United States District Court, W.D. Texas, San Antonio Division
MEMORANDUM OPINION AND ORDER
PULLIAM, UNITED STATES DISTRICT JUDGE
first party insurance action, a tenant/insured, Silo
Restaurants, Inc. (“Silo”), and the owner of the
property, Phil Dyer, who the applicable insurance policy also
lists as mortgagee and payee, have sued the insurance
company, Allied Property and Casualty Insurance Company
(“Allied”), under various theories for hail
damage to the insured property's roof in 2016. The Court
has three motions under consideration: (1) Defendant Allied
Property and Casualty Insurance Company's Motion for
Summary Judgment (ECF No. 10); (2) Plaintiffs' Written
Objections to Defendant's Summary Judgment Evidence,
Exhibit B and Motion to Strike Defendant's Summary
Judgment Evidence, Exhibit B (ECF No. 19); and (3)
Plaintiffs' Motion for Leave to File Plaintiffs'
Surreply to Defendant's Reply in Support of its Motion
for Summary Judgment (ECF No. 22). The summary judgment
motion is fully briefed, including evidence submitted by both
sides. Defendant has responded to the motion to
strike, but Plaintiffs have not filed a reply brief.
Defendant has not responded to the motion for leave to file
surreply. Regardless of the briefing filed, all motions are
ready for ruling.
factual background is essentially undisputed. Allied issued
an insurance policy, with effective dates March 17, 2016 to
March 17, 2017, to Silo to cover a restaurant located at 1133
Austin Highway in San Antonio, Texas. See Premier
Businessowners Policy No. ACP BPFC 7245584525 [hereinafter
“Policy”]. Silo is the named insured.
Id. at 2, 13. Dyer owns the property, leases it to Silo
who “has a duty to maintain fire and casualty insurance
on the property for [Dyer's] benefit, ” and Dyer is
“included in that policy as a mortgagee and loss
payee.” Decl. Dyer ¶ 2; see also Policy
at 16 (showing Dyer listed as mortgagee). Patrick Richardson
is President of Silo and handles all daily operations,
including obtaining insurance to comply with the lease
obligations with Dyer. Richardson Decl. ¶¶ 2-3.
Silo engaged Insurance One Agency to act on its behalf and
Ryan Hutchinson of that entity was “the writing agent
for Silo.” See Ex. B-8. The policy contains a
limitations provision that applies to the contractual claims
of Plaintiffs. See Policy at 157.
the period of coverage, a hailstorm affected the insured
property. On August 25, 2016, Delia Willis, an insurance
agent with Insurance One Agency, L.C., acting on behalf of
Silo and as agent for Richardson, submitted a Property Loss
Notice to Defendant alleging hail damage to the roof and
air-conditioning (“AC”) unit of the property.
See Ex. B-1; Richardson Decl. ¶ 9. Defendant
assigned Terry Nichols as the adjuster on the claim. Decl.
Bailey ¶ 3. Following an initial inspection, Nichols
engaged EFI Global to inspect and report on possible hail
damage to the property. Id. ¶ 4; Ex. B-3.
Following the engineer's inspection, Defendant agreed to
pay Silo and Dyer (as a mortgagee) for covered damages to an
AC unit. Ex. B-4.
sent its report to Nichols on September 28, 2016. Ex. B-5.
Relying on that report, Nichols sent the following email to
Richardson and his Insurance One Agent, Ryan Hutchinson:
Please see attached letter and engineer's report. Based
on the engineer's findings I am unable to help you on the
roof as no hail damage was found to the flat roof, rather it
is leaking due to wear and tear at seams, penetrations, etc.
Let me know if you have any questions.
Ex. B-6. The attached letter informed Richardson and
Hutchinson that coverage was denied for hail damage to the
roof and provided reasons for the denial. See Ex.
