Opinion
Civil Action 7:24-CV-00103-O
11-25-2024
GEORGE'S AIRCRAFT REPAIR, LLC, Plaintiff, v. TRAVELERS LLOYDS INSURANCE COMPANY, Defendant.
FINDINGS, CONCLUSIONS, AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE
HAL R. RAY, JR., UNITED STATES MAGISTRATE JUDGE
Before the Court are the Motion for Partial Summary Judgment, Brief in Support, and Appendix (ECF Nos. 5, 6, and 7, respectively) (the “MPSJ”) that Travelers Lloyds Insurance Company (“Travelers”) filed; Plaintiff's Response and Appendix (ECF Nos. 12, 13); and Travelers' Reply and Appendix (ECF Nos. 15, 16). By Order dated August 8, 2024, United States District Judge Reed O'Connor referred the motion and all related pleadings to the undersigned for hearing, if necessary, and determination or recommendation under 28 U.S.C. § 636(b)(1). ECF No. 9. After reviewing the pleadings, summary judgment evidence, and applicable legal authorities, the undersigned RECOMMENDS that Judge O'Connor GRANT the MPSJ.
I. BACKGROUND
This case involves a claim for insurance coverage and damages. George's Aircraft Repair, LLC (“GAR”) had an insurance policy that Travelers issued, covering GAR's private airport and repair facility. ECF No. 1-1 at 7. On May 4, 2022, a tornado struck the facility, causing substantial damage to airplanes that were being repaired and to other property. Id. GAR alleges that it filed a proper claim for the damage and that Travelers has not paid damage despite coverage under its policy. Id. GAR initially sued Travelers in state court for breach of contract, breach of the duty of good faith and fair dealing, violations of the Texas Insurance Code, Texas Deceptive Trade Practices Act, and Texas Prompt Payment of Claims Act, and gross negligence. Id. at 9-13.
Travelers timely removed the case to this Court on July 24, 2024. ECF No. 1. On August 5, 2024, Travelers filed the pending MPSJ, seeking to limit GAR's attorney's fees because GAR did not give timely presuit notice as Texas Insurance Code Chapter 542A requires. ECF No. 5.
II. LEGAL STANDARD
Under Federal Rule of Civil Procedure 56, summary judgment is proper when “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56; Slaughter v. S. Talc. Co., 949 F.2d 167, 170 (5th Cir. 1991). Disputes concerning material facts are genuine “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). “An issue is ‘material' if it involves a fact that might affect the outcome of the suit under the governing law.” Burgos v. Sw. Bell Tel. Co., 20 F.3d 633, 635 (5th Cir. 1994). “The movant bears the burden of identifying those portions of the record it believes demonstrate the absence of a genuine issue of material fact.” Triple Tee Golf, Inc. v. Nike, Inc., 485 F.3d 253, 261 (5th Cir. 2007) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322-25 (1986)).
When a movant carries its initial burden, the burden then shifts to the nonmovant to show that the entry of summary judgment would be improper. Duckett v. City of Cedar Park, 950 F.2d 272, 276 (5th Cir. 1992). Although the nonmovant may satisfy this burden by tendering depositions, affidavits, and other competent evidence, “conclusory allegations, speculation, and unsubstantiated assertions are inadequate to satisfy the nonmovant's burden.” Douglass v. United Servs. Auto. Ass'n, 79 F.3d 1415, 1429 (5th Cir. 1996) (en banc). Merely colorable evidence or evidence not significantly probative will not defeat a properly supported motion. Anderson, 477 U.S. at 249-50. Furthermore, a mere scintilla of evidence will not defeat a motion for summary judgment. Id. at 252; Davis v. Chevron U.S.A., Inc., 14 F.3d 1082, 1086 (5th Cir. 1994).
The Court views summary judgment evidence in the light most favorable to the party opposing the motion. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Rosado v. Deters, 5 F.3d 119, 123 (5th Cir. 1993). Additionally, it resolves factual controversies in favor of the nonmovant, but only when both parties have submitted evidence of contradictory facts, thus creating an actual controversy. Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc). In the absence of any proof, however, the Court does not assume that the nonmovant could or would prove the necessary facts. Id.
