Opinion
CASE NO. 1:20-cv-00217
2021-07-27
Robert D. DILKS, Jr. and His Wife, Katye O'Dell, Plaintiffs v. PROGRESSIVE FLOOD INSURANCE PROCESSING, American Strategic Insurance Corp., and Stephen M. Biehle and His Wife, Cheryl Biehle, Defendants
Bruce Manuel Partain, Wells Peyton Greenberg & Hunt LLP, Beaumont, TX, for Plaintiffs. Bradley K. Jones, Baker & Hostetler LLP, Houston, TX, Iliaura Hands, Kim Tran Britt, Nielsen & Treas, LLC, Metairie, LA, for Defendants.
Bruce Manuel Partain, Wells Peyton Greenberg & Hunt LLP, Beaumont, TX, for Plaintiffs.
Bradley K. Jones, Baker & Hostetler LLP, Houston, TX, Iliaura Hands, Kim Tran Britt, Nielsen & Treas, LLC, Metairie, LA, for Defendants.
OPINION AND ORDER
Michael J. Truncale, United States District Judge
Before the Court is Defendants Stephen and Cheryl Biehle's ("the Biehles") Motion for Judgment on the Pleadings pursuant to Federal Rule of Civil Procedure 12(c), and in the alternative, Motion for Summary Judgment pursuant to Federal Rule of Civil Procedure 56 [Dkt. 47]. The Court has considered the motion, all relevant filings, and the applicable law. For the reasons stated below, the Court GRANTS the Biehles' Motion for Judgment on the Pleadings. [Dkt. 47].
I. BACKGROUND
Plaintiffs Robert Dilks and Katye O'Dell ("Plaintiffs") own the residence at 485 Oakland, Vidor, Orange County, Texas ("the Residence"). Plaintiffs claim that the Biehles owned the Residence from December 18, 1992 until February 4, 2019. [Dkt. 36, p. 3]. During that time, Tropical Storm Harvey made landfall and flooded the Residence. Id. The Residence sustained damage to, among other things, two HVAC units and eleven windows. Id. In 2017, the Biehles received flood insurance proceeds from their insurance company, Allstate, but, according to Plaintiffs, did not use these proceeds to replace the two HVAC units and eleven windows at the Residence. Id.
The Biehles admit that they received flood insurance proceeds in 2017 in connection with property damage at the Residence and that they used all the insurance proceeds to repair the Residence. [Dkt. 37, p. 2]. According to the Biehles, however, the insurance proceeds were depleted before the two HVAC units or eleven window units could be installed. Id. They allege that the proceeds were not nearly enough to cover the items outlined in the scope of work. Id. The Biehles sold the Residence to Eastman Capital in February 2019. [Dkt. 36, p. 4].
On September 12, 2019, Plaintiffs purchased the Residence from Eastman Capital, and at the same time, purchased standard flood insurance policy offered by ASI/Progressive. Id. Plaintiffs argue ASI/Progressive should have inspected the property at the time they issued the policy and should have informed Plaintiffs of any policy exclusions from the flood insurance coverage, specifically the exclusion of the HVAC units and windows. Id. Plaintiffs state there are no exceptions or exclusions for these damages in the policy. Id.
Plaintiffs sustained additional damage to the Residence because of Tropical Storm Imelda on September 19, 2019. Id. at 5. Plaintiffs made a claim for flood insurance proceeds from ASI/Progressive, and ASI/Progressive denied payment to Plaintiffs for some of the damage, stating that "some items that were paid for in your prior claim of 08/28/2017 and to date have not been repaired/replaced." Id. Specifically, ASI/Progressive denied payment for the two air conditioner condensers, windows, air handler, and original wood siding. Id. Plaintiffs claim that the August 28, 2017 claim referenced by ASI/Progressive was made by the Biehles to Allstate, the Biehles' flood insurer. Plaintiffs further contend that the items not repaired or replaced by the Biehles were two air conditioner condensers, windows, an air handler and original wood siding. Id.