B-7. The report from EFI concluded that (1) the property was
exposed to hail resulting in visible “spatter marks on
the sheet metal roofing panels over the silo, distress to AC
fins, dents to light gauge metal roof vents, and spatter
marks on mechanical equipment, ” but “[o]therwise
the roof and associated components were found to be free of
hail related damage”; (2) the “[s]patter marks to
the sheet metal roofing panels are cosmetic in nature and
does [sic] not constitute functional damage”; and (3)
there were observed “potential sources of water
infiltration” but they were “not storm related
damage.” Ex. A-1 at 7.
he received the claim denial, Hutchinson sought clarification
from Nichols, but did not include either Plaintiff on the
email. See Ex. B-8. Nichols explained:
There is a lot of difference in thin aluminum a/c fins and
commercial roofing material made of tar and gravel and rubber
compounds. I did not see hail damage to the roof and that is
why I had the engineer look at it. If they think differently,
they can get their own expert and submit it to us to
consider. Basically, what I saw was an old roof that needs to
closed the case file on November 3, 2016. See Ex.
B-2 at 167. Nichols noted: “Kept claim open for a
period of time in case of further actions . . . regarding
roof. I am closing claim at this time.” Id.
leaks later began to appear in the same areas of the roof,
Richardson contacted another roofer for repairs with approval
from Dyer. Richardson Decl. ¶ 20; Decl. Dyer ¶ 7.
On October 5, 2018, Richardson informed Dyer that the newly
hired roofer disagreed with the prior denial of hail damage
claim. Richardson Decl. ¶¶ 21-22; Decl. Dyer ¶
commenced this action by filing an Original Petition in state
court on October 8, 2018. See Orig. Pet. (ECF No.
1-1). Defendant timely removed the action to this Court the
next month based upon diversity of citizenship. See
Notice of Removal, (ECF No. 1).
April 30, 2019, Defendant filed its motion for summary
judgment on grounds that Plaintiffs untimely commenced this
action under the insurance policy and applicable statutes of
limitations. Plaintiffs first responded with an unopposed
motion for leave to amend their complaint and filed the
amendment with court permission. In their amended complaint,
Plaintiffs assert five theories of liability and two defenses
to the asserted limitations bar. See Pls.' First
Am. Compl. (ECF No. 13) at 7-16. Following the filing of the
amended complaint, Plaintiffs responded directly to the
motion for summary judgment and the parties filed the other
motions and briefing currently before the Court. All motions
are ripe for ruling.
the Erie doctrine, federal courts sitting in
diversity apply state substantive law and federal procedural
law.” Gasperini v. Ctr. for Humanities, Inc.,
518 U.S. 415, 427 (1996); accord Erie R.R. Co. v.
Tompkins, 304 U.S. 64, 78 (1938). Because jurisdiction
in this case is based on diversity of citizenship, the Court
must “apply Texas law, ” including its law
regarding statutes of limitations. Ocwen Loan Servicing,
L.L.C. v. Berry, 852 F.3d 469, 473 (5th Cir. 2017);
accord West v. Conrail, 481 U.S. 35, 39 n.4 (1987);
Walker v. Armco Steel Corp., 446 U.S. 740, 752-53
(1980); Hensgens v. Deere & Co., 869 F.2d 879,
880 (5th Cir. 1989). Accrual of a claim or cause of action is
also governed by state law. See Milton v. Stryker
Corp., 551 Fed.Appx. 125, 127 (5th Cir. 2014) (per
curiam) (applying Texas law on accrual in diversity case).
“federal law, rather than state law, invariably governs
procedural matters in federal courts, ” Camacho v.
Tex, Workforce Comm'n, 445 F.3d 407, 409 (5th Cir.