In considering the motion, the Court looks at the full record including the pleadings, depositions, answers to interrogatories, admissions, and affidavits. Fed.R.Civ.P. 56(c); Williams v. Adams, 836 F.2d 958, 961 (5th Cir. 1988). However, the Court's function is not “to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial.” Anderson, 477 U.S. at 242-43. The Court grants the motion only if the movant meets its burden and the nonmovant fails to make the requisite showing of a genuine issue of material fact. Fed.R.Civ.P. 56; Duckett, 950 F.2d at 276.
III. ANALYSIS
Texas Insurance Code § 542A.003(a) requires that “not later than the 61st day before the date a claimant files an action to which this chapter applies in which the claimant seeks damages from any person, the claimant must give written notice to the person in accordance with this section as a prerequisite to filing the action.” Tex. Ins. Code § 542A.003(a) (West 2024). The code further states that:
[i]f a defendant in an action to which this chapter applies pleads and proves that the defendant was entitled to but was not given a presuit notice stating the specific amount alleged to be owed by the insurer under Section 542A.003(b)(2) at least 61 days before the date the action was filed by the claimant, the court may not award to the claimant any attorney's fees incurred after the date the defendant files the pleading with the court. A pleading under this subsection must be filed not later than the 30th day after the date the defendant files an original answer in the court in which the action is pending.Tex. Ins. Code § 542A.007(d).
Travelers contends that “[b]ecause [GAR] is seeking damages based on a first-party property claim involving damage resulting from a force of nature, specifically a tornado, [GAR] is required to comply with the notice requirements under section 542A.003 of the Texas Insurance Code.” ECF No. 6 at 6. Travelers asserts that “[GAR] failed to provide any notice to Travelers prior to filing this suit.” Id. at 8. Travelers also claims that it filed the MPSJ “within thirty days of the date its answer was filed as required under section 542A.007.” Id. at 9.
GAR offers three reasons why the Court should deny the MPSJ. First, “[s]ummary adjudication is not an appropriate or viable remedy for limiting the time period for a single element of damages.” ECF No. 12 at 5. Second, “[GAR's] reasonable belief that the limitations period was set to expire protects [its] full attorney's fees entitlement.” Id. at 10. Third, the issue of attorney's fees raises a fact issue the Court should not address “until basic discovery has occurred” or the Court grants a continuance for additional discovery to take place. Id. at 15-16.
A. The MPSJ is a proper procedural vehicle to resolve this issue.
GAR asserts that summary judgment is an improper remedy for the relief Travelers seeks. In support of this argument, GAR relies on a case in which the court denied summary judgment as to attorney's fees under section 542A.007(d). ECF No. 12 at 7; Moncivais v. Allstate Texas Lloyd's, 5-18-CV-00525-OLG-RBG, 2020 WL 5984059 (W.D. Tex. Oct. 8, 2020), rec. adopted, 2020 WL 13199004 (W.D. Tex. Dec. 14, 2020). However, the court in Moncivais denied summary judgment because the defendant did not timely plead and prove the lack of notice under section 542A.007(d). Id. at *3. Further, the court stated that even if the defendant had properly pleaded it, summary judgment would not be proper since the plaintiff still could obtain attorney's fees for the period before the plaintiff filed the section 542A.007(d) pleading. Id. Here, Travelers seeks to limit GAR's “attorneys fees incurred after the date [the MPSJ was] filed.” ECF No. 6 at 7. Thus, Travelers does not seek to prevent recovery of all of GAR's attorney's fees, only those that the language of section 542A.007(d) itself addresses. Consequently, Moncivais is not persuasive on this issue.
Further, as Travelers notes, the Texas Insurance Code “does not provide guidance on the procedural tool to be used to ‘plead and prove' the lack of presuit notice, [but] courts in this District have indicated that a motion for summary judgment is an appropriate procedure to raise this issue.” ECF No. 15 at 2. United States District Judge Mark T. Pittman suggested in an order dated April 18, 2023 that a motion for summary judgment is a proper procedure to seek limitation of attorney's fees for failure to provide presuit notice. See Order, Sellers v. Am. Econ. Ins. Co., No. 4:23-cv-00319-P, ECF No. 19 (N.D. Tex. Apr. 18, 2023).
