A Texas federal judge recently granted a homeowners insurer’s motion to sever extra-contractual claims from a breach of contract claim after determining that trying the breach of contract claim with the extra-contractual claims could be prejudicial to the homeowners insurer (Tammy Kea, et al., v. Meridian Security Insurance Co.). Tammy and Monty Kea filed suit in the Rockwall County, Texas, 382nd Judicial District Court against their homeowners insurer, Meridian Security Insurance Co., alleging claims for breach of the duty of good faith and fair dealing, breach of contract, common-law fraud and violations of the Texas Insurance Code and the Texas Deceptive Trade Practices.
The Keas filed a claim for coverage under their homeowners policy after a storm damaged their property. Meridian paid for some of the loss incurred to the home but not all of the claimed damage. Meridian made a payment of $2,563 to the Keas. The Keas maintained that the storm caused more than $25,000 in damages. The Keas then filed the instant suit against Meridian. Meridian removed the suit to the U.S. District Court for the Northern District of Texas on the basis of diversity jurisdiction. Meridian then moved to dismiss or, in the alternative, to sever the extra-contractual claims. Senior Judge A. Joe Fish granted the motion to sever the Keas’ extra-contractual claims after determining that severing the claims would prevent Meridian from being prejudiced. “Thus, the Keas’s breach of contract claim must be tried separately from, and prior to, their extra-contractual claims. Accordingly, Meridian’s motion for separate trials of the Keas’s contractual and extra-contractual claims is granted,” the judge said.
However, the judge said, “Meridian has presented no demonstrable basis for abatement. The court will not speculate as to the likely outcome of a trial on liability and thus it cannot determine whether abatement would be more efficient than trying the claims concurrently. For this reason, the court concludes that it is premature to abate any of the extra-contractual claims. The court thus denies Meridian’s motion to abatement without prejudice to a later showing of potential prejudice, and it may petition the court to reconsider its ruling,” the judge concluded.
