Court Opinion

ID: 21185
Source: CourtListenerOpinion
Date Created: 2010-04-25 07:42:16+00
Date Added: 2024-06-11T15:04:17.255737
License: Public Domain

IN THE UNITED STATES COURT OF APPEALS
               FOR THE FIFTH CIRCUIT

                       No. 98-10781

    ERNEST A. JANIK,   JR., INDIVIDUALLY, ON
     BEHALF OF GRANT   JOSEPH JANIK, ON BEHALF OF
        TYLER NEWMAN   JANIK; LEAH EILEEN JANIK,
   INDIVIDUALLY, ON    BEHALF OF GRANT JOSEPH JANIK,
           ON BEHALF   OF TYLER NEWMAN JANIK,

                                      Plaintiffs-Appellants,

                          versus

        CITY OF DALLAS, TEXAS, ETC., ET AL,

                                      Defendants,

CITY OF DALLAS, TEXAS, AN INCORPORATED MUNICIPALITY,

                                      Defendant-Appellee.

                       No. 98-11369

   ERNEST A. JANIK, JR., INDIVIDUALLY, ON
    BEHALF OF GRANT JOSEPH JANIK, ON BEHALF OF
      TYLER NEWMAN JANIK; LEAH EILEEN JANIK,
  INDIVIDUALLY, ON BEHALF OF GRANT JOSEPH JANIK,
          ON BEHALF OF TYLER NEWMAN JANIK,

                                      Plaintiffs-Appellants,

                          versus

        CITY OF DALLAS, TEXAS, ETC., ET AL,

                                      Defendants,
         AMICA MUTUAL INSURANCE CO., A RHODE ISLAND COMPANY;
            INSURANCE ADJUSTMENT SERVICES OF TEXAS INC.,
             A TEXAS CORPORATION, ALSO KNOWN AS INSURANCE
       ADJUSTMENT SERVICES, ALSO KNOWN AS INSURANCE ADJUSTMENT
              SERVICES INC; NOBEL SERVICE CORPORATION, A
                DELAWARE CORPORATION, DOING BUSINESS AS
                  INSURANCE ADJUSTMENT SERVICES INC.,

                                              Defendants-Appellees.

           Appeals from the United States District Court for the
                         Northern District of Texas
                               3:95-CV-2594-D

                               July 6, 2000

Before GARWOOD, WIENER and DENNIS, Circuit Judges.1

GARWOOD, Circuit Judge:

       Plaintiffs-appellants Ernest A. Janik, Jr., and Leah Eileen Janik,

individually, and as next friends of their minor children,

(collectively, the Janiks) filed suit against defendants-appellees the

City of Dallas (the City), AMICA Mutual Insurance Co. (AMICA), IAS Claim

Services, Inc., (IAS), and Nobel Service Corp. (Nobel)2, seeking

recovery for personal and property damage resulting from a sewage leak

in the basement of a home they were leasing and from the handling of

their insurance claims for losses caused by the sewage leak. The Janiks

brought numerous claims against the City, against AMICA (the Janiks’

insurer), and against IAS and Nobel (their insurance adjustors). In a

       1
      Pursuant to 5th Cir. R. 47.5 the Court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5th Cir. R. 47.5.4.
   2
    The Janiks also named Floyd E. Meyers, Noble Holdings, Inc., and
Insurance Adjustment Services of Texas, Inc., as defendants to this
action. These defendants, however, were later dismissed from the case
and are not parties to this appeal.

                                     2
series of orders, the district court granted the City summary judgment

on all claims against it. With regard to AMICA, IAS, and Nobel, the

district court granted summary judgment in their favor on several, but

not all, of the Janiks’ causes of action. The Janiks’ remaining claims

against AMICA, IAS, and Nobel proceeded to trial, and the jury returned

one liability question favorable to the Janiks against AMICA and IAS.

