     Case: 15-20522      Document: 00513778783         Page: 1    Date Filed: 11/30/2016




           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT


                                      No. 15-20522                       United States Court of Appeals
                                                                                  Fifth Circuit

                                                                                FILED
VADA DE JONGH,                                                          November 30, 2016
                                                                           Lyle W. Cayce
              Plaintiff–Appellant,                                              Clerk

v.

STATE FARM LLOYDS,

              Defendant–Appellee.




                   Appeal from the United States District Court
                        for the Southern District of Texas
                             USDC No. 4:14-CV-2305


Before JONES, DENNIS, and PRADO, Circuit Judges.
PER CURIAM:*
       This insurance dispute concerns when the Plaintiff–Appellant Vada De
Jongh’s cause of action against her homeowner’s insurance provider, State
Farm Lloyds (“State Farm”), accrued. The parties dispute whether the claim
accrued on the date State Farm denied De Jongh’s insurance claim or on a
subsequent date when State Farm reinspected De Jongh’s property and again
denied coverage. State Farm moved for summary judgment, arguing that the


       * Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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cause of action accrued as a matter of law when State Farm first closed De
Jongh’s claim file and thus that the suit was time barred under the limitations
clause in De Jongh’s insurance policy and by statute. The district court granted
State Farm’s motion for summary judgment. We AFFIRM.
                               I. BACKGROUND
A.       Insurance Claim
         In May 2012, De Jongh filed an insurance claim with State Farm for
property damage caused by a hail and wind storm that hit De Jongh’s home in
early April of the same year. State Farm dispatched a claims adjuster to
inspect De Jongh’s property for storm damage that week. The adjuster noted
in De Jongh’s claim file that there were deteriorating shingles on the rear slope
of the roof and “evidence of small hail on an aluminum vent cap.” The adjuster
also noted that the “[h]ail was too small to damage the shingle” and that some
minor damage caused by an overhanging tree constituted a maintenance issue
excluded under De Jongh’s insurance policy. Thereafter the adjuster informed
De Jongh that the inspection revealed no damage covered by her insurance
policy.
         State Farm entered notes into its claims management system on June
11 and 12, 2012, evidencing its intention to issue a denial of coverage letter to
De Jongh. The notes indicate the letter was to explain that De Jongh’s roof
damage was the result of maintenance issues excluded from coverage. On July
12, 2012, State Farm closed its file regarding De Jongh’s claim. De Jongh
asserts that she never received the June denial letter indicated in State Farm’s
records. State Farm did not issue any payment to De Jongh when it closed her
file.
         On August 17, 2012, De Jongh requested that State Farm reinspect the
property. Three days later, State Farm reopened De Jongh’s claim. On August
23, 2012, a new adjuster reinspected De Jongh’s property and observed damage
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to a metal patio cover that was not listed in the initial inspection report.
Nevertheless, the cost of repairing the damage the inspection uncovered was
less than De Jongh’s deductible. State Farm again closed De Jongh’s claim
without payment. This time State Farm did send a letter, on August 23, 2012,
acknowledging minor damage but explaining that it would not pay because the
amount did not exceed the deductible. De Jongh alleges that the August 23
letter was the only denial letter she received from State Farm.
B.     Procedural History
       In November 2012, De Jongh filed suit against State Farm Lloyds, Inc.
(“Lloyds”) and Dwight Johnson, the insurance adjuster who initially inspected
De Jongh’s property. Lloyds is a related entity but distinct from the party
named in the present case, State Farm Lloyds. 1 De Jongh’s alleged breach of
contract and violations of the Texas Prompt Payment of Claims Act against
Lloyds and violations of the Deceptive Trade Practices Act (“DTPA”) against
Lloyds and Johnson. State Farm—not Lloyds—filed an answer in December
2012, asserting that it had been “incorrectly named as State Farm Lloyds Inc.”
“However, State Farm did not move to intervene or otherwise request that the
state court substitute it as the proper party in interest.” De Jongh v. State
Farm Lloyds, 555 F. App’x 435, 436 (5th Cir. 2014). Yet in December 2012,
State Farm removed the case to federal court. On February 27, 2013, the court
issued a take-nothing judgment in favor of State Farm and Johnson. The
district court’s take-nothing judgment did not reference Lloyds. De Jongh
argued on appeal that State Farm was not a proper defendant and the parties




