Fonseca v. Allstate Vehicle & Prop. Ins. Co.

JULIO FONSECA and MARIA A. FONSECA, Plaintiffs, v. ALLSTATE VEHICLE AND PROPERTY INSURANCE COMPANY, Defendant.

CIVIL ACTION NO. 7:20-cv-00358

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF TEXAS MCALLEN DIVISION

December 21, 2020

OPINION AND ORDER

The Court now considers "Defendant Allstate Texas Lloyd's [sic] Motion for Partial Dismissal Under Rule [sic] 9(b) and 12(b)(6),"¹ Plaintiffs' response,² and Defendant's reply.³ Six days after Defendant's reply, Plaintiffs filed a "Reply to Defendant's Reply"⁴ without seeking leave of Court. This Court's Local Rules do not contemplate such a filing and Plaintiffs are not entitled to additional bites at the apple.⁵ Accordingly, the Court STRIKES Plaintiffs' surresponse from the Court's docket and will not consider the brief except for the limited purpose described infra. After considering the motion, record, and relevant authorities, the Court GRANTS Defendant's motion.

I. BACKGROUND AND PROCEDURAL HISTORY

This is an insurance dispute. On or about June 20, 2018, Plaintiffs allege that a "very heavy rainstorm" damaged buildings in the lower Rio Grande Valley, including Plaintiffs' home.⁶ Plaintiffs allege that their home was damaged again by a heavy rainstorm on June 24, 2019.⁷ Defendant Allstate Vehicle and Property Insurance Company denied Plaintiffs' 2018 and 2019 insurance claims arising from both of these events.⁸ Plaintiffs claim that Defendant breached the duty of good faith and fair dealing, claim that Defendant committed common law and statutory fraud, claim that Defendant breached their contracts, and claim that Defendant violated the Texas Deceptive Trade Practices Act.⁹

Plaintiffs originally filed in state court on July 17, 2020.¹⁰ Plaintiffs served process via certified mail on October 13, 2020.¹¹ Defendant removed to this Court on November 6, 2020, on the basis of diversity jurisdiction.¹² That same day, Defendant filed the instant motion to dismiss, seeking dismissal of only Plaintiffs' common law and statutory fraud claim and claim under the Texas Deceptive Trade Practices-Consumer Protection Act.¹³ Plaintiffs timely responded¹⁴ and Defendant's motion is ripe for consideration.

II. DISCUSSION

a. Jurisdiction

This Court has jurisdiction under 28 U.S.C. § 1332. Plaintiffs reside in Hidalgo County, Texas.¹⁵ "Evidence of a person's place of residence . . . is prima facie proof of his domicile" for citizenship purposes.¹⁶ Defendant Allstate "is an Illinois corporation with its principle place of business in Cook County, in Illinois."¹⁷ Accordingly, the parties are diverse in citizenship.

Plaintiffs seek $116,000 in actual damages.¹⁸ Therefore, it is "facially apparent"¹⁹ that Plaintiffs' claims are for more than the jurisdictional threshold of $75,000 set by 28 U.S.C. § 1332(a). Accordingly, the Court agrees with Defendant that jurisdiction is proper in this Court.²⁰

b. Legal Standards for the Motion for Partial Dismissal

"A motion to dismiss an action for failure to state a claim admits the facts alleged in the complaint, but challenges plaintiff's right to relief based upon those facts."²¹ Under Federal Rule of Civil Procedure 12(b)(6), to avoid dismissal, the complaint "must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'"²² The Court reads the complaint as a whole²³ and accepts all well-pleaded facts as true (even if doubtful or suspect²⁴) and views those facts in the light most favorable to the plaintiff (because aRule 12(b)(6) motion is viewed with disfavor²⁵), but will not strain to find inferences favorable to the plaintiff,²⁶ but also will not indulge competing reasonable inferences that favor the Defendant.²⁷ A plaintiff need not plead evidence²⁸ or even detailed factual allegations, especially when certain information is peculiarly within the defendant's possession,²⁹ but must plead more than "'naked assertion[s] devoid of 'further factual enhancement'" or "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements" to survive a motion to dismiss.³⁰ The Court is to give a liberal construction to the pleadings and disentitle Plaintiffs from offering evidence to clarify and support their theories of liability only if there is no basis for liability.³¹