The district court, however, entered judgment in favor of AMICA and IAS

on this jury finding, on the basis that there was no causal link between

the sole liability finding and the damages finding. The Janiks appeal

on numerous points.    We affirm.

                   Factual and Procedural History

     In 1993, the Janiks lived in a home they were renting at 5509

Melshire Boulevard in Dallas, Texas. On Sunday, October 31, 1993, the

Janiks returned home from church to discover a liquid seeping into their

home. The Janiks attempted to clean their home and furnishings until

discovering that the water was in fact untreated sewage water. The

Janiks then stayed with a neighbor for several days and soon moved to

a different residence.

     Seeking recovery for the property damage they suffered, the Janiks

filed a claim under their renter’s insurance policy with AMICA. The day

after discovering the sewage in their leased home, the Janiks orally

notified AMICA of their claim. AMICA then referred the claim to IAS,

an independent claims adjuster, which opened a file on the Janiks’

insurance claims on November 2, 1993.      Blackmon Mooring Steamatic

(Blackmon Mooring) was retained to assist in the cleaning and moving of

the Janiks’ personal property.

                                    3
     Problems, unfortunately, soon arose. The Janiks considered AMICA

and the claims adjustors to be engaging in deliberate delay and

misrepresentation in processing the Janiks’ claims.        After several

attempts by Blackmon Mooring to clean the personal property to the

Janiks’ satisfaction, AMICA decided to treat the Janiks’ claim as a

constructive total loss.     IAS recommended that the Janiks receive

$60,000–their policy limit. However, Blackmon Mooring was owed $15,900

for its cleaning and moving services, and a dispute arose over whether

AMICA would pay the full $60,000 directly to the Janiks who would then

pay Blackmon Mooring or issue two checks, one to the Janiks and the

other to Blackmon Mooring. Eventually, the Janiks paid Blackmon Mooring

themselves, and AMICA then released the entire $60,000 to the Janiks.

In addition to the $60,000 payment for unscheduled personal property,

AMICA also provided the Janiks $4,425 in coverage for additional living

expenses. Although the Janiks do not contend that they received less

coverage than they were entitled to under the policy, they do assert

extra-contractual damages on various theories for alleged problems in

the handling of their claim. The Janiks maintain that AMICA improperly

delayed payment and improperly demanded proof of loss for payment, when

the requirement for such proof was waived by AMICA.

     On October 30, 1995, the Janiks filed suit against the City,

alleging that the City was responsible for the sewerage leak and the

resulting personal and property damages they suffered.        The Janiks

sought recovery under various theories, including trespass, conversion,

nuisance, the Texas Constitution, the Federal Clean Water Act, 33 U.S.C.

§§ 1251-1387 (CWA), the Texas Tort Claims Act, TEX. CIV. PRAC. & REM. CODE

                                    4
ANN. §§ 101.001-101.109 (TTCA), the Texas Water Code, the Texas Solid

Disposal Act, the Federal Declaratory Judgment Act, the Texas

Declaratory Judgment Act, and violations of the Fourteenth Amendment of

the United States Constitution. In their third amended complaint, the

Janiks referenced the Resource Conservation and Recovery Act, 42 U.S.C.

§ 6972 (RCRA), as an alternative standard to support their claims under

the CWA and state nuisance law. In a series of orders, the district

court granted summary judgment in favor of the City on each claim

asserted by the Janiks.

