Insurance lawyers live on the Texas Insurance Code, Section 541.060. There is disagreement among the Federal Courts about which of the sub-sections under 541.060 require the specifics of a “fraud” pleading. This issue is discussed in a 2022, opinion from the Northern District of Texas, Dallas Division. The style of the opinion is UGM Of Dallas, Inc. d/b/a Union Gospel Mission Of Dallas, Inc. v. Harleysville Insurance Company And Laura Jones.
UGM has a insurance policy with Harleysville that covers hail damage to the insured property. UGM claimed a loss that was eventually adjusted by Jones. The facts of the case can be read in the opinion. What is discussed here is the courts coverage of whether or not the requirements of a fraud pleading applied to the section of the insurance code that was pled by UGM when a lawsuit resulted against Jones.
Defendants respond that Plaintiff fails to state a claim against Defendant Jones
that is cognizable under Texas law and also fails to satisfy the higher federal pleading
standard under Federal Rule of Civil Procedure 9(b) because these claims are “grounded
in fraud”
Defendants claim that Plaintiff fails to state a claim against Defendant Jones that is cognizable under Texas law and also fails to satisfy the higher federal pleading standard under Federal Rule of Civil Procedure 9(b) because these claims are “grounded in fraud”.
Defendants argue that Rule 9(b)’s heightened pleading standard applies to all of Plaintiff’s claims against Defendant Jones because fraud is either an element of the claim or the claim is
grounded in fraud. Defendants’ argument as to Plaintiff’s claim under Section 541.060(a)(2)
fails.
Defendants argue that Plaintiff’s factual allegations supporting the claim are averments of fraud. In support, Defendants cite the Court to Plaintiff’s allegations that Defendant Jones “indicated to [CSI] that Defendant Harleysville should pay the claim” and Defendant “Jones retained ProNet because it was known to Jones and/or Harleysville that ProNet would issue a report favorable to Harleysville which could then be used to deny or underpay Plaintiff’s claim.” These allegations are not based in fraud and, although certain Texas Insurance Code provisions are grounded in fraud, Section 541.060(a)(2) itself is not. The Court concludes Rule 8(a) applies to the Section 541.060(a)(2) claim.
This ruling is in favor of insureds. It will be interesting to see if an appeal is taken and then to see the results of that appeal.