Court Opinion

ID: 4437000
Source: CourtListenerOpinion
Date Created: 2019-09-11 01:00:18.974878+00
Date Added: 2024-06-11T14:53:00.445133
License: Public Domain

Case: 18-10713      Document: 00515112089         Page: 1    Date Filed: 09/10/2019

           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT
                                                                        United States Court of Appeals
                                                                                 Fifth Circuit

                                      No. 18-10713                             FILED
                                                                       September 10, 2019
                                                                          Lyle W. Cayce
UNIVERSITY BAPTIST CHURCH OF FORT WORTH,                                       Clerk

       Plaintiff - Appellant

v.

YORK RISK SERVICES GROUP INCORPORATED,

       Defendant – Appellee

                   Appeal from the United States District Court
                        for the Northern District of Texas
                              USDC No. 4:17-CV-962

Before STEWART, Chief Judge, and JONES, and OWEN, Circuit Judges.
PER CURIAM:*
       This case involves an insurance dispute between University Baptist
Church of Fort Worth (“UBC”) and an insurance adjuster, York Risk Services. 1
UBC appeals from the district court’s dismissal of its claims on a Fed. Rule
Civ. Pro. 12(b)(6) motion, and the church maintains that it adequately alleged
violations of the Texas Insurance Code and the Deceptive Trade Practices Act

       * 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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH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.
       The court also heard oral argument in the related case between UBC and Lexington
       1

Insurance Company. See University Baptist Church of Fort Worth v. Lexington Insurance
Company, No. 18-11415 (N.D. Tex. filed Nov. 1, 2018).
     Case: 18-10713      Document: 00515112089        Page: 2    Date Filed: 09/10/2019

                                     No. 18-10713
(“DTPA”). Finding no reversible error of fact or law, we AFFIRM the district
court’s judgment.
      The dispute in this case concerns how the insurance adjuster 2 and
adjusting company (York) handled UBC’s insurance claim for municipal code
upgrade work under the insurance policy’s code and ordinance endorsement.
Following storm damage to the church’s tile roof, UBC submitted a claim with
its insurance company, Lexington. In addition to coverage for storm and other
damage, the insurance policy included a code and ordinance endorsement,
which covered up to $250,000 for any repairs deemed necessary to bring the
building into compliance with city building codes. The City of Fort Worth
required UBC to do code upgrade work, which was performed by the church’s
roofer, Jeff Eubank Roofing. Because Eubank initially submitted a fixed bid
for about $286,000, the church claims it could have had the work completed for
$35,798 in out-of-pocket costs over and above the policy limit. The church
asserts that Eubank was willing to honor its fixed bid. But the adjuster,
realizing that Eubank’s bid was seriously deficient, instead directed the roofer
to perform the work on a time-and-materials basis due to the unique nature of
the construction. As a result, although the insurance company fulfilled its
obligation and paid the policy limit, the church eventually had to pay an
additional $614,148.49 in out-of-pocket costs.
      UBC contends that York’s actions denied it the benefit of the original
bargain with Eubank and that York violated various provisions of the Texas
Insurance Code and DTPA. 3 UBC alleged that York violated four sections of

      2  The adjuster was Kevin Forman, a York employee, who was dismissed without
prejudice for non-diversity once the case was removed to the federal forum.

      3 The district court properly dismissed UBC’s additional theory, concluding that any
promises alleged by UBC were too indefinite to support offensive promissory estoppel.

