Opinion
SA-21-CV-510-OLG
04-02-2024
DONALD HOPE and ERICA HOPE, Plaintiffs, v. STATE FARM LLOYDS, Defendant.
REPORT AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE
Henry J. Bemporad United States Magistrate Judge
To the Honorable United States District Judge Orlando L. Garcia:
This Report and Recommendation concerns the Motion for Summary Judgment Regarding Plaintiff's Extra-Contractual Claims (“the Motion”) filed by Defendant State Farm Lloyds (“State Farm”). (Docket Entry 27). The Motion has been referred to the undersigned for consideration. (See Text Order Dated Dec. 18, 2023.) For the reasons set out below, I recommend that the Motion be GRANTED IN PART and DENIED WITHOUT PREJUDICE IN PART.
I. Jurisdiction.
Plaintiffs Donald Hope and Erica Hope filed suit in the 225th District Court, in Bexar County, Texas, alleging breach of contract, violations of the Texas Deceptive Trade Practices Act (“DTPA”), violations of the Texas Insurance Code, and breach of the common law duty of good faith and fair dealing. (Docket Entry 1-1, at 2; Docket Entry 1-2 at 8-14.) State Farm removed the case to this Court on the basis of diversity jurisdiction. (Docket Entry 1 at 2-3.) The Court has original jurisdiction over this matter pursuant to 28 U.S.C. §§ 1332 and 1441. The undersigned has authority to issue this recommendation pursuant to 28 U.S.C. § 636(b)(1)(B).
II. Background.
This case presents a dispute whether a home insurance policy Plaintiffs purchased from State Farm (“the Policy”) covers alleged damage to their concrete-tile roof from a hailstorm that occurred on or about May 28, 2020. (See Docket Entry 27, at 3; Docket Entry 31, at 1.) Because the Motion before the Court involves claims as to the timing and reasonableness of State Farm's investigation of the alleged damage, the investigation is described in detail below.
On June 6, 2020, Plaintiffs initiated an insurance claim with State farm for damage to their roof. (See Docket Entry 27-1, at 28.) State Farm claims adjuster Michelle Mitchell inspected the roof on June 24, 2020. (See Docket Entry 27, at 3; 27-1, at 21-22.) The next day, Mitchell updated the claim file with photographs from her inspection and reported “[h]ail damage observed to [roof] tiles,” and remarking that “[r]oof appears and seems and feels to be unrepairable.” (Id. at 22.)
On July 2, 2020, Tammy Stewartbarr, another State Farm employee, reviewed the notes and photos provided by Mitchell. (See id. at 20-21.) Stewartbarr disagreed with Mitchell's assessment, updating the claim file to reflect that, “[t]here is damage but it appears to be old and not storm related.” (Id. at 21.) On July 7, 2020, State Farm's Claims Team Manager Kristi Carmichael reviewed the claim file, agreeing with and expanding upon Stewartbarr's assessment. (See id. at 19.) Carmichael concluded that, while there was evidence of hail, it was too small to damage the concrete roof tiles; that the corner breaks to the tiles were not consistent with hail damage; and that the cracks observed in the tiles appeared older than the date of the May 2020 storm and were not accompanied by observable hail impact marks. (See id.)
In light of Carmichael's and Stewartbarr's assessments, State Farm hired Envista Forensics, LLC (“Envista”), a professional engineering firm, to inspect the roof and determine whether there was any “wind and/or hail damage to the tile roofing related to the date of loss 5/28/2020.” (See Docket Entry 27-1, at 18, 180.) On July 11, 2020, State Farm notified Plaintiffs that there remained an open “question as to whether the origin and cause of the loss was accidental in nature and related to the storm which occurred on May 28, 2020.” (Id. at 184.) Envista inspected the roof on July 21, 2020, and produced a report of its findings on July 30, 2020. (See id. at 186-87.) In its report, Envista concluded that it “observed no hail-related damage to the concrete tile roofing,” and that any broken tiles “were the result of causes unassociated with storm induced forces, such as mechanical damage.” (Id. at 189.) Such “mechanical damage,” Envista explained, could include “foot traffic or placement of equipment” and “damage from construction, installation, inspection, or maintenance activities.” (Id.) On August 22, 2020, State Farm sent Plaintiffs a letter denying their claim based on the findings in the Envista report, along with a copy of that report. (See id. at 14, 215.)