       1 See De Jongh v. State Farm Lloyds, 555 F. App’x 435, 436 n.1 (5th Cir. 2014) (per
curiam) (“State Farm and Lloyds are distinct legal entities. State Farm sells insurance under
a so-called ‘Lloyd’s plan,’ which consists of a group of underwriters who combine to issue
insurance through an attorney in fact—in this case, Lloyds.”).
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were not diverse; this Court vacated and remanded for lack of subject matter
jurisdiction. De Jongh, 555 F. App’x at 438–39.
      On July 14, 2014—nearly six months after the Fifth Circuit vacated the
judgment in her case—De Jongh filed an amended petition dropping the claims
against Lloyds and Johnson and naming State Farm as the defendant. State
Farm removed the case on the basis of diversity jurisdiction, then moved for
summary judgment, contending that De Jongh’s claims were barred under the
limitations clause in De Jongh’s policy. On August 17, 2015, the district court
granted State Farm’s summary judgment motion and entered a take-nothing
judgment in favor of State Farm. De Jongh’s insurance policy required
contractual claims against State Farm to be filed within two years and one day
from the date the cause of action accrued. Under Texas law, claims for breach
of the duty of good faith and fair dealing and violations of the Texas Insurance
Code must be brought within two years after the cause of action accrues. Tex.
Ins. Code Ann. § 541.162; Tex. Civ. Prac. & Rem. Code Ann. § 16.003(a);
Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 220–21 (Tex.
2003). The district court found that De Jongh’s cause of action accrued on July
12, 2012 when State Farm first denied the claim and closed the file. The district
court then determined that De Jongh’s suit was time barred because she failed
to name State Farm as a defendant until July 14, 2014—two years and two
days after the accrual date.
                        II. STANDARD OF REVIEW
      We review a district court’s grant of summary judgment de novo. Martin
Res. Mgmt. Corp. v. AXIS Ins. Co., 803 F.3d 766, 768 (5th Cir. 2015). Summary
judgment is warranted “if the movant shows that there is no genuine dispute
as to any material fact and the movant is entitled to judgment as a matter of
law.” Fed. R. Civ. P. 56(a). When reviewing summary judgment, “[t]he evidence
of the nonmovant is to be believed, and all justifiable inferences are to be drawn
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in his favor.” Tolan v. Cotton, 134 S. Ct. 1861, 1863 (2014) (per curiam) (quoting
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986)). “Interpretation of
an insurance contract is a question of law also reviewed de novo,” Tesoro Ref.
& Mktg. Co. v. Nat’l Union Fire Ins. Co. of Pittsburgh, 833 F.3d 470, 473 (5th
Cir. 2016), as is determining “when a cause of action accrues,” Knott, 128
S.W.3d at 221.
                               III. DISCUSSION
      “As a general rule, a cause of action accrues and the statute of limitations
begins to run when facts come into existence that authorize a party to seek a
judicial remedy.” Knott, 128 S.W.3d at 221. The cause of action generally
accrues at this point “regardless of when the plaintiff learns of th[e] injury.”
Id. In Texas, a cause of action for breach of a first-party insurance contract
accrues when the insurer denies the claim. Murray v. San Jacinto Agency, Inc.,
800 S.W.2d 826, 828 (Tex. 1990). “When, unlike this case, there is no outright
denial of a claim, the exact date of accrual of a cause of action becomes more
difficult to ascertain and should be a question of fact determined on a case-by-
case basis.” Id. at 828 n.2.
      State Farm argues that closing De Jongh’s claim for the first time on
July 12, 2012, constituted an outright denial that triggered the limitations
clock. We agree. Under Texas law, “a cause of action accrues when a wrongful
act causes some legal injury, even if the fact of injury is not discovered until
later.” Kuzniar v. State Farm Lloyds, 52 S.W.3d 759, 760 (Tex. App.—San
Antonio 2001, pet. denied) (en banc) (quoting S.V. v. R.V., 933 S.W.2d 1, 4 (Tex.
1996)). While the “discovery rule” will delay an accrual date if the injury is
fraudulently concealed or inherently undiscoverable, id, De Jongh disclaims
reliance on the discovery rule. In Kuzniar, the insureds filed a claim with State
Farm in August 1992 regarding a possible plumbing leak under their home.
Id. at 760. The adjuster instructed the insureds to have a plumber inspect the
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property and confirm the leak but the insureds neglected to follow the
