Aqrawi v. Am. Modern Prop. & Cas. Co.

555 F.Supp.3d 467

Hokar "Cooper" AQRAWI, Plaintiff,

v.AMERICAN MODERN PROPERTY AND CASUALTY COMPANY, Defendant.

CIVIL ACTION NO. 4:20-CV-3161

United States District Court, S.D. Texas, Houston Division.

Signed August 18, 2021

Mark Allen Counts, The Counts Company, Conroe, TX, for Plaintiff.

Andrew J. Sarne, Christopher C. Pappas, Kathryn Grace Laflin, Kane Russell Coleman & Logan PC, Houston, TX, for Defendant.

ORDER

Andrew S. Hanen, United States District Judge Pending before the Court are the Plaintiff Hokar Aqrawi's (the "Plaintiff" or "Aqrawi") Motion to Dismiss the Defendant American Modern Property and Casualty Company's (the "Defendant" or "American Modern") Counterclaims (Doc. No. 11) and the Defendant's Motion for Summary Judgment (Doc. No. 12). The Defendant filed a response to the Plaintiff's motion (Doc. No. 13). The Plaintiff filed a response to the Defendant's motion (Doc. No. 14) to which the Plaintiff replied (Doc. No. 15). After considering the motions, briefing, evidence, and applicable law, the Court hereby grants both motions.

I. Background

In February of 2019, Aqrawi purchased a 2019 Lamborghini Urus (the "Vehicle") and purchased insurance for it from American Modern. The insurance policy is a "Collector Vehicle Policy" and contemplates that the Vehicle would only be used for "occasional pleasure use." (See Doc. No. 12-4 at 4, 8). Aqrawi titled the Vehicle to an LLC called DNC Motors registered in Montana, of which he is a member. Aqrawi then transferred possession of the Vehicle and its title to his "shop" Icon Exotics, a combination garage and dealership owned by Aqrawi and a partner. (See Doc. No. 12-3; 12-5 at 10, 15). Icon Exotics put the Vehicle up for sale. (Doc. No. 12-5 at 6). In June of 2019, a potential buyer, McLevy St. Eloi ("St. Eloi"), was interested in purchasing the Vehicle and was allowed to test drive it. The next day, while St. Eloi was still driving the Vehicle, it ran out of gas on the highway. Another vehicle collided with the rear-end of the Vehicle, causing it to crash into a retaining wall and sustain damage. St. Eloi was cited for impeding traffic and failure to maintain financial responsibility and the other driver was cited for driving without a driver's license. (See Doc. No. 12-2 at 3). An estimate provided by the Plaintiff puts the cost to repair the Vehicle is $134,225.70. (See Doc. No. 1-2 at 64).

Aqrawi made a demand on American Modern for it to pay the cost to repair the Vehicle. American Modern denied the claim. Aqrawi filed suit against American Modern in Texas state court claiming breach of contract, violations of the Texas Insurance Code, the Texas Deceptive Trade Practices Act (DTPA), breach of the duty of good faith and fair dealing, and asking for a declaratory judgment. American Modern removed to this Court based on diversity of citizenship and counterclaimed against Aqrawi for declaratory judgment. Aqrawi filed a motion to dismiss the counterclaim and American Modern has moved for summary judgment on Aqrawi's claims.

II. Motion to Dismiss Counterclaim

First, Aqrawi has moved to dismiss American Modern's declaratory judgment counterclaim pursuant to Rule 12(b)(6).

A. Legal Standard

A defendant (or counter-defendant) may file a motion to dismiss a complaint for "failure to state a claim upon which relief may be granted." Fed. R. Civ. P. 12(b)(6). To defeat a motion to dismiss under Rule 12(b)(6), a plaintiff must plead "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal , 556 U.S. 662, 663, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citing Twombly , 550 U.S. at 556, 127 S.Ct. 1955 ). "The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. (quoting Twombly , 550 U.S. at 556, 127 S.Ct. 1955 ). "Where a complaint pleads facts that are ‘merely consistent with’ a defendant's liability, it ‘stops short of the line between possibility and plausibility of entitlement to relief.’ " Id. (quoting Twombly , 550 U.S. at 557, 127 S.Ct. 1955 ).

