Piazzo v. Allstate Indem. Co.

601 F.Supp.3d 189

Barbara PIAZZO, Plaintiff.

v.ALLSTATE INDEMNITY COMPANY, Defendant.

CIVIL ACTION NO. 4:21-cv-01690

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

Signed April 27, 2022

John W. Stevenson, Jr., Stevenson Murray, Houston, TX, Philip F. Klosowsky, Klosowsky Law Offices, Sugar Land, TX, for Plaintiff.

Michael Clifton Maus, Lisa Chastain & Associates, Houston, TX, Lee Kathryn Shuchart, Law Office of Amy L. Mitchell, Houston, TX, for Defendant.

OPINION AND ORDER

ANDREW M. EDISON, UNITED STATES MAGISTRATE JUDGE

Pending before me is Defendant Allstate Indemnity Company's Partial Motion to Dismiss. See Dkt. 15. Having considered the briefing, the record, and the applicable law, the motion is GRANTED in part and DENIED in part. My reasoning follows.

BACKGROUND

Plaintiff Barbara Piazzo ("Piazzo") filed this lawsuit against her insurance company, Allstate Indemnity Company ("Allstate"), alleging that she has been improperly denied underinsured motorist benefits. According to the First Amended Complaint, Piazzo was stopped at a traffic light on December 20, 2013, when an underinsured motorist, Brett Brittain ("Brittain"), failed to control his vehicle and collided with Piazzo's automobile. As a result, Piazzo alleges that she suffered substantial personal injuries.

Brittain carried a liability policy providing for coverage of $50,000 per person. With Allstate's written consent, Piazzo settled with Brittain's automobile insurance carrier for $49,000.

On January 5, 2021, Piazzo made an offer to settle her underinsured motorist ("UIM") claim with Allstate for the $100,000 UIM policy limits provided by the Allstate policy. Piazzo claims that Allstate refused her offer. This lawsuit followed.

In her First Amended Complaint, Piazzo brings causes of action against Allstate for declaratory judgment, breach of contract, and violations of the Texas Insurance Code and Texas Deceptive Trade Practices Act ("DTPA"). In addition to seeking the UIM benefits available under the applicable Allstate policy, Piazzo seeks attorney's fees and prejudgment interest as allowed by law.

Allstate has filed a Partial Motion to Dismiss, asking that I get rid of Piazzo's (1) breach-of-contract claim; (2) extra-contractual claims; and (3) claim for attorney's fees under the Texas Declaratory Judgment Act.

LEGAL STANDARD

Allstate's Partial Motion to Dismiss is brought under Federal Rule of Civil Procedure 12(c). "The standard for deciding a Rule 12(c) motion is the same standard used for deciding motions to dismiss pursuant to Rule 12(b)(6)." Q Clothier New Orleans, L.L.C. v. Twin City Fire Ins. Co. , 29 F.4th 252, 256 (5th Cir. 2022). Under Rule 12(b)(6), "a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting 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." Id. Although a complaint "does not need detailed factual allegations," the "allegations must be enough to raise a right to relief above the speculative level." Twombly , 550 U.S. at 555, 127 S.Ct. 1955. The allegations pleaded must show "more than a sheer possibility that a defendant has acted unlawfully." Iqbal , 556 U.S. at 678, 129 S.Ct. 1937. A court must accept "all well-pleaded facts as true, viewing them in the light most favorable to the plaintiff." Martin K. Eby Constr. Co. v. Dall. Area Rapid Transit , 369 F.3d 464, 467 (5th Cir. 2004) (quotation omitted). Because a complaint must be liberally construed in favor of the plaintiff, a motion to dismiss under Rule 12(b)(6) is generally viewed with disfavor and is rarely granted. See IberiaBank Corp. v. Ill. Union Ins. Co. , 953 F.3d 339, 345 (5th Cir. 2020).

ANALYSIS

A. BREACH OF CONTRACT

In seeking dismissal of Piazzo's breach-of-contract claim, Allstate argues that "there has been no breach of contract established at this point as [Piazzo] does not have a judgment against the tortfeasor or any agreement establishing liability." Dkt. 15 at 4. I agree.

The Texas Insurance Code requires that all personal automobile policies include UIM coverage unless the insured rejects it in writing. See TEX. INS. CODE § 1952.101(b), (c). The purpose of such coverage is to place the insured in the same position she would have occupied if the tortfeasor had carried adequate insurance. See Allstate Ins. Co. v. Irwin , 627 S.W.3d 263, 265 (Tex. 2021) ("Underinsured motorist coverage is insurance designed to fill the gap between the insured's damages from an accident and the other driver's ability to pay."). Although this seems straightforward, "presenting a claim to your insurance carrier for underinsured motorist benefits is not like other claims under an automobile liability insurance policy." Id. An insurer is only obligated to pay the insured what the insured is "legally entitled to recover" from the underinsured motorist. TEX. INS. CODE § 1952.101(a).

