Risinger Holdings, LLC v. Sentinel Ins. Co.

Decision Date30 September 2021
Docket NumberCIVIL ACTION NO. 1:20-CV-00176
Citation565 F.Supp.3d 844
Parties RISINGER HOLDINGS, LLC, and Ronald K. Risinger DDS, MS, P.C. d/b/a Gulf Coast Orthodontic Specialists, Plaintiffs v. SENTINEL INSURANCE COMPANY, LTD. and The Hartford Financial Services, Group, Inc., Defendants
CourtU.S. District Court — Eastern District of Texas

Joseph Azor Muckleroy, Nishi Vimal Kothari, Derek Clinton Brasher, The Brasher Law Firm, PLLC, Beaumont, TX, for Plaintiffs Risinger Holdings, LLC, Ronald K. Risinger, DDS, MS, P.C.

Nishi Vimal Kothari, The Brasher Law Firm, PLLC, Beaumont, TX, for Plaintiffs Ronald K. Risinger, DDS, Risinger & Nelson Orthodontic Specialists.

Zachary Schreiber, Pro Hac Vice, Catherine D. Cockerham, Sarah D. Gordon, Pro Hac Vice, Steptoe & Johnson LLP, Washington, DC, Christine Kirchner, Chamberlain Hrdlicka White Williams & Aughtry, P.C., Houston, TX, for Defendant Sentinel Insurance Company, Ltd.

ORDER ON DEFENDANTS12(B)(1), 12(B)(2), AND 12(B)(6) MOTIONS TO DISMISS PLAINTIFF'S FIRST AMENDED COMPLAINT

Michael J. Truncale, United States District Judge

The matters before the Court are the Defendant, The Hartford Financial Services Group, Inc.’s Rule 12(b)(1), 12(b)(2), and 12(b)(6) Motions to Dismiss [Dkt. 22] and the Defendant, Sentinel Insurance Company, Ltd.’s Rule 12(b)(6) Motion to Dismiss [Dkt. 18].

BACKGROUND

Risinger Holdings, LLC ("Risinger")1 owns several orthodontic practices that bracket the Gulf Coast. Risinger had an insurance policy ("Policy") issued by the Sentinel Insurance Company, Ltd. ("Sentinel"). Last year, when coronavirus lockdowns were ordered across the United States, Sentinel, like other insurers, braced itself for claims and resulting lawsuits. Then, with increasing momentum, courts began dismissing cases in which insurers argued that, because of so-called "virus exclusions," their policies provided no coverage for business income losses caused by the coronavirus. Sentinel deploys that same argument here.

Sentinel is a subsidiary of The Hartford Financial Services Group, Inc. ("Hartford"), a Delaware company headquartered in Connecticut. Like some parents today, Hartford's relationship with its subsidiaries is a distant one: it does not issue or administer claims, it is not a party to the contracts its subsidiaries enter, and it does not collect premiums. Accordingly, Hartford avers that 12(b)(1), 12(b)(2), and an independent basis for 12(b)(6) dismissal are warranted, since it is entirely uninvolved in this dispute. But it also hedges its bets. Should the Court deny its Motion, it joins in Sentinel's Motion to Dismiss under Rule 12(b)(6). [Dkt. 18 n.1].

For the reasons provided below, the Court GRANTS Hartford's Motions to Dismiss under Rules 12(b)(1), 12(b)(2), and 12(b)(6) [Dkt. 22] but DENIES Sentinel's Motion to Dismiss under Rule 12(b)(6) [Dkt. 18].

DISCUSSION
I. Hartford's Motion to Dismiss on 12(b)(1), 12(b)(2), and 12(b)(6) Grounds.

Anytime a federal court makes a decision, the "[j]urisdictional questions comes first." Calcote v. Texas Pac. Coal & Oil Co. , 157 F.2d 216, 218 (5th Cir. 1946). Hartford's Motion challenges (1) the Court's subject matter jurisdiction, because Risinger lacks Article III standing to sue; (2) the Court's personal jurisdiction, because Hartford lacks minimum contacts with the forum; and (3) the sufficiency of Risinger's Complaint, because it fails to state a claim against Hartford, a non-party to the insurance contract. The Court begins its analysis with the two threshold jurisdictional questions.

A. Legal Standards and Analysis.
1. Subject Matter Jurisdiction.

If a district court concludes that it lacks subject matter jurisdiction over a matter, it must dismiss. Arbaugh v. Y & H Corp. , 546 U.S. 500, 514, 126 S.Ct. 1235, 163 L.Ed.2d 1097 (2006). The burden of establishing subject matter jurisdiction lies with the plaintiff, and it requires proof by a preponderance of the evidence. Southern Recycling, L.L.C v. Aguilar , 982 F.3d 374, 379 (5th Cir. 2020). When resolving jurisdictional questions, a district court may properly consider evidence outside the pleadings without converting a motion to dismiss into a motion for summary judgement. RLB Contr., Inc. v. Butler , 773 F.3d 596, 601 (5th Cir. 2014).

Even if some basis for original jurisdiction exists, Article III standing remains a non-negotiable component of subject matter jurisdiction. Ortiz v. Am. Airlines, Inc. , 5 F.4th 622, 627 (5th Cir. 2021). To establish Article III standing, a plaintiff must show (1) an "injury in fact," (2) "fairly traceable" to the defendant's "challenged conduct," (3) that is "likely to be redressed" by a favorable decision. Id. at 628.