II. LEGAL STANDARD
Rule 12(c) of the Federal Rules of Civil Procedure provides that "[a]fter the pleadings are closed—but early enough not to delay trial—a party may move for judgment on the pleadings." FED. R. CIV. P. 12(c). "The central issue [in a 12(c) motion] is whether, in the light most favorable to the plaintiff, the complaint states a valid claim for relief." Great Plains Trust Co. v. Morgan Stanley Dean Witter & Co. , 313 F.3d 305, 312 (5th Cir. 2002). A motion for judgment on the pleadings pursuant to Rule 12(c) is therefore subject to the same standard as a motion to dismiss under Rule 12(b)(6). See Johnson v. Johnson , 385 F.3d 503, 529 (5th Cir. 2004). "A motion brought pursuant to [Federal Rule of Civil Procedure] 12(c) is designed to dispose of cases where the material facts are not in dispute and a judgment on the merits can be rendered by looking to the substance of the pleadings and any judicially noticed facts." Hebert Abstract Co. v. Touchstone Props., Ltd. , 914 F.2d 74, 76 (5th Cir. 1990). The "inquiry focuses on the allegations in the pleadings and not on whether the plaintiff actually sufficient evidence has to succeed on the merits." Ackerson v. Bean Dredging LLC , 589 F.3d 196, 209 (5th Cir. 2009).
III. DISCUSSION
The Biehles move for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c), claiming that: (1) Plaintiffs lack standing to pursue any claim against the Biehles; (2) Plaintiffs fail to state a claim for money had and received; (3) Plaintiffs fail to state a claim for fraud; and (4) Plaintiffs fail to state a claim for gross negligence. [Dkt. 47, p. 2]. Because Plaintiffs fail to establish standing to sue, Plaintiffs' claims against the Biehles are dismissed for lack of subject matter jurisdiction.
The Biehles argue that Plaintiffs lack standing to bring suit because Plaintiffs cannot establish causation or redressability. First, the Biehles argue that the injury of which Plaintiffs complain is not causally related to any conduct of the Biehles because Plaintiffs had no ownership interest in the Residence at the time the Biehles were paid insurance proceeds for damage to the Residence, nor did Plaintiffs have any ownership interest in the Residence at the time the Biehles sold the Residence to Eastman Capital. [Dkt. 47, p. 5]. Plaintiffs respond that the connection between the Biehles' conduct and the Plaintiffs' injury is clear, direct and traceable because if the Biehles had properly used the insurance proceeds from their 2017 flood insurance claim, or if they had disclosed that they had not, Plaintiffs would likely not have been injured and that part of their 2019 flood insurance claim would not have been denied. [Dkt. 49, p. 6].
Second, the Biehles argue that there is no injury of which Plaintiffs complain that can be redressed by a favorable decision by this Court because any decision against the Biehles would require the Biehles to pay Eastman Capital, which is not a party to this suit. [Dkt. 47, pp. 5–6]. Plaintiffs respond that if they can recover damages from the Biehles in the amount of money ASI/Progressive deducted from Plaintiffs' 2019 flood insurance claim, Plaintiffs' injuries would be remedied. [Dkt. 49, p. 7].
Standing is a jurisdictional question which must be resolved as a preliminary matter. See Xerox Corp. v. Genmoora Corp. , 888 F.2d 345, 350 (5th Cir. 1989). In making such a determination, both the trial and reviewing courts must accept as true all material allegations of the complaint and must construe the complaint in favor of the complaining party. Id. If the Plaintiffs' standing does not adequately appear from all materials of record, the complaint must be dismissed. Id.
