     Case: 09-30830     Document: 00511099781          Page: 1    Date Filed: 05/04/2010




            IN THE UNITED STATES COURT OF APPEALS
                     FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                     Fifth Circuit

                                                  FILED
                                                                             May 4, 2010

                                     No. 09-30830                           Lyle W. Cayce
                                   Summary Calendar                              Clerk



MEL HIBBETS; BREAK WIND YACHT CLUB, INC.,

                                                   Plaintiff - Appellee
v.

LEXINGTON INSURANCE CO.,

                                                   Defendant - Appellant




                   Appeal from the United States District Court
                       for the Eastern District of Louisiana
                             USDC No. 2:07-CV-5169


Before KING, STEWART, and HAYNES, Circuit Judges.
PER CURIAM:*
        Plaintiffs-appellants Mel Hibbets (“Hibbets”) and the Break Wind Yacht
Club, Inc. (the “Yacht Club”) appeal the dismissal of their claims against their
insurer, defendant-appellee Lexington Insurance Company (“Lexington”), for
violations of Louisiana’s Valued Policy Law and Louisiana’s insurance bad faith
statutes. For the following reasons, we affirm.




        *
         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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR .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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                              I. BACKGROUND
      Hibbets and the Yacht Club, the two named plaintiffs, filed a putative
class action complaint (the “Original Complaint”) on behalf of themselves and all
other similarly situated Lexington insureds whose properties were rendered a
total loss from damage resulting from Hurricane Katrina.           They alleged
violations of Louisiana’s Valued Policy Law (“VPL”), L A. R EV. S TAT. A NN. §
22:695 (now L A. R EV. S TAT. A NN. § 22:1318). Additionally, they alleged that
Lexington violated Louisiana’s insurance bad faith statutes, formerly L A. R EV.
S TAT. A NN. §§ 22:658 and 22:1220 (now §§ 22:1892 and 22:1973).
      Lexington moved to dismiss the Original Complaint for failure to state a
claim upon which relief may be granted pursuant to Federal Rule of Civil
Procedure 12(b)(6). In response to Lexington’s motion to dismiss, Appellants
moved to file an amended class action complaint (the “First Amended
Complaint”). The district court granted leave to amend. Thereafter, Lexington
filed a motion to dismiss the First Amended Complaint for failure to state a
claim. Given the significance of the VPL claims to the Appellants’ claims and
the fact that the Louisiana Supreme Court was set to hear argument in a case
involving the VPL the parties filed a joint motion to administratively close the
case approximately one week before the hearing date on Lexington’s second
motion to dismiss. The district court granted the parties’ motion and
administratively closed the case on February 11, 2008.
      On March 17, 2009, Appellants moved to restore the case to active status
on the district court’s trial docket, and the court restored the case to active
status by order dated March 25, 2009. Lexington filed a memorandum
supplementing the grounds for dismissal of the First Amended Complaint.
Appellants filed an opposition to that memorandum, and they sought leave to file
a Second Supplemental and Amending Class Action Complaint (the “Proposed
Second Amended Complaint”). Lexington filed a brief in reply supporting its

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motion to dismiss the First Amended Complaint, and a brief in opposition to
Appellants’ motion for leave to file another amended complaint.
      The district court granted Lexington’s motion to dismiss the Appellants’
First Amended Complaint and denied the Appellants’ motion for leave to file the
Proposed Second Amended Complaint.          Although the district court denied
Appellants’ motion for leave to amend, it nonetheless examined their Proposed
Second Amended Complaint and determined that it also did not assert any
viable claims against Lexington. Undeterred, the Appellants then made another
attempt to revive their claims by filing a motion for a new trial, which the
district court denied because it presented neither new legal arguments nor new
evidence.   Appellants appeal only the district court’s dismissal of their First
Amended Complaint for failure to state a claim.
                                II. DISCUSSION
      We review de novo the grant of a 12(b)(6) motion to dismiss. Ballard v.
Wall, 413 F.3d 510, 514 (5th Cir. 2005). To survive a motion to dismiss, a
plaintiff is required to plead “enough facts to state a claim to relief that is
plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007). “A claim
has facial plausibility when the plaintiff pleads factual content that allows the
court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009). “Conclusory
allegations or legal conclusions masquerading as factual conclusions will not
suffice to prevent a motion to dismiss.” Taylor v. Books A Million, Inc., 296 F.3d
376, 378 (5th Cir. 2002).
      Appellants argue that the district court erred in concluding that their First
Amended Complaint failed to state a claim under Louisiana’s VPL and bad faith
statutes. The First Amended Complaint asserts claims against Lexington under
Louisiana’s VPL statute and alleges that the Appellants’ properties were
rendered a total loss by a peril covered under their Lexington homeowners


