Regency Title Co. v. Westchester Fire Ins. Co.

5 F.Supp.3d 836

Regency Title Company, LLC, Plaintiff,

v.Westchester Fire Insurance Company and the Plus Companies, Inc., Defendants.

Civil Action No. 4:11–cv–390

United States District Court, E.D. Texas, Sherman Division.

11/15/2013

Christopher Scott Ayres, Ayres Law Office, P.C., Addison, TX, for Plaintiff.

Leah Kimberly Steele, W. Neil Rambin, Sedgwick Detert Moran & Arnold, Dallas, TX, for Defendants.

MEMORANDUM OPINION AND ORDER GRANTING DEFENDANTS' MOTION FOR JUDGMENT ON THE PLEADINGS AND DENYING PLAINTIFF'S CROSS–MOTION FOR JUDGMENT ON THE PLEADINGS

RICHARD A. SCHELL, UNITED STATES DISTRICT JUDGE

Pending before the court are Defendants' Motion for Judgment on the Pleadings (Dkt.8), Plaintiff's Response to Defendant's Motion for Judgment on the Pleadings (Dkt.12), Plaintiff's Cross–Motion for Judgment on the Pleadings (Dkt.13), Defendants' Response to Plaintiff's Cross–Motion for Judgment on the Pleadings (Dkt.14), and Defendants' Reply in Support of Motion for Judgment on the Pleadings (Dkt.15). Defendants' Motion for Judgment on the Pleadings is GRANTED and Plaintiff's Cross–Motion for Judgment on the Pleadings is DENIED.

I. BACKGROUND

Plaintiff Regency Title Company, LLC (“Regency”) has brought a declaratory judgment and breach of contract action against Defendants Westchester Fire Insurance Company (“Westchester”) and the Plus Companies. Pl.'s First Am. Compl. ¶¶ 4.2, 5.10. The dispute is a result of a denial of insurance coverage by Westchester under a professional liability policy that Regency purchased from Westchester. Defs.' Mot. for J. on the Pleadings ¶ 2. The policy period was from September 1, 2009 to September 1, 2010. Id. The policy provides coverage for “claims made and reported” during the policy period. Id.

Regency seeks coverage for a lawsuit styled Tower Custom Homes v. John A. Cook and Regency Title Company, LLC, Cause No. 380–03132–2010 pending in the 380th Judicial Court of Collin County, Texas (“Underlying Lawsuit”). Id. ¶ 3. The plaintiff in the Underlying Lawsuit sued Regency for breach of contract, negligence, conversion, and breach of fiduciary duty. The Underlying Lawsuit was filed on July 29, 2010, during the policy period. Pl.'s First Am. Compl. ¶ 3.1.

Regency notified Westchester of the Underlying Lawsuit requesting insurance coverage and for Westchester to defend Regency. Id. ¶ 3.2. Westchester refused to defend or indemnify Regency. Id. ¶ 3.4. Westchester asserted that while the Underlying Lawsuit was brought against Regency during the policy period, the ‘claim’ in the Underlying Lawsuit was first made against Regency prior to the inception of the policy and is consequently not covered by the policy. Defs.' Mot. for J. on the Pleadings ¶ 9.

Regency filed a Third–Party Petition against Westchester in the Underlying Lawsuit. Pl.'s First Am. Compl. ¶ 3.5. Westchester filed a Motion to Sever Regency's cross-claim, which was granted. Id. ¶ 3.6. Westchester then removed the case to this court on the basis of diversity. Id.

II. DISCUSSION

A. Legal Standard

Federal Rule of Civil Procedure 12(c) allows any party to move for judgment on the pleadings “[a]fter the pleadings are closed—but early enough not to delay trial.” Fed. R. Civ. P. 12(c). Motions for judgment on the pleadings are “subject to the same standard as a motion to dismiss under 12(b)(6).” Ackerson v. Bean Dredging LLC, 589 F.3d 196, 209 (5th Cir.2009) (quoting Doe v. MySpace, Inc., 528 F.3d 413, 418 (5th Cir.2008)). The “inquiry focuses on the allegations in the pleadings” and not on whether the “plaintiff actually has sufficient evidence to succeed on the merits.” Id. (quoting Ferrer v. Chevron Corp., 484 F.3d 776, 782 (5th Cir.2007)).

“To survive a Rule 12(c) motion, a complaint must allege ‘sufficient factual matter, accepted as true, to state a claim that is plausible on its face.’ ” Hole v. Tex. A & M Univ., 360 Fed.Appx. 571, 573 (5th Cir.2010) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 667, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2007)). “[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint ... has not shown that the pleader is entitled to relief.” Iqbal, 556 U.S. at 679, 129 S.Ct. 1937. The complaint must be factually suggestive, so as to “raise a right to relief above the speculative level,” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), and state a claim “plausible on its face.” Id. at 570, 127 S.Ct. 1955. Facial plausibility is achieved “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678, 129 S.Ct. 1937. “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id.

