Janik v. City of Dallas, TX ( 2000 )

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 98-10781
ERNEST A. JANIK, JR., INDIVIDUALLY, ON
BEHALF OF GRANT JOSEPH JANIK, ON BEHALF OF
TYLER NEWMAN JANIK; LEAH EILEEN JANIK,
INDIVIDUALLY, ON BEHALF OF GRANT JOSEPH JANIK,
ON BEHALF OF TYLER NEWMAN JANIK,
Plaintiffs-Appellants,
versus
CITY OF DALLAS, TEXAS, ETC., ET AL,
Defendants,
CITY OF DALLAS, TEXAS, AN INCORPORATED MUNICIPALITY,
Defendant-Appellee.
No. 98-11369
ERNEST A. JANIK, JR., INDIVIDUALLY, ON
BEHALF OF GRANT JOSEPH JANIK, ON BEHALF OF
TYLER NEWMAN JANIK; LEAH EILEEN JANIK,
INDIVIDUALLY, ON BEHALF OF GRANT JOSEPH JANIK,
ON BEHALF OF TYLER NEWMAN JANIK,
Plaintiffs-Appellants,
versus
CITY OF DALLAS, TEXAS, ETC., ET AL,
Defendants,
AMICA MUTUAL INSURANCE CO., A RHODE ISLAND COMPANY;
INSURANCE ADJUSTMENT SERVICES OF TEXAS INC.,
A TEXAS CORPORATION, ALSO KNOWN AS INSURANCE
ADJUSTMENT SERVICES, ALSO KNOWN AS INSURANCE ADJUSTMENT
SERVICES INC; NOBEL SERVICE CORPORATION, A
DELAWARE CORPORATION, DOING BUSINESS AS
INSURANCE ADJUSTMENT SERVICES INC.,
Defendants-Appellees.
Appeals from the United States District Court for the
Northern District of Texas
3:95-CV-2594-D
July 6, 2000
Before GARWOOD, WIENER and DENNIS, Circuit Judges.1
GARWOOD, Circuit Judge:
Plaintiffs-appellants Ernest A. Janik, Jr., and Leah Eileen Janik,
individually, and as next friends of their minor children,
(collectively, the Janiks) filed suit against defendants-appellees the
City of Dallas (the City), AMICA Mutual Insurance Co. (AMICA), IAS Claim
Services, Inc., (IAS), and Nobel Service Corp. (Nobel)2, seeking
recovery for personal and property damage resulting from a sewage leak
in the basement of a home they were leasing and from the handling of
their insurance claims for losses caused by the sewage leak. The Janiks
brought numerous claims against the City, against AMICA (the Janiks’
insurer), and against IAS and Nobel (their insurance adjustors). In a
1
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this opinion should not be published and is not precedent except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.
2
The Janiks also named Floyd E. Meyers, Noble Holdings, Inc., and
Insurance Adjustment Services of Texas, Inc., as defendants to this
action. These defendants, however, were later dismissed from the case
and are not parties to this appeal.
2
series of orders, the district court granted the City summary judgment
on all claims against it. With regard to AMICA, IAS, and Nobel, the
district court granted summary judgment in their favor on several, but
not all, of the Janiks’ causes of action. The Janiks’ remaining claims
against AMICA, IAS, and Nobel proceeded to trial, and the jury returned
one liability question favorable to the Janiks against AMICA and IAS.
The district court, however, entered judgment in favor of AMICA and IAS
on this jury finding, on the basis that there was no causal link between
the sole liability finding and the damages finding. The Janiks appeal
on numerous points. We affirm.
Factual and Procedural History
In 1993, the Janiks lived in a home they were renting at 5509
Melshire Boulevard in Dallas, Texas. On Sunday, October 31, 1993, the
Janiks returned home from church to discover a liquid seeping into their
home. The Janiks attempted to clean their home and furnishings until
discovering that the water was in fact untreated sewage water. The
Janiks then stayed with a neighbor for several days and soon moved to
a different residence.