     In the same complaint, the Janiks also named AMICA, IAS, and Nobel

as defendants. The Janiks alleged inter alia that AMICA, IAS, and Nobel

were liable for negligence, gross negligence, civil conspiracy, breach

of fiduciary duty, breach of contract, quasi-contract, economic coercion

and undue influence, violations of the Texas Deceptive Trade Practices

Act (DTPA), violations of the Texas Uniform Fraudulent Transfer Act

(TUFTA), and Texas Insurance Code violations, all in connection with

their conduct and representations while adjusting the Janiks’ insurance

claims.3   In a series of orders, the district court granted summary

judgment in favor of AMICA on the following causes of action asserted

by the Janiks: breach of fiduciary duty, quasi-contract, economic

      3
         Against AMICA, the Janiks sought recovery for breach of
contract, quasi-contract, DTPA violations, bad faith, negligence, gross
negligence, economic coercion and undue influence, breach of fiduciary
duty, the Texas Declaratory Judgment Act, the Federal Declaratory
Judgment Act, civil conspiracy, unconscionability, and Texas Insurance
Code violations. The claims against IAS were based upon negligence,
gross negligence, economic coercion and undue influence, civil
conspiracy, Texas Insurance Code violations, DTPA violations, and TUFTA
violations. The Janiks sought recovery from Nobel for alleged TUFTA
violations.

                                   5
coercion and undue influence, and DTPA violations. The district court

also granted IAS summary judgment on the Janiks’ claims against it for

civil conspiracy and economic coercion. The remaining claims were tried

before a jury.

     In August 1998, the Janiks remaining claims against AMICA, IAS, and

Nobel proceeded to trial.     At the close of the Janiks’ case, the

district court granted the defendants judgment on the Janiks’ TUFTA

claim. The district court then submitted the charge to the jury. The

charge included the following liability issues: breach of contract,

breach of the duty of good faith and fair dealing, negligence, gross

negligence, negligent misrepresentation, civil conspiracy (as to AMICA),

and nineteen insurance code violations. The jury answered “yes” to only

one liability question, finding that AMICA and IAS violated the Texas

Insurance Code by “[f]ailing to acknowledge with reasonable promptness

pertinent communications with respect to claims arising under the

policy.” The jury made a damages finding of $2,815.73, representing the

“out of pocket costs to plaintiffs to clean plaintiffs’ consumer goods,

other than those requiring special remediation efforts, as to those

items that can be cleaned at a cost less than the cost of replacement.”

The jury apportioned responsibility for the loss at twenty-five percent

to AMICA and seventy-five percent to IAS.

     The district court, however, ruled that the jury’s liability

finding bore no relationship to the damages finding, specifically

determining that there was no evidence of any out-of-pocket expenses

incurred by the Janiks as a result of any delayed or inadequate

communication by IAS and AMICA. Therefore, the district court entered

                                   6
judgment in favor of AMICA and IAS.         The Janiks filed motions for

reconsideration, new trial, and judgment as a matter of law.                 The

district court denied relief on these motions. The Janiks then timely

appealed.

                                  Discussion

         On appeal, the Janiks assert that the district court erred in its

disposition of their claims against the City, AMICA, IAS, and Noble.

We affirm.

I.       The City

         The district court granted the City’s motions for summary judgment

on all of the Janiks’ claims. On appeal, the Janiks contend that the

district court committed error in four respects: (1) the district

court’s finding that the Janiks lacked Article III standing to assert

a CWA claim; (2) the district court’s decision that the Janiks had not

stated a cause of action under the RCRA4; (3) the district court’s

conclusion that the City was not liable under the TTCA; and (4) the

district court’s determination that the City’s actions did not

constitute      a   nuisance   and,   therefore,   did   not   result   in   an

unconstitutional takings. With regard to the first two issues, we agree

     4
       On appeal, the Janiks contend that even if the district court
correctly determined that they had failed to state a claim under the
RCRA, the district court erred in refusing their motion to amend their
pleadings pursuant to Rule 15 of the Federal Rules of Civil Procedure.
Whether a party should be allowed to amend his pleadings is a decision
left to the sound discretion of the district court. See Moody v. FMC
Corp., 995 F.2d 63, 65 (5th Cir. 1993). The Janiks filed their Rule 15
motion to amend their pleadings to include an RCRA claim on May 22,
1998, more than two and one-half years after filing this action and
after three previous amendments to their pleadings. We cannot conclude
that the district court abused its discretion in refusing the Janiks’
request for a fourth amendment.

                                       7
with the district court for the reasons stated in its orders, but write

further to address the last two points raised by the Janiks.

