Gaffney Ex Rel. Gaffney v. State Farm Fire & Casualty Co. , 294 F. App'x 975 ( 2008 )

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
October 7, 2008
No. 08-30281 Charles R. Fulbruge III
Summary Calendar Clerk
LENA TURNER GAFFNEY, wife of; JAMES L GAFFNEY, III, on behalf of
the minors Amanda Rose Gaffney and Rebecca Ann Gaffney
Plaintiffs-Appellants
v.
STATE FARM FIRE and CASUALTY COMPANY
Defendant-Appellee
Appeal from the United States District Court
for the Eastern District of Louisiana
USDC No. 2:07-CV-7581
Before DAVIS, GARZA, and PRADO, Circuit Judges.
PER CURIAM:*
Lena Turner Gaffney and James L. Gaffney, on behalf of their minor
children, Plaintiffs Amanda Rose Gaffney and Rebecca Ann Gaffney
(“Plaintiffs”), appeal the district court’s order dismissing, sua sponte, their case
against State Farm Fire and Casualty Company (“State Farm”) for failure to
*
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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.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.
No. 08-30281
properly allege a right of action. For the following reasons, we vacate the district
court’s order and remand.
I. FACTUAL AND PROCEDURAL BACKGROUND
In this case, arising in the aftermath of Hurricane Katrina, Plaintiffs
Amanda Rose Gaffney and Rebecca Ann Gaffney, the minor children of State
Farm policyholders James L. Gaffney, III and Lena Turner Gaffney, seek
damages from State Farm pursuant to LA. REV. STAT. ANN. § 22:1220. Plaintiffs
allege that on August 29, 2005, the winds of Hurricane Katrina damaged their
family residence, which their parents owned and State Farm insured under a
policy on which their parents were the named insureds. They further allege that
State Farm, despite having been “presented with due proofs [sic] of claim of the
windstorm damage” and documentation of the extent of loss to their parents’
house, “failed to tender the limits of the coverages” for which their parents paid.
Accordingly, they seek damages under LA. REV. STAT. ANN. § 22:1220(B)(5),
which provides for the recovery of general and special damages by insureds
when an insurer “[f]ail[s] to pay the amount of any claim due any person insured
by the contract within sixty days after receipt of satisfactory proof of loss from
the claimant when such failure is arbitrary, capricious, or without probable
cause.” Plaintiffs further assert that they “are insureds under the policy issued
by the defendant, being residents of the household of the named insured
thereunder.” State Farm disputes that Plaintiffs are “insureds” under the policy;
it contends that only the named insureds—James and Lena Gaffney—are
insureds under the policy, and that therefore only they could possibly maintain
an action against it under § 22:1220(B)(5).
Plaintiffs filed their petition in the Louisiana Civil District Court for the
Parish of Orleans on August 30, 2007. On October 30, 2007, State Farm
successfully removed the case, on the basis of diversity, to the federal District
Court for the Eastern District of Louisiana and filed its answer with that court.
2
No. 08-30281
On January 15, 2008, Plaintiffs moved to transfer venue, continue the trial date,
and consolidate their case with one that their parents filed against State Farm
seeking to recover insurance benefits from State Farm for the same damage to
the residence alleged in the instant suit. State Farm opposed the motion. The
district court, on February 7, 2008, after considering Plaintiffs’ motion, sua
sponte dismissed the case in a one-page order, finding that Plaintiffs have no
right of action. Plaintiffs appeal the sua sponte dismissal of their suit.
II. JURISDICTION AND STANDARD OF REVIEW
We have jurisdiction over the district court’s order dismissing Plaintiffs’
case pursuant to 28 U.S.C. § 1291.
This court reviews de novo a district court’s dismissal under Federal Rule
of Civil Procedure 12(b)(6). Sw. Bell Tel., LP v. City of Houston, 529 F.3d 257,
260 (5th Cir. 2008). We must construe the complaint in the light most favorable
to the plaintiff, and we will affirm a 12(b)(6) dismissal only “if we determine that
the plaintiff would not be entitled to relief under any set of facts or any possible
theory that he could prove consistent with the allegations in the complaint.”
