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LLC v. Westchester Surplus Lines Insurance Co.

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

November 6, 2019

9520 HOMESTEAD, LLC Plaintiff,
v.
WESTCHESTER SURPLUS LINES INSURANCE COMPANY, Defendant.

          ORDER

          VANESSA D. GILMORE, UNITED STATES DISTRICT JUDGE

         Pending before the Court is Defendant Westchester Surplus Lines Insurance Company's Motion to Dismiss. (Instrument No. 5).

         I.

         This case arises from an insurance coverage dispute pertaining to Plaintiffs insurance claim policy with Defendant. (Instrument No. 1-3). In August of 2017, Hurricane Harvey damaged Plaintiffs house and other property. Id. at 3. Plaintiff, who had a contract of insurance with Defendant, filed a claim on its insurance policy for the property damage it sustained. Id. Plaintiff alleges that Defendant's adjuster conducted a substandard investigation and inspection of the property. Id. Based on the unreasonable investigation, Plaintiff contends Defendant's report failed to include and undervalued all of the damages that were observed during the inspection. Id. As such, Plaintiff has brought Texas Insurance Code violations and a breach of contract claim against Defendant. Id.

         On June 6, 2019, Plaintiff filed its Original Petition against Defendant in state court. (Instrument No. 1-3). Defendant removed Plaintiffs claims to federal court on July 23, 2019. (Instrument No. 1). On July 30, 2019, Defendant filed its Motion to Dismiss. (Instrument No. 5). Plaintiff filed its Response to Defendant's Motion to Dismiss on August 20, 2019. (Instrument No. 13). Defendant filed its Reply in Support of its Motion to Dismiss on August 26, 2019. (Instrument No. 14).

         II.

         Under Rule 8 of the Federal Rules of Civil Procedure, a pleading 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). The complaint need not contain "detailed factual allegations," but it must include "more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).

         When a complaint does not meet the pleading requirements of Rule 8, Rule 12(b)(6) authorizes dismissal of a civil action for "failure to state a claim upon which relief can be granted." Fed.R.Civ.P. 12(b)(6). To survive a motion to dismiss, the complaint must articulate "the plaintiffs 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). Stated otherwise, in order to withstand a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim for relief that is plausible on its face. Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570); Turner v. Pleasant, 663 F.3d 770, 775 (5th Cir. 2011). A claim for relief is plausible on its face "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678; Montoya v. FedEx Ground Package Sys., Inc., 614 F.3d 145, 148 (5th Cir. 2010).

         When ruling on a 12(b)(6) motion, the Court may consider "the complaint, its proper attachments, documents incorporated into the complaint by reference, and matters of which a court may take judicial notice." Wolcott v. Sebehus, 635 F.3d 757, 763 (5th Cir. 2011) (internal citations and quotations omitted); see also Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007). The Court does not resolve any disputed fact issues. Smith v. Reg'l Transit Auth, 756 F.3d 340, 347 (5th Cir. 2014). Instead, the Court assumes all well-pleaded facts contained in the complaint are true. Wolcott, 635 F.3d at 763. The Court will not, however "accept as true conclusory allegations, unwarranted factual inferences, or legal conclusions." Great Lakes Dredge & Dock Co. LLC v. La. State, 624 F.3d 201, 210 (5th Cir. 2010) (internal quotation omitted). Similarly, legal conclusions masquerading as factual conclusions need not be treated as true. Blackburn v. City of Marshall, 42 F.3d 925, 931 (5th Cir. 1995); see also Iqbal, 556 U.S. at 678. Although all well-pleaded facts are viewed in the light most favorable to the plaintiff, Turner, 663 F.3d at 775; Gonzalez v. Kay, 577 F.3d 600, 603 (5th Cir. 2009), the Court "will not strain to find inferences favorable to the plaintiff." Dorsey v. Portfolio Equities, Inc., 540 F.3d 333, 338 (5th Cir. 2008) (internal citations and quotations omitted). Therefore, to avoid a dismissal for failure to state a claim, a plaintiff must plead specific facts. Dorsey, 540 F.3d at 338.

         III

         Plaintiff asserts causes of action for bad faith in violation of Chapter 541 of the Texas Insurance Code, violations of Chapter 542 of the Texas Insurance Code, and breach of contract. (Instrument No. 1-3). Defendant contends Plaintiff fails to allege facts to support its causes of action. (Instrument No. 5).

         A.

         Plaintiff alleges Defendant settled Plaintiffs property damage claim in bad faith by assigning an adjuster to Plaintiffs claims that conducted a substandard investigation, failed to include all of the damages that were observed during the inspection, and undervalued the damages observed during the inspection. (Instrument No. 1-3 at 3). Plaintiff contends the biased investigation resulted in an inequitable evaluation of Plaintiffs losses on the property. Id. Defendant asserts Plaintiffs bare and conclusory assertions do not give rise to legal liability under Chapter 541 of the Texas Insurance Code.

         To state a claim under Chapter 541, Plaintiff must show that (1) it is a "person" as defined by Section 541.002(2) of the Texas Insurance Code; (2) Defendant is a "person" as defined by Section 541.002(2) of the Texas Insurance Code; (3) Defendant engaged in an act or practice that violated (a) Chapter 541, subchapter B, of the Texas Insurance Code, (b) Section 17.46 of the Texas Business and Commerce Code and Plaintiff relied on the act or practice to its detriment, or (c) a tie-in provision of the Texas Insurance Code; and (4) Defendant's act or practice was a producing cause of Plaintiffs alleged actual damages. See TEX. INS. CODE ...


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