On October 2, 2020, Plaintiffs called State Farm to dispute the findings in Envista's report and State Farm's denial. (Docket Entry 27-1, at 13.) Plaintiffs then hired Blackstone Claim Services, Inc. (“Blackstone”), a Public Adjuster, to inspect the roof and prepare a report and estimate of the hail damage, if any. (See id; Docket Entry 31-1, at 20.) Blackstone inspected the roof on October 16, 2020. (Docket Entry 27-1, at 240.) On November 30, 2020, Blackstone provided State Farm with an estimate of the damage to Plaintiff's roof, concluding that it exceeded $200,000. (See id. at 239-40.)
On January 6, 2021, State Farm conducted another inspection of the roof and again concluded that there was no wind or hail damage to the concrete roof tiles. (See id. at 11.) The next day, State Farm notified Plaintiffs that its denial decision had not changed because it estimated that their covered losses did not exceed their $9,040 deductible. (See id. at 367.)
On January 27, 2021, Plaintiffs sent State Farm a formal demand letter, which State Farm received on February 5, 2021. (Docket Entry 27-1, at 369, 382.) In the letter, Plaintiffs alleged that State Farm committed a breach of contract and that it violated provisions of the Texas Insurance Code and the DTPA. (See id. at 371-374.) As to the extracontractual claims, Plaintiffs specifically alleged that State Farm failed to reasonably investigate their claim, failed to settle their claim once its liability became clear, failed to provide a reasonable explanation for its denial of their claim, and failed to make a timely decision as to their claim. (See id. at 371-373.) State Farm responded to the demand letter on March 26, 2021. (Id. at 382.) In its response, State Farm contended that it handled Plaintiffs' claim “promptly and in good faith,” noting that its decision was based on several inspections of the Property and the findings of an engineer. (See id. at 383.)
On April 16, 2021, Plaintiffs filed suit in the 255th District Court, in Bexar County, Texas. (See Docket Entry 1-2, at 2, 5.) Plaintiffs alleged breach of contract as well as a wide variety of extracontractual claims under the Texas Insurance Code, the DTPA, and Texas common law. (See id. at 8-14.)On May 28, 2021, State Farm removed the case to this Court. (See Docket Entry 1.)
Indeed, in less than six pages, Plaintiffs allege that State Farm violated DTPA provisions in Texas Business & Commerce Code §§ 17.46(b)(5), (7), (12), (24), and 17.50(a)(3)-(4); Texas Insurance Code §§ 541.051(1)(A)-(B), 541.060(a)(1), 541.060(a)(2)(A), 541.060(a)(3), 541.060(a)(6)-(7), 541.061(1)-(3), 541.061(5), 542.003(b)(1)-(5), 542.055-.056, 542.058(a), and 542.060; and the common law duty of good faith and fair dealing. (See Docket Entry 1-2, at 8-14.) To support all these claims, Plaintiffs offered only a single page of factual background. (See id. at 6-7.) Typically, such “‘naked assertion[s]' devoid of ‘further factual enhancement'” are subject to dismissal under Federal Rule of Civil Procedure 12(b)(6). Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation omitted); see also Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 556 (2007) (“While a complaint . . . does not need detailed factual allegations, . . . [it] requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.”) (citation omitted). Yet State Farm never filed a motion to dismiss. The failure to file such a motion is especially curious with respect to Plaintiffs' claim that State Farm made “knowing” misrepresentations in violation of Texas Insurance Code § 542.003(b)(1) (see Docket Entry 1-2, at 10,13-14.), as such allegations are subject to the more stringent pleading requirements of Federal Rule of Civil Procedure 9(b). See Partain v. Mid-Continent Specialty Ins. Servs., Inc., 838 F.Supp.2d 547, 557 (S.D. Tex. 2012), (“[C]laims alleging violations under the Texas Insurance Code that are ‘substantively identical' to fraud are subject to the Rule 9(b) pleading requirements.”), aff'd sub nom. Graper v. Mid-Continent Cas. Co., 756 F.3d 388 (5th Cir. 2014).