Audler v. CBC Innovis Inc., 519 F.3d 239, 247 (5th Cir. 2008) (citation and
internal quotation marks omitted). Because this case is in federal court based
on diversity jurisdiction, we must follow Louisiana’s substantive law. See Erie
R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938); Ashland Chem. Inc. v. Barco Inc.,
123 F.3d 261, 265 (5th Cir. 1997).
III. DISCUSSION
Before considering the merits of Plaintiffs’ claims, we must first assess the
propriety of the district court’s sua sponte dismissal of Plaintiffs’ case. This
court has on numerous occasions recognized the inherent authority of a district
court to dismiss a complaint on its own motion for failure to state a claim. See,
e.g., Carroll v. Fort James Corp., 470 F.3d 1171, 1177 (5th Cir. 2006); Shawnee
Int’l, N.V. v. Hondo Drilling Co., 742 F.2d 234, 236 (5th Cir. 1984). However,
3
No. 08-30281
this power is not unlimited. We have consistently held that a district court can
dismiss an action sua sponte only “‘as long as the procedure employed is fair.’”
Carroll, 470 F.3d at 1177 (quoting Bazrowx v. Scott, 136 F.3d 1053, 1054 (5th
Cir. 1998)); see also 5B Charles Allen Wright & Arthur Miller, Federal Practice
and Procedure § 1357 (3d ed. 2004). Although we have stopped short of
enunciating a bright-line rule, we have “‘suggested that fairness in this context
requires both notice of the court’s intention [to dismiss sua sponte] and an
opportunity to respond.’” Lozano v. Ocwen Fed. Bank, FSB, 489 F.3d 636, 643
(5th Cir. 2007) (quoting Carroll, 470 F.3d at 1177).
Even if a district court fails to provide notice to the plaintiff prior to
dismissal, however, we will affirm if the plaintiff has alleged his “best case” and
the dismissal was otherwise proper. Lozano, 489 F.3d at 643; Bazrowx, 136 F.3d
at 1054 (citing Jacquez v. Procunier, 801 F.2d 789, 792-93 (5th Cir. 1986)). We
have recognized that “[a]t some point a court must decide that a plaintiff has had
fair opportunity to make his case; if, after that time, a cause of action has not
been established, the court should finally dismiss the suit.” Jacquez, 801 F.2d
at 792. Thus, in Jacquez, a case involving a § 1983 action, we directed the
dismissal of the plaintiff’s case after the plaintiff filed a deficient complaint that,
in subsequent pleadings, he simply repeatedly claimed was adequate. Id. We
cautioned, however, that “[d]ismissing an action after giving the plaintiff only
one opportunity to state his case is ordinarily unjustified.” Id.
In the instant case, the district court denied Plaintiffs both notice that it
might sua sponte dismiss their case and an opportunity to respond. The district
court dismissed this case in an order addressing Plaintiffs’ Motion to Transfer,
Motion to Continue Trial Date and Other Dates, and Motion to Consolidate,
which State Farm had opposed. There is no evidence in the record to suggest
that the district court notified any party that it was considering dismissal,
neither party briefed the issue, and Plaintiffs were not given an opportunity to
4
No. 08-30281
amend their complaint to cure any deficiencies that the district court thought
warranted dismissal. Moreover, based upon the record before us, we cannot say
that Plaintiffs, who were not given a chance to amend their complaint or file
subsequent pleadings addressing the merits of their case, were able to plead
their “best case.”
IV. CONCLUSION
The district court erred in dismissing Plaintiffs’ case without prior notice
and without providing Plaintiffs an opportunity to respond or plead their “best
case.” Therefore, we VACATE the judgment of the district court and REMAND
for further proceedings consistent with this opinion.
VACATED AND REMANDED.
5