The Texas Supreme Court has held that an insurer has no obligation to pay under a UIM policy "until the insured obtains a judgment establishing the liability and underinsured status of the other motorist." Brainard v. Trinity Universal Ins. Co. , 216 S.W.3d 809, 818 (Tex. 2006). Without that judgment, "the insurer's contractual obligation to pay benefits simply does not arise," Banda v. Allstate Prop. & Cas. Ins. Co. , No. 4:19-CV-3418, 2020 WL 3972537, at *2 (S.D. Tex. July 14, 2020), and "[n]either requesting UIM benefits nor filing suit against the insurer" changes that result. Brainard , 216 S.W.3d at 818. Moreover, "neither a settlement nor an admission of liability from the tortfeasor establishes UIM coverage, because a jury could find that the other motorist was not at fault or award damages that do not exceed the tortfeasor's liability insurance." Id.

Piazzo's breach-of-contract claim must be dismissed because she has failed to plead the existence of a judgment establishing Brittain's liability and underinsured status. Without that allegation, the First Amended Complaint fails to establish that Allstate had an obligation to pay UIM benefits. See Ali v. Allstate Indem. Co. , No. 4:20-CV-02769, 2021 WL 3868306, at *2 (S.D. Tex. Aug. 9, 2021) (granting motion to dismiss breach-of-contract claim for failing to allege that a judgment had been rendered establishing the liability and underinsured status of another motorist); Banda , 2020 WL 3972537, at *2–3 (same); Martinez v. Allstate Fire & Cas. Ins. Co. , No. 5:19-CV-35-DAE, 2019 WL 5789988, at *5 (W.D. Tex. June 18, 2019) (same); Adedipe v. Safeco Ins. , No. 4:17-CV-347-ALM-CAN, 2017 WL 6811798, at *4 (E.D. Tex. Oct. 18, 2017) (same); Woods v. Argonaut Midwest Ins. Co. , No. 6:15-CV-139, 2016 WL 3653518, at *2 (E.D. Tex. Mar. 18, 2016) (same).

Although the breach-of-contract claim must be dismissed, Allstate concedes that Piazzo's declaratory judgment claim, as pled, survives. This is important because the same relief Piazzo seeks under her breach-of-contract claim is available as a result of her declaratory judgment action. Under Texas law, an insured can obtain the judgment needed to establish the negligence and underinsured status of the other motorist in two ways: (1) by filing suit against the other motorist and obtaining a judgment establishing liability and the resulting damages; or (2) by settling with the tortfeasor, as Piazzo did in this case, and then proceed to litigate UIM coverage with the insurer. See Brainard , 216 S.W.3d at 818. In this second situation, "the litigation between the insured and [her] carrier is on the UIM contract but not for its breach, which cannot occur until the underlying conditions precedent of liability and damages are established." Irwin , 627 S.W.3d at 267. The Texas Supreme Court has expressly held that an insurer's obligation to pay may be triggered by a declaratory judgment that the other motorist was at fault and underinsured. See id. ("[A] declaratory judgment action is the appropriate remedy for determining the underlying tort issues that control the validity of an insured's UIM claim against his insurer.").

B. EXTRA-CONTRACTUAL CLAIMS

Next, I turn to Piazzo's extra-contractual claims. In short, Piazzo alleges that although Allstate "had a duty to fully, fairly, and promptly evaluate and adjust" her claim, it failed "in good faith to effectuate a prompt, fair, and equitable settlement of the claim." Dkt. 13 at 4–5. Allstate asks that I dismiss the extra-contractual claims because the First Amended Complaint contains "nothing more than unsubstantiated, conclusory statements that are all too common in first-party bad faith litigation." Dkt. 15 at 5. On this point, I disagree with Allstate.

Under Texas law, "an insurer may be liable for common-law bad faith and for unfair settlement practices under Chapter 541 of the Insurance Code when it delays payment on a claim for UIM benefits until the insured has obtained legal determinations as to the liability and underinsured status of the third-party motorists." Burgess v. Allstate Fire & Cas. Ins. Co. , 641 S.W.3d 474, 483 (Tex. App.—Austin 2021, no pet. h.). See also State Farm Mut. Auto. Ass'n v. Cook , 591 S.W.3d 677, 683 (Tex. App.—San Antonio 2019, no pet.) ("[A]n insurer can act in bad faith by failing to reasonably investigate or delaying payment on a claim for uninsured motorist benefits until after the insured obtains a judgment establishing the liability and uninsured status of the other motorist."); Accardo v. Am. First Lloyds Ins. Co. , No. CIV.A. H-11-0008, 2012 WL 1576022, at *5 (S.D. Tex. May 3, 2012) ("When a reasonable investigation reveals overwhelming evidence of the UM/UIM's fault, the judicial determination that triggers the insurer's...