As the lawsuit proceeded, the parties hired additional experts to conduct further inspections of the roof. (See Docket Entry 27-2, at 31-40, 60, 86, 287-306.) On November 6, 2021, at Plaintiffs' request, Mayfield Building Envelope Consultants (“MBEC”) inspected the roof and produced a Roof Survey Report on November 13, 2021, concluding that “the roof was severely damaged during storms containing severe hail and winds in May of 2020.” (See Docket Entry 272, at 287.) In the report, MBEC disputed Envista's assessment of the damage as “mechanical,” because “1) there was no roof-mounted equipment requiring maintenance or roof traffic, and 2) roofs were too steep for foot traffic, other than climbing up valleys and along ridges.” (Id. at 306.) MBEC also concluded that, because the tiles on Plaintiffs' roof are “no longer produced or available,” the only remedy was a total roof replacement. (Id.) Plaintiffs also hired Art Boudin to provide an estimate for the cost of a new roof installation, which he estimated would cost around $111,000. (See Docket Entry 31-7, at 2-3.)
On January 11, 2022, at State Farm's request, both R.H. Hash & Associates, Inc. (“Hash”) and Roof Technical Services, Inc. (“RTSI”) separately inspected the roof. (See Docket Entry 272, at 38, 60.) Hash produced its report on January 13, 2022, concluding that there was “no damage to the concrete roof tiles from hail or wind.” (Id. at 40.) According to Hash, the roof was in poor condition “due to poor installation” and “lack of maintenance,” and that the broken tiles were likely “broken by expansion and contraction of the structure or foot traffic on the roof.” (Id.) Hash reported that the only evidence of hail was “from spatter marks from small hail,” which it concluded were “cosmetic and only remove[d] algae growth where the hail struck the tile” and “d[id] not affect the integrity of the tile.” (Id.) As for remedies, Hash noted that, out of “approximately 6,440 tiles on the roof, there were 30 chipped tiles, 6 broken tiles, 2 missing tiles, and 14 tiles that were new from previous repairs.” (Id.) Hash also demonstrated the availability of replacement tiles from its own “salvage yard in Houston,” and thereby concluded that the damage “can easily be repaired and does not require the roofing to be replaced.” (Id. at 40, 53.)
RTSI produced its report on January 14, 2022, concluding that “the concrete roof tiles . . . did not sustain damage from hailstone impacts on or around May 27/28, 2020.” (Docket Entry 272, at 86.) According to the report, the kind of damage observed in some of the tiles is “common” for concrete tiles, and “usually caused by thermal expansion/contraction coupled with a lack of proper shunt spacing (i.e., installation of the tiles too close together without enough ‘play').” (Id.) RTSI further reported that the observed fractures were covered in “grime and algae/lichen accumulation, and had evidence of historical repair (adhesive repairs of lower corner fractures are often performed during installation).... indicat[ing that] they occurred long ago, prior to the reported date of loss,” and were not caused by “a single, sudden event such as a hailstorm.” (Id.)
Finally, on January 13, 2022, at State Farm's request, CrossPointe Environmental and Restoration Services (“CrossPointe”) inspected the roof. (Docket Entry 27-1, at 31.) On January 14, 2022-after inspecting the roof and reviewing the Envista, Blackstone, MBEC, Boudin, Hash, and RTSI reports-CrossPointe produced its own report, concluding that “[t]he tiles were weathered and discolored, . . . but no evidence of hail or wind damage was observed.” (Id. at 32.) Like RTSI, CrossPointe reported that “[l]ichen growth was noted on exposed corner cracks, indicating that the cracks occurred many years ago.” (Id.) CrossPointe also found that, given the limited number of damaged tiles and the availability of replacement tiles through “Hash and other salvage suppliers as needed,” a complete“[r]eplacement of the roof is not necessary.” (Id. at 32, 34.) CrossPointe therefore concluded that Blackstone and Boudin's estimates were “excessive” and included “unnecessary” charges, including a complete “replacement of the concrete tile roof.” (Id. at 34.)
State Farm now moves for summary judgment on Plaintiffs' extracontractual claims, with one exception. (See Docket Entry 27.) Plaintiffs have responded in opposition. (Docket Entry 31.)
State Farm specifies that it is not moving for summary judgment on Plaintiffs' claim for attorney's fees and interest under §§ 542.005-060 of the Texas Insurance Code. (See Docket Entry 27, at 1.)
