U.S. DISTRICT COURT DISMISSES CLAIMS AGAINST INSURANCE AGENCY AS PLAINTIFF FAILED TO MEET THE PLEADING REQUIREMENTS

The United States District Court for the Western District of Texas recently dismissed claims against an insurance agency due to the plaintiff’s failure to meet the pleading requirements. In Molina v. American Access Casualty Co., Civil Action No. SA-21-CV-00363-XR (W.D. Tex. [San Antonio Division] August 17, 2021), Vargas was involved in a motor vehicle collision with Molina, who subsequently filed suit against Vargas and obtained a default judgment for $200,000, plus costs and interest. Vargas was insured with American Access Casualty Company (“AACC”). A-Max Automobile Insurance Company (“A-Max”), an insurance agency, facilitated the issuance of Vargas’ policy with AACC.  

As the judgment creditor of Vargas, and the assignee of his rights under the policy, Molina sued A-Max (and AACC) for breach of contract, bad faith, violations of the DTPA and Texas Insurance Code, and fraud.

The U.S. District Court dismissed Molina’s claims against A-Max. To start, the court concluded that, “to the extent [Molina’s] claims arise out of the terms of the Policy itself, [Molina] cannot plausibly recover from A-Max because A-Max is not a party to the Policy.” Next, the court recognized that sales agents may be individually liable to insureds (when the agent misrepresents specific policy terms, and the insured's reliance upon that misrepresentation actually causes the insured to incur damages), but the court concluded that Molina’s pleading did not provide any factual allegations to support the claims. Instead, the pleading merely recited the statutory language of the claims.  “The petition does not identify any specific statements made by, or on behalf of A-Max, or explain how those statements amounted to misrepresentations ….”  “[Molina’s] statutory claims fail to allege with sufficient specificity the “who, what, when, and where” of the alleged misrepresentations and must be dismissed.”