2006), classifying “law as ‘substantive' or
‘procedural' for Erie purposes is
sometimes a challenging endeavor, ” Gasperini,
518 U.S. at 427. But when a matter is “covered by the
Federal Rules of Civil Procedure, the characterization
question is usually unproblematic, ” because “if
the Rule in point is consonant with the Rules Enabling Act,
28 U.S.C. § 2072, and the Constitution, the Federal Rule
applies regardless of contrary state law.” Id.
at 427 n.7 (citing Hanna v. Plumer, 380 U.S. 460,
469-74 (1965); Burlington N. R. Co. v. Woods, 480
U.S. 1, 4-5 (1987)). As will be discussed in more detail
later in this memorandum opinion, one such procedural rule
that is governed by federal law is “the federal rule of
summary judgment procedure.” FDIC v. Shrader &
York, 991 F.2d 216, 220 (5th Cir. 1993).
reviewing issues of state law, federal courts look to the law
of that state's highest court.” City of
Alexandria v. Brown, 740 F.3d 339, 351 (5th Cir. 2014);
accord Price v. City of San Antonio, Tex., 431 F.3d
890, 892 (5th Cir. 2005). Absent a final decision by the
Texas Supreme Court that “‘precisely'
resolves the legal issue, federal courts “must make an
Erie guess and determine as best [they] can what the
Supreme Court of Texas would decide.” Martinez v.
Walgreen Co., 935 F.3d 396, 398 (5th Cir. 2019)
(citation omitted). When compelled to make an Erie
guess, federal courts “defer to intermediate state
appellate court decisions, unless convinced by other
persuasive data that the highest court of the state would
decide otherwise.” Mem'l Hermann Healthcare
Sys. Inc. v. Eurocopter Deutschland, GMBH, 524 F.3d 676,
678 (5th Cir. 2008) (citations and internal quotation marks
omitted); accord Price, 431 F.3d at 893 n.5. The
federal courts not only look to the intermediate state
appellate decisions, but also to “the general rule on
the issue, decisions from other jurisdictions, and general
policy concerns.” Martinez, 935 F.3d at 398
Court will first address two procedural motions before
considering the summary judgment motion.
MOTION TO STRIKE
Plaintiffs have moved to strike a declaration presented by
Defendant in support of its motion for summary judgment,
their primary thrust is to provide written objections to the
declaration. They state no rule or other basis for striking
the evidence. They merely urge the Court to strike the
evidence as “not proper summary judgment
to December 1, 2010, the proper method by which to attack an
affidavit was by filing a motion to strike, ” but
amendments to the Federal Rules of Civil Procedure changed
that practice. Cutting Underwater Techs. USA, Inc. v. Eni
U.S. Operating Co., 671 F.3d 512, 515 (5th Cir. 2012)
(per curiam). “As amended in December 2010,
Fed.R.Civ.P. 56(c)(2) makes motions to strike unnecessary to
challenge evidence presented in the summary judgment
context.” Reitz v. City of Abilene, No.
1:16-CV-0181-BL, 2018 WL 6181493, at *8 n.8 (N.D. Tex. Nov.
27, 2018). Accordingly, the Court denies the motion to strike
as unnecessary. It will instead consider the filing as
Plaintiffs' Rule 56(c)(2) objections and will rule on
such objections as necessary.
the Court cited the alleged objectionable declaration in the
background section, it did so only for matters not in
dispute. Furthermore, Plaintiffs did not object to the cited
portions of the declaration. In addition, as noted in
footnote 1 and the motion to strike, Defendant and the
declarant have misread the date of the email attached as Ex.
C to the motion for summary judgment. That objection is
well-taken as to that email and the Court does not rely on
Ex. C or the declarant's statements about that exhibit.
Because the Court does not consider any objectionable
portions of the declaration, the Court deems all other
MOTION FOR LEAVE TO FILE SURREPLY
move for leave to file a surreply purportedly to respond to
new arguments raised for the first time by Defendant in its
reply in support of its motion for summary judgment. They
state that “there are several new arguments made of
which is necessary for Plaintiffs to succinctly address with
supporting case law.” Neither the motion nor the
proposed surreply identify with any specificity the new
arguments purportedly made in the reply brief. The proposed
submission, furthermore, appears to be little more than
rehashing of prior arguments and submitting various case law
general practice, neither the Federal Rules of Civil
Procedure nor the local rules of this Court permit the filing
of a surreply. But the local rules do contemplate a party
seeking leave to file a post-reply submission. See
W.D. Tex. Civ. R. 7(f)(1). Furthermore, because defendant has
filed no response to the motion for leave, the Court could
grant the motion as unopposed. See W.D. Tex. Civ. R.
