FEDERAL COURT IN FORT WORTH DISMISSES EXTRA-CONTRACTUAL CLAIMS BUT INSURED'S BREACH OF CONTRACT COUNTERCLAIM SURVIVES

Last week, Judge McBryde from the Northern District of Texas, Fort Division, partially granted a motion to dismiss on behalf of an insurer but allowed a breach of contract counterclaim to survive.  In Columbia Mutual Insurance Co. v. Trewitt-Reed Funeral Home, Inc., No. 4:15-CV-568-A, (N.D. Tex. February 5, 2016), the insurer brought a declaratory judgment action to determine coverage and the insured counterclaimed, asserting claims for breach of contract, violation of the Texas Insurance Code, and bad faith. The insured also also sought a declaratory judgment that the policy at issue provides coverage for the cost to repair the properties or, at least, that the policy is ambiguous and must be interpreted in defendants' favor, that is, to provide coverage.

Plaintiff argued that the second amended counterclaim failed to state any claim to relief plausible on its face and the request for declaratory judgment serves no independent purpose and must be dismissed. Judge McBryde first addressed the breach of contract claim and found that although the “details are somewhat sketchy, Lacy has pleaded a claim for breach of contract” because their pleading contained factual allegations of the existence of a policy and breach of that policy. Next turning to violations of the Texas Insurance Code, Judge McBryde found the allegations were conclusory and did not contain the necessary factual allegations as to who said what, when, and where, and how the insured was harmed. The Court found that bad faith claims suffered from the same deficiency. Finally, the Court found that Plaintiff was seeking a declaratory judgment under the Texas statute, which did not apply and would add nothing to the case since it is duplicative of the breach of contract claim. Judge McBryde ordered entry of final judgment as to the dismissal of the counterclaims for violation of the Texas Insurance Code, bad faith, and declaratory judgment.