Article III of the United States Constitution limits federal court jurisdiction to actual cases and controversies. U.S. CONST. art. III, 2, cl. 1 ; Raines v. Byrd , 521 U.S. 811, 818, 117 S.Ct. 2312, 138 L.Ed.2d 849 (1997). A key element of the case-or-controversy requirement is that a plaintiff must establish standing to sue. Lujan v. Defenders of Wildlife , 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). Standing "involves both constitutional limitations on federal-court jurisdiction and prudential limitations on its exercise." Bennett v. Spear , 520 U.S. 154, 162, 117 S.Ct. 1154, 137 L.Ed.2d 281 (1997) (internal citation omitted). To prove Article III standing, a plaintiff must establish an (1) injury in fact that is (2) fairly traceable to the defendant's challenged action, and (3) redressable by a favorable outcome. Croft v. Governor of Tex. , 562 F.3d 735, 745 (5th Cir. 2009) (citing Lujan , 504 U.S. at 560, 112 S.Ct. 2130 ). "Failure to establish any one [element] deprives the federal courts of jurisdiction to hear the suit." Rivera v. Wyeth-Ayerst Labs. , 283 F.3d 315, 319 (5th Cir. 2002). The party invoking jurisdiction bears the burden of demonstrating that jurisdiction exists. Ramming v. U.S. , 281 F.3d 158, 161 (5th Cir. 2001).
To establish standing, the alleged injury must be "fairly ... trace[able] to the challenged action of the defendant, and not ... th[e] result [of] the independent action of some third party[.]" Delta Com. Fisheries Ass'n v. Gulf of Mexico Fishery Mgmt. Council , 259 F. Supp. 2d 511, 514–15 (E.D. La. 2003), aff'd , 364 F.3d 269 (5th Cir. 2004) (quoting Lujan , 504 U.S. at 560, 112 S.Ct. 2130 ). Where an element of standing "depends on the unfettered choices made by independent actors not before the courts and whose exercise of broad and legitimate discretion the courts cannot presume either to control or to predict ... it becomes the burden of the plaintiff to adduce facts showing that those choices have been or will be made in such a manner as to produce causation." Rivera , 283 F.3d at 321 (quoting Lujan , 504 U.S. at 560, 112 S.Ct. 2130 ).
Plaintiffs' alleged injury is not fairly traceable to the Biehles' challenged conduct because the Biehles sold the Residence to a non-party and that non-party sold the Residence to Plaintiffs. As the Biehles correctly point out, "at best, the injury of which Plaintiffs complain is causally related to Eastman Capital's failure to disclose the status of the HVAC units and windows; notably, Plaintiffs make no allegations in their live Complaint regarding Eastman Capital's failure to disclose the status of the HVAC units and windows." [Dkt. 47, p. 5]. Because Plaintiffs did not purchase the home from the Biehles, because the Biehles had no duty to use their insurance proceeds in any certain manner, and because the Biehles had no duty to make any disclosure to the Plaintiffs (a party with whom they had no transaction), Plaintiffs' claims against the Biehles are far too attenuated to meet the constitutional requirements of standing. See Rivera , 283 F.3d at 321 ; see also Myre v. Meletio , 307 S.W.3d 839, 844 (Tex. App. 2010) (finding no basis for the imposition of a duty to disclose where there is no evidence of an informal or a fiduciary relationship between defendant and home purchasers with whom defendant had no contact).
Plaintiffs have, therefore, failed to establish that their alleged injury is not the result of some independent action of some third party. Because "[f]ailure to establish any one [element] deprives the federal courts of jurisdiction to hear the suit," Plaintiffs' claims against the Biehles are dismissed for lack of subject matter jurisdiction. See Rivera , 283 F.3d at 319.
IV. CONCLUSION
For the reasons stated, Defendants Stephen and Cheryl Biehle's Motion for Judgment on the Pleadings pursuant to Federal Rule of Civil Procedure 12(c), and in the alternative, Motion for Summary Judgment pursuant to Federal Rule of Civil Procedure 56 [Dkt. 47] is GRANTED.
IT IS ORDERED that Plaintiffs claims against Defendants Stephen and Cheryl Biehle are DISMISSED with prejudice and all other pending motions filed by the Biehles are DISMISSED as moot.