7(e)(2). While such practice is permissible, resorting to it
in the context of leave to file a surreply may unnecessarily
downplay the importance of a proper response to a motion as
well as permitting briefing that is simply unwarranted.
surreplies “are heavily disfavored, ” it is
within the sound discretion of the courts to grant or deny
leave to file such additional briefing. Warrior Energy
Servs. Corp. v. ATP Titan M/V, 551 Fed.Appx. 749, 751
n.2 (5th Cir. 2014) (per curiam) (quoting Weems v.
Hodnett, No. 10-CV-1452, 2011 WL 2731263, at *1 (W.D.
La. July 13, 2011)). Because “the scope of the reply
brief must be limited to addressing the arguments
raised” in the response or memorandum in opposition,
Petty v. Portofino Council of Coowners, Inc., 702
F.Supp.2d 721, 729 n.3 (S.D. Tex. 2010) (citation omitted),
and “it is improper for the movant to sandbag and raise
wholly new issues in a reply memorandum, ”
Weems, 2011 WL 2731263, at *1, the need for
post-reply briefing should be rare. As aptly explained in
This court's experience, shared by others in reported
decisions, is that surreplies often amount to little more
than a strategic effort by the nonmovant to have the last
word on a matter. The fourth brief usually just repeats
arguments from the memorandum in opposition and serves only
to delay resolution of the underlying motion. Accordingly, it
is proper to deny a motion for leave to file a surreply where
the party fails to demonstrate exceptional or extraordinary
circumstances warranting the relief sought. In other words,
in seeking leave to file a surreply brief, a party must
identify the new issues, theories, or arguments which the
mo-vant raised for the first time in its reply brief.
Id. (citations omitted).
course, as recognized by the Fifth Circuit,
“[a]rguments raised for the first time in a reply brief
are generally waived.” Jones v. Cain, 600 F.3d
527, 541 (5th Cir. 2010). Such waiver often reduces a need
for a sur-reply. Nevertheless, granting leave to file a
sur-reply in extraordinary circumstances “on a showing
of good cause” is a viable alternative to the general
practice to summarily deny or exclude “all arguments
and issues first raised in reply briefs.” Layne
Chris-tensen Co. v. Bro-Tech Corp., No. CIV.A.
09-2381-JWL, 2011 WL 3880830, at *1 n.1 (D. Kan. Aug. 31,
2011) (citation omitted).
case, however, Plaintiffs have simply made conclusory
statements about new arguments without identifying any new
issue, theory, or argument first raised in the reply brief.
They have not shown exceptional or extraordinary
circumstances that warrant a surreply. Nor have they shown
good cause for the relief requested. To the extent that
Defendant has asserted a new argument in reply, the Court
either will not consider it in making its ruling on the
motion for summary judgment or its consideration does not
prejudice Plaintiffs. For these reasons, the Court denies the
motion for leave to file a surreply.
MOTION FOR SUMMARY JUDGMENT
presents a single, legal basis for seeking summary judgment.
It argues that the applicable statutes of limitations expired
for all asserted claims before Plaintiffs filed this action
in state court on October 8, 2018. In response, Plaintiffs
argue that some claims are timely even using Defendant's
accrual date and assert the discovery rule and fraudulent
concealment doctrine to counter Defendant's limitations
defense. They also argue that a lack of payment or notice to
Dyer delays the accrual date as to him.
