In re Delta Lloyds Ins. Co. of Houston

• Citation: 339 S.W.3d 384
• Decision Date: 05 September 2008
• Docket Number: 08–0208,Nos. 08–0142,08–0427.,s. 08–0142
• Parties: In re DELTA LLOYDS INSURANCE COMPANY OF HOUSTON, Texas.In re Hurricane Rita Homeowners' Claims.In re Southeast Surplus Underwriters General Agency, Inc.
• Court: United States Judicial Panel on Multidistrict Litigation

339 S.W.3d 384

In re DELTA LLOYDS INSURANCE COMPANY OF HOUSTON, Texas.In re Hurricane Rita Homeowners' Claims.In re Southeast Surplus Underwriters General Agency, Inc.

Nos. 08–0142

08–0208

08–0427.

Texas Judicial Panel on Multidistrict Litigation.

Sept. 5, 2008.

On Review By the Multidistrict Litigation Panel

Justice HANKS delivered the opinion of the Multidistrict Litigation Panel, in which Justice LANG and Justice STONE joined.

Before this Panel are three motions to transfer various insurance coverage cases to a single court for the coordination of pretrial proceedings. ¹ These cases, arising from the defendants' denial of Hurricane Rita property damage claims, are currently pending in Jasper, Jefferson, Hardin and Orange Counties. The first motion, filed by Delta Lloyd's Insurance Company of Houston (“Delta”), seeks to consolidate four cases brought against Delta and its adjusters. The second motion, filed by Southeast Surplus Underwriters General Agency Inc. (“Southeast”), seeks to consolidate twelve cases brought against Southeast, as the managing general agent for Farmers and Ranchers Insurance Company (“Farmers”), and/or Farmers and its adjusters. The third motion, filed by Standard Insurance Company, American–Bankers Insurance Company, American Security Insurance Company and Voyager Insurance Company (collectively, “the Carriers”), seeks to consolidate five cases against the Carriers and their adjusters and one case against Underwriters at Lloyd's of London (“Underwriters”) and its adjusters. We grant Delta's motion in part and deny it in part. We grant Southeast's motion. We deny the Carriers' motion.

Background

For each of the three motions before us, the plaintiffs in the underlying cases own property covered by insurance policies. All of the plaintiffs are represented by the same law firm, and they allege that their respective defendants engaged in unfair settlement practices and wrongfully denied their claims for property damage caused by Hurricane Rita. In each of the petitions, the plaintiffs allege violations of the Texas Insurance Code, fraud, breach of contract and breach of the duty of good faith and fair dealing.

The petitions in all of the underlying cases contain nearly identical generalized allegations of wrongdoing. The discovery requests are nearly identical, and are typical of initial discovery in insurance coverage disputes—seeking general information regarding each defendant's justification for denying the claims, as well as each defendants' policies and procedures for investigating the claims, compliance with the requisite insurance code provisions for adjusting the claims and their communications with the plaintiffs. The discovery requests are voluminous, averaging approximately 93 requests for production and 23 interrogatories (plus requests for disclosure) per defendant insurance carrier and 64 requests for production and 23 interrogatories (plus requests for disclosure) for the remaining defendants.

Mandates of Rule 13

Each of the three motions to transfer asks us to consolidate a particular subset of cases into an MDL. Rule 13 authorizes this Panel to grant a motion for the transfer of “related” cases from different trial courts to a single pretrial judge if the transfer will (1) serve the convenience of the parties and witnesses and (2) promote the just and efficient conduct of litigation. See Tex.R. Jud. Admin. 13.3(a)(2), Tex. Gov't Code § 74.162 (West 2005). Our decision regarding a motion to transfer is necessarily influenced by our review of the contents of the parties' pleadings and discovery in the cases at issue in the motion. Accordingly, for each of the three motions to transfer, we analyze the case grouping suggested by the defendants under the rubric of Rule 13 and the factual issues at play in the cases.

Are the Cases Related?

Under Rule 13.2(f), cases are related if they involve “one or more common questions of fact.” See Tex.R. Jud. Admin. 13.2(f), Tex. Gov't Code § 74.162 (West 2005). While the rule requires common questions of fact, strict identity of issues and parties in the cases is not required and cases containing case-specific issues such as damages may still be transferred under Rule 13. See In re Hurricane Rita Evacuation Bus Fire, 216 S.W.3d 70, 72 (Tex. M.D.L. Panel 2006). As we have held, “every case is different. No two cases are alike. A rule 13 transfer of cases does not require that the cases be congruent or anything close to it.” In re Hurricane Rita Evacuation, 216 S.W.3d at 72.

