Here is an opinion from the Northern District of Texas, Dallas Division, that discusses the pleadings in a lawsuit where in the property owner claims to have suffered hail damage and the insurer denied the claim. The opinion is styled, Valtex Properties LLC v. Central Mutual Insurance Company.
The insured, ValTex, sued Central for various violations of the Texas Insurance Code. The allegations are that Central violated sections, 541.060(a)(1), 541.051, 541.052, and 541.061. In response, Central filed a Rule 12(b)(6) motion to dismiss. This blog will deal with only Section 541.060(a)(1). However, the case is a good read on how the Court dealt with remaining Insurance Code sections.
To survive a motion to dismiss, a plaintiff must plead enough facts to state a claim to relief that is plausible on its face. Thread bare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice. A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully. When well-pleaded facts fail to achieve this plausibility standard, the complaint has alleged—but it has not shown—that the pleader is entitled to relief.
This Court held that ValTex failed to state a misrepresentation claim under Section 541.060(a)(1) for two reasons. First, none of the alleged misrepresentations are misrepresentations of “a material fact or policy provision relating to coverage at issue. ValTex alleges Central made the post-loss misrepresentations that:
1.Central’s “engineer’s position was that the property did not suffer damage from the. . . hailstorm”;
2.“The scope of Central’s engineer’s work had changed from determining the causation of the damage to the scope of the necessary repairs”;
3.“The estimate upon which the insurer was relying for the replacement costs for the necessary scope of repairs was higher than the estimate provided by the insured’s contractor”;
4.“The damage is ‘cosmetic’ in nature”;
5.“Coverage for new damage to the roofing system that occurred during the Policy period is to be treated under the Policy in the same manner as a vehicle that is subject to multiple collisions”;
6.Central wanted to ensure coverage if it was available;
7.There was no new damage occurring after the Policy went into effect;
8.ValTex’s claim did not trigger coverage because there was “no pecuniary loss as would be required for coverage”; and
9.Central would send a roofer to the property for the purpose of obtaining an estimate “for use in trying to settle this matter.”
None of these statements are misrepresentations of “a material fact or policy provision relating to coverage at issue. Rather, ValTex attempts to use Section 541.060(a)(1) as a statutory vehicle for contesting any statement made by Central—but the statute’s language is not so broad. Under Section 541.060(a)(1), ValTex must specify a misrepresentation that is both: (1) of “a material fact or policy provision,” and (2) “relating to coverage at issue.”
Of the above alleged misrepresentations, the majority—statements 1–4, 7, and 9—fail because they do not relate to the Policy’s coverage.
Moreover, the claims premised upon the three remaining statements fail, because regardless of whether these statements relate to coverage, they are not misrepresentations of “a material factor policy provision. The first, regarding Central’s comparison of coverage for damage to a car accident, does not mention any statement of material fact or policy provision. Likewise, the second remaining misrepresentation—that Central wanted to ensure coverage if it was available—does not implicate a material fact or policy provision. Finally,the third remaining misrepresentation, that ValTex’s claim does not trigger coverage due to the lack of pecuniary loss,does not allege a statement of a material fact or policy provision either—rather, it concerns a “difference of opinion” regarding the extent of damage.
In sum, ValTex’s Section 541.060(a)(1) claims first fail because none of the alleged misrepresentations are of “a material fact or policy provision relating to coverage at issue.”
Second, ValTex’s Section 541.060(a)(1) claims fail because ValTex has not alleged that it relied to its detriment on any of the misrepresentations. A misrepresentation claim under the Texas Insurance Code requires reliance on the misrepresentation to the plaintiff’s detriment. Here, ValTex does not allege any reliance to its detriment with respect to the statements at issue. This provides another basis for dismissal of its Section 541.060(a)(1) claims.