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insurance policies. Louisiana’s VPL statute requires an insurer to pay the
agreed face value of the insured property if the property is rendered a total loss
from a covered peril. L A. R EV. S TAT. A NN. § 22:695. While there is some question
regarding whether Louisiana’s VPL statute applies to homeowners insurance
policies, this is a question that we need not address today. See, e.g., Landry v.
La. Citizens Prop. Ins. Co., 07-1907 (La. 2008); 983 So. 2d 66, 74-76 n.10; In re
Katrina Canal Breaches Consol. Litig., 601 F. Supp. 2d 809, 825-26 (E.D. La.
2009); Chauvin v. State Farm Fire & Cas. Co., 495 F.3d 232, 237-38 (5th Cir.
2007).
      We have expressly held that the VPL does not apply to any loss partially
caused by a non-covered peril.      Chauvin, 495 F.3d at 124.       In their First
Amended Complaint, the named Plaintiffs, Hibbets and the Yacht Club, assert
that their properties were rendered total losses “by hurricane force winds [a
covered peril] and subsequent flooding [an excluded peril].” Thus, their
allegations that their properties incurred wind and flood damage are insufficient
to state a claim against Lexington. See Chauvin, 495 F.3d at 238-41. In the
First Amended Complaint, Appellants defined the putative class as persons “who
sustained damage to their property in connection with Hurricane Katrina” from
a “covered peril” but allege no facts in support of their claims that their
properties were rendered a total loss by a covered peril. A mere legal label such
as “covered peril” does not raise the right to relief under the VPL above the
speculative level and as a result the putative class members’ VPL claims were
properly dismissed by the district court as well.
      The Appellants also contend that the district court erred by dismissing
their Section 22:658 and 22:1220 claims. Section 22:658 requires insurers to pay
in full the claim due to the insured within thirty days of receiving satisfactory
proof of loss, and allows for recovery of certain penalties if the insurer’s failure
to pay is arbitrary, capricious, or without probable cause. L A. R EV. S TAT. A NN.

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§ 22:658. Section 22:1220 imposes on insurers a duty of good faith and fair
dealing and allows for recovery of damages and penalties for any claim not paid
within sixty days of receipt of satisfactory proof of loss if the failure to pay is also
arbitrary, capricious, or without probable cause. L A. R EV. S TAT. A NN. § 22:1220.
The conduct prohibited by the two sections is “virtually identical”: “[T]he failure
to timely pay a claim after receiving satisfactory proof of loss when that failure
to pay is arbitrary, capricious, or without probable cause. The primary difference
is the time periods allowed for payment.” Reed v. State Farm Mut. Auto. Ins.
Co., 03-0107 857 (La. 2003); 857 So.2d 1012, 1020 (footnote and citations
omitted).
      Because their VPL claims fail, in order to state a claim under Sections
22:658 and 22:1220, Appellants had to allege a viable claim against Lexington
for the breach of their homeowners insurance contracts. Edwards v. Allstate
Prop. & Cas. Co., No. 04-2434, 2005 WL 221558, at *2 (E.D. La. Jan. 27, 2005)
(holding that claims for penalties under sections 22:658 and 22:1220 cannot
stand alone and require that there be a viable underlying claim, such as a breach
of contract); see also Clausen v. Fid. & Deposit Co. of Md., 95-0504 (La. App. 1
Cir. 8/4/95); 660 So. 2d 83, 85 (noting that “a plaintiff attempting to base her
theory of recovery against an insurer on these statutes [§§ 22:658 and 22:1220]
must first have a valid, underlying, substantive claim upon which insurance
coverage is based”).
      We have recognized that in order to allege a valid “claim for breach of an
insurance contract under Louisiana law, a plaintiff must allege a breach of a
specific policy provision.” Louque v. Allstate Ins. Co., 314 F.3d 776, 782 (5th Cir.
2002). The Appellants’ First Amended Complaint reveals that they made no
reference to any specific policy provision of their homeowners insurance contract
that Lexington allegedly breached. Instead, the Appellants set forth general
allegations that Lexington failed “to tender an appropriate amount” and that

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Lexington “misrepresented pertinent policy provisions.” The First Amended
Complaint is devoid of facts concerning when the Appellants submitted their
claims to Lexington, when they were contacted by a claims adjuster, the nature
of the damage to their properties, what amounts they contend that Lexington
should have paid, and on what basis, other than the VPL claim, Lexington
breached its contracts with them. Nevertheless, Appellants contend the First
Amended Complaint contains a valid claim for breach of contract because it
contained their names, insurance policy numbers, addresses for the insured
properties, and a conclusory statement that they were underpaid by Lexington.
These facts alone are insufficient to state a plausible breach of contract claim.
See, e.g., Landavazo v. Toro Co., 301 F. App’x 333, 336-37 (5th Cir. 2008)
(unpublished).
      In addition to failing to establish the predicate breach of contract claim,
the First Amended Complaint is devoid of any factual allegations which would
lead us to plausibly conclude that Lexington violated Section 22:658 and
22:1220. The First Amended Complaint alleges “that Lexington has breached
and continued to breach its duties of good faith and fair dealing, as well as its
duty to fairly adjust claims;” that “Lexington has breached and continues to
breach its duty to timely adjust claims upon satisfactory proof of loss from
individual Plaintiff Class members, evidencing losses from covered perils” and
“misrepresented pertinent policy provisions;” and that these actions “are
arbitrary, capricious, and unsupported by any evidence” and “constitute bad
faith.”
      These allegations are nothing more than labels and conclusions and a
recitation of the language of the statutes. Simply stating a conclusory allegation
that Lexington’s actions were arbitrary, or that Lexington breached a duty,
without providing factual allegations in support is insufficient to state a claim.
Twombly, 550 U.S. at 555; Iqbal, 129 S. Ct. at 194 (“Threadbare recitals of the


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elements of cause of action, supported by mere conclusory statements, do not
suffice.”); Banal v. Freeport-McMoran, Inc., 197 F.3d 161, 165 (5th Cir. 1999)
(rejecting conclusory allegations). In other words, the absence of any factual
allegations dooms any claim that Lexington’s actions could be construed as
“arbitrary, capricious or without probable cause.” L A. R EV. S TAT. A NN. §§
22:658(B)(1); 22:1220(B)(5).
                               III. CONCLUSION
      For the foregoing reasons, we affirm the district court’s judgment.




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