In evaluating a motion to dismiss, Courts first disregard any conclusory allegations or legal conclusions³² as not entitled to the assumption of truth,³³ and then undertake the "context-specific" task, drawing on judicial experience and common sense, of determining whether the remaining well-pled allegations give rise to entitlement to relief.³⁴ "A claim has facialplausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged."³⁵ Courts have "jettisoned the [earlier] minimum notice pleading requirement"³⁶ and the complaint must plead facts that "nudge" the claims "across the line from conceivable to plausible"³⁷ because discovery after permitting a complaint to survive a motion to dismiss is not a license to fish for a colorable claim.³⁸ The complaint must allege more than the sheer possibility that a defendant acted unlawfully and more than facts merely consistent with a defendant's liability;³⁹ the complaint must plead every material point necessary to sustain recovery and dismissal is proper if the complaint lacks a requisite allegation.⁴⁰ However, the standard is only "to determine whether the plaintiff has stated a legally cognizable claim that is plausible, not to evaluate the plaintiff's likelihood of success."⁴¹

The Court is limited to assessing only the complaint, its proper attachments, documents incorporated into the complaint by reference, and matters of which the Court may take judicial notice.⁴² Attachments to the complaint become part of the pleadings for all purposes,⁴³ but the Court is not required to accept any characterization of them because the exhibit controls over contradictory assertions,⁴⁴ except in the case of affidavits.⁴⁵ Because the focus is on thepleadings, "if, on a motion under Rule 12(b)(6) or 12(c), matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56,"⁴⁶ but not if the material is a matter of public record⁴⁷ or a website⁴⁸ and not if a defendant attaches documents to a motion to dismiss that are "referred to in the plaintiff's complaint and are central to her claim."⁴⁹

In addition, Federal Rule of Civil Procedure 9(b) requires that Plaintiffs, "[i]n alleging fraud or mistake, . . . must state with particularity the circumstances constituting fraud or mistake. Malice, intent, knowledge, and other conditions of a person's mind may be alleged generally." Rule 9(b) extends to all claims or allegations in which the gravamen is fraud, even if the associated theory of liability is not technically termed fraud.⁵⁰ For example, Texas Deceptive Trade Practices-Consumer Protection Act⁵¹ claims generally have to meet the Rule 9(b) standard.⁵² "The Fifth Circuit has interpreted Federal Rule of Civil Procedure 9(b) strictly, requiring the plaintiff to specify the statements contended to be fraudulent, identify the speaker, state when and where the statements were made, and explain why the statements were fraudulent. In short, plaintiffs must plead enough facts to illustrate the who, what, when, where,why and how of the alleged fraud."⁵³ This strict requirement is "a gatekeeper to discovery, a tool to weed out meritless fraud claims sooner than later. [Courts] apply Rule 9(b) to fraud complaints with bite and without apology."⁵⁴ Nevertheless, "fraud may be pleaded without long or highly detailed particularity."⁵⁵ To plead a claim for fraud by misrepresentation or omission, "Rule 9(b) typically requires the claimant to plead the type of facts omitted, the place in which the omissions should have appeared, and the way in which the omitted facts made the representations misleading."⁵⁶ The "particularity" required by Rule 9(b) also disallows collectivized or group allegations; Plaintiffs must delineate which Defendant is responsible for which allegedly fraudulent activity.⁵⁷ Courts will "treat a dismissal for failure to plead fraud with particularity under Rule 9(b) as a dismissal for failure to state a claim upon which relief can be granted."⁵⁸

c. Analysis

Defendant argues that Plaintiffs' allegations undergirding their fraud claims and Texas Deceptive Trade Practices-Consumer Protection Act claims are conclusory and do not satisfy the fraud pleading standard.⁵⁹ Plaintiffs argue that their claims satisfy the Texas state court pleading standards,⁶⁰ and also meet the federal pleading standards.⁶¹

1. What Pleading Standard Applies?

The Court holds that federal pleading standards apply to determine Defendant's motion to dismiss. Plaintiffs cite two district court cases that appear to stand for the application of state pleading standards in determining whether a removed complaint should be dismissed.⁶² However, both cases ultimately rely on Tompkins v. Cyr, which did not hold that state pleading standards supersede Federal Rules of Civil Procedure 8, 9, and 12 in determining the sufficiency of a complaint.⁶³ In any case, this issue was fully settled by Pena v. City of Rio Grande City, a case cited by no party, in which the Fifth Circuit held that "[u]pon removal, the federal pleading standards control."⁶⁴ In Plaintiffs' struck surresponse, Plaintiffs concede "that the Federal Pleading Standard applies."⁶⁵ Given the foregoing, the Court holds that federal pleading standards apply to Plaintiffs' complaint in determining Defendant's motion to dismiss.⁶⁶ The Court now turns to whether Plaintiffs' complaint states claims for common law and statutory fraud and for violation of the Texas Deceptive Trade Practices-Consumer Protection Act.

2. Do Plaintiffs State a Claim?

Defendant Allstate...