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A federal court in Texas has dismissed an insured's claim that his insurer had violated the Deceptive Trade Practices Act (“DTPA”).

The Case

After Bob Click's home suffered water damage, his insurer, State Farm Lloyds, determined that his insurance policy covered the claim. State Farm made two estimates as to the amount needed to cover repairs, but Mr. Click objected that the quotes of $9,015.05 and $11,824.76 were insufficient.

Ron Allen, the claim adjuster, suggested that a local repair company prepare an estimate for consideration.

The company quoted $18,288.39 to repair the damage.

At Mr. Allen's request, Mr. Click then prepared his own quote, and submitted an estimate at $82,819.29.

Mr. Allen declined to use that estimate, although State Farm increased its payout to $25,741.14.

Mr. Click sued State Farm, contending that this amount was insufficient to comply with the policy, and that State Farm's delay in fully compensating him for the damages gave rise to liability for physical injury and mental anguish. Among other things, he alleged violations of the DTPA.

State Farm moved to dismiss, asserting that Mr. Click's claims did not meet the heightened pleading standard for claims of fraud under Federal Rule of Civil Procedure 9(b).

The Court's Decision

The court granted State Farm's motion.

In its decision, the court found that Mr. Click had insufficiently pleaded the allegations of violation of the Texas DTPA. Mr. Click had not explained how his alleged facts supported any violations, the court said. It pointed out that he had not alleged how State Farm purportedly made its misrepresentations, other than a “repeated general reference to advertising materials claiming to fully restore the insured following a loss.”

According to the court, reading the complaint most favorably to Mr. Click and inserting natural factual assumptions, Mr. Click asserted a difference between the policy as advertised and State Farm's unwillingness to pay Mr. Click the full amount of his estimated damages. This argument, the court said, was “unsound” because he could not decide that the multiple estimates prepared by an adjustor were insufficient, provide his own estimate, and then claim that State Farm had violated the DTPA by declining to pay out the total of his estimate, “whether or not the insurer advertised the policy as compensating for all loss.”

The court ruled that his DTPA claim had to be dismissed because Mr. Click had failed to allege sufficiently that State Farm had acted to deceive or defraud him, instead citing the DTPA provisions generally and inferring a supporting factual allegation based upon “advertising puffery.”

The case is Click v. State Farm Lloyds, No. 1:17-CV-00108-BL (N.D. Tex. March 13, 2018). Attorneys involved include: For State Farm Lloyds, Defendant: Armando De Diego, LEAD ATTORNEY, Harvey G Joseph, The Law Office of Armando De Diego PC, Dallas, TX. For Ron Allen, Defendant: Armando De Diego, LEAD ATTORNEY, The Law Office of Armando De Diego PC, Dallas, TX.

Steven A. Meyerowitz, Esq., is the Director of FC&S Legal, the Editor-in-Chief of the Insurance Coverage Law Report, and the Founder and President of Meyerowitz Communications Inc. As FC&S Legal Director, Mr. Meyerowitz, a member of the team that conceptualized FC&S Legal, provides daily analysis and commentary on the most significant insurance coverage law decisions from courts across the country and news regarding legislative and regulatory developments. A graduate of Harvard Law School, Mr. Meyerowitz was an attorney at a prominent Wall Street law firm before founding Meyerowitz Communications Inc., a law firm marketing communications consulting company.