United States District Court, E.D. Texas, Sherman Division
MEMORANDUM OPINION AND ORDER
L. MAZZANT, UNITED STATES DISTRICT JUDGE
before the Court is Defendants State Automobile Mutual
Insurance Company and Daniel Prough's (collectively,
“State Auto”) Motion to Dismiss (Dkt. #39). After
careful consideration, the motion will be denied.
Park Board Ltd. (“Park Board”) purchased an
insurance policy (the “Policy”) from State Auto
in January 2017 for a commercial building in Collin County.
The Policy includes a clause entitling the insurer and
insured to an “appraisal, ” which determines the
amount of loss to damaged property if the Parties disagree on
the initial valuation. Either side may demand an
appraisal, which prompts each side to select its own
appraiser. The chosen appraisers subsequently select a
third-an “umpire”-or have one appointed by the
Court. Working together, the group will determine the
appropriate amount of damage.
March and April of 2017, Park Board's property sustained
damage from severe wind and hail storms. Park Board reported
a claim to State Auto immediately. State Auto's adjuster
assessed the claim and found a damage amount of $8, 097.85
(below the policy's $26, 006.00 deductible) (Dkt. #42,
Exhibit 1 at p. 1, 3). Because the adjuster determined the
damage to be less than the Policy's deductible, State
Auto informed Park Board that it would not pay the claim via
email on April 7, 2017 (Dkt. #42, Exhibit 1 at p. 1). Park
Board contends that State Auto failed to conduct a good faith
investigation into the damages and that a reasonable insurer
would not have valued the claim so low. Not satisfied with
the result from the adjuster, Park Board sought to initiate
appraisal pursuant to the Policy in January 2018 (Dkt. #30,
¶ 32). According to Park Board, State Auto denied the
request for appraisal in breach of the Policy. In response,
Park Board filed suit in April 2018, a year after the storm
occurred. The Parties ultimately initiated the Appraisal
process in August 2018.
Auto's appraiser and the umpire signed and issued their
findings in April 2019. The appraisers found that it would
cost $211, 546.56 to purchase replacement parts for any
damages to the property. They also found that, at the time
the wind and hail storms hit, the parts of the property that
were damaged had already depreciated in value by $80, 165.61.
This means that the “actual cash value” of the
parts needing repairs amounted to $131, 380.95. State Auto
provided Park Board with a check for $49, 531.29 shortly
after. Due to the deductible and prior payments State Auto
had made to Park Board, this payment ensured that the $131,
380.95 “actual cash value” determination was
satisfied. Under some circumstances, the Policy
provides Park Board with the full replacement cost
for damage to its property-including the amount of
depreciation. State Auto informed Park Board that it would
pay the $80, 165.16 depreciation amount once repairs were
completed. But it also advised that Park Board has
“2 years from the date of the loss in which to
actually complete the repairs in order to collect the balance
of the damages”-a date that has passed. (Dkt.
#39, Exhibit 4 at p. 3) (emphasis in original).
Auto now moves to dismiss Park Board's claims, arguing
that payment of an appraisal award forecloses any possibility
of suit (Dkt. #39, ¶ 3.1). Park Board counters that its
claims should survive because it sustained injury separate
from the damage caused by the storm.
Federal Rules of Civil Procedure require that each claim in a
complaint include a “short and plain statement . . .
showing that the pleader is entitled to relief.”
Fed.R.Civ.P. 8(a)(2). Each claim must include enough factual
allegations “to raise a right to relief above the
speculative level.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007).
12(b)(6) motion allows a party to move for dismissal of an
action when the complaint fails to state a claim upon which
relief can be granted. Fed.R.Civ.P. 12(b)(6). When
considering a motion to dismiss under Rule 12(b)(6), the
Court must accept as true all well-pleaded facts in the
plaintiff's complaint and view those facts in the light
most favorable to the plaintiff. Bowlby v. City of
Aberdeen, 681 F.3d 215, 219 (5th Cir. 2012). The Court
may consider “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).
The Court must then determine whether the complaint states a
claim for relief that is plausible on its face.
“‘A claim has facial plausibility when the
plaintiff pleads factual content that allows the [C]ourt to
draw the reasonable inference that the defendant is liable
for the misconduct alleged.'” Gonzalez v.
Kay, 577 F.3d 600, 603 (5th Cir. 2009) (quoting
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).
“But where the well-pleaded facts do not permit the
[C]ourt to infer more than the mere possibility of
misconduct, the complaint has alleged-but it has not
‘show[n]'-‘that the pleader is entitled to
relief.'” Iqbal, 556 U.S. at 679 (quoting
Fed.R.Civ.P. 8(a)(2)). “This standard ‘simply
calls for enough facts to raise a reasonable expectation that
discovery will reveal evidence of the necessary claims or
elements.'” Morgan v. Hubert, 335
Fed.Appx. 466, 470 (5th Cir. 2009) (citation omitted). This
evaluation will “be a context-specific task that
requires the reviewing court to draw on its judicial
experience and common sense.” Iqbal, 556 U.S.
“[t]o survive a motion to dismiss, a complaint must
contain sufficient factual matter, accepted as true, to
‘state a claim to relief that is plausible on its
face.'” Id. at 678 (quoting
Twombly, 550 U.S. at 570).
Parties dispute whether the completed appraisal forecloses
Park Board from bringing suit. While appraisals function as
an alternative to litigation, they do not supplant
adjudication. Sec. Nat. Ins. Co. v. Waloon Inv.,
Inc., 384 S.W.3d 901, 905 (Tex. App.-Houston [14th
Dist.] 2012, no pet.). The amount of appraisal damages is not
contestable, but other aspects of the insurer's conduct
could entitle an insured to relief. Id. The relevant
case law supports allowing Park Board to proceed on its
claims to the extent they seek damages beyond those covered
in the appraisal award.
Board's seven causes of action can be separated into
three categories: Contractual, Extra-Contractual, and the
Prompt Payment of Claims Act ...