III. Summary Judgment Standard.
Summary judgment is appropriate when “the movant shows that there is no genuine dispute as to any material fact,” and that they are “entitled to judgment as a matter of law.” FED. R. CIV. P. 56(a). A dispute is genuine “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Allen v. U.S. Postal Serv., 63 F.4th 292, 300 (5th Cir. 2023) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). A disputed fact is material if it “might affect the outcome of the suit under the governing law.” Id. (quoting Anderson, 447 U.S. at 248). When considering a motion for summary judgment, a court “must view all facts and evidence in the light most favorable to the non-moving party.” Feist v. La., Dep't of Just., Off. of the Atty. Gen., 730 F.3d 450, 452 (5th Cir. 2013)
The party moving for summary judgment bears the initial burden of “informing the court of the basis for its motion, and identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the moving party carries its burden, “the nonmovant must then direct the court's attention to evidence in the record sufficient to establish that there is a genuine issue of material fact for trial.” Mary Kay, Inc. v. Weber, 601 F.Supp.2d 839, 851 (N.D. Tex. 2009) (citing Celotex Corp., 477 U.S. at 323-24). “The parties may satisfy their respective burdens by tendering depositions, affidavits, and other competent evidence.” Arthur v. Liberty Mut. Pers. Ins. Co., No. SA-21-CV-00602-FB, 2022 WL 17824520, at *1 (W.D. Tex. Dec. 20, 2022) (citing Topalian v. Ehrman, 954 F.2d 1125, 1131 (5th Cir. 1992)), report and recommendation adopted, No. SA-21-CA-602-FB, 2023 WL 2557392 (W.D. Tex. Feb. 3, 2023).
In ruling on motions for summary judgment, the Court is required to consider only the party's cited materials. FED. R. CIV. P. 56(c)(3); see Am. Fam. Life Assur. Co. of Columbus v. Biles, 714 F.3d 887, 896 (5th Cir. 2013) (“Rule 56 does not impose upon the district court a duty to sift through the record in search of evidence ....”) (citation omitted).
IV. Discussion.
As noted above, Plaintiffs' complaint presents a wide variety of extracontractual claims. For purposes of the Motion before the Court, this Report and Recommendation divides the claims into three categories: (a) claims predicated on bad faith, (b) claims predicated on misrepresentation, and (c) claims predicated on lack of promptness.
A. Extracontractual Claims Predicated on Bad Faith.
Under Texas law, extracontractual tort claims pursuant to the Texas Insurance Code and the DTPA require the same predicate for recovery as bad faith causes of action. Watson v. State Farm Lloyds, 56 F.Supp.2d 734, 736 (N.D. Tex. 1999) (citing Higginbotham v. State Farm Mut. Auto. Ins. Co., 103 F.3d 456, 460 (5th Cir. 1997)). Texas law imposes “a duty on the part of the insurer to deal fairly and in good faith with an insured in the processing of claims.” Jajou v. Safeco Ins. Co. of Indiana, No. SA-20-CV-00839-XR, 2022 WL 220391, at *5 (W.D. Tex. Jan. 24, 2022) (quoting Higginbotham, 103 F.3d at 459). “A cause of action for breach of the duty of good faith and fair dealing exists when the insurer has no reasonable basis for denying or delaying payment of a claim or when the insurer fails to determine or delays in determining whether there is any reasonable basis for denial.” Higginbotham, 103 F.3d at 459 (emphasis in original). To prove that an insurer acted in bad faith in violation of Texas common law, and hence the Texas Insurance Code and DTPA, “an insured must show that the insurer failed to settle the claim even though it ‘knew or should have known that it was reasonably clear that the claim was covered.'” Lee v. Catlin Specialty Ins. Co., 766 F.Supp.2d 812, 818 (S.D. Tex. 2011) (quoting Universe Life Ins. Co. v Giles, 950 S.W.2d 48, 54-55 (Tex. 1997)).
