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University Baptist Church Fort Worth v. Lexington Insurance Co.

United States District Court, N.D. Texas, Fort Worth Division

May 23, 2018



          John McBryde United States District Judge

         (This amended memorandum opinion and order is effective May 16, 2018, and replaces in its entirety the memorandum opinion and order signed in this action on May 16, 2018.)

         Came on for consideration in the above-captioned action the motion to dismiss filed by defendant York Risk Services Group, Inc. ("York"). The court, having considered the motion, the response of plaintiff, University Baptist Church of Fort Worth, thereto, York's reply, the entire record, including the supplemental authority submitted by plaintiff, and the applicable legal authorities, finds that the motion should be granted.

         I. Plaintiff's Amended Complaint

         The following is an abbreviated form of the allegations against York in plaintiff's live pleading, Plaintiff's Amended Complaint:

         York was hired by defendant Lexington Insurance Company ("Lexington") to adjust the alleged loss sustained to plaintiff's property following a hail and wind storm on March 17, 2016. Doc.[1] 19 at 2, ¶¶ 7-8. York, in turn, assigned one of its employees, Kevin Forman ("Forman"), to examine the property and adjust the loss. Id., ¶ 8. On September 14, 2016, Lexington sent documentation to plaintiff indicating that the undisputed loss and agreed scope of costs for replacement of the roof was $586, 040.20. Id. at 3, ¶¶ 9 & 11. Also in September, after concerns arose about whether plaintiff's commercial property complied with the necessary code requirements, Forman retained a third party to inspect the roof and address the code upgrade issues. Id., ¶ 13.

         Forman notified plaintiff on September 26, 2016, that plaintiff would be receiving a copy of an engineering report from the engineer retained by the third party, and a related invoice from Jeff Eubank Roofing (" JE Roofing"), and requested that plaintiff forward those items to Forman upon receipt for the purpose of developing with plaintiff an agreed scope for the additional improvements required.[2] Id., , ¶ 14. On November 23, 2016, JE Roofing submitted to Forman a code upgrade bid of $285, 798.00 Id., ¶ 16. In December 2016 and January 2017 Forman discussed with JE Roofing the proposed cost of the code upgrade project. Id. at 4, ¶¶ 18-19. The decision was made that "the cost of re-decking the main chapel" would be conducted on a "time and material" basis, "due to the uniqueness of the project." Id., ¶ 19. Forman sent JE Roofing the forms to be used for tracking time and materials with instructions that in order to avoid any concerns or misunderstandings, the forms were to be returned within two days of the applicable activity. Id., ¶ 20.

         On February 28, 2017, Forman sent an email to plaintiff that read:

I have informed the carrier that [the third-party] has verified that the changes being made to the decking of the main church for the installment of new tile is being required and enforced by the city of Fort Worth. Code upgrade costs are indemnified once incurred when they fall under this city of FT. Worth enforcement. Due to the uniqueness of the operation and since it hasn't been done before, this is why we are tracking the costs in this way as agreed with JE Roofing.

Id. at 4, ¶22. Before York's approval was given for the work to begin, JE Roofing had already begun replacing the roof. Id. at 5, ¶24. JE Roofing, which was the roofing contractor, regularly submitted to York the invoices or forms as required by York. Id., ¶ 23.

         On April 28, 2017, Plaintiff received an invoice that included seven weeks of "Extras" charges in the amount of $582, 944.75. Id., ¶ 25. Plaintiff asked Forman several days later to confirm in writing that the insurance would "provide the funds for the work required by the engineer." Id. On July 11, 2017, plaintiff, through the church's pastor, informed Lexington "that its prior inquiries about the status of the claim had gone unresponded to." Id., ¶ 28. The pastor, in the email he sent to Lexington "recalled a conversation [the pastor] had with Forman in which Forman stated that he was 'alarmed at the skyrocketing costs for the repairs and implied that the church could potentially be responsible.'" Id. The pastor also informed Lexington at this time that it had not received weekly updates regarding progress on the re-decking, that plaintiff "endured increased exposure to the roof and the church itself, " and that plaintiff had instructed JE Roofing to cease work on the roof. Id., at 5-6, ¶ 28'. JE Roofing charged $864, 148.49 in "time and materials" related to the code upgrade for plaintiff's property. Id., at 6, ¶ 32.

         "Defendants failed and refused to pay [p]laintiff an appropriate amount for losses and damages caused to [p]laintiffs property by an occurrence covered under their contract of insurance." Id., ¶ 37. Plaintiff was required to take out a loan to pay for "the extra work" performed by JE Roofing. Id., ¶ 33.

         Plaintiff's claims against York are alleged in sections X, XI, and XII of the amended complaint. In section X, plaintiff alleged that York violated section 541.060(a)(2}(A) of the Texas Insurance Code by failing "to attempt in good faith to effectuate a prompt, fair, and equitable settlement of Plaintiff's claims even though Defendant Lexington's liability had become reasonably clear, " Id. at 12, ¶ 78; that York violated section 541.060(a)(3) by "refus[ing] to pay Plaintiff's claim without conducting a reasonable investigation with respect to the claim, " id. at 13, ¶ 80; and, that York violated section 541.060(a)(1) by "misrepresent[ing] material facts or policy provisions related to coverage, " id. ¶ 81. In section XI, plaintiff alleged that, as authorized by section 541.151 of the Texas Insurance Code, plaintiff is bringing a private action for violations of the Texas Deceptive Trade Practices Act ("DTPA"), sections 17.41 et. seq. of the Texas Business & Commerce Code. Plaintiff, as a "consumer, " as defined by the DTPA, relied on the acts and practices enumerated in section XI to its detriment. York represented that an agreement confers or involves rights, remedies, or obligations which it does not have or involve, that York employed an act or practice in violation of chapter 541 of the Texas Insurance Code, and that its services were of a particular standard, quality, or grade, when they were of another. All of those "acts were a producing cause of Plaintiff's damages for which Plaintiff now sues." Id. at 14, ¶ 90. In section XII, plaintiff made a promissory estoppel claim against York, alleging that York is estopped from claiming that plaintiff is not entitled to proceeds that were expended to bring plaintiff's roof into compliance with the City of Fort Worth Building Codes, and concluding with the following assertion:

94. By overseeing the adjustment of the Plaintiffs claim, Defendant York represented that it would adjust the claim fairly and properly. Defendant York also promised to prepare and present an "agreed scope" for the repairs to Plaintiffs roof. Defendant York knew or should have known that Plaintiff would rely on this promise by Defendant York. Plaintiff relied to its detriment on the promises of Defendant York to properly monitor the work of Jeff Eubank Roofing and to provide an agreed scope.
95. The detrimental reliance by Plaintiff on the promises of Defendant York were a producing cause of damages to Plaintiff for which Plaintiff now sues.

Id. ¶¶ 94-95.

         II. Grounds of the Motion

         York moves to dismiss plaintiff's claims against it on the grounds that (1) plaintiff failed to allege in its amended complaint the necessary "who, what, where, when, and how" of York's purported statutory violations, (2) plaintiff failed to allege that plaintiff suffered any extra-contractual damages as a result of York's ...

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