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Park Board Ltd. v. State Automobile Mutual Insurance Co.

United States District Court, E.D. Texas, Sherman Division

August 12, 2019

PARK BOARD LTD.,
v.
STATE AUTOMOBILE MUTUAL INSURANCE COMPANY and DANIEL PROUGH

          MEMORANDUM OPINION AND ORDER

          AMOS L. MAZZANT, UNITED STATES DISTRICT JUDGE

         Pending 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.

         BACKGROUND

         Plaintiff 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.

         In 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.

         State 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.[1] 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).

         State 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.

         LEGAL STANDARD

         The 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).

         A Rule 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. at 679.

         Thus, “[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).

         DISCUSSION

         The 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.

         Park Board's seven causes of action can be separated into three categories: Contractual, Extra-Contractual, and the Prompt Payment of Claims Act ...


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