Risinger cannot establish Article III standing because it lacks contractual privity with Hartford and cannot show any injury "fairly traceable" to Hartford's conduct. [Dkt. 22 at 15]. Risinger's claims (Count I for a declaratory judgment; Counts II, IV and V for violations of the Texas Insurance Code and the Texas Deceptive Trade Practices Act; and Count VII for breach of the duty of good faith and fair dealing; see Dkt. 16 at 16–23) are necessarily predicated on two things: first, Hartford's status an "insurer" under the Policy; and second, whether Risinger's alleged injury, the denial of coverage for business income losses due to the coronavirus, is fairly traceable to conduct by Hartford. But Risinger's own exhibits show that Hartford was not an insurer under the Policy, which clearly lists "Sentinel Insurance Company, Limited" as the "insurer." [Dkt. 16-1 at 17]. Risinger's Complaint also does not adequately allege that Hartford engaged in any relevant conduct. A sworn declaration avers that Hartford does not underwrite risks; issue or adjust policies; or investigate, handle, or deny claims. [Dkt. 22-1 at 2–3]. Hartford's Form 10-K filed with the SEC declares that it is only a "holding company [with] no significant business operations of its own." [Dkt. 22-1 at 7].

Hartford points to a likely source of confusion. Multiple entities, including the Sentinel Insurance Company, The Hartford Financial Services Group, the Hartford Fire Insurance Company, and Hartford Financial Products, operate under a trade name: "The Hartford." [Dkt. 22-1 at 2; Dkt. 22 at 14; Dkt. 16-1 at 7]. Risinger's response merely restates conclusory allegations about Hartford's involvement, but also backtracks—acknowledging it may have sued the wrong entity. [Dkt. 26 at 3–5]. Even if Risinger were capable of stating a claim, it has only adequately alleged conduct linked to the group of entities doing business under the trade name, "The Hartford," but not the legal entity, "The Hartford Financial Services Group, Inc." [see Dkt. 26 at 5, alleging vaguely that a "Hartford entity" is involved].

"The Hartford," as a trade name, "is not a separate legal entity capable of being sued." Snowden v. Checkpoint Check Cashing , 290 F.3d 631, 634 n.2 (4th Cir. 2002) ; Mastro v. Seminole Tribe , 578 Fed. App'x 801, 803 (11th Cir. 2014) ; Emrit v. Pub. Access to Court Elec. Records (PACER) , No. A-14-CV-461 LY, 2014 U.S. Dist. LEXIS 155631, at *4 (W.D. Tex. 2014); Hill v. Oria , No. 07-36424, 2010 WL 5256806, at *11 n.9 (Bankr. S.D. Tex. 2010).2 Accordingly, Risinger's injuries are not "fairly traceable" to conduct by either "The Hartford" or Hartford. First, "The Hartford," a non-entity, is incapable of engaging in judicially cognizable conduct, so any complaints about it are a legal nullity. Second, Risinger has not adequately alleged that Hartford, the named defendant, engaged in any conduct at all. See Black Magic, LLC v. Hartford Fin. Servs. Grp., Inc. , No. 2:20-cv-1743-BHH, 2021 WL 964969, at *4 (D.S.C. Mar. 15, 2021) (granting defendant's 12(b)(1) motion because defendant was not an "insurer" under the policy and plaintiff's complaint asserted no conduct by defendant fairly traceable to the alleged injury).

Therefore, the Motion to Dismiss under Rule 12(b)(1) is GRANTED .

2. Personal Jurisdiction.

When a court assesses a non-resident defendant's challenge to personal jurisdiction without holding an evidentiary hearing, the plaintiff bears the burden of presenting "sufficient facts" for a prima facie case of personal jurisdiction. Thiam v. T-Mobile USA, Inc. , No. 4:19-CV-00633, 2021 WL 1550814, at *1 (E.D. Tex. Apr. 20, 2021). The court accepts as true allegations in the plaintiff's complaint, except when they are contradicted by the defendant's affidavits. Id. However, "genuine, material conflicts" between the facts in the parties’ affidavits and other evidence are construed in the plaintiff's favor. Id.

Establishing in personam jurisdiction in a diversity case is a two-step dance. Daimler AG v. Bauman , 571 U.S. 117, 125, 134 S.Ct. 746, 187 L.Ed.2d 624 (2013). First, a court asks whether a defendant is subject to the jurisdiction of a state court of general jurisdiction under state law. FED. RULE CIV. PROC. 4(k)(1)(A). This requires measuring the reach of the long-arm statute of the state where the federal court sits. Daimler AG , 571 U.S. at 125, 134 S.Ct. 746. Second, the court asks if the exercise of personal jurisdiction would be within the limits imposed by the U.S. Constitution. Id. But if a long-arm statute is construed to extend to the limits of due process, a federal court may skip to the second step. Id. ; Jackson v. Tanfoglio Giuseppe S.R.L. , 615 F.3d 579, 584 (5th Cir. 2010). The Texas Supreme Court has construed Texas’ long-arm statute to extend "as far as the federal constitutional requirements of due process will permit." BMC Software Belg., N.V. v. Marchand , 83 S.W.3d 789, 795 (Tex. 2002) (citing U-Anchor Adver., Inc. v. Burt , 553 S.W.2d 760, 762 (Tex. 1977) ). So, the Court focuses only on the due process aspects of the personal jurisdiction question.

The constitutional inquiry requires the court to consider (1) whether a defendant has purposefully availed itself of the protections and benefits of the forum state by establishing ...

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