Dennis Horn v. State Farm Lloyds
703 F.3d 735
5th Cir.2012Background
- After Hurricane Ike, hundreds of homeowners filed claims against State Farm Lloyds in Texas; many suits named individual adjusters personally.
- State Farm removed several cases to federal court on diversity grounds; Mostyn Law Firm represented the Horns in Galveston County.
- On June 11, 2009, the Firm and State Farm executed an Agreement: the Firm would abandon claims against individual adjusters and refrain from future suits, in exchange for State Farm not removing any Hurricane Ike cases.
- The Agreement stated it would pertain to all Hurricane Ike cases filed or to be filed by the Firm against State Farm Lloyds; it contemplated production of an adjuster for deposition and limited inspections of properties; and it restricted removals when co-defendants could seek removal.
- The Horns amended their state-court claim to a putative class action; State Farm removed to federal court; the district court remanded, and the magistrate judge recommended remand on the contract’s scope, which the district judge adopted.
- State Farm appealed the remand order, challenging whether the contract phrase covers class actions and whether surrounding provisions conflict with a broad reading.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the phrase any Hurricane Ike cases unambiguously cover class actions? | Horns: includes all Ike-related suits by the Firm, including class actions. | State Farm: excludes class actions from any Hurricane Ike cases. | Unambiguous; covers class actions. |
| Is 'any' read in isolation or in context with the Agreement’s scope? | N/A | N/A | Reads expansively to mean all Ike cases within the scope provision. |
| Do surrounding provisions of the Agreement render the plain reading of 'any Hurricane Ike cases' nonsensical? | N/A | N/A | No; surrounding terms are consistent with the broad reading. |
| Does Texas contract-interpretation law require enforcing the contract as written despite differences from the parties’ expectations? | N/A | N/A | Yes; the contract is enforced as written. |
Key Cases Cited
- SAS Institute, Inc. v. Breitenfeld, 167 S.W.3d 840 (Tex. 2005) (unambiguous contract provisions govern beyond anticipated scenarios)
- Friendswood Dev. Co. v. McDade + Co., 926 S.W.2d 280 (Tex. 1996) (plain language controls over reasonable expectations)
- Addicks Servs., Inc. v. GGP-Bridgeland, LP, 596 F.3d 286 (5th Cir. 2010) (ambiguous vs. unambiguous contract terms; context matters)
- N Nat’l Union Fire Ins. Co. v. CBI Indus., Inc., 907 S.W.2d 517 (Tex. 1995) (terminology like any and exclusions unambiguously preclude claims)
- Interstate 35/Chisam Rd., L.P. v. Moayedi, 377 S.W.3d 791 (Tex. App.—Dallas 2012) (contextual reading of contract terms; broad defenses supported)
- Westwood Apex v. Contreras, 644 F.3d 799 (9th Cir. 2011) (read words like any/all consistently with sentence structure)
- Med. Ctr. Pharmacy v. Mukasey, 536 F.3d 383 (5th Cir. 2008) (contextual reading of phrase any drug)
- Nixon v. Mo. Mun. League, 541 U.S. 125 (U.S. 2004) (any can have expansive meanings depending on setting)