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Aviles v. Allstate Fire and Casualty Insurance Co.

United States District Court, S.D. Texas, Laredo Division

July 9, 2019

SALVADOR AVILES, Plaintiff,
v.
ALLSTATE FIRE AND CASUALTY, INSURANCE COMPANY, Defendant.

          REPORT AND RECOMMENDATION

          SAM S. SHELDON UNITED STATES MAGISTRATE JUDGE

         This case involves a first-party property insurance dispute between Plaintiff Salvador Aviles (Aviles) and his insurer, Defendant Allstate Fire and Casualty, Insurance Company (Allstate). Pending before the Court is Allstate's motion for partial dismissal as to Aviles' misrepresentation claims. (Dkt. 2.) The District Court has referred the motion to the undersigned Magistrate Judge. (Dkt. 6.) Having considered the parties' filings and the applicable law, the Undersigned recommends that the District Court GRANT IN PART and DENY IN PART the motion and DISMISS WITHOUT PREJUDUCE Aviles' misrepresentations claims under Texas Insurance Code Section 541.060(a)(1) WITH LEAVE TO AMEND.

         I. Factual Findings

         Aviles owns a home located in Laredo, Texas that was insured by Allstate. (Dkt. 1-2 at 5.) Aviles alleges that on May 21, 2017, a severe wind and/or hailstorm caused substantial damage to his home. (Id.) Aviles submitted a property claim to Allstate. (Id. at 6.) Thereafter a disagreement ensued between the parties regarding the cause and damage to Aviles' home. (Id. at 6-7.) Additionally, Aviles alleges that Allstate acted "knowingly" when failing to properly investigate and pay his claim. (Id. at 6-10.)

         II. Procedural Background

         Aviles filed suit against Allstate in Webb County District Court alleging claims for breach of contract and noncompliance with the Texas Insurance Code, including making misrepresentations, engaging in unfair settlement practices and not promptly paying his claim. (Dkt. 1-2 at 7-14.) Aviles also alleges that Allstate is vicariously liable for the acts of its adjuster. (Id. at 13.) Allstate removed the case to federal court based on diversity citizenship. (Dkt. 1.) After removing the case to federal court, Allstate filed both an answer and a motion for partial dismissal. (Dkts. 2 and 3.) Allstate is seeking to dismiss Aviles' misrepresentation claims under Federal Rules of Civil Procedure, Rules 12(b)(6) and 9(b). (Dkt. 2.)

         III. Legal Standard

         A. Rule 12(b)(6)

         A civil claim may be dismissed under Federal Rule of Civil Procedure 12(b)(6) if it does not contain "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). Federal Rule of Civil Procedure 8(a)(2) provides the general requirement for pleadings in federal court: Each cause of action must include "a short and plain statement of the claim showing that the pleader is entitled to relief." While the complaint need not contain detailed factual allegations, it must set forth "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555 (internal citation omitted). Rather, the complaint's "[f]actual allegations must be enough to raise a right to relief above the speculative level." Id. While all well-pleaded facts in the complaint are to be accepted as true, legal conclusions "are not entitled to the assumption of truth," Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009) (citation omitted), nor should a court strain to make unwarranted inferences favorable to the plaintiff. R2 Invs. LDC v. Phillips, 401 F.3d 638, 642 (5th Cir. 2005).

         B. Rule 9(b)

         Allegations of fraud or mistake are subject to even a higher pleading standard than other civil claims. Federal Rule of Civil Procedure 9(b) provides that a party alleging fraud "must state with particularity the circumstances constituting fraud." What constitutes "particularity" varies depending on the facts of the case. Benchmark Elec, Inc. v. J.M. Huber Corp., 343 F.3d 719, 724 (5th Cir. 2003). At a minimum, though, the plaintiff must "allege the particulars of [1] time, [2] place, and [3] contents of the false representations, as well as [4] the identity of the person making the representation and [5] what that person obtained thereby." Tuchman v. DSC Commc'ns Corp., 14 F.3d 1061, 1068 (5th Cir. 1994) (internal quotation marks and alterations omitted). In other words, a plaintiff must plead the "who, what, when, where, and how" of the alleged fraud. Williams v. WMX Techs., Inc., 112 F.3d 175, 179 (5th Cir. 1997). In the Fifth Circuit, a dismissal under Rule 9(b) is "treated as a dismissal for failure to state a claim under Rule 12(b)(6)." United States ex rel. Thompson v. Columbia/HCA Healthcare Corp., 125 F.3d 899, 901 (5th Cir. 1997).

         IV. Analysis of Allstate's Motion to Dismiss Aviles* Misrepresentation Claims

         Allstate moves to dismiss Aviles' misrepresentation claims alleged under the Texas Insurance Code. (Dkt. 2 at 5-6 and 14.) Specifically, Allstate asserts that Aviles failed to satisfy the pleading standards under Rule 9(b) by either alleging only legal conclusions and/or not providing the "who, what, when, where, and how" of the misrepresentations. (Id.) In response, Aviles argues that when his complaint "is read as a whole, the complaint more than meets the federal pleading standard." (Dkt. 4 at 2.)

         For the following reasons, the Magistrate Judge concludes that Aviles' misrepresentation claims alleged under Texas Insurance Code Section 541.060(a)(1) fail to satisfy either the Rule 8(a) and/or 9(b) pleading standards, ...


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