instructions or communicate further with State Farm. Id. In January 1993,
State Farm closed the claim file; however, the insureds did not file suit until
August 1996—over three and a half years after the claim file was closed. Id.
This Court affirmed summary judgment for State Farm, reasoning that the
legal injury arose in January 1993 because “[t]he closing of the claim file was
an objectively verifiable event that unambiguously demonstrated State Farm’s
intent not to pay the claim, ‘even if the fact of injury [was] not discovered until
later.’” Id. (quoting S.V., 933 S.W.2d at 4). Summary judgment was proper
because the cause of action accrued when State Farm closed the claim file and
the insureds failed to bring suit within two years of that date. Id. at 761.
      Admittedly, the accrual date is often tied to a written notice of denial.
See Knott, 128 S.W.3d at 222 (“We do not require an insurer to include ‘magic
words’ in its denial of a claim if an insurer’s determination regarding a claim
and its reasons for the decision are contained in a clear writing to the
insured.”). However, courts have used the claim closure date as the accrual
date where there is no notice of denial. See Williams v. Allstate Fire & Cas. Ins.
Co., No. H-11-530, 2012 WL 1098424, at *5 (S.D. Tex. Mar. 30, 2012) (finding
that cause of action accrued when insurer closed the plaintiff’s claim file even
though the agency failed to provide written notice of the denial); Sheppard v.
Travelers Lloyds of Tex. Ins. Co., No. 14-08-00248-CV, 2009 WL 3294997, at *7
(Tex. App.—Houston [14th Dist.] Oct. 15, 2009, pet. denied) (mem. op.) (finding
that the cause of action accrued when the insurer closed the claim file).
      As in Kuzniar, De Jongh’s insurance policy contained a limitations
provision. Under De Jongh’s policy, all contractual claims against State Farm
must be brought within two years and one day from the date of accrual, and
extra-contractual claims must have been brought within two years by statute.
Under Texas law, De Jongh’s cause of action accrued on July 12, 2012, when
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State Farm closed the claim file. See Kuzniar, 52 S.W.3d at 760. The accrual
date remains unchanged, even though State Farm reopened the claim upon De
Jongh’s request. Requesting that an insurance company reinvestigate a closed
file does not in and of itself reset the limitations clock. 2 See Pace v. Travelers
Lloyds of Texas Ins. Co., 162 S.W.3d 632, 635 (Tex. App.—Houston [14th Dist.]
Feb. 24, 2005, no pet.) (holding that a second denial, issued after policyholder’s
request for reconsideration, did not begin anew the limitations period).
       The facts in this case provide no reason to deviate from the weight of
authority in Texas holding that closing a claim file constitutes an outright
denial of coverage and triggers the limitations period. See Feurtado v. State
Farm Lloyds, No. 13-14-00488-CV, 2016 WL 747777, at *2 (Tex. App.—Corpus
Christi Feb. 25, 2016, no pet.) (mem. op.) (holding that an insured’s cause of
action “accrues as a matter of law when the insurer unambiguously makes a
final determination concerning the insured’s claim, such as when . . . the
insurer closes its claim file”). While the accrual date may have been subject to
a factual dispute had State Farm strung De Jongh along “without denying or
paying [the] claim,” Kuzniar, 52 S.W.3d at 761 (quoting Murray, 800 S.W.2d
at 828 n.2), State Farm closed De Jongh’s file within two months of inspecting
the property.
       Summary judgment is therefore proper because State Farm closed De
Jongh’s claim file on July 12, 2012, a fact which De Jongh does not dispute, at
which point her claim accrued under Texas law. The fact that State Farm never
sent a denial letter in June or July 2012, even if true, does not change the
analysis. As the claim file shows, State Farm intended to issue a written denial



       2 While in some circumstances reconsideration may restart the statute of limitations,
see Pena v. State Farm Lloyds, 980 S.W.2d 949, 954 (Tex. App.—Corpus Christi 1998, no
pet.), De Jongh did not argue that her claim falls into this limited category of cases, and
therefore we decline to consider this argument.
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in conjunction with closing the claim file. Even if the failure to send a denial
letter was tortious, it does not reset the limitations clock to State Farm’s
subsequent denial.
                             IV. CONCLUSION
      For the foregoing reasons, we AFFIRM the judgment of the district court.




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