Stonewater Roofing, Ltd. v. Tex. Dep't of Ins.

• Decision Date: 02 February 2022
• Docket Number: 07-21-00016-CV
• Parties: STONEWATER ROOFING, LTD. CO., Appellant v. TEXAS DEPARTMENT OF INSURANCE and Kent Sullivan in His Official Capacity as Commissioner of the Texas Department of Insurance, Appellees
• Court: Texas Court of Appeals

641 S.W.3d 794

STONEWATER ROOFING, LTD. CO., Appellant

v.TEXAS DEPARTMENT OF INSURANCE and Kent Sullivan in His Official Capacity as Commissioner of the Texas Department of Insurance, Appellees

No. 07-21-00016-CV

Court of Appeals of Texas, Amarillo.

February 2, 2022

Rehearing Denied April 21, 2022

William Sumner Macdaniel, H. Melissa Mather, Austin, for Appellees.

Brian S. Goodman, for Real party in interest.

Michael A. McCabe, Chase Cobern, Michael Kim, Ericha Brown, Dallas, for Appellant.

Before QUINN, C.J., and PIRTLE and DOSS, JJ.

Patrick A. Pirtle, Justice

Appellant, Stonewater Roofing, Ltd. Co., appeals from the trial court's Order Granting Motion to Dismiss , entered pursuant to Rule 91a of the Texas Rules of Civil Procedure, in favor of Appellees, Texas Department of Insurance and Kent Sullivan, in his official capacity as Commissioner of the Texas Department of Insurance (hereinafter collectively "TDI"). By two issues, Stonewater contends the trial court erred in granting TDI's motion to dismiss because its pleadings demonstrated an adequate basis in law and in fact, under the appropriate Rule 91a standard, to support its causes of action under the First and Fourteenth Amendments to the United States Constitution. See TEX. R. CIV. P. 91a.¹ (providing for the dismissal of any cause of action that does not have a "basis in law or fact"). Based on the facts of this case, we will reverse the order of the trial court and remand the matter for further proceedings not inconsistent with this ruling. TEX. R. APP. P. 43.2(d).²

BACKGROUND

In 2005, the Texas Legislature enacted provisions under the insurance code regulating "public insurance adjusting."³ Public insurance adjusters are frequently hired by an insured to help resolve and settle insurance claims. The enacted provisions provide that a public insurance adjuster must be licensed in order to adjust insurance claims on an insured's behalf. TEX. INS. CODE ANN . § 4102.051 (West Supp. 2021).⁴ Under these provisions, any person or entity defined as a contractor is prohibited from adjusting insurance claims for properties at which the contractor is, or will be, providing contracting services. TEX. INS. CODE ANN. § 4102.163 (West 2009). Likewise, licensed public insurance adjusters are prohibited from providing any contracting services on property at which they are, or will be, providing public insurance adjusting services. In other words, acting as a public insurance adjuster and a contractor on the same claim is a statutorily defined conflict of interest. TEX. INS. CODE ANN. § 4102.158(a)(1) (West 2009).

Stonewater is a professional roofing company that repairs and replaces commercial and residential roofs in Texas. Stonewater is not licensed as a public insurance adjuster. However, Stonewater's website purportedly includes statements such as it is "highly experienced with the insurance claims process," that it has "done thousands of roof restorations due to insurance claims over the years," and it "understand[s] the supplement process required." Stonewater's website has also allegedly referenced the company as a "Trusted Roofing and Insurance Specialist" and "The Leader In Insurance Claim Approval," having "developed a system which helps our customers settle their insurance claims as quickly, painlessly and comprehensively as possible." Some of Stonewater's prior form agreements ostensibly contained language that "authorized" Stonewater "to negotiate on [the customer's] behalf with [the] insurance company and upon insurance approval to do the work specified." One of Stonewater's customers sued it, arguing these statements violated the prohibitions set forth in chapter 4102 of the Insurance Code.

In June 2020, Stonewater filed suit against TDI, challenging the prohibitions as impermissible regulations of commercial speech and alleging the provisions were unconstitutionally vague.⁵ Stonewater requested a declaration that the prohibitions are invalid on their face and as applied under the First and Fourteenth Amendments to the United State Constitution and "corresponding provisions" of the Texas Constitution. TDI filed a general denial on July 17, 2020, and a Rule 91a motion to dismiss on August 21, 2020. TDI argued that Stonewater's constitutional challenges were subject to dismissal because they had no basis in law. The trial court held a hearing on the motion and without explanation as to the basis for its ruling, granted TDI's motion to dismiss.

STANDARD OF REVIEW

Rule 91a provides a procedure for dismissal of a case that has no basis in law or no basis in fact. TEX. R. CIV. P. 91a. A court of appeals reviews the merits of a Rule 91a motion "de novo because the availability of a remedy under the facts alleged is a question of law and the rule's factual plausibility standard is akin to a legal-sufficiency review." Antolik v. Antolik , No. 07-20-00281-CV, 2021 WL 3883302 at *3, 2021 Tex. App. LEXIS 7272 at *6 (Tex. App.—Amarillo Aug. 31, 2021, no pet.) (mem. op.) (citing City of Dallas v. Sanchez , 494 S.W.3d 722, 724 (Tex. 2016) ).