     We review a grant of summary judgment applying the same standard

as the court below was required to apply. See King v. Chide, 974 F.2d

653, 655 (5th Cir. 1992). Summary judgment is proper when no issue of

material fact exists and the moving party is entitled to judgment as a

matter of law. See id. at 656. Summary judgment evidence is viewed in

the light most favorable to the nonmovant, in this case, the Janiks, and

questions of law are reviewed de novo.                  See id.   We may affirm a

judgment on any basis raised below and supported by the record. See

Davis v. Scott, 157 F.3d 1003, 1005 (5th Cir. 1998); Davis v. Liberty

Mut. Ins. Co., 525 F.2d 1204, 1207 (5th Cir. 1976); see also 10A CHARLES

ALAN WRIGHT,   ET AL.,   FEDERAL PRACTICE   AND   PROCEDURE § 2716, at 290 (3d ed.

1998).

     The Janiks’ claims under nuisance and the TTCA are governed by

Texas law. When adjudicating claims for which state law provides the

rules of decision, we are bound to apply the law as interpreted by the

state’s highest court. See Transcontinental Gas v. Transportation Ins.

Co., 953 F.2d 985, 988 (5th Cir. 1992). If the state’s highest court

has not spoken on a particular issue, “it is the duty of the federal

court to determine as best it can, what the highest court of the state

would decide.” Id. When making such a determination, we are bound by

an intermediate state appellate court decision unless “convinced by

other persuasive data that the highest court of the state would decide

otherwise.” First Nat’l Bank of Durant v. Trans Terr Corp., 142 F.3d

802, 809 (5th Cir. 1998) (internal quotations and footnote omitted).

                                            8
We, however, “will not expand state law beyond its presently existing

boundaries.” Rubinstein v. Collins, 20 F.3d 160, 172 (5th Cir. 1994)

(footnote omitted).

      We will first consider the Janiks’ claim under the TTCA. Before

the Texas legislature enacted the TTCA, liability against a municipality

for   the   negligence   of   its   representatives   depended   upon   the

classification of the activity at issue as either a governmental

function or a proprietary function. See Dilley v. City of Houston, 222

S.W.2d 992, 993 (Tex. 1949).        The former was shielded by sovereign

immunity, while the latter was not.           Under this scheme, if a

municipality decided to provide sewer services, such services were

classified as a proprietary function and, therefore, not afforded

immunity. See City of Tyler v. Likes, 962 S.W.2d 489, 502 (Tex. 1997)

(“Common law classified operation and maintenance of storm sewers as

proprietary functions for which a municipality could be sued.”). The

TTCA, however, has largely done away with this classification system.

Under the TTCA, sovereign immunity applies to negligence claims arising

from a municipality’s construction, operation, and maintenance of its

sewer systems, except to the extent such immunity is waived by the TTCA.

See TEX. CIV. PRAC. & REM. CODE ANN. § 101.021 (1997)5; id. § 101.0215.6

      5
       Section 101.021 of the Texas Civil Practice & Remedies Code
states as follows:

      “A governmental unit in the state is liable for:
           (1) property damage, personal injury, and death
      proximately caused by the wrongful act or omission or the
      negligence of an employee acting within his scope of
      employment if:
                (A) the property damage, personal injury, or death
           arises from the operation or use of a motor-driven
           vehicle or motor-driven equipment; and

                                      9
Accordingly, the TTCA narrowed municipal liability for damages caused

by sewer systems.   City of Tyler, 962 S.W.2d at 504.       The Janiks

alleged below, and reiterate on appeal, that the City’s employees

utilized motor-driven equipment when repairing a sewer line in their

neighborhood. The Janiks contend that this equipment caused the sewage

to seep into their home, thereby falling within the purview of section

101.021 of the TTCA (see note 5, supra). Under the TTCA, the City is

immune from liability for the intentional torts of trespass and

conversion asserted by the Janiks. See TEX. CIV. PRAC. & REM. CODE ANN.

