintiff in its Amended Complaint were made while Schiff was
representing its client Dorel in the Hinson case,
Plaintiff's claim is barred by the doctrine of attorney
immunity. (Dkt. No. 17 at 20-25.) In particular, Defendant
argues that because it provided information to Ironshore
pursuant to Dorel's obligations under its insurance
contract with Ironshore, whatever representations Defendant
made to Ironshore fall within the scope of attorney immunity.
responds that attorney immunity does not apply in this case
because Schiff “expressly assumed an independent duty
to guide Ironshore, ” which, under McCamish,
can provide the basis for a negligent misrepresentation claim
where, as here, Plaintiff justifiably relies on misstatements
by a defendant. (Dkt. No. 28 at 5, 20-21.) Plaintiff further
argues that Schiff's statements were made out of court
and “in discharge of an independent duty Schiff
knowingly assumed to ...