"A cause of action has no basis in law if the allegations, taken as true, together with reasonable inferences drawn from them, do not entitle the claimant to the relief sought." Antolik , 2021 WL 3883302, at *3, 2021 Tex. App. LEXIS 7272, at *6-7 (citation omitted). Except as required by 91a.7 (award of costs and attorney fees), the court "may not consider evidence in ruling on the motion and must decide the motion based solely on the pleading of the cause of action ...." Id. (citing TEX. R. CIV. P. 91a.6).

Furthermore, the trial court construes the pleadings liberally in favor of the plaintiff, looks to the plaintiff's intent, and accepts the plaintiff's factual allegations as true, and, if necessary, draws reasonable inferences from the factual allegations to determine if the cause of action has a basis in both law and fact. Antolik , 2021 WL 3883302, at *3, 2021 Tex. App. LEXIS 7272, at *7 (citing In re Farmers Tex. Cty. Mut. Ins. Co. , 604 S.W.3d 421, 425-26 (Tex. App.—San Antonio 2019, orig. proceeding) ). Dismissal of a cause of action under Rule 91a is a harsh remedy with fee-shifting consequences; thus, an appellate court strictly construes the rule's requirements. Antolik , 2021 WL 3883302, at *3, 2021 Tex. App. LEXIS 7272, at *7 (citing Bedford Internet Office Space, LLC v. Tex. Ins. Grp., Inc. , 537 S.W.3d 717, 720-21 (Tex. App.—Fort Worth 2017, pet. dism'd) ).

The trial court may not consider evidence in ruling on the dismissal motion and must decide the motion based solely on the pleading of the cause of action, together with any pleading exhibits permitted by the Texas Rules of Civil Procedure. Antolik , 2021 WL 3883302, at *3–4, 2021 Tex. App. LEXIS 7272, at *7-8 (citing TEX. R. CIV. P. 91a.6.5; AC Interests, L.P. v. Tex. Comm'n on Envtl. Quality , 543 S.W.3d 703, 706 (Tex. 2018) ; ConocoPhillips Co. v. Koopmann , 547 S.W.3d 858, 880 (Tex. 2018) ; Sanchez , 494 S.W.3d at 724 ). In deciding whether the trial court properly granted a motion to dismiss under Rule 91a, a reviewing court applies the fair-notice pleading standard in determining whether the allegations in the petition were sufficient to allege a cause of action. Antolik , 2021 WL 3883302, at *3, 2021 Tex. App. LEXIS 7272, at *8 (citing Thomas v. 462 Thomas Family Props., LP , 559 S.W.3d 634, 639-40 (Tex. App.—Dallas 2018, pet. denied) ). Under that standard, a court considers whether the opposing party "can ascertain from the pleading the nature and basic issues of the controversy and what testimony will be relevant." Antolik , 2021 WL 3883302, at *3, 2021 Tex. App. LEXIS 7272, at *8 (citing Horizon/CMS Healthcare Corp. v. Auld , 34 S.W.3d 887, 896 (Tex. 2000) ). In other words, the fair-notice standard measures whether the pleading has provided the opposing party sufficient information to enable that party to prepare a defense or a response. Antolik , 2021 WL 3883302, at *3, 2021 Tex. App. LEXIS 7272, at *8 (citing First United Pentecostal Church of Beaumont v. Parker , 514 S.W.3d 214, 224-25 (Tex. 2017) (citing Kopplow Dev., Inc. v. City of San Antonio , 399 S.W.3d 532, 536 (Tex. 2013) ; Roark v. Allen , 633 S.W.2d 804, 810 (Tex. 1982) ).

ISSUES

Through two issues, Stonewater contends it sufficiently pleaded both a factual and a legal basis for its claim under the First and Fourteenth Amendments, for which TDI failed to identify any clear bar. Accordingly, it argues, the trial court's judgment of dismissal must be reversed.

ISSUE ONE—FIRST AMENDMENT CLAIM

Via its first issue, Stonewater argues the trial court erred as a matter of law in granting TDI's motion to dismiss its First Amendment claim. Stonewater argues its claim survives a Rule 91a motion to dismiss because the prohibitions in question restrict a broad range of commercial speech and facially regulate that speech on the basis of both its content and its speaker. As such, Stonewater contends the statutory prohibitions violate the First Amendment on its face. Stonewater further claims the statutory provisions amount to a content-based restraint of free speech, are presumptively unconstitutional, and fail to pass a strict scrutiny review. Alternatively, Stonewater asserts that the statutory provisions in question amount to an improper regulation of commercial speech and that they also fail intermediate scrutiny. TDI argues the trial court properly dismissed Stonewater's First Amendment challenge to the prohibitions because the statutes do not trigger First Amendment scrutiny at all. As support for its argument, TDI contends the "First Amendment only applies to governmental regulations of speech, and the Public Adjusting Prohibitions do not regulate speech but instead regulate unprotected professional conduct." TDI asserts the prohibitions do not require anything specific to be said, printed, or disseminated and do not prohibit general discussions of topics that are legal. As such, TDI contends,...