§ 101.057.7 In response to an interrogatory, the Janiks stated that

               (B) the employee would be personally liable to the
          claimant according to Texas law; and
          (2) personal injury and death so caused by a condition
     or use of tangible personal or real property if the
     governmental unit would, were it a private person, be liable
     to the claimant according to Texas law.”
     6
         Section 101.0215 reads in pertinent part:

          “(a) A municipality is liable under this chapter for
     damages arising from its governmental functions, which are
     those functions that are enjoined on a municipality by law
     and are given it by the state as part of the state’s
     sovereignty, to be exercised by the municipality in the
     interest of the general public, including but not limited to:
                . . .
                (9) sanitary and storm sewers;
                . . .
                (32) water and sewer service; and
                . . ..”
     7
         Section 101.057 provides as follows:

     “This chapter does not apply to a claim:
          (1) based on an injury or death connected with any act
     or omission arising out of civil disobedience, riot,
     insurrection, or rebellion; or
          (2) arising out of assault, battery, false
     imprisonment, or any other intentional tort, including a tort
     involving disciplinary action by school authorities.”

                                  10
they “have not asserted any ‘negligence’ cause of action (or ‘count’)

against the City of Dallas.” As the City is immune for any intentional

tort alleged against it and the Janiks have not sought recovery under

a negligence theory, there is no remaining basis for liability under the

TTCA. Therefore, the district court’s grant of summary judgment in

favor of the City on the Janiks’ claim under the TTCA is affirmed.

     The Janiks also sought recovery under a state-law takings claim,

which they based on the doctrine of nuisance. Texas courts have split

actionable nuisance into three categories: (1) the negligent invasion

of another’s interest; (2) the intentional invasion of another’s

interest; and (3) other conduct, culpable because it is abnormal and out

of place in its surroundings, that invades another’s interests. See

City of Tyler, 962 S.W.2d at 503. As noted previously, the Janiks do

not allege that the City acted negligently; therefore, the first

category of nuisance is inapplicable. Although several pre-City of

Tyler Texas courts of appeals’ decisions suggest that the Janiks may

recover under the abnormal and unusual condition branch of nuisance, see

Bible Baptist Church v. City of Cleburne, 848 S.W.2d 826 (Tex. App.—Waco

1993, writ denied); Shade v. City of Dallas, 818 S.W.2d 578 (Tex.

App.—Dallas 1991, no writ)8, the Janiks’ pleadings do not contain an

allegation that any conduct by the City was “abnormal and out of place

     8
         However, when considering a nuisance claim from excessive
flooding caused by culverts and a drainage channel, the Texas Supreme
Court focused on whether the culvert system was abnormal and out of
place in its surroundings, not whether the resulting flood waters were.
See City of Tyler, 962 S.W.2d at 504. Similarly, were we to reach the
issue in the present case, we would need to address whether the sewer
system itself, not the sewage that escaped from that system, was
sufficiently abnormal and out of place in its surroundings. There does
not appear adequate evidence that it was.

                                  11
in its surroundings.” Therefore, the Janiks are relegated to the second

type of nuisance–intentional nuisance.

      We again look to the Texas Supreme Court’s decision in City of

Tyler for guidance. Likes’s home was damaged after a drainage channel

and culverts owned by the City of Tyler flooded from heavy rains in the

area, and Likes sought recovery from the City of Tyler under a nuisance

theory. See City of Tyler, 962 S.W.2d at 503. The Texas Supreme Court

held, as a matter of law, that the City of Tyler “did not intentionally

do anything to increase the amount of water in the watershed in which

Likes’s home was located.” Id. at 504. The court based this conclusion

on the City of Tyler’s having completed the culvert system before the

Likes’s home was built and not having made any improvements since then

to increase the amount of water in the watershed where Likes’s home was

located. See id. It is undisputed that the City of Tyler intentionally

constructed the culvert system and, therefore, the court’s attention

must have been focused on the intent to cause the flooding in the

vicinity of Likes’s home. In the present case, there is no allegation,

nor any evidence, that the City intended to cause the sewage flooding

in the vicinity of the Janiks’ home. Accordingly, the Janiks’ takings

claim premised on nuisance fails.

