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United Property and Casualty Insurance Co. v. Davis

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

August 28, 2019

UNITED PROPERTY AND CASUALTY INSURANCE COMPANY, Plaintiff,
v.
CHARLENE DAVIS, and ROBIN HOLDER, Defendants.

          MEMORANDUM AND ORDER

          Lee H. Rosenthal Chief United States District Judge

         United Property and Casualty Insurance Company sued Charlene Davis and Robbin Holder, seeking a declaratory judgment that it has no duty under the homeowner's insurance policy it issued Davis to defend or indemnify her in an underlying state-court lawsuit Holder filed against Davis in the 234th Judicial District Court of Harris County, Texas. (Docket Entry No. 1). In federal this suit, Davis asserted counterclaims against United Property, seeking a declaratory judgment that United Property must defend and indemnify her in the underlying lawsuit and alleging breach of contract, breach of the duty of good faith and fair dealing, and violations of the Texas Insurance Code and the Texas Deceptive Trade Practices Act. (Docket Entry No. 11). United Property has moved for judgment on the pleadings as to Davis's counterclaims under Federal Rule of Civil Procedure 12(c). (Docket Entry No. 29). Davis has not responded, and the motion is ripe.

         After a careful review of the pleadings, the motion, and the applicable law, the court grants in part and denies in part the motion for judgment on the pleadings. (Docket Entry No. 29). The court dismisses Davis's contract-breach counterclaim based on United Property's alleged failure to indemnify, without prejudice, because the duty to indemnify has not arisen. The court grants United Property's motion for judgment on the pleadings on Davis's counterclaims under the federal Declaratory Judgment Act, the Texas Insurance Code, and the Texas Deceptive Trade Practices Act, and dismisses those counterclaims, with leave to amend only the Texas Insurance Code and Texas Deceptive Trade Practices Act claims. The court dismisses Davis's Texas Declaratory Judgments Act claim, with prejudice and without leave to amend, because amendment would be futile. The court denies United Property's motion for judgment on the pleadings as to Davis's contract-breach counterclaim based on United Property's alleged failure to defend Davis. Davis must amend consistent with these rulings no later than September 27, 2019.

         The reasons are set out in detail below.

         I. Background

         United Property issued Davis a homeowner's insurance policy for her LaPorte, Texas residence. (Docket Entry No. 1 at ¶ 3.5; Docket Entry No. 1-2; Docket Entry No. 11 at ¶ 10). The policy period ran from September 28, 2016, to September 28, 2017. (Docket Entry No. 1 at ¶ 3.5; Docket Entry No. 11 at ¶ 10). In 2016, Doug Longron lived with Davis on the insured property. (Docket Entry No. 11 at ¶ 9). On October 13, 2016, Robbin Holder's vehicle was on the property for Longron to repair. (See Id. at ¶ 30). According to Davis, Holder arrived for her car and refused to leave, leading to a physical fight between Davis and Holder. (Id. at ¶ 31). Holder alleged in the underlying litigation that, while she was on the property, Davis hit her with the butt of a handgun, which discharged. The bullet hit Holder. (Id. at ¶ 33). Davis alleged self-defense. (Id. at ¶¶ 32, 36-38).

         Davis's policy covered personal injury or property damage arising from an “occurrence” on her property. (Docket Entry No. 1 at ¶ 3.6; Docket Entry No. 11 at ¶ 11). If an “occurrence” caused personal injury or property damage, United Property was obligated to:

1. Pay up to our limit of liability for the damages for which an “insured” is legally liable. Damages include prejudgment interest awarded against an “insured”; and
2. Provide a defense at our expense by counsel of our choice, even if the suit is groundless, false or fraudulent. We may investigate and settle any claim or suit that we decide is appropriate. Our duty to settle or defend ends when our limit of liability for the “occurrence” has been exhausted by payment of a judgment or settlement.

(Docket Entry No. 1-2 at 23). The policy excluded personal liability coverage, but it did not extend to “‘bodily injury' or ‘property damage' which is expected or intended by an ‘insured[, '] even if the resulting ‘bodily injury' or ‘property damage'” was “of a different kind, quality, or degree than initially expected or intended” or “a different person, entity, or property than initially expected or intended” sustained the damage. (Id. at 25). The policy also excluded coverage for losses from injuries resulting from a business on the covered property, and for damages for physical or mental abuse. (Id.).

