United States District Court, S.D. Texas, Houston Division
ORDER AND OPINION
MELINDA HARMON UNITED STATES DISTRICT JUDGE
the Court is Defendant American Southern Insurance
Company's (“American Southern”) Motion to
Dismiss under Fed.R.Civ.P. 12(b)(6), Doc. 6, Plaintiff,
R&M Enterprises' (“R&M”) Response,
Doc. 9, American Southern's Motion to Strike
R&M's First Amended Complaint, Doc. 15, R&M's
Response and Motion for Leave to File R&M's First
Amended Complaint, Doc. 19, and R&M's Supplement to
its Motion for Leave, Doc. 25, American Southern's Motion
to Dismiss R&M's First Amended Complaint under
Fed.R.Civ.P. 12(b)(6), Doc. 16, R&M's Response, Doc.
20, and Defendant Assurance Resources, Inc.'s
(“Assurance”) Motion to Dismiss under
Fed.R.Civ.P. 12(b)(1), Doc. 23. After considering these
documents and the applicable law, the Court grants American
Southern's initial Motion to Dismiss, Doc. 6, but grants
R&M's Motion for Leave to File its First Amended
Complaint (“FAC”), Doc. 19, rendering American
Southern's Motion to Strike as moot, Doc. 15. Considering
the remaining motions, the Court grants Assurance's
Motion to Dismiss, Doc. 23, which moots American
Southern's subsequent Motion to Dismiss, Doc. 16, and
remands this case to state court.
November 18, 2016, R&M filed its Original Petition in
state court alleging that American Southern refused “to
pay the costs to defend R&M, as required under the
insurance policy” in accordance with “Section 1B-
Contingent Liability Policy.” Doc. 1 at 12, (Cause No.
2016-80160 in the 334th Judicial District Court of Harris
County, Texas). R&M asserted the claims of breach of
contract, promissory estoppel, suit on sworn account,
violations of the Texas Deceptive Trade Practices Act,
violation of the Texas Insurance Code Chapter 541, violation
of Texas Insurance Code Chapter 542, and bad faith.
Id. at 14-20. Attached to the petition were an
affidavit from the firm who defended R&M, Martin,
Disiere, Jefferson, & Wisdom L.L.P., (the
“Firm”), stating that the firm defended R&M
on behalf of American Southern, Ex. 1, the Firm's account
statement to “Assurance Resources, Inc., ” Ex. 2,
the firm's invoices to “Assurance Resources, Inc.,
” Ex. 3A-3I, and an invoice for expert witness
services, Ex. 4. Id. at 24-121. Subsequently,
American Southern removed the case to this Court under
diversity jurisdiction. See 28 U.S.C. § 1332;
Doc. 1 at 2.
Southern then filed its motion to dismiss and requests that
the Court dismiss R&M's complaint for lack of
standing and capacity to sue. Doc. 6. American Southern
asserts that “the attachments to [R&M]'s
Original Petition establish the attorney fees [R&M] bases
its claims on were payable to the law firm of Martin,
Disiere, Jefferson, & Wisdom L.L.P. and are owed by
Assurance. . . .” Id. at 2. Because
“[a]ll of [R&M's] claims arise from a third
party's alleged failure to pay the attorney of another
third party, ” American Southern asserts that R&M
lacks standing to bring this suit and capacity to sue for
these claims. Id. at 1-2. Therefore, American
Southern asserts that R&M's “claims should be
dismissed.” Id. at 2. R&M responded. Doc.
Court issued a scheduling order setting the date to file
motions for leave to amend pleadings and join new parties as
June 30, 2017. Doc. 11. Next, the parties filed a joint case
management plan wherein American Southern indicated that it
intended to add Assurance “as a third-party
defendant” following the resolution of American
Southern's motion to dismiss. Doc. 10 at 2.
than twenty-one days after the American Southern's motion
to dismiss, R&M filed its FAC, wherein it added a
“negligent and fraudulent misrepresentation”
claim against American Southern and joined Assurance,
asserting claims “for breach of contract, unjust
enrichment, money had and received, tortious interference
with existing contract, violations of the Texas Deceptive
Trade Practices Act, and misrepresentation” against
Assurance. Doc. 13 at 12-13.
the attachments to the FAC is an unsigned renewal endorsement
of R&M's limited liability policy. The liability
policy lists the policy holder as R&M and the issuer as
American Southern. Doc. 13-3 at 3, 5. The policy designates
Assurance as the claims administrator, “Authorized
Surplus Lines Agent, ” and the receiver of notices and
suits concerning this policy. Id. at 4-5. And policy
section I B contains the language, “We
will pay Your legal defense in connection
with a Claim of an Eligible
Person.” Id. at 10.
Southern then filed its Motion to Strike the FAC as untimely,
without written consent of American Southern, and without
leave of court as required under Fed.R.Civ.P. 15. Doc. 15.
R&M responded by requesting leave to file its FAC. Doc.
19. R&M attached in support an e-mail from American
Southern's counsel, suggesting that “[R&M] will
need to seek these damages from [Assurance]” because
Assurance “controlled all aspects of retention of all
counsel on this claim and had a contractual obligation with
our client to set aside premium dollars to pay these fees and
costs.” Doc. 19-1 at 2. The e-mail added, American
Southern “had to shut down this related claims program
because it lost substantial money, and they are out
significant dollars.” Id. R&M later
supplemented its motion for leave. Doc. 25.
to its Motion to Strike, American Southern filed a second
motion to dismiss against the FAC asserting the same
arguments presented in its earlier motion to dismiss. Doc.
16. R&M responded. Doc. 20.
Assurance filed a motion to dismiss under Fed.R.Civ.P.
12(b)(1) asserting that the Court “lacks subject-matter
jurisdiction” because “there is not complete
diversity between the parties.” Doc. 23 at 1. In
support, Assurance attaches an affidavit from its president
and its articles of incorporation, indicating that Assurance
“is incorporated in the State [of] Texas and duly
registered with the Texas Secretary of state.” Doc.
23-1 at 2-6.
motions are now ripe for adjudication.
Motion to Dismiss under 12(b)(6)
Southern requests that the Court dismiss R&M's
complaint under 12(b)(6) for lack of standing and capacity to
sue because the debt is owed to the Firm from ...