      In conclusion, the district court did not err in granting summary

judgment in favor of the City.

II.   Insurance Defendants

      The Janiks raise several claims of error in the district court’s

disposition of their claims against AMICA, IAS, and Nobel. First, the

Janiks appeal the district court’s grant of partial summary judgment in

                                  12
favor of AMICA, IAS, and Nobel on the following causes of action:

economic coercion and undue influence, civil conspiracy, DTPA

violations,      breach   of   fiduciary    duty,   quasi-contract,    and

unconscionability. Second, the Janiks contend that the district court

erred in declining to find manifest error in the jury’s verdict,

specifically, that the Janiks had not established their claims for

breach of contract and violations of the Texas Insurance Code and

greater damages than those awarded by the jury.         Third, the Janiks

assert that the district court erred granting judgment for IAS and AMICA

on the jury’s one liability finding in the Janiks’ favor.9 We hold that

the district court did not err in any respect and rely on its reasoning

in all matters save one. We briefly address the Janiks’ contention that

AMICA breached the policy by delaying payment of their claims until

March 23, 1994, when the Janiks and AMICA had agreed on or around

February 15, 1994 that AMICA would pay the Janiks $60,000 under the

policy.

        The Janiks alleged that AMICA breached the policy by failing to pay

the Janiks’ claim within the prescribed five-day period after giving

notice of its intent to pay their claim.       On or around February 15,

1994, AMICA and the Janiks reached an agreement whereby a total loss

would be claimed on the Janiks’ damaged personal property. Therefore,

    9
       The Janiks raise two additional points of error. First, the
Janiks claim that defense counsel engaged in improper jury argument when
referring to the Janiks’ attorney as stating that the case was about
“invisible” harm when the Janiks’ attorney in fact said “indivisible”
harm. The resulting error, if any, was cured by the district court’s
instructions to the jury. Second, the Janiks complain that the district
court’s rulings on motions for summary judgment, new trial, and post-
trial judgement as a matter of law collectively deprived them of their
Seventh Amendment right to trial by jury. This claim is meritless.

                                     13
the Janiks would receive payment for the policy limit of $60,000.

However, Blackmon Mooring had submitted a bill for approximately $15,900

in expenses associated with the cleaning and moving of the Janiks’

personal property. Blackmon Mooring’s bill was to be paid out of the

$60,000 fund, and the Janiks would receive the remaining $44,100.

Confusion arose over whether or not the Janiks wanted AMICA to pay

Blackmon Mooring directly. The Janiks eventually paid Blackmoon Mooring

independently. Upon being informed of this payment, AMICA immediately

sent the Janiks a check payable to them in the amount of $60,000. Even

assuming arguendo that AMICA breached the policy by delaying payment to

the Janiks10, the Janiks have failed to establish any resulting damage

from such breach. The Janiks received payment for the policy limit and,

thus, the benefit of their bargain with AMICA. Under these facts, there

can be no recovery for this alleged breach of the policy.

     We find that the district court committed no error in its

disposition of the Janiks’ claims against AMICA, IAS, and Noble.

                              Conclusion

     The judgment of the district court is

                               AFFIRMED.

    10
        AMICA argues that the uncertainty surrounding the method of
paying Blackmon Mooring’s bill mitigated its duty to pay within five
days of notifying the Janiks that they would receive $60,000 in benefits
under the policy. In support of its position, AMICA relies on a
provision in the policy that states that, if payment of a claim requires
performance of an act by the insured, payment of the claim must be made
within five business days after the date such act is performed by the
insured. As we conclude that the Janiks suffered no injury from this
alleged breach, we need not address whether AMICA breached the policy.

                                  14