Opinion
1:23-CV-630-DII
10-10-2023
BRIAN VARNER, Plaintiff, v. STATE FARM LLOYDS, Defendant.
REPORT AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE
MARK LANE, UNITED STATES MAGISTRATE JUDGE
TO THE HONORABLE ROBERT PITMAN UNITED STATES DISTRICT JUDGE:
Before the court is Defendant's Verified Plea in Abatement and Motion to Limit Fees (“the Motion”) (Dkt. 4). After reviewing the pleadings, the relevant case law, as well as the entire case file, and determining a hearing is not necessary, the undersigned recommends the District Court GRANT the Motion.
United States District Judge Robert Pitman, via text order, referred the Motion to the undersigned for report and recommendation pursuant to 28 U.S.C. § 636(b)(1)(B), Federal Rule of Civil Procedure 72, and Rule 1(d) of Appendix C of the Local Rules of the United States District Court for the Western District of Texas. Text Order, Jul. 11, 2023.
I. Background
This lawsuit involves a disputed property insurance claim arising from alleged damage to residential property in Pflugerville, Texas owned by Plaintiff on April 15, 2021. Dkt. 1-1 (Plaintiff's Original Petition) ¶¶8-9. State Farm issued a policy to Plaintiff which was in effect at the time of the loss. Id. ¶7.
Defendant State Farm Lloyds (“State Farm”) contends Plaintiff filed suit without providing State Farm proper pre-suit notice of its claims as required by Section 542A.003 of the Texas Insurance Code. Dkt. 4 ¶2. State Farm answered, Dkt. 1-1, before it removed the lawsuit from Texas state court. Dkt. 1. State Farm submitted its Plea in Abatement, Dkt. 4, contending that it was entitled to receive, but was not provided, the statutorily prescribed pre-suit notice of Plaintiff's claims at least sixty-one days before Plaintiff commenced suit. Id ¶3. State Farm also argues that Texas Insurance Code §542A.007(d) prohibits the recovery of attorney's fees by Plaintiff for fees incurred from the date State Farm filed its Original Answer. Id. State Farm filed its Verified Plea in Abatement less than thirty days after it filed its Original Answer. Compare Dkt. 4 (filed June 23, 2023) with Dkt. #1-1 at 22 (filed May 26, 2023).
Plaintiff argues the Motion should be denied because Plaintiff retained counsel nineteen days before Plaintiff's counsel “reasonably believed the statute of limitations would expire on Plaintiff's claim,” asserting that Plaintiff's failure to provide timely notice because of the looming statute of limitation deadline to file suit was excused under Texas Insurance Code and §541.154(c)(1) and §542A.003(d)(1). Dkt. 5 at 1, 2.
II. Analysis
The Texas Insurance Code requires pre-suit notice to contain (1) a statement of the acts or omissions giving rise to the claim, (2) the specific amount alleged to be owed by the insurer on the claim for damage to or loss of covered property, and (3) the amount of reasonable and necessary attorney's fees incurred by the claimant. TEX. INS. CODE ANN. § 542A.003(b). “Here, Plaintiff filed suit on April 27, 2023, so notice must have been given to [State Farm] by February 24, 2023.” Dkt. 5 at 2. Plaintiff did not provide pre-suit notice, Dkt. 4 ¶2, believing he was excused from the requirement to do so. Dkt. 5 at 1.
State Farm argues it was entitled to written notice of Plaintiff's “specific complaints against [State Farm], the alleged amount of actual damages being sought, and a calculation of attorney's fees purportedly incurred by the claimant . . . not later than the 61st day before the suit [was] filed.” Dkt. 4 ¶6 (citing TEX. INS. CODE §542A.003).
Plaintiff argues that pre-suit notice is “not required if giving notice is impracticable because: (1) the claimant has a reasonable basis for believing there is insufficient time to give the pre-suit notice before the limitations period will expire.” TEX. INS. CODE §542A.003(d)(1). Dkt. 5 at 2. Plaintiff argues he was unable to provide the required pre-suit notice because by the time he hired an attorney on April 19, 2023, there was insufficient time to comply with both the pre-suit notice requirement and the two-year statute of limitations. Id. at 3.