The arguments and counter-arguments made for each of the three motions to transfer are similar. For example, in each of the three motions, the movants argue that the cases they list are related because they are all insurance coverage disputes arising from property damage sustained during Hurricane Rita. Accordingly, all three groups of movant defendants contend that a number of common questions of fact exist and that these common questions of fact mandate the transfer of their cases to a single pretrial court.²

In contrast, the Respondents argue that all of the cases covered by the three motions are highly individualized and that they do not share common questions of fact. Respondents argue that each individual plaintiff had different problems with each defendant carrier and adjuster, and the cases involve separate and distinct pieces of real property located in four different counties.

At the outset, we note that the fact that these insurance coverage disputes may arise from the same disaster does not mean ipso facto that they are “related” for purposes of Rule 13. Here, in all three motions to transfer, the occurrence of a single disaster—Hurricane Rita—is a common undisputed fact rather than a “common question of fact” under Rule 13. See, e.g., In re Personal Injury Litigation Against Great Lakes Dredge & Dock Company LLC, 283 S.W.3d 547 (Tex. M.D.L. Panel, 2007)(denying motion to transfer where the alleged similarities between the cases are “not common questions of fact; instead they are undisputed facts”). Movants' reliance upon our opinion in In re Hurricane Rita Evacuation Bus Fire, 216 S.W.3d 70 (Tex. M.D.L. Panel 2006) to support their argument that the occurrence of Hurricane Rita makes all of these cases related under Rule 13 is misplaced. That case is factually distinguishable from the case at bar.

In In re Hurricane Rita Evacuation Bus Fire, where we found that the cases arising from a single disaster—a tragic bus fire—were related, there are common questions of fact regarding the occurrence of the disaster itself. As we noted, because these fact questions are central to the resolution of each case, “none of the parties seriously denied that the liability issues in each of the cases will be substantially the same,” and in all of the cases the lawyers would have to examine “the same large pool of employees and fact witnesses” and explore the same negligence and causation issues of this single event. In re Hurricane Rita Evacuation Bus Fire, 216 S.W.3d at 72; see also In re Cano Petroleum Inc, et. al., 283 S.W.3d 179 (Tex. M.D.L. Panel, 2008)(granting motion to transfer cases where common questions of fact regarding a single disaster—a wildfire—exist in seven lawsuits).

However, in each of the three motions currently presented to us, the pleadings and the discovery in the underlying cases reveal that the occurrence of Hurricane Rita is not an actual “question of fact,” nor is any purported question of fact pertaining to Hurricane Rita central to the resolution of the mostly contractual and statutory claims asserted against the various defendants. Rather, the underlying factual questions of each case below are the alleged conduct of each of the particular defendants in adjusting the individual insurance claims and the alleged contractual basis for denying each plaintiff's claims. These are the underlying questions of fact that we must examine to determine whether the cases at issue in each motion are “related” under Rule 13.

Delta

Applying the above analysis, each of the four cases against Delta do share common questions of fact regarding Delta's alleged conduct in adjusting the individual insurance claims and the alleged contractual basis for denying each plaintiff's claims. Accordingly, we agree with Delta that these four cases are “related” under Rule 13.

In In re Ocwen Loan Servicing, LLC Mortgage Servicing Litigation, 286 S.W.3d 669 (Tex. M.D.L. Panel 2007), the Panel addressed factual allegations very similar to the facts before us now and our opinion in that case is instructive to our analysis here. In Ocwen, the plaintiffs argued that the cases were highly individualized and not related because each plaintiffs' experience with the defendant in servicing their mortgages “was their own personal nightmare, with unique facts” and each case involves “a different specific piece of real property” located in different counties. Id. However, a review of the pleadings and discovery revealed that the claims in each of cases are “based on standard practices and procedures” followed by a single company in the conduct of its business. Id. Thus we held that, under those circumstances, each case shared one or more common questions of fact and that under Rule 13 they were related.

The claims in each of the nine pending cases are based on standard practices and procedures followed by Ocwen in its business of servicing mortgage loans. Accordingly, in all nine cases, discovery will be aimed at disclosing the nature of these common practices and procedures. In addition, similar legal issues will arise as to whether those standard practices and procedures give rise to liability under the commonly alleged theories.

Id.

Similarly, as reflected in the plaintiffs' pleadings and discovery requests, the claims against Delta all arise from standardized policy language used by Delta and from the same standard practices and procedures allegedly followed by...