Pena v. American Residential Services, LLC
4:12-cv-02588
S.D. Tex.Feb 7, 2013Background
- Pena filed a 2010 home warranty claim for a water leak from the air conditioning unit and hired ARS to perform repairs.
- ARS performed repairs; the leaking stopped but Pena alleges damage to the home from faulty early repairs.
- ARS referred Pena’s damages claim to its insurer, Liberty Mutual, which negotiated but failed to settle.
- Pena sued ARS and Liberty Mutual in state court asserting DTPA, Texas Insurance Code, fraud, and negligence related to negotiations.
- Liberty Mutual removed the case to federal court on diversity grounds and moved to dismiss under Rule 12(b)(6).
- The court granted Liberty Mutual’s motion and dismissed Pena’s claims against Liberty Mutual with prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Pena may bring a direct action against Liberty Mutual. | Pena contends direct action against insurer is permissible under applicable law. | Liberty Mutual argues there is no direct action and Pena has pled no applicable exceptions. | Dismissed; no direct-action liability pleaded. |
Key Cases Cited
- Nelms v. State Farm Mut. Auto. Ins. Co., 463 F.2d 1191 (5th Cir. 1972) (substantive law governs direct action in diversity cases)
- Russell v. Hartford Cas. Ins. Co., 548 S.W.2d 737 (Tex. App.—Austin 1977, writ refused n.r.e.) (Texas bars direct action against insurers absent statutory/contractual exceptions)
- Angus Chem. Co. v. IMC Fertilizer, Inc., 939 S.W.2d 138 (Tex. 1997) (direct-action requirements exist at state court level)
- Jones v. CGU Ins. Co., 78 S.W.3d 626 (Tex. App.—Austin 2002) (no common-law direct-action against insurer by third-party)
- Allstate Ins. Co. v. Watson, 876 S.W.2d 145 (Tex. 1994) (limits on insurer’s duty in third-party claims)
- Texas Farmers Ins. Co. v. Soriano, 881 S.W.2d 312 (Tex. 1994) (good-faith and fair-dealing duties in insurance context)