“[T]he issue of bad faith does not focus on whether the claim was valid, but on the reasonableness of the insurer's conduct in rejecting the claim.” Lyons v. Miller Cas. Ins. Co., 866 S.W.2d 597, 601 (Tex. 1993). “[E]vidence showing only a bona fide coverage dispute does not . . . demonstrate bad faith.” State Farm Lloyds v. Nicolau, 951 S.W.2d 444, 448 (Tex. 1997). However, an insurer cannot assert that a bona fide coverage dispute exists if it fails to conduct a reasonable investigation. State Farm Fire & Cas. Co. v. Simmons, 963 S.W.2d 42, 44 (Tex. 1998). “The scope of the appropriate investigation will vary with the claim's nature and value and the complexity of the factual issues involved.” Id. at 44-45. “An insurer does not act in bad faith where a reasonable investigation reveals the claim is questionable.” United Servs. Auto. Ass'n v. Croft, 175 S.W.3d 457, 471 (Tex. App.-Dallas 2005, no pet.). “An insurer's reliance on an expert's report will not support a finding of bad faith unless ‘there is evidence that the report was not objectively prepared or the insurer's reliance on the report was unreasonable.'” Arthur, 2022 WL 17824520, at *7 (quoting Nicolau, 951 S.W.2d at 448).
Plaintiffs argue that the Court must deny the Motion because whether State Farm's liability was reasonably clear is a question of fact for a jury. (Docket Entry 31, at 6.) Even on a fact question, however, summary judgment is appropriate if, based on the evidence in the record, no reasonable jury could find in the nonmovant's favor. See Anderson, 477 U.S. at 248; Allen, 63 F.4th at 300. And no reasonable jury could find that State Farm acted in bad faith if the evidence conclusively shows that there was a bona fide coverage dispute following a reasonable investigation by State Farm. See, e.g., Nunn v. State Farm Mutual Auto. Ins. Co., 729 F.Supp.2d 801, 807 (N.D. Tex. 2010) (granting summary judgment on claims predicated on bad faith because “[t]here was a bona fide dispute between the parties that justified State Farm's failure to pay”); Jajou, 2022 WL 220391, at *9 (granting summary judgment for insurer on claims predicated on bad faith where “evidence merely show[ed] a bona fide coverage dispute”); Arthur, 2022 WL 17824520, at *7-8 (granting summary judgment to insurer on claims predicated on bad faith after finding “no evidence in the record . . . of an unreasonable investigation, such as pretext or an outcome-oriented investigation”).
Here, State Farm denied Plaintiffs' claim based on the expert reports provided by Envista, Hash, RTSI, and CrossPointe. Plaintiffs have not produced any evidence to raise a genuine issue that State Farm's reliance on these reports was unreasonable, or that Envista, Hash, RTSI, or CrossPointe conducted their investigations in an outcome-oriented manner, such that their reports were merely pretext for State Farm to deny Plaintiffs' claim. On the contrary, the summary judgment record shows that State Farm first denied Plaintiffs' claim based on the findings in Envista's report, and then continued to deny their claim based on the consistent findings in subsequent reports produced by three additional independent experts. And in their respective depositions, Plaintiffs agreed that there was a genuine coverage dispute arising after a thorough investigation. (See Docket Entry 27-2, at 16 (“They did . . . a thorough investigation[;] I just don't think they came to a conclusion that made sense.”); 22-23 (“[T]here's been a lot of disagreement between the two sides and several different people that have experts that have done their assessments.”).)
Plaintiffs have also produced no evidence to suggest that State Farm failed to adequately explain its rationale for denying Plaintiffs' claim. Rather, the record shows that State Farm clearly communicated that it was denying Plaintiffs' claim based on the findings in Envista's report (see Docket Entry 27-1, at 215; Docket Entry 27-2, at 13), and then maintained that decision based on subsequent consistent findings in other expert reports (see Docket Entry 27-2, at 26; 31-35; 3840; 60-86). And when asked whether State Farm failed to explain why it was denying their claim, Plaintiff Donald Hope responded, “No, I understand what they were saying.” (Id. at 15.) When asked how State Farm explained its denial, he referred to “the report from the engineers that said it looked like it was old damage from something else.” (Id. at 13.)
