Last week, in Burton v. Companion Property and Casualty Insurance Company, Civil Action No. W-14-CV-054 (W.D. Tex. July 29, 2014), Federal District Court Judge Walter S. Smith, Jr. in the Waco division of the Western District of Texas dismissed all of the Insured’s contractual and extra-contractual causes of action against Companion.

The Insured filed a homeowner’s insurance claim with Companion for damages resulting from a wind and hailstorm that occurred on or around May 9, 2013.  The Insured filed his lawsuit against Companion in state court asserting both contractual and extra-contractual claims.  Companion promptly removed the case to Federal District Court on the basis of diversity jurisdiction. After removal, the Insured amended his complaint twice. In addition to his “laundry list” of insurance code allegations, the Insured also generally alleged that Companion “failed to properly adjust Plaintiff’s claim” and “relied on biased adjusters and engineers.”

After the Insured filed his Second Amended Complaint, Companion filed a Rule 12(b)(6) Motion to Dismiss on the basis that, even after two opportunities to amend his pleadings,  Plaintiff’s Second Amended Complaint still failed to properly plead a Breach of Contract claim under Federal Rule 8 and certainly failed to properly plead any extra-contractual causes of action under Rule 8 or the heightened pleading requirements of Rule 9(b).In his response, the Insured asserted that he had included sufficient facts to support his claims and that none of his claims were subject to the heightened pleading requirements of Rule 9(b).

The Court held that Plaintiff’s Second Amended Complaint failed to state a claim for breach of contract. After stating the elements for a breached contract claim under Texas law, the Court found that the Insured failed to allege what provision of the contract was breached.  Further, the Court found that the Insured failed to show how the amount offered by Companion was a breach of the contract or what he should have received under the Policy. In summary, the Court found that Plaintiff’s breach of contract claim failed as a matter of law because his “allegations are conclusory, and lack sufficient factual support.”

As to the Insured’s extra-contractual claims, the Court found that the claims under the common law duty of good faith and fair dealing, the Texas Insurance Code and Deceptive Trade Practices Act also failed to state a claim under both Rule 8 and Rule 9(b).  The Court unequivocally found that, despite Plaintiff’s argument to the contrary, the heightened pleading requirements of Rule 9(b) applied to Plaintiff’s extra-contractual claims.  The Insured generally made allegations of misrepresentations but failed to specify who made them, when and where they were made or why such statements were misrepresentations. In sum, the Court found that the mere recitation of the elements of a cause of action is not enough to state a claim in federal court. As such, all of the extra-contractual claims were dismissed as well.

Although the Insured had already had the opportunity to replead, the Court dismissed all claims without prejudice and gave the Plaintiff “one last opportunity” to replead.

[Editor’s Note: Companion was represented in this case by Mark Dyer, Kevin Sewell and Ryan Geddie of our firm and we are grateful for the opportunity to defend Companion in this case].

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