The court's conclusion in J.P. Columbus Warehousing, Inc. v. United Fire and Casualty Co is instructive:
[I]t would not be consistent with the language of section 542A.003 to conclude that sending pre-suit notice was impracticable due to a reasonable belief that there was insufficient time to send the notice based solely on the fact that Plaintiff did not hire an attorney until sixty-three days prior to the expiration of the statute of limitations, as presented in this case.
Furthermore, establishing a rule that Section 542A.003(d)(1)'s presuit notice exception applies whenever a claimant postpones hiring an attorney until the eve of the expiration of the statute of limitations, without further explanation or justification, could encourage claimants to do just that, defeating the purpose of the presuit notice requirements.J.P. Columbus, 5:18-CV-00100, 2019 WL 453378, at *6-7 (S.D. Tex. Jan. 14, 2019), report and recommendation adopted, 5:18-CV-100, 2019 WL 450681, at *6 (S.D. Tex. Feb. 4, 2019).
The Court's reasoning in J.P. Columbus is persuasive. Moreover, Section 542A.003(d)(1) requires Plaintiff to articulate “a reasonable basis for believing there is insufficient time to give the pre-suit notice before the limitations period will expire.” Id. (emphasis added). Plaintiff has failed to do so.
In Tadeo, as Trustee of John E. Milbauer Trust v. Great Northern Insurance Co, the district court similarly found that “[a] finding of impracticability, however, ought to be reserved for those instances in which pre-suit notice genuinely cannot be provided; a plaintiff should not be allowed to skirt the important requirements of the Texas Insurance Code by engaging in dilatory tactics.” No. 3:20-CV-00147-G, 2020 WL 4284710, at *8 (N.D. Tex. July 27, 2020) (emphasis added). See also, Vuong Huynh Corp. v. Certain Underwriters at Lloyds, London, No. 1:19-CV-00373, 2020 WL 6992868, at *2 (E.D. Tex. Sept. 22, 2020).
Plaintiff fails to cite a single case in support of his interpretation of the statute.
Plaintiff does not have clean hands in this matter. Plaintiff's initial claim relates to an incident that occurred on April 15, 2021. Plaintiff filed a claim two days later. By May 6, 2021, State Farm had completed its investigation, made its claim decision, and closed the claim. State Farm did not receive a contractor's estimate until April 2022 and received a letter of representation from Plaintiff's public adjuster in January 2023. But Plaintiff then waited until April 19, 2023 to retain counsel in this matter. While Plaintiff's counsel may have thereafter moved with alacrity, the fact remains that two years passed between the incident giving rise to the claim and the filing of this lawsuit. Other than the hiring of counsel at the eleventh hour, Plaintiff fails to provide any justification whatsoever, let alone “a reasonable basis,” for the consequent delays in either pursing his claim or this lawsuit.
Allowing Plaintiff to avoid his pre-suit notice obligations rewards dilatory behavior, renders the Texas Insurance Code provisions related to pre-suit notice meaningless, and incentivizes claimants to wait until the last minute to hire an attorney, all to the disadvantage of the defendants.
III. Recommendation
For these reasons, the undersigned RECOMMENDS that State Farm's Verified Plea in Abatement and Motion to Limit Fees (Dkt. 4) be GRANTED. The undersigned, accordingly, further recommends that this lawsuit REMAIN ABATED until the 60th day after Plaintiff serves State Farm with notice complying with Texas Insurance Code §541.154 and §542A.003 as well as with Texas Business and Commerce Code §17.505.
IV. Objections
The parties may file objections to this Report and Recommendation. A party filing objections must specifically identify those findings or recommendations to which objections are being made. The District Court need not consider frivolous, conclusive, or general objections. See Battles v. U.S. Parole Comm'n, 834 F.2d 419, 421 (5th Cir. 1987).
A party's failure to file written objections to the proposed findings and recommendations contained in this Report within fourteen (14) days after the party is served with a copy of the Report shall bar that party from de novo review by the District Court of the proposed findings and recommendations in the Report and, except upon grounds of plain error, shall bar the party from appellate review of unobjected-to proposed factual findings and legal conclusions accepted by the District Court. See 28 U.S.C. § 636(b)(1)(C); Thomas v. Arn, 474 U.S. 140, 150-53 (1985); Douglass v. United Services Auto. Ass'n, 79 F.3d 1415 (5th Cir. 1996) (en banc).