Misrepresentation In Selling An Insurance Policy

Kennedale insurance lawyers need to read this recent opinion from the United States District Court, Dallas Division. It is styled, Renee Davis and Reginald Davis v. State Farm Lloyds and Leah Suzanne McGee.
This is a case that was filed in State Court against State Farm and the agent, McGee, and removed to Federal Court by the Defendants based on Federal diversity jurisdiction. Davis sought to have the case remanded to the State Court. This court denied that request. There are more than a couple issues in this case but the part dealing with misrepresentation by the agent is what will be discussed.
Davis alleges that their insured property was damaged but that State Farm “failed to pay the full proceeds of the policy” and failed to settle the claim in an adequate and timely manner. With respect to the insurance agent McGee, Davis alleged that McGee “constantly assured Plaintiffs that they were adequately insured even though a reasonable and prudent insurance agent would testify otherwise.” They further allege that McGee “misrepresented to Plaintiffs that the insured person was covered by such peril although State Farm denied such coverage.” It thus appears that Davis claim they have been wrongfully denied full coverage for the damages sustained to their property, although there is no information as to the event that caused the damage, the nature or extent of the damage, and the circumstances underlying State Farm’s alleged denial of full coverage. As a result Davis sued McGee for negligent misrepresentation, among other causes.
Davis alleged that McGee made a negligent misrepresentation regarding their insurance policy. To state a claim for negligent misrepresentation, a plaintiff must establish that (1) the defendant made a representation in the course of his business, or in a transaction in which he has a pecuniary interest; (2) the defendant supplied false information for the guidance of others in their business; (3) the defendant did not exercise reasonable care or competence in obtaining or communicating information; and (4) the plaintiff suffered pecuniary loss by justifiably relying on the representation. In addition, “the false information complained of in a negligent representation claim ‘must be a misstatement of an existing fact rather than a promise of future conduct.'”
The Original Petition echoes these elements in a general fashion, supplementing them only with the assertion that “Defendant Insurance Agent misrepresented to Plaintiffs that the insured person was covered by such peril although Defendant Insurance Company denied such coverage.” They further add that “from the time of sale of her policy to date, Defendant Insurance Agent constantly assured Plaintiffs that they were adequately insured even though a reasonable and prudent insurance agent would testify otherwise.”
These allegations lack factual support or context from which the Court can draw the reasonable inference that McGee is liable for negligent misrepresentation. First, the statement that Plaintiffs were “covered by such peril” points to no facts regarding what this “peril” is and fails to disclose what McGee misrepresented. With respect to the statement that Plaintiffs were “adequately insured,” Plaintiffs’ pleadings and briefing fail to explain what this vague term means, how it relates to the loss to their property, and whether this was, in fact, a misrepresentation. Therefore, outside Plaintiffs’ recitation of the elements of the claim, they allege no facts indicating what misrepresentation McGee made, how they relied on McGee’s statements, and what damages this led them to incur. Although Plaintiffs’ petition includes the generic assertion that they incurred “actual damages, exemplary damages, interest, and court costs,” there are no allegations indicating what loss Plaintiffs suffered and how such loss was caused by their justifiable reliance on McGee’s misrepresentations. In short, Plaintiffs’ allegations are a collection of threadbare recitals of the elements of the claim, conclusory statements, and even ambiguous assertions that provide no facts to indicate the viability of the negligent misrepresentation claim.
Thus, on this element of the claim, Davis’s Motion to Remand was denied.