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C-Bons International Golf Group, Inc. v. Lexington Insurance Co.

United States District Court, N.D. Texas, Dallas Division

October 22, 2019

C-BONS INTERNATIONAL GOLF GROUP, INC., Plaintiff,
v.
LEXINGTON INSURANCE CO., WILLIS TOWERS WATSON U.S. LLC, and WILLIS OF ILLINOIS, INC., Defendants.

          MEMORANDUM OPINION AND ORDER

          JANE J. BOYLE, UNITED STATES DISTRICT JUDGE.

         Before the Court is Defendants Willis of Illinois, Inc. & Willis Towers Watson U.S. LLC's (collectively “Willis”)[1] Motion to Dismiss Plaintiff's Claims for Violation of the Texas Insurance Code, Breach of Fiduciary Duty, and Recovery of Attorneys' Fees (Doc. 17). For the reasons that follow, the Court DENIES Defendants' Motion to Dismiss.

         I.

         FACTUAL BACKGROUND

         For the purposes of this motion, Plaintiff's allegations are taken as true. Plaintiff C-Bons International Golf Group, Inc. entered into an insurance agreement (“the Policy”) with co-Defendant Lexington Insurance Company to provide insurance coverage for its golf courses in and around Houston, Texas, effective April 24, 2016. Doc. 12, First Am. Compl, ¶ 10. Defendant Willis acted as a broker/agent for C-Bons in obtaining the coverage from Lexington. Id. ¶ 11. In late August 2017, C-Bons' properties were damaged by Hurricane Harvey. Id. ¶ 12. C-Bons believes that its damaged properties were covered by the Policy, and that it sustained over $31, 000, 0000 in damage to its properties. Id.

         Lexington, however, paid C-Bons oly $2, 500, 000, which Lexington stated was the maximum coverage under the Policy because all of the damage was done by “flooding.” Id. ¶ 14. C-Bons disputes this characterization and believes that it also sustained non-flood damages that are covered by the Policy. See Id. ¶¶ 15-17.

         Lexington then paid C-Bons an additional $242, 023 for wind damage, which Lexington considered to be non-flood damage covered under the Policy. Id. at ¶ 17. C-Bons, however, contends that it “is entitled to full coverage for damages caused by a ‘Named Storm' up to $75, 000, 000 per occurrence.” Id. ¶ 18. As it relates to the Willis Defendants, C-Bons states that if it is not entitled to such coverage, “Defendant Willis misrepresented to Plaintiff that Plaintiff was fully covered for the type of loss sustained.” Id. ¶ 19; see also Id. ¶¶ 20-22.

         C-Bons believes that in doing so, Willis breached its special and/or fiduciary relationship with C-Bons, id. ¶ 44, and violated § 541.051 of the Texas Insurance Code, which makes it unlawful to engage in “an unfair method of competition or an unfair or deceptive act or practice in the business of insurance.” Doc. 12, First Am. Compl, ¶ 36 (citing Tex. Ins. Code § 541.003) (internal quotations omitted). C-Bons is also attempting to recover attorneys' fees in connection with the alleged Texas Insurance Code violation. Doc. 12, First Am. Compl, ¶ 49.

         Thereafter, Defendants Willis filed a Motion to Dismiss Plaintiffs Claims for Violation of the Texas Insurance Code, Breach of Fiduciary Duty, and Recovery of Attorneys' Fees (Doc. 17). Plaintiff filed a Response (Doc. 28) and Defendants filed a Reply (Doc. 36). The Motion is now ripe for the Court's review.

         II.

         LEGAL STANDARD

         A. The Rule 12(b)(6), Motion-to-Dismiss Standard

         Under Federal Rule of Civil Procedure Rule 8(a)(2), a complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief . . . .” Fed.R.Civ.P. 8(a)(2). Rule 12(b)(6) authorizes the Court to dismiss a complaint for “failure to state a claim upon which relief can be granted . . . .” Id. 12(b)(6). To survive a 12(b)(6) motion, “enough facts to state a claim to relief that is plausible on its face” must be pled. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

         “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. At this stage, a court “must accept all well-pleaded facts alleged in the complaint as true and must construe the allegations in the light that is most favorable to the plaintiff.” J&J Sports Prods., Inc. v. Live Oak Cnty. Post No. 6119 Veterans of Foreign Wars, 2009 WL 483157, at *3 (S.D. Tex. Feb. 24, 2009) (quoting Cent. Laborers' Pension Fund v. Integrated Elec. Servs., 497 F.3d 546, 550 (5th Cir. 2007)).

         The Fifth Circuit has held that dismissal is appropriate “if the complaint lacks an allegation regarding a required element necessary to obtain relief.” Blackburn v. City of Marshall, 42 F.3d 925, 931 (5th Cir. 1995) (internal citation omitted). Essentially, “the complaint must contain either direct allegations on every material point necessary to sustain a recovery . . . or contain allegations from which an inference fairly may be drawn that evidence on these material points will be introduced at trial.” Campbell v. City of San Antonio, 43 F.3d 973, 975 (5th Cir. 1995) (internal citation omitted).

         III.

         ANALYSIS

         When sitting in diversity, a federal court “must apply the choice of law rules of the forum state, in this case Texas.” R.R. Mgmt. Co. v. CFS La. Midstream Co., 428 F.3d 214, 222 (5th Cir. 2005) (citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941)). In Texas, courts do not undertake a choice-of-law analysis absent “a true conflict of law.” Saint Paul Surplus Lines Ins. Co. v. Geo Pipe Co., 25 S.W.3d 900, 904 n.2 (Tex. App.-Houston [1st Dist.] 2000, no pet.); see also R.R. Mgmt. Co., 428 F.3d at 222 (“Where there are no differences between the relevant substantive laws of the respective states, there is no conflict, and a court [applying Texas law] need not undertake a choice of law analysis.”).

         When there is a conflict, “Texas law generally gives effect to contractual choice-of-law provisions.” Quicksilver Res., Inc. v. Eagle Drilling, LLC, 792 F.Supp.2d 948, 951 (S.D. Tex. 2011). If there is no choice-of-law provision applicable, courts must then use the Second Restatement's “most significant relationship test to decide choice of law issues.” Benchmark Elec., Inc. v. J.M. Huber Corp., 343 F.3d 719, 727 (5th Cir. 2003)(internal quotation marks omitted). The Restatement requires a court to first look to see if there is “a statutory directive of its own state on choice of law . . . .” TV-3, Inc. v. Royal Ins. Co. of Am., 28 F.Supp.2d 407, 414 (E.D. Tex. 1998) (citing Restatement (Second) of Conflicts of Laws § 6 (1971) [hereinafter “Restatement”). If there is no statutory directive, courts must then apply the principles of the Restatement (Second) of Conflicts of Laws Section 6, with Section 145(2) providing the specific factors to be applied in tort and tort-like cases. Benchmark Elec, 343 F.3d at ...


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