Summary Judgment Standard
court shall grant summary judgment if the movant shows that
there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of
law.” Fed.R.Civ.P. 56(a). “As to
materiality, the substantive law will identify which facts
are material” and facts are “material” only
if they “might affect the outcome of the suit under the
governing law.” Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986). Disputes over material
facts qualify as “genuine” within the meaning of
Rule 56 when “the evidence is such that a reasonable
jury could return a verdict for the nonmoving party.”
Id. Given the required existence of a genuine
dispute of material fact, “the mere existence of
some alleged factual dispute between the parties
will not defeat an otherwise properly supported motion for
summary judgment.” Id. at 247-48. A claim
lacks a genuine dispute for trial when “the record
taken as a whole could not lead a rational trier of fact to
find for the nonmoving party.” Scott v.
Harris, 550 U.S. 372, 380 (2007) (quoting Matsushita
Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,
“party seeking summary judgment always bears the
initial responsibility of informing the district court of the
basis for its motion.” Celotex Corp. v.
Catrett, 477 U.S. 317, 323 (1986). When seeking summary
judgment on an affirmative defense, such as claims being
barred by a statute of limitations, the movant “must
establish beyond peradventure” each essential element
of the defense. Fontenot v. Upjohn Co., 780 F.2d
1190, 1194 (5th Cir.1986); accord Hagan v. Mazda Motor
Co. of Am., Inc., 690 Fed.Appx. 242, 243 (5th Cir. 2017)
(per curiam) (“Under Texas law, a defendant moving for
summary judgment on an affirmative defense must irrefutably
establish its elements.”).
considering a motion for summary judgment, courts view all
facts and reasonable inferences drawn from the record
“in the light most favorable to the party opposing the
motion.” Heinsohn v. Carabin & Shaw, P.C.,
832 F.3d 224, 234 (5th Cir. 2016) (citation omitted). Once
the movant has carried the burden to establish that
“claims are time-barred as a matter of law, ” the
burden shifts to the non-movant to establish a genuine
dispute of material fact on the timeliness of asserted
claims. Dommert v. Raymond James Fin. Servs., Inc.,
No. 1:06-CV-102, 2009 WL 275440, at *8 (E.D. Tex. Feb. 3,
2009) (adopting recommendation of Mag. J.). With this
shifting burden, the nonmoving party “must do more than
simply show that there is some metaphysical doubt as to the
material facts.” Matsushita, 475 U.S. at 586.
“Unsubstantiated assertions, improbable inferences, and
unsupported speculation are not sufficient to defeat a motion
for summary judgment.” Heinsohn, 832 F.3d at
234 (citation omitted). Additionally, the courts have
“no duty to search the record for material fact
issues.” RSR Corp. v. Int'l Ins. Co., 612
F.3d 851, 857 (5th Cir. 2010); accord Hernandez v. Yellow
Transp., Inc., 670 F.3d 644, 651 (5th Cir. 2012).
Summary Judgment Analysis
general, the parties agree on the facts and timeline
presented. Based on those facts and timeline, the Court must
determine, as a matter of law, when Plaintiffs' claims
accrued and whether they are untimely under the applicable
statutes of limitations. Such determination may include
considering Plaintiffs' assertions of the discovery rule
and fraudulent concealment doctrine.
Applicable Limitations Periods
their amended complaint, Plaintiffs assert five theories of
liability: (1) breach of contract; (2) violations of Section
542 of the Texas Insurance Code through failures to promptly
pay the claim under Tex. Ins. Code Ann. §§ 542.055,
542.056, and 542.058; (3) violations of the Deceptive Trade
Practices and Consumer Protection Act (“DTPA”),
namely Tex. Bus. & Com. Code Ann. § 17.46(b)(2),
(5), (7), (9), (12), (20), and (24); (4) unfair insurance
practices in violation of Section 541 of the Texas Insurance
Code, specifically Tex. Ins. Code Ann. §§
541.060(a)(1), (2)(A), (3), (4), and (7); and (5) breach of
common law ...