In short, State Farm denied Plaintiffs' claim based on a genuine coverage dispute after a reasonable investigation. State Farm clearly relied on the findings in the Envista report, and subsequent expert reports, in making its decision to deny Plaintiffs' claim-and explained this to Plaintiffs. Accordingly, State Farm is entitled to summary judgment on Plaintiffs' claim for breach of the common law duty of good faith and fair dealing, as well as all of Plaintiffs' claims under the Texas Insurance Code and DTPA which “share ‘the same predicate for recovery as bad faith causes of action in Texas.'” Jajou, 2022 WL 220391, at *11 (quoting Weiser-Brown Operating Co. v. St. Paul Surplus Lines Ins. Co., 801 F.3d 512, 525 (5th Cir. 2015)). The Motion should therefore be granted as to Plaintiffs' claim for breach of the common law duty of good faith and fair dealing; Plaintiffs' claims under Texas Insurance Code §§ 541.060(a)(2)(A), 541.060(a)(6)-(7), 542.003(b)(4)-(5); and any related claims under the DTPA, as codified in Texas Business & Commerce Code § 17.50(a)(4).
B. Extracontractual Claims Predicated on Misrepresentation
Plaintiffs also assert claims under the Texas Insurance Code and DTPA that are predicated on alleged misrepresentations by State Farm. (See Docket Entry 1-2, at 9-13.) Those claims arise under Texas Insurance Code §§ 541.051(1)(A)-(B); 541.060(a)(1); 541.061(1)-(3), (5); and 542.003(b)(1); and the DTPA as codified in Texas Business and Commerce Code §§ 17.46(b)(5), (7), (12), (24), and 17.50(a)(3). (See id.)
In the Motion, State Farm argues that it is entitled to summary judgment on these claims on two bases. First, where the alleged misrepresentations pertain to its failure to comply with the terms of the Policy as Plaintiffs interpret it, “such a failure is properly characterized as a breach of contract, not a misrepresentation.” (Docket Entry 27, at 11 (quoting Partain v. Mid-Continent Specialty Ins. Servs., Inc., 838 F.Supp.2d 547, 563 (S.D. Tex. 2012), aff'd sub nom. Graper v. Mid-Continent Cas. Co., 756 F.3d 388 (5th Cir. 2014)).) Second, where the alleged misrepresentations pertain to post-loss representations it made regarding coverage under the Policy, there is no evidence in the record that Plaintiffs relied on such representations to their detriment. (Docket Entry 27, at 11.) State Farm is correct on both counts. To the extent Plaintiffs' position is that the terms of the Policy itself were misrepresentations because State Farm denied a claim that they sincerely believe the Policy covers, their position is really no more than a repackaging of their breach-of-contract claim. See, e.g., Riddick v. Quail Harbor Condominium Ass'n, Inc., 7 S.W.3d 663, 670 (Tex. App.-Houston [14th Dist.] 1999, no pet.) (“A mere breach of contract allegation, without more, is not a ‘false, misleading or deceptive act' in violation of the DTPA.”). And with regard to postloss misrepresentations, there is no evidence in the record that State Farm made any misrepresentations, or that Plaintiffs relied on them. To the contrary, Plaintiffs challenged State Farm's representations throughout the claims process, and “by filing this lawsuit.” Partain, 838 F.Supp.2d at 558; see also Nunn, 729 F.Supp.2d at 813) (explaining that a claim under the Texas Insurance Code for misrepresentation requires proof that the alleged misrepresentation caused the plaintiff's damages); Carper v. State Farm Lloyds, No. 3-01-CV-1979-M, 2002 WL 31086074, at *8 (N.D. Tex. Sept. 13, 2002) (granting summary judgment for defendant-insurer on plaintiff's Texas Insurance Code claims based on absence of evidence of reliance and causation).
Based on the foregoing, the Motion should be granted as to Plaintiffs' claims under the Texas Insurance Code §§ 541.051(1)(A)-(B); 541.060(a)(1); 541.061(1)-(3), (5); and 542.003(b)(1); and the DTPA as codified in the Texas Business and Commerce Code §§ 17.46(b)(5), (7), (12), (24), and 17.50(a)(3).
C. Extracontractual Claims Predicated on Promptness
Finally, Plaintiffs also assert claims under the Texas Insurance Code and DTPA that are predicated on a lack of promptness by State Farm in investigating their claim or communicating with them about their claim. (See Docket Entry 1-2, at 10, 12-13.) Those claims arise under Texas Insurance Code §§ 542.003(b)(2), 542.003(b)(3), 542.055, 542.056, 542.058(a), and the DTPA as codified in Texas Business & Commerce Code § 17.50(a)(4). (See id.) As to these claims, summary judgment should be denied because State Farm has not made any argument as to the timing of its actions.