Finally, the language of Federal Rule Civil Procedure 56 provides that this motion is timely and proper. Under the rule, “a party may file a motion for summary judgment at any time until 30 days after the close of all discovery.” Fed.R.Civ.P. 56(b). According to the scheduling order in this case, the discovery cut-off is March 28, 2025. ECF No. 11. Because discovery in this case does not close for nearly four months, this MPSJ is timely. Thus, GAR's argument that the MPSJ is not an available to Travelers on the facts of this case is unavailing.
B. GAR has not shown that it was excused from providing timely notice.
Section 542A provides that “[a] presuit notice under Subsection (a) 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 presuit notice before the limitations period will expire[.]” Tex. Ins. Code § 542A.003(d)(1).
GAR argues that it “felt compelled to file suit when it did” because Travelers sent correspondence on May 27, 2022, and June 28, 2022, and that both “could be interpreted as beginning claim accrual[.]” ECF No. 12 at 12-13. Thus, the two-year statutory deadline for filing suit would be either in May or June 2024. Id. GAR asserts that because it “felt compelled to file,” it had a plausible reason for failing to provide timely presuit notice to Travelers, and its intent was not “to circumvent the notice requirement of Section 542A.” Id. at 13.
Travelers responds that “[i]f [GAR] had concerns that limitations would run by May 28, 2024, the day suit was filed, based on a letter sent on May 27, 2022, it knew of those concerns in 2023 when it retained counsel and has no excuse for not providing statutory notice earlier.” ECF No. 15 at 7. Travelers continues that “[i]f limitations has not run, as Plaintiff references twice in its response, Plaintiff had no need to file suit and violated the statute by filing suit without sending a presuit notice.” Id.
The Court notes at the outset that “[a] finding of impracticability ... ought to be reserved for those instances in which presuit 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.” Tadeo as Tr. of John E. Milbauer Tr. v. Great N. Ins. Co., No. 3:20-cv-00147-G, 2020 WL 4284710, at *8 (N.D. Tex. July 27, 2020). And as would be expected when examining facts to see if a plaintiff met the standard, “most federal courts observe that the impracticability exception in Section 542A.003(d) is a difficult standard to meet.” D. Reynolds Co., LLC v. AGCS Marine Ins. Co., No. 3:23-cv-2224-E, 2024 WL 3585636, at *2 (N.D. Tex. July 15, 2024), rec. adopted, No. 3:23-cv-2224-E, 2024 WL 3585601 (N.D. Tex. July 30, 2024) (quoting Lionhead Prop. v. AmGUARD Ins. Co., No. SA-22-CV-701-OLG, 2023 WL 4279321, at *2 (W.D. Tex. Mar. 14, 2023).
To excuse GAR from not providing the required notice, “... impracticability must be supported by a ‘reason independent from simply stating that the impending expiration of the limitations period made notice impracticable.'” M Cent. Residences Condo. Ass'n Inc. v. Tech. Ins. Co., No. 3:23-cv-0640-D, 2023 WL 4089388, at *2 (N.D. Tex. June 20, 2023) (quoting Hosp. Operations, LLC v. Amguard Ins. Co., 2019 WL 11690209, at *2 (E.D. Tex. Dec. 2, 2019)). As Judge Fitzwater found, a plaintiff who does not provide timely presuit notice must offer evidence supporting its excuse other than simply its fear that limitations might run. GAR has not done so here.
Likewise, a court in the Western District of Texas rejected a similar argument “that the action was filed because [plaintiff] believed that the statute of limitations could run,” for “lack of reasonability.” Lionhead, 2023 WL 4279321, at *2. The court there noted that “the information concerning when the statute of limitations would accrue and expire was clearly available to Plaintiff.” Such is the case here as well. GAR acknowledges that the limitations period for its claims is two years, and the evidence shows that it had months after it retained counsel in September 2023 to provide the requisite presuit notice before the limitations period expired two years after receiving the May and June 2022 correspondence from Travelers. On the summary judgment evidence, the Court concludes that GAR has not presented an issue for trial on the impracticability of giving proper notice under section 542A.
