FIFTH CIRCUIT DISMISSES DEFAMATION AND TORTIOUS INTERFERENCE CLAIMS AGAINST MULTIPLE INSURERS

August 10, 2016

Recently, in Bruce Copeland v. State Farm Insurance Company; Wellington Insurance Company; Liberty Mutual Insurance Company, 15-10921, 2016 WL 4010441, at *1 (5th Cir. July 26, 2016), the Fifth Circuit affirmed the trial court dismissal of an insured’s defamation and tortious interference claims against Liberty Mutual and Wellington Insurance Companies, and granted summary Judgment in favor of State Farm Insurance Company.

The lawsuit arouse out of an alleged employment contract between Bruce Copeland (“Copeland”) and a law firm owned by Alice Bonner of Houston, Texas.  Copeland alleged that he was hired by Bonner to do paralegal work in 2011.  After a tornado hit Lancaster, Texas, in April 2012, Copeland thought the disaster was a business opportunity.  He claimed that he helped find office space in Dallas and began to seek clients in need of legal assistance in filing claims with insurance companies.  Several months later, Copeland said he learned that Bonner denied hiring him and told clients and insurers that Copeland had stolen her identity.  Copeland contended that several insurance companies, which included Liberty Mutual, State Farm, and Wellington, opened investigations into Copeland’s contractual relationship with Bonner and declined to pay invoices for services Copeland performed.

In June 2013, Copeland filed this lawsuit against Bonner and the defendant insurance companies. Copeland alleged the defendants slandered him and tortuously interfered with his contract with Bonner.  Copeland obtained a default against State Farm and Liberty Mutual, which the district court later set aside.  The claims against Liberty Mutual and Wellington were dismissed on a Rule 12(b)(6) motion.  The district court then granted summary judgment for State Farm.  

On Appeal, Copeland argued the District Court erred in setting aside the clerk’s entry of default against Liberty Mutual and State Farm.  The Fifth Circuit determined Copeland attempted to serve the defendants by certified mail, and in Texas service may be effectuated on a corporation’s president, vice-president, or registered agent by certified mail.  The trial court determined Liberty Mutual was not properly served because someone other than the company’s agent signed the return receipt.  The trial court also determined State Farm was not properly served because the summons was not addressed to the agent.  Consequently, the Court of Appeals determined the trial court did not abuse its discretion in setting aside the clerk’s entry of default against State Farm and Liberty Mutual.

Copeland next challenged the trial court’s dismissal of his defamation and tortious interference claims against Liberty Mutual and Wellington on Rule 12(b)(6) grounds.  With regard to the defamation allegations, the Court determined the only allegation against the insurance companies is that the companies and their insureds discussed Bonner’s identity-theft accusation.  The Court concluded that was not enough for the trial court to draw the reasonable inference that Liberty Mutual and Wellington are liable for defamation.  The Court also concluded Copeland did not allege any defamatory statement was made with negligence regarding the truth of the statement justified the trial court’s dismissal of his claim.  

The Court also concluded the trial court did not err by dismissing Liberty Mutual and Wellington’s tortious interference with an existing contract claims because Copeland’s injury was not the proximate result of the defendant’s interference.  Here, Copeland pleaded that the alleged interference occurred months after the law firmed denied any contractual relationship with Copeland.

Next, the Court evaluated the claims against State Farm, and determined that Copeland’s claims for defamation and tortious interference also failed.  Copeland asserted State Farm did not provide sufficient evidence to justify State Farm’s Motion for Summary Judgment.  While the Court recognized that the evidence in the record did not support dismissal on summary judgment grounds, State Farm also moved in the alternative for judgment on the pleadings 12(c).  Consequently, the trial court’s decision focused on Plaintiff’s pleadings, not evidence, and the Court affirmed the dismissal due to Copeland’s failure to state a claim. 

Ultimately, the Court affirmed the trial court’s dismissal of all of Copeland’s claims against the insurance company defendants.