In moving for summary judgment on all of Plaintiffs' statutory claims, State Farm did not specifically refer to statutory provisions, but instead contended generally that the summary judgment record reveals a “bona fide dispute,” and that Plaintiffs “failed to provide any evidence of misrepresentation[s].” (Id. at 1, 6-11.) However, the subset of claims at issue here are not predicated on bad faith or misrepresentation, but rather on State Farm's alleged “failure to affirm or deny coverage within a reasonable time.” Jajou, 2022 WL 220391, at *12. While the record might support summary judgment on these promptness-based claims as well, the Court should not sua sponte grant summary judgment without notice on legal grounds State Farm failed to raise in the Motion. See, e.g., D'Onofrio v. Vacation Publ'ns, Inc., 888 F.3d 197, 210 (5th Cir. 2018) (“While district courts may grant summary judgment sua sponte, . . . they must first give the parties ‘notice and a reasonable time to respond.'”) (citations omitted); O'CONNOR'S FEDERAL RULES * CIVIL TRIALS, Ch. 7-B § 11.4.2 (2024 ed.) (“If summary judgment should be granted on factual or legal grounds not raised by a party, the court may do so after giving the parties notice and a reasonable time to respond.”).
Instead, the undersigned recommends that the Motion be denied without prejudice as to Plaintiffs' promptness claims under the Texas Insurance Code and the DTPA. State Farm may still seek a judgment as a matter of law on these claims at the close of evidence at trial by filing a motion under Federal Rule of Civil Procedure 50(a) and, if necessary, after a verdict has been returned by filing a renewed motion for judgment as a matter of law pursuant Federal Rule of Civil Procedure 50(b).
V. Conclusion and Recommendation.
Based on the foregoing, I RECOMMEND that State Farm's Motion for Summary Judgment Regarding Plaintiffs' Extra-Contractual Claims (Docket Entry 27) be GRANTED IN PART and DENIED WITHOUT PREJUDICE IN PART. The Motion should be GRANTED as to Plaintiffs' claim for breach of the common law duty of good faith and fair dealing; Plaintiffs' claims under Texas Insurance Code §§ 541.051(1)(A)-(B), 541.060(a)(1), 541.060(a)(2)(A), 541.060(a)(6)-(7), 541.061(1)-(3), 541.061(5), 542.003(b)(1), and 542.003(b)(4)-(5); and Plaintiffs' DTPA claims, as codified in Texas Business and Commerce Code §§ 17.46(b)(5), (7), (12), (24), and 17.50(a)(3)-(4). The Motion should be DENIED WITHOUT PREJUDICE as to Plaintiffs' promptness-based claims under Texas Insurance Code §§ 542.003(b)(2)-(3), 542.055.056, 542.058(a), and any related claims under the DTPA as codified in Texas Business & Commerce Code § 17.50(a)(4).
VI. Notice of Right to Object.
The United States District Clerk shall serve a copy of this Report and Recommendation on all parties by either (1) electronic transmittal to all parties represented by attorneys registered as a “filing user” with the Clerk of Court, or (2) by mailing a copy to those not registered by certified mail, return receipt requested. Written objections to this Report and Recommendation must be filed within fourteen (14) days after being served with a copy of the same, unless this time period is modified by the district court. 28 U.S.C. § 636(b)(1); FED. R. CIV. P. 72(b).
The parties shall file any objections with the Clerk of the Court and serve the objections on all other parties. Absent leave of Court, objections are limited to twenty (20) pages in length. An objecting party must specifically identify those findings, conclusions or recommendations to which objections are being made and the basis for such objections; the district court need not consider frivolous, conclusory, or general objections. Battle 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, conclusions, and recommendations contained in this report shall bar the party from a de novo determination by the district court. Thomas v. Arn, 474 U.S. 140, 149-52 (1985); Acuna v. Brown & Root, Inc., 200 F.3d 335, 340 (5th Cir. 2000). Additionally, failure to file timely written objections to the proposed findings, conclusions, and recommendations contained in this Report and Recommendation shall bar the aggrieved party, except upon grounds of plain error, from attacking on appeal the unobjected-to proposed factual findings and legal conclusions accepted by the district court. Douglass v United Servs. Auto. Ass'n, 79 F.3d 1415, 1428-29 (5th Cir. 1996) (en banc).