Dallas Fort Worth Insurance Lawyer Blog
Lawyers who handle insurance claims have to know the pleading requirements for alleging fraud when a lawsuit ends of in Federal Court. Otherwise, the fraud allegations can be thrown out of Court. This is illustrated in a February 2020 opinion from the Southern District of Texas, Houston Division. The opinion is styled, Nancy Roberson v. Allstate Vehicle and Property Insurance Company.
This is a claim for roof damage alleged to have resulted from storms in Houston. Roberson had filed two previous lawsuits which she had voluntarily dismissed. In this third lawsuit, Allstate has moved for summary judgment and for a judgment on the pleadings. This Court granted the motion for summary judgment in favor of Allstate.
Roberson’s common law fraud claim must satisfy Federal Rule of Civil Procedure 9(b). This Rule requires a plaintiff to state the circumstances of an alleged fraud with particularity. The elements of Texas common law fraud are (1) that a material representation was made; (2) the representation was false; (3) when the representation was made, the speaker knew it was false or made it recklessly without any knowledge of the truth and as a positive assertion; (4) the speaker made the representation with the intent that the other party should act upon it; (5) the party acted in reliance on the representation; and (6) the party thereby suffered injury. Roberson must state the who, what, when, where, and how of the alleged fraud by pleading the time, place, and contents of the false representation, as well as the identity of the person making the misrepresentations and what that person obtained thereby.
As a result that this is Roberson’s third lawsuit on the same dispute, the record includes ample discovery. Careful examination of the record shows that undisputed evidence entitles Allstate to summary judgment. There is no reasonable basis to find that, or material factual dispute as to whether, Allstate committed fraud. Roberson’s retained roofing contractor, Jake Albert of Redemption Roofing, testified that: the April 2016 storm damaged only part of Roberson’s roof; a partial roof replacement would be sufficient; Allstate accurately estimated the cost to repair the roof; and Redemption Roofing agreed to complete the repairs outlined in the Allstate estimate for the value of the Allstate estimate. Roberson testified that she had intended to do a partial roof replacement to replace the part of her roof that was damaged in the April 2016 storm. The evidence shows that the roof repair work has not been done because Roberson’s homeowner’s association did not permit the partial roof replacement that was called for, and the covered damage did not extend to a full roof replacement.
In her deposition, Roberson agreed that Allstate would not be required to pay for an entire roof replacement just because her homeowner’s association rejected a partial replacement. She also disclaimed any fraud or misrepresentation by Allstate or its adjustors, testifying as follows:
Q. Do you contend that any of the Allstate representatives you spoke to made any misrepresentations to you?
A. No.
Q. Do you believe Edward Felchak made any misrepresentations?
A. No.
Q. Do you believe Kristee Eldridge made any misrepresentations?
A. No.
Q. Do you believe that anyone from Allstate told you something that was untrue?
A. No.
Q. Was Edward Felchak courteous to you?
A. Very, yes.
Q. And was Kristee Eldridge courteous to you?
A. Yes, very.
Q. Do you believe that they were trying to do a good job?
A. Yes.
Q. Do you believe that anyone from Allstate failed to disclose information to you with respect to your claims?
A. No.
Q. Do you believe that Edward Felchak intentionally ignored damages to your property during his inspection?
A. No.
Q. Do you believe Kristee Eldridge intentionally ignored damages to your property?
A. No.
Q. Do you believe anyone from Allstate intentionally ignored damages to your property relating to this claim?
A. No.
Q. Is there anything that you believe Allstate should have done to investigate your claim that they did not do?
A. I don’t know the answer to that. I’m going to say no, but I’m not aware of what else would—that that would encompass, no.
Q. Do you think Kristee Eldridge should have taken any further action than what she did?
A. I don’t think so from—no. I—I think she did what she could do actually.
Q. And the same with Mr. Felchak?
A. I believe.
Q. And sitting here today, your complaint is not that Allstate failed to identify any damages, it’s just that you don’t believe that they paid enough; is that correct?
A. That’s correct.
Finally, Allstate served written discovery asking Roberson to identify: (1) the factual bases for her assertion that “Felchak and Eldridge (the adjustors) had a vested interest in undervaluing the claim assigned to them by Allstate in order to maintain their employment”; and (2) all communications that Roberson contends were “fraudulent” or “contained a misrepresentation of any material fact.” The sworn discovery answers failed to identify responsive information. When Allstate challenged the sufficiency of these answers in state court, Roberson’s counsel responded that, “Defendants have had a chance to depose Plaintiff, and have ascertained from Plaintiff the specific complaints she has against all Defendants.” The deposition testimony makes clear that Roberson knows no basis to find fraud. The discrepancies between Allstate’s estimates and Roberson’s own expert estimates show at most a bona-fide dispute over covered loss amounts, not fraud. Even if Roberson had competent summary judgment evidence that the entire roof was damaged and should be replaced, such evidence is not enough to create a factual dispute material to determining whether Allstate committed fraud in its communications with Roberson or in denying her a full roof replacement.