         United Property alleges that the homeowner's policy does not cover the injuries or losses arising from the September 2016 incident because, while the policy covers damages from accidents resulting in bodily injury, it does not cover “expected or intended” bodily injury by the policyholder. (Id. at ¶¶ 4.2, 4.3). According to United Property, Davis's actions were not accidental, excluding coverage. United Property also alleges that because “Longron, a person living on the insured premises, had been operating an automobile repair shop out of the insured premises, ” the policy excludes coverage for the claimed losses, including the costs of defending and indemnifying Davis in the state-court case. (Id. at ¶ 4.4). United Property alleges that the policy's exclusion of bodily injury arising from “physical or mental abuse” also applies because “Davis assaulted Holder.” (Id. at ¶ 4.5). United Property seeks a declaratory judgment that it has no duty to defend or indemnify Davis in the underlying lawsuit. (Id. at ¶ 3.1).

         Davis's first amended answer included counterclaims for breach of contract, bad faith, and violations of the Texas Insurance Code and the Texas Deceptive Trade Practices Act and seeking damages and a declaratory judgment under the Texas Declaratory Judgments Act and the federal Declaratory Judgment Act. (Docket Entry No. 11 at ¶¶ 47-86). She alleged that the policy covered her use of force against Holder because “[t]he use of reasonable force in defense of persons or property is specifically excepted from the policy exclusion.” (Id. at ¶ 40 (emphasis omitted)).

         II. The Legal Standard

         “A motion brought pursuant to Federal Rule of Civil Procedure 12(c) is designed to dispose of cases where the material facts are not in dispute and a judgment on the merits can be rendered by looking to the substance of the pleadings and any judicially noticed facts.” Great Plains Tr. Co. v. Morgan Stanley Dean Witter & Co., 313 F.3d 305, 312 (5th Cir. 2002). The Rule 12(c) standard for judgment on the pleadings is the same as the standard under Rule 12(b)(6). Gentilello v. Rege, 627 F.3d 540, 543-44 (5th Cir. 2010).

         Rule 12(b)(6) requires dismissal if a plaintiff fails “to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). Rule 12(b)(6) must be read in conjunction with Rule 8's requirement of a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P.8(a)(2). A complaint must contain “only 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). Rule 8 “does not require ‘detailed factual allegations,' but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 555). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556). “The plausibility standard is not akin to a ‘probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. (citing Twombly, 550 U.S. at 556).

         To withstand a Rule 12(b)(6) motion, a “complaint must allege ‘more than labels and conclusions, '” and “a formulaic recitation of the elements of a cause of action will not do.” Norris v. Hearst Tr., 500 F.3d 454, 464 (5th Cir. 2007) (quoting Twombly, 550 U.S. at 555). “Nor does a complaint suffice if it tenders ‘naked assertion[s]' devoid of ‘further factual enhancement.'” Iqbal, 556 U.S. at 678 (alteration in original) (quoting Twombly, 550 U.S. at 557). “[A] complaint ‘does not need detailed factual allegations,' but must provide the plaintiff's grounds for entitlement to relief-including factual allegations that when assumed to be true ‘raise a right to relief above the speculative level.'” Cuvillier v. Taylor, 503 F.3d 397, 401 (5th Cir. 2007) (quoting Twombly, 550 U.S. at 555). “Conversely, when the allegations in a complaint, however true, could not raise a claim of entitlement to relief, this basic deficiency should be exposed at the point of minimum expenditure of time and money by the parties and the court.” Id. (quotation marks and alteration omitted).

         In considering a motion to dismiss under Rule 12(b)(6), “a district court must limit itself to the contents of the pleadings, including attachments.” Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498 (5th Cir. 2000). Documents “attache[d] to a motion to dismiss are considered part of the pleadings, if they are referred to in the plaintiff's complaint and are central to [the] claim.” Id. at 498-99 (quoting Venture Assocs. Corp. v. Zenith Data Sys. Corp., 987 F.2d 429, 431 (7th Cir. 1993)). The court may also “take judicial notice of matters of public record.” Norris, 500 F.3d at 461 n.9.

         When a plaintiff's complaint fails to state a claim, the court should generally give the plaintiff a chance to amend under Rule 15(a) before dismissing the action with prejudice, unless it is clear that to do so would be futile. See Carroll v. Fort James Corp., 470 F.3d 1171, 1175 (5th Cir. 2006) (“[Rule 15(a)] evinces a bias in favor of granting leave to amend.” (quotation omitted)); Great Plains Tr. Co. v. Morgan Stanley Dean Witter & Co., 313 F.3d 305, 329 (5th Cir. 2002) (“[D]istrict courts often afford plaintiffs at least one opportunity to cure pleading deficiencies before dismissing a case, unless it is clear that the defects are incurable or the plaintiffs advise the court that they are unwilling or unable to amend in a manner that will avoid dismissal.”). A court may deny a motion to amend as futile if an amended complaint would fail to state a claim upon ...


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