In reviewing a Rule 12(b)(6) motion, the court must accept all well-pleaded facts in the complaint as true and view them in the light most favorable to the plaintiff. Sonnier v. State Farm Mut. Auto. Ins. Co. , 509 F.3d 673, 675 (5th Cir. 2007). The court is not bound to accept factual assumptions or legal conclusions as true, and only a complaint that states a plausible claim for relief survives a motion to dismiss. Iqbal , 556 U.S. at 678-79, 129 S.Ct. 1937. When there are well-pleaded factual allegations, the court assumes their veracity and then determines whether they plausibly give rise to an entitlement to relief. Id.

B. Analysis

American Modern has counterclaimed against Aqrawi pursuant to the Declaratory Judgment Act. It asks for various declarations that amount to a finding by the Court that American Modern did not breach its insurance agreement with Aqrawi when it denied coverage. (See Doc. No. 4 at 11). Aqrawi has asked that the Court dismiss this request for declaratory relief as redundant of his affirmative causes of action.

"If a request for a declaratory judgment adds nothing to an existing lawsuit, it need not be permitted." Burlington Ins. Co. v. Ranger Specialized Glass, Inc. , 4:12-CV-1759, 2012 WL 6569774, at *2 (S.D. Tex. Dec. 17, 2012). "Courts in the Fifth Circuit have regularly rejected declaratory judgment claims that seek resolution of matters that will already be resolved as part of the claims in the lawsuit." Id. To determine whether such rejection is appropriate, courts must "determine whether what a counterclaim requests is the opposite of the affirmative causes of action pleaded." Centex Homes v. Lexington Ins. Co. , 3:13-CV-719-BN, 2014 WL 1225501, at *14 (N.D. Tex. Mar. 25, 2014).

Here, Aqrawi has accused American Modern of breaching the insurance agreement by refusing to pay the claim. American Modern has asked for a declaration that it did not breach the agreement when it refused to pay the claim. American Modern's declaration request "seek[s] resolution of matters that will already be resolved as part of the claims in the lawsuit." Burlington , 4:12-CV-1759, 2012 WL 6569774, at *2. Accordingly, it is appropriate to dismiss it. Aqrawi's motion to dismiss is granted. The counterclaim for declaratory judgment is dismissed without prejudice.

III. Motion for Summary Judgment

American Modern has moved for summary judgment on all of Aqrawi's claims against it, arguing that the damage to the Vehicle was not covered by the insurance agreement, so American Modern was not obligated to pay. Further, American Modern argues that, because the policy did not provide the relevant coverage, all of Aqrawi's additional claims fail as well.

A. Legal Standard

Summary judgment is warranted "if 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(a). "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, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ).

Once a movant submits a properly supported motion, the burden shifts to the non-movant to show that the Court should not grant the motion. Celotex , 477 U.S. at 321-25, 106 S.Ct. 2548. The non-movant then must provide specific facts showing that there is a genuine dispute. Id. at 324, 106 S.Ct. 2548 ; Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). A dispute about a material fact is 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, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The Court must draw all reasonable inferences in the light most favorable to the nonmoving party in deciding a summary judgment motion. Id. at 255, 106 S.Ct. 2505. The key question on summary judgment is whether there is evidence raising an issue of material fact upon which a hypothetical, reasonable factfinder could find in favor of the nonmoving party. Id. at 248, 106 S.Ct. 2505.

B. Analysis

1. Breach of Contract

The relevant general portion of the coverage provided by American Modern to Aqrawi provides:

PART D –

COVERAGE FOR DAMAGE TO YOUR AUTO

INSURING AGREEMENT

A. We will pay for sudden, direct and accidental loss to your covered auto, including equipment, minus any applicable deductible shown on the Declarations. If loss to more than one of your covered autos results from the same collision, only the highest applicable deductible will apply. We will pay for loss to your covered auto caused by:

1. Comprehensive only if the Declarations indicate that Comprehensive Coverage is provided for that auto.

2. Collision only if the Declarations indicate that Collision Coverage is provided for that auto.¹

(Doc. No. 12-4 at 19). American Modern makes two main arguments that there was no coverage for Aqrawi's claim. First, it argues that Aqrawi's intent when he bought the Vehicle removed the Vehicle from the definition of "your covered auto" such that there was no coverage for the vehicle at all. Next, it argues that, even if the Vehicle does fall within the definition of "your covered auto," a policy exclusion removes this particular loss from the coverage.² Each argument will be addressed in turn.

a. "Your Covered Auto"

The policy provides the definition of "your covered auto":

U. Your covered auto means:

1. Any vehicle shown on the

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