Seeking recovery for the property damage they suffered, the Janiks
filed a claim under their renter’s insurance policy with AMICA. The day
after discovering the sewage in their leased home, the Janiks orally
notified AMICA of their claim. AMICA then referred the claim to IAS,
an independent claims adjuster, which opened a file on the Janiks’
insurance claims on November 2, 1993. Blackmon Mooring Steamatic
(Blackmon Mooring) was retained to assist in the cleaning and moving of
the Janiks’ personal property.
3
Problems, unfortunately, soon arose. The Janiks considered AMICA
and the claims adjustors to be engaging in deliberate delay and
misrepresentation in processing the Janiks’ claims. After several
attempts by Blackmon Mooring to clean the personal property to the
Janiks’ satisfaction, AMICA decided to treat the Janiks’ claim as a
constructive total loss. IAS recommended that the Janiks receive
$60,000–their policy limit. However, Blackmon Mooring was owed $15,900
for its cleaning and moving services, and a dispute arose over whether
AMICA would pay the full $60,000 directly to the Janiks who would then
pay Blackmon Mooring or issue two checks, one to the Janiks and the
other to Blackmon Mooring. Eventually, the Janiks paid Blackmon Mooring
themselves, and AMICA then released the entire $60,000 to the Janiks.
In addition to the $60,000 payment for unscheduled personal property,
AMICA also provided the Janiks $4,425 in coverage for additional living
expenses. Although the Janiks do not contend that they received less
coverage than they were entitled to under the policy, they do assert
extra-contractual damages on various theories for alleged problems in
the handling of their claim. The Janiks maintain that AMICA improperly
delayed payment and improperly demanded proof of loss for payment, when
the requirement for such proof was waived by AMICA.
On October 30, 1995, the Janiks filed suit against the City,
alleging that the City was responsible for the sewerage leak and the
resulting personal and property damages they suffered. The Janiks
sought recovery under various theories, including trespass, conversion,
nuisance, the Texas Constitution, the Federal Clean Water Act, 33 U.S.C.
§§ 1251-1387 (CWA), the Texas Tort Claims Act, TEX. CIV. PRAC. & REM. CODE
4
ANN. §§ 101.001-101.109 (TTCA), the Texas Water Code, the Texas Solid
Disposal Act, the Federal Declaratory Judgment Act, the Texas
Declaratory Judgment Act, and violations of the Fourteenth Amendment of
the United States Constitution. In their third amended complaint, the
Janiks referenced the Resource Conservation and Recovery Act, 42 U.S.C.
§ 6972 (RCRA), as an alternative standard to support their claims under
the CWA and state nuisance law. In a series of orders, the district
court granted summary judgment in favor of the City on each claim
asserted by the Janiks.
In the same complaint, the Janiks also named AMICA, IAS, and Nobel
as defendants. The Janiks alleged inter alia that AMICA, IAS, and Nobel
were liable for negligence, gross negligence, civil conspiracy, breach
of fiduciary duty, breach of contract, quasi-contract, economic coercion
and undue influence, violations of the Texas Deceptive Trade Practices
Act (DTPA), violations of the Texas Uniform Fraudulent Transfer Act
(TUFTA), and Texas Insurance Code violations, all in connection with
their conduct and representations while adjusting the Janiks’ insurance
claims.3 In a series of orders, the district court granted summary
judgment in favor of AMICA on the following causes of action asserted
by the Janiks: breach of fiduciary duty, quasi-contract, economic
3
Against AMICA, the Janiks sought recovery for breach of
contract, quasi-contract, DTPA violations, bad faith, negligence, gross
negligence, economic coercion and undue influence, breach of fiduciary
duty, the Texas Declaratory Judgment Act, the Federal Declaratory
Judgment Act, civil conspiracy, unconscionability, and Texas Insurance
Code violations. The claims against IAS were based upon negligence,
gross negligence, economic coercion and undue influence, civil
conspiracy, Texas Insurance Code violations, DTPA violations, and TUFTA
violations. The Janiks sought recovery from Nobel for alleged TUFTA
violations.
5
coercion and undue influence, and DTPA violations. The district court
also granted IAS summary judgment on the Janiks’ claims against it for
civil conspiracy and economic coercion. The remaining claims were tried
before a jury.