The summary judgment evidence shows that GAR had ample time to give Travelers the notice that the statute requires. As Travelers details in its Brief in Support of the MPSJ, GAR:
had knowledge of its claims on or before June 28, 2022, when the last claim payment was issued for contents.. .At the latest, [GAR] had knowledge of its claims by September 1, 2023, when it retained counsel.. .[GAR] therefore had knowledge of its claims at least 299 days before limitations would have run and filed suit approximately eight months after it had that knowledge.ECF No. 6 at 9. GAR did not provide the notice, and its reason for not doing so is not legally sufficient to show impracticability under section 542A.
C. Further discovery or a continuance is unnecessary to resolve the MPSJ.
Finally, GAR argues that the Court should deny the MPSJ to permit further discovery or should grant a continuance to permit additional discovery. GAR urges both points so that it can “establish whether [it] ‘ha[d] a reasonable basis for believing there [was] insufficient time to give the presuit notice before the limitations period [would have] expire[d].'” ECF No. 12 at 16 (quoting Tex. Ins. Code § 542A.003(d)(1)). Neither request is warranted on the summary judgment record.
The language of Chapter 542A supports the conclusion that discovery is not necessary here. Under the statute, Travelers must file a pleading showing that it was entitled to but did not receive presuit notice within thirty days after filing its answer. Tex. Ins. Code § 542A.007(d). As Travelers asserts in its reply, “[b]ecause a 26(f) conference has to take place before discovery requests can be served, there is no time to conduct discovery before a motion seeking relief under section 542A must be filed.” ECF No. 15 at 9. In this case, the Court already entered the Scheduling Order under Rule 26(f) on August 22, 2024, and the parties have been able to conduct discovery for three months.
Further discovery or a continuance is not reasonably necessary to uncover the reasons that GAR did not provide presuit notice. GAR contends that “[o]nly discovery can ferret out the represented to the Court that it filed the petition without giving notice because it was concerned about the running of the statute of limitations. See ECF No. 12 at 12-13. No additional discovery or continuance would change that reason or the effect that it has on GAR's claim for attorney's fees incurred after Travelers' filing of the MPSJ on the summary judgment record before the Court.
IV. CONCLUSION
Summary judgment is a proper procedural vehicle for presenting a request to limit attorney's fees under Texas Insurance Code section 542A. The summary judgment evidence shows that GAR did not provide timely notice here and that there is no genuine issue of material fact as to its entitlement to attorney's fees incurred after Travelers filed the MPSJ on August 5, 2024. Further, there is no genuine issue of material fact for trial that GAR's providing notice under section 542A was “impracticable because .. [of its] reasonable basis for believing there [was] insufficient time to give the presuit notice before the limitations period [would] expire.” There is no reasonable basis to believe that additional discovery or a continuance would raise a fact issue on the issues that the MPSJ presents. Accordingly, the undersigned RECOMMENDS that Judge O'Connor GRANT Travelers' Motion for Partial Summary Judgment (ECF No. 5) and order that GAR cannot recover its attorney's fees incurred after August 5, 2024 to which it otherwise would be entitled under the provisions of the Texas Insurance Code.
A copy of these findings, conclusions, and recommendation shall be served on all parties in the manner provided by law. Any party who objects to any part of these findings, conclusions, and recommendation must file specific written objections within 14 days after being served with a copy. See 28 U.S.C. § 636(b)(1)(B) and Fed.R.Civ.P. 72(b)(1). In order to be specific, an objection must identify the specific finding or recommendation to which objection is made, state the basis for the objection, and specify the place in the magistrate judge's findings, conclusions, and recommendation where the disputed determination is found. An objection that merely incorporates by reference or refers to the briefing before the magistrate judge is not specific. Failure to file specific written objections will bar the aggrieved party from appealing the factual findings and legal conclusions of the magistrate judge that are accepted or adopted by the district court, except upon grounds of plain error. See Douglass v. United Services Auto. Ass'n, 79 F.3d 1415, 1417 (5th Cir. 1996) (en banc), modified by statute on other grounds, 28 U.S.C. § 636(b)(1) (extending the time to file objections to 14 days).