Defendants attached several documents to Defendants' Motion for Judgment on the Pleadings that Defendants would like the court to consider when reaching a decision. Plaintiff filed Plaintiff's First Amended Complaint in order to incorporate the documents attached to Defendants' Motion for Judgment on the Pleadings into the actual pleadings. Pl.'s First Am. Compl. ¶ 3.7. Plaintiff did this to allow the court to properly rule on Defendants' Rule 12(c) motion. Pl.'s Resp. to Defs.' Mot. for J. on the Pleadings, at 3; see also Pl.'s First Am. Compl. n. 1.

B. Analysis

Plaintiff (Regency) and Defendants (Westchester and the Plus Companies) agree that the sole issue in this case is whether the insurance contract between Regency and Westchester requires Westchester to defend and indemnify Regency in the Underlying Lawsuit. Defs' Mot. for J. on the Pleadings, at 1; Pl's Resp. to Defs' Mot. for J. on the Pleadings, at 1. Plaintiff and Defendant are further in agreement that the issue of coverage hinges solely on whether the plaintiff in the Underlying Lawsuit first asserted the ‘claim’ made against Regency in the Underlying lawsuit before the inception of the insurance policy. Pl's Resp. to Defs' Mot. for J. on the Pleadings, at 6; Defs' Reply in Supp. of Mot. for J. on the Pleadings ¶ 5. Specifically, the plaintiff in the Underlying Lawsuit filed a complaint with the Texas Department of Insurance (TDI) on September 30, 2008 (approximately one year before the inception of the insurance policy) and Plaintiff and Defendants dispute whether this complaint filed with TDI constitutes a ‘claim’ within the meaning of the insurance contract. Pl's Resp. to Defs' Mot. for J. on the Pleadings, at 6; Defs' Reply in Supp. of Mot. for J. on the Pleadings ¶ 5.

The complaint filed with the TDI against Regency has been included in Defendants' Motion for Judgment on the Pleadings as “Exhibit C”. Additional correspondence between TDI and Regency and TDI and the plaintiff in the Underlying Lawsuit (Tower Custom Homes) are also part of “Exhibit C” and TDI's dismissal of Tower Custom Homes' complaint is included as “Exhibit D”. In addition, Tower Custom Home's complaint against Regency in the Underlying Lawsuit is included as “Exhibit B” and the insurance contract between Regency and Westchester is included as “Exhibit A”.

1. TDI Complaint against Regency

The complaint filed with TDI refers to the same nexus of facts as the Underlying Lawsuit (“Exhibit B” at 4–5; “Exhibit C” at 5) and requests that Regency pay Tower Custom Homes $100,000 or, alternatively, requests specific performance from Regency. “Exhibit C” at 5. The TDI complaint was filed on September 30, 2008. “Exhibit C” at 4. On October 2, 2008, TDI sent a letter to Tower Custom Homes indicating that TDI had received the compliant and that “an investigation [was] being initiated.” “Exhibit C” at 7. Also on October 2, 2008, TDI sent a letter to Regency informing Regency that Tower Custom Homes filed a complaint against Regency. “Exhibit C” at 2. Tower Custom Homes' complaint was attached and the letter asked Regency to review the complaint and to “respond specifically to each allegation and include supporting documentation.” “Exhibit C” at 2.

On October 22, 2008, TDI sent a second letter to Tower Custom Homes with Regency's response attached. “Exhibit D” at 2. The letter indicated that TDI “[had] concluded its investigation” and that TDI had found “no violation of the Texas Insurance Code.” “Exhibit D” at 2. The letter indicated that TDI was not capable of resolving disputes of fact and recommended that Tower Custom Homes consult with legal counsel or seek private remedies if Tower Custom Homes was unsatisfied with the result. “Exhibit D” at 2. While the letter in “Exhibit D” indicates that Regency's response is attached, the response is not actually included in the exhibits attached to Defendants' Motion for Judgment on the Pleadings; however, Regency attached its response to the TDI complaint to Plaintiff's Response to Defendants' Motion for Judgment on the Pleadings as “Exhibit F”. Regency's response acknowledges the request for money included in Tower Custom Homes' TDI complaint. “Exhibit F” at 1–2.

2. Regency's Insurance Contract with Westchester

Regency's insurance policy with Westchester provides coverage for claims “first made against the insureds and reported to [Westchester] during the policy period” and excludes claims first made or reported outside the policy period. “Exhibit A” at 2. The only point of contention between Regency and Westchester is whether Tower Custom Homes' complaint to TDI constitutes a “claim” within the meaning of the contract. No other provisions of the insurance policy are at issue. Pl's Resp. to Defs' Mot. for J. on the Pleadings, at 6; Defs' Reply in Supp. of Mot. for J. on the Pleadings ¶ 5. If the TDI complaint constitutes a ‘claim’ under the contract, then coverage for the Underlying Lawsuit is excluded; if the complaint does not constitute a ‘claim’, then Westchester is contractually obligated to defend and indemnify Regency. Pl's See Resp. to Defs' Mot. for J. on the Pleadings...