In August 1998, the Janiks remaining claims against AMICA, IAS, and
Nobel proceeded to trial. At the close of the Janiks’ case, the
district court granted the defendants judgment on the Janiks’ TUFTA
claim. The district court then submitted the charge to the jury. The
charge included the following liability issues: breach of contract,
breach of the duty of good faith and fair dealing, negligence, gross
negligence, negligent misrepresentation, civil conspiracy (as to AMICA),
and nineteen insurance code violations. The jury answered “yes” to only
one liability question, finding that AMICA and IAS violated the Texas
Insurance Code by “[f]ailing to acknowledge with reasonable promptness
pertinent communications with respect to claims arising under the
policy.” The jury made a damages finding of $2,815.73, representing the
“out of pocket costs to plaintiffs to clean plaintiffs’ consumer goods,
other than those requiring special remediation efforts, as to those
items that can be cleaned at a cost less than the cost of replacement.”
The jury apportioned responsibility for the loss at twenty-five percent
to AMICA and seventy-five percent to IAS.
The district court, however, ruled that the jury’s liability
finding bore no relationship to the damages finding, specifically
determining that there was no evidence of any out-of-pocket expenses
incurred by the Janiks as a result of any delayed or inadequate
communication by IAS and AMICA. Therefore, the district court entered
6
judgment in favor of AMICA and IAS. The Janiks filed motions for
reconsideration, new trial, and judgment as a matter of law. The
district court denied relief on these motions. The Janiks then timely
appealed.
Discussion
On appeal, the Janiks assert that the district court erred in its
disposition of their claims against the City, AMICA, IAS, and Noble.
We affirm.
I. The City
The district court granted the City’s motions for summary judgment
on all of the Janiks’ claims. On appeal, the Janiks contend that the
district court committed error in four respects: (1) the district
court’s finding that the Janiks lacked Article III standing to assert
a CWA claim; (2) the district court’s decision that the Janiks had not
stated a cause of action under the RCRA4; (3) the district court’s
conclusion that the City was not liable under the TTCA; and (4) the
district court’s determination that the City’s actions did not
constitute a nuisance and, therefore, did not result in an
unconstitutional takings. With regard to the first two issues, we agree
4
On appeal, the Janiks contend that even if the district court
correctly determined that they had failed to state a claim under the
RCRA, the district court erred in refusing their motion to amend their
pleadings pursuant to Rule 15 of the Federal Rules of Civil Procedure.
Whether a party should be allowed to amend his pleadings is a decision
left to the sound discretion of the district court. See Moody v. FMC
Corp., 995 F.2d 63, 65 (5th Cir. 1993). The Janiks filed their Rule 15
motion to amend their pleadings to include an RCRA claim on May 22,
1998, more than two and one-half years after filing this action and
after three previous amendments to their pleadings. We cannot conclude
that the district court abused its discretion in refusing the Janiks’
request for a fourth amendment.
7
with the district court for the reasons stated in its orders, but write
further to address the last two points raised by the Janiks.
We review a grant of summary judgment applying the same standard
as the court below was required to apply. See King v. Chide, 974 F.2d
653, 655 (5th Cir. 1992). Summary judgment is proper when no issue of
material fact exists and the moving party is entitled to judgment as a
matter of law. See id. at 656. Summary judgment evidence is viewed in
the light most favorable to the nonmovant, in this case, the Janiks, and
questions of law are reviewed de novo. See id. We may affirm a
judgment on any basis raised below and supported by the record. See
Davis v. Scott, 157 F.3d 1003, 1005 (5th Cir. 1998); Davis v. Liberty
Mut. Ins. Co., 525 F.2d 1204, 1207 (5th Cir. 1976); see also 10A CHARLES
ALAN WRIGHT, ET AL., FEDERAL PRACTICE AND PROCEDURE § 2716, at 290 (3d ed.
1998).
The Janiks’ claims under nuisance and the TTCA are governed by
Texas law. When adjudicating claims for which state law provides the
rules of decision, we are bound to apply the law as interpreted by the
state’s highest court. See Transcontinental Gas v. Transportation Ins.