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                                   No. 18-10713
the Insurance Code: §§ 541.060(a)(1), 541.060(a)(2), (a)(3), and (a)(7). These
provisions, as codified at the time the case was filed, provide as follows. Section
541.060(a)(1) prohibits: “misrepresenting to a claimant a material fact or
policy provision relating to coverage at issue.” Tex. Ins. Code § 541.060 (Lexis
Advance 2016).       The relevant portion of Section 541.060(a)(2) sanctions:
“failing to attempt in good faith to effectuate a prompt, fair, and equitable
settlement of . . . a claim with respect to which the insurer’s liability has
become reasonably clear . . . .” Id. Section 541.060(a)(3) prohibits: “failing to
promptly provide to a policyholder a reasonable explanation of the basis in the
policy, in relation to the facts or applicable law, for the insurer’s denial of a
claim or offer of a compromise settlement of a claim.” Id. Section 541.060(a)(7)
prohibits “refusing to pay a claim without conducting a reasonable
investigation with respect to the claim.” Id.
      The DTPA provision at issue is Section 17.50(a)(4) which provides that:
“[a] consumer may maintain an action where any of the following constitute a
producing cause of economic damages or damages for mental anguish: . . . the
use or employment by any person of an act or practice in violation of
Chapter 541, Insurance Code.” Tex. Bus. & Com. Code Ann. § 17.50(a)(4)
(Lexis Advance 2017)). 4 A violation of this Section, as pled by UBC, requires
an underlying violation of the Insurance Code, and so the DTPA claim will rise
or fall based on the Insurance Code claims.            See Effinger v. Cambridge
Integrated Servs. Grp., 478 Fed. Appx. 804, 807 (5th Cir. 2011) (where DTPA
claim was dependent upon Chapter 541 claims, when such claims failed, the
DTPA claim also failed).

      4  On appeal, UBC has purposefully waived two of its three DTPA claims, choosing
instead to focus on only § 17.50(a)(4).
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                                     No. 18-10713
      The district court dismissed UBC’s claims on a Rule 12(b)(6) motion,
reasoning that adjusters are not covered by the relevant sections of the Code;
that UBC failed to adequately plead claims under the Code; that UBC failed to
satisfy Rule 9(b) as to the DTPA allegations; and that any promise made was
too vague and indefinite to support offensive promissory estoppel.
      This court reviews rulings on motions to dismiss de novo, under the same
standards applicable to the district court. See Rogers v. Bromac Title Servs.,
L.L.C., 755 F.3d 347, 350 (5th Cir. 2014). To survive a motion to dismiss, a
complaint “must contain sufficient factual matter, accepted as true, to ‘state a
claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 670 (2007)). “But
where the well-pleaded facts do not permit the court to infer more than the
mere possibility of misconduct, the complaint has alleged—but it has not
‘show[n]’—‘that the pleader is entitled to relief.’” Id. at 679 (quoting Fed. R.
Civ. P. 8(a)(2)). The court need not credit bare legal conclusions that are
unsupported by any factual underpinnings.              See id. at 679 (“While legal
conclusions can provide the framework of a complaint, they must be supported
by factual allegations.”).
      On appeal, UBC presses the same arguments offered below and provides
no new legal arguments or factual allegations on which the district court did
not rule. 5 We heard oral arguments on this appeal and have studied the briefs
and relevant portions of the record.            Assuming, without deciding, that
insurance adjusters can be held liable under the Texas Insurance Code for the
types of violations alleged by UBC, we agree with the district court’s judgment
that UBC has failed to state any claim upon which relief could be granted.

      5  While UBC expands its discussion of the facts on appeal, the Amended Complaint is
quite barebones and consists primarily of reciting the elements of the various statutory
prohibitions.
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                                 No. 18-10713
UBC failed to allege that York misrepresented a “material fact” about policy
coverage, as described in Section 541.060(a)(1).       None of York’s actions
reflected lack of good faith in effectuating a prompt, fair and equitable
settlement of UBC’s claim, per Section 541.060(a)(2).                 Under UBC’s
allegations, York did not fail to provide a “reasonable explanation…for the
denial   of   a   claim,”   because   there   was    no      denied    claim,   per
Section 541.060(a)(3). And York did not “refus[e] to pay a claim” as proscribed
by Section 541.060(a)(7). Moreover, the sole remaining DTPA claim, being
derivative of Insurance Code claims, is also insufficient.
      Finding no reversible error of fact or law, we AFFIRM the district court
judgment for essentially the reasons articulated by that court.

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