United States District Court, S.D. Texas, Houston Division
Kenneth M. Hoyt United States District Judge
before the Court is the defendant's, Travelers Lloyds of
Texas Insurance Company (“Travelers”), motion for
judgment on the pleadings brought pursuant to Fed.R.Civ.P.
12(c). (Dkt. No. 2). The plaintiffs, Randy Randel and Debra
Randel (the “plaintiffs”), have filed a response
in opposition to the motion (Dkt. No. 7) and the defendant
has filed a reply. (Dkt. No. 8). After having carefully
considered the motion, response, reply and the applicable
law, the Court determines that the motion should be
lawsuit stems from damages allegedly sustained to the
plaintiff's residence located at 14811 Stella's Point
Court, Humble, Texas 77396 in Harris County, Texas, following
a fire that emanated in their attached garage on or about
July 4, 2017. The plaintiffs are the owners of a
homeowners' insurance policy, policy no.
0HP4889805316356761 (the “Policy”), issued by
Travelers and covering the real property. On July 5, 2017,
the plaintiffs filed a claim with Travelers requesting that
it provide coverage for the damages caused by the fire and
smoke, together with additional living expenses associated
with their displacement due to the fire.
assigned Victor McKnight to adjust the plaintiffs' claim.
McKnight estimated the plaintiffs' damages to be $126,
720.86. The plaintiffs, however, determined that
McKnight's assessment significantly undervalued their
actual damages and requested that Eric Althouse of Air
Intellect, LLC be retained to conduct an indoor environmental
quality assessment of their property. On August 19, 2017, Mr.
Althouse inspected the property, took samples and provided a
written report detailing his findings and recommendations.
October 4, 2017, the plaintiffs advised Travelers of their
concerns regarding its underestimation of their claim,
including its refusal to permit allowances for replacement of
drywall and/or wall insulation in the rooms impacted by the
fire and/or smoke. Thereafter, the plaintiffs retained Mark
Earle of Key Claims Consultants to perform an inspection of
the property and provide an estimate as to the amount of
damages sustained to the property. Upon receipt of Mr.
Earle's estimate, Travelers sent adjuster Mike Boone to
inspect the plaintiffs' property on February 20, 2018.
Afterwards, Travelers denied the plaintiffs' claim for
additional structural damages and further advised that its
payments for additional living expenses would be terminated.
the plaintiffs sought an appraisal to resolve the disputed
loss amount, but Travelers rejected their appraisal request,
maintaining that there was no covered damage to appraise. On
March 21, 2018, the plaintiffs instituted an action against
Travelers in the 281st Judicial District Court of Harris
County, Texas seeking a declaratory judgment as to whether
the Policy requires Travelers to proceed to appraisal and
requesting that the Court compel Travelers to participate in
an appraisal. Travelers eventually agreed to send the claim
to appraisal. On February 5, 2019, the plaintiffs filed a
Notice of Nonsuit with Prejudice advising of their decision
to no longer prosecute their claims against Travelers. On
February 6, 2019, the state court entered an Order dismissing
their declaratory judgment action with prejudice.
date, the appraisal has not been completed. On July 3, 2019,
the plaintiffs filed the instant action against Travelers in
the 295th Judicial District Court of Harris County, Texas
alleging claims for breach of contract and noncompliance with
the Texas Insurance Code's prompt payment of claims
provision. Travelers timely removed the action to this Court.
It now moves for judgment on the pleadings, arguing that the
plaintiffs' claims are barred by the res
Rule of Civil Procedure 12(c) expressly provides that
“[a]fter the pleadings are closed-but early enough not
to delay trial-a party may move for judgment on the
pleadings.” Fed.R.Civ.P. 12(c). “A motion brought
pursuant to Fed. R. Civ. P 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.” Hebert Abstract Co. v. Touchstone
Properties, Ltd., 914 F.2d 74, 76 (5th Cir. 1990)
(internal citations omitted). Such a motion “is subject
to the same standard as a motion to dismiss under Rule
12(b)(6).” Doe v. MySpace, Inc., 528 F.3d 413,
418 (5th Cir. 2008) (citing Johnson v. Johnson, 385
F.3d 503, 529 (5th Cir. 2004) (citing Great Plains Trust
Co. v. Morgan Stanley Dean Witter & Co., 313 F.3d
305, 313 n. 8 (5th Cir. 2002)). To this end, the pleadings
are to “be construed liberally, and [a] judgment on the
pleadings is appropriate only if there are no disputed issues
of fact and only questions of law remain.” Great
Plains Tr., 313 F.3d at 312.
preclusion or res judicata, bars the litigation of
claims that either have been litigated or should have been
raised in an earlier suit.” Test Masters Educ.
Servs., Inc. v. Singh, 428 F.3d 559, 571 (5th Cir.
2005), cert. denied, 547 U.S. 1055, 126 S.Ct. 1662,
164 L.Ed.2d 397 (2006) (citing Petro-Hunt, L.L.C. v.
United States, 365 F.3d 385, 395 (5th Cir. 2004)). The
elements of claim preclusion, or res judicata, are
(1) the parties in the subsequent action are identical to, or
in privity with, the parties in the prior action; (2) the
judgment in the prior case was rendered by a court of
competent jurisdiction; (3) there has been a final judgment
on the merits; and (4) the same claim or cause of action is
involved in both suits.
Duffie v. United States, 600 F.3d 362, 372 (5th Cir.
2010) (citing Test Masters, 428 F.3d at 571; see
also Ellis v. Amex Life Ins. Co., 211 F.3d 935, 937 (5th
Cir. 2000)). If all four of these elements are present,
“claim preclusion prohibits [a litigant] from raising
any claim or defense in the later action that was or
could have been raised in support of or in
opposition to the cause of action asserted in the prior
action.” United States v. Shanbaum, 10 F.3d
305, 310 (5th Cir. 1994) (citing In re Howe, 913
F.2d 1138, 1144 (5th Cir. 1990) (emphasis in original)).
crux of Travelers' argument here is that because the
plaintiff's claim for declaratory relief was part of a
prior lawsuit involving the same parties, the same claim, and
arising out of the same nucleus of operative facts, the
res judicata doctrine bars the plaintiffs'
current lawsuit. This Court does not agree.
the plaintiffs previously sought a declaratory judgment as to
whether the Policy requires Travelers to proceed to appraisal
and further requested that the state court compel Travelers
to participate in the appraisal process in a prior state
court lawsuit. Travelers eventually conceded that issue,
thereby obviating the need for adjudication. Therefore, the
plaintiffs' subsequent voluntary dismissal of their
lawsuit pursuit to a Notice of Nonsuit with Prejudice does
not bar the instant action, as their declaratory judgment
action was not adjudicated.
Fifth Circuit has reasoned that “the rules of claim
preclusion are difficult, if not impossible, to apply in the
usual form when a declaratory judgment proceeding ends in a
judgment that states no more than ‘dismissed with
prejudice.' ” Kaspar Wire Works, Inc. v. Leco
Eng'g and Machine Inc., 575 F.2d 530, 536 (5th Cir.
1978). To this end, it dictates that a “more reasonable
alternative within the usual framework of res
judicata principles, is to view the preclusive effect of
a prior declaratory [judgment] proceeding as presenting a
special problem of issue preclusion.” Id. at
537. Thus, for an issue to be barred “under the usual
rationale of issue preclusion, ” the issue must be one