Co., 953 F.2d 985, 988 (5th Cir. 1992). If the state’s highest court
has not spoken on a particular issue, “it is the duty of the federal
court to determine as best it can, what the highest court of the state
would decide.” Id. When making such a determination, we are bound by
an intermediate state appellate court decision unless “convinced by
other persuasive data that the highest court of the state would decide
otherwise.” First Nat’l Bank of Durant v. Trans Terr Corp., 142 F.3d
802, 809 (5th Cir. 1998) (internal quotations and footnote omitted).
8
We, however, “will not expand state law beyond its presently existing
boundaries.” Rubinstein v. Collins, 20 F.3d 160, 172 (5th Cir. 1994)
(footnote omitted).
We will first consider the Janiks’ claim under the TTCA. Before
the Texas legislature enacted the TTCA, liability against a municipality
for the negligence of its representatives depended upon the
classification of the activity at issue as either a governmental
function or a proprietary function. See Dilley v. City of Houston, 222
S.W.2d 992, 993 (Tex. 1949). The former was shielded by sovereign
immunity, while the latter was not. Under this scheme, if a
municipality decided to provide sewer services, such services were
classified as a proprietary function and, therefore, not afforded
immunity. See City of Tyler v. Likes, 962 S.W.2d 489, 502 (Tex. 1997)
(“Common law classified operation and maintenance of storm sewers as
proprietary functions for which a municipality could be sued.”). The
TTCA, however, has largely done away with this classification system.
Under the TTCA, sovereign immunity applies to negligence claims arising
from a municipality’s construction, operation, and maintenance of its
sewer systems, except to the extent such immunity is waived by the TTCA.
See TEX. CIV. PRAC. & REM. CODE ANN. § 101.021 (1997)5; id. § 101.0215.6
5
Section 101.021 of the Texas Civil Practice & Remedies Code
states as follows:
“A governmental unit in the state is liable for:
(1) property damage, personal injury, and death
proximately caused by the wrongful act or omission or the
negligence of an employee acting within his scope of
employment if:
(A) the property damage, personal injury, or death
arises from the operation or use of a motor-driven
vehicle or motor-driven equipment; and
9
Accordingly, the TTCA narrowed municipal liability for damages caused
by sewer systems. City of Tyler, 962 S.W.2d at 504. The Janiks
alleged below, and reiterate on appeal, that the City’s employees
utilized motor-driven equipment when repairing a sewer line in their
neighborhood. The Janiks contend that this equipment caused the sewage
to seep into their home, thereby falling within the purview of section
101.021 of the TTCA (see note 5, supra). Under the TTCA, the City is
immune from liability for the intentional torts of trespass and
conversion asserted by the Janiks. See TEX. CIV. PRAC. & REM. CODE ANN.
§ 101.057.7 In response to an interrogatory, the Janiks stated that
(B) the employee would be personally liable to the
claimant according to Texas law; and
(2) personal injury and death so caused by a condition
or use of tangible personal or real property if the
governmental unit would, were it a private person, be liable
to the claimant according to Texas law.”
6
Section 101.0215 reads in pertinent part:
“(a) A municipality is liable under this chapter for
damages arising from its governmental functions, which are
those functions that are enjoined on a municipality by law
and are given it by the state as part of the state’s
sovereignty, to be exercised by the municipality in the
interest of the general public, including but not limited to:
. . .
(9) sanitary and storm sewers;
. . .
(32) water and sewer service; and
. . ..”
7
Section 101.057 provides as follows:
“This chapter does not apply to a claim:
(1) based on an injury or death connected with any act
or omission arising out of civil disobedience, riot,
insurrection, or rebellion; or
(2) arising out of assault, battery, false
imprisonment, or any other intentional tort, including a tort
involving disciplinary action by school authorities.”
10
they “have not asserted any ‘negligence’ cause of action (or ‘count’)
against the City of Dallas.” As the City is immune for any intentional
tort alleged against it and the Janiks have not sought recovery under
a negligence theory, there is no remaining basis for liability under the
TTCA. Therefore, the district court’s grant of summary judgment in
favor of the City on the Janiks’ claim under the TTCA is affirmed.
The Janiks also sought recovery under a state-law takings claim,
which they based on the doctrine of nuisance. Texas courts have split
actionable nuisance into three categories: (1) the negligent invasion
of another’s interest; (2) the intentional invasion of another’s
interest; and (3) other conduct, culpable because it is abnormal and out
of place in its surroundings, that invades another’s interests. See
City of Tyler, 962 S.W.2d at 503. As noted previously, the Janiks do
not allege that the City acted negligently; therefore, the first
category of nuisance is inapplicable. Although several pre-City of
Tyler Texas courts of appeals’ decisions suggest that the Janiks may
recover under the abnormal and unusual condition branch of nuisance, see
Bible Baptist Church v. City of Cleburne, 848 S.W.2d 826 (Tex. App.—Waco
1993, writ denied); Shade v. City of Dallas, 818 S.W.2d 578 (Tex.
App.—Dallas 1991, no writ)8, the Janiks’ pleadings do not contain an
allegation that any conduct by the City was “abnormal and out of place
8
However, when considering a nuisance claim from excessive
flooding caused by culverts and a drainage channel, the Texas Supreme
Court focused on whether the culvert system was abnormal and out of
place in its surroundings, not whether the resulting flood waters were.
See City of Tyler, 962 S.W.2d at 504. Similarly, were we to reach the
issue in the present case, we would need to address whether the sewer
system itself, not the sewage that escaped from that system, was
sufficiently abnormal and out of place in its surroundings. There does
not appear adequate evidence that it was.
11
in its surroundings.” Therefore, the Janiks are relegated to the second
type of nuisance–intentional nuisance.
We again look to the Texas Supreme Court’s decision in City of
Tyler for guidance. Likes’s home was damaged after a drainage channel
and culverts owned by the City of Tyler flooded from heavy rains in the
area, and Likes sought recovery from the City of Tyler under a nuisance
theory. See City of Tyler, 962 S.W.2d at 503. The Texas Supreme Court
held, as a matter of law, that the City of Tyler “did not intentionally
do anything to increase the amount of water in the watershed in which
Likes’s home was located.” Id. at 504. The court based this conclusion
on the City of Tyler’s having completed the culvert system before the
Likes’s home was built and not having made any improvements since then
to increase the amount of water in the watershed where Likes’s home was
located. See id. It is undisputed that the City of Tyler intentionally
constructed the culvert system and, therefore, the court’s attention
must have been focused on the intent to cause the flooding in the
vicinity of Likes’s home. In the present case, there is no allegation,
nor any evidence, that the City intended to cause the sewage flooding
in the vicinity of the Janiks’ home. Accordingly, the Janiks’ takings
claim premised on nuisance fails.
In conclusion, the district court did not err in granting summary
judgment in favor of the City.
II. Insurance Defendants
The Janiks raise several claims of error in the district court’s
disposition of their claims against AMICA, IAS, and Nobel. First, the
Janiks appeal the district court’s grant of partial summary judgment in
12
favor of AMICA, IAS, and Nobel on the following causes of action:
economic coercion and undue influence, civil conspiracy, DTPA
violations, breach of fiduciary duty, quasi-contract, and
unconscionability. Second, the Janiks contend that the district court
erred in declining to find manifest error in the jury’s verdict,
specifically, that the Janiks had not established their claims for
breach of contract and violations of the Texas Insurance Code and
greater damages than those awarded by the jury. Third, the Janiks
assert that the district court erred granting judgment for IAS and AMICA
on the jury’s one liability finding in the Janiks’ favor.9 We hold that
the district court did not err in any respect and rely on its reasoning
in all matters save one. We briefly address the Janiks’ contention that
AMICA breached the policy by delaying payment of their claims until
March 23, 1994, when the Janiks and AMICA had agreed on or around
February 15, 1994 that AMICA would pay the Janiks $60,000 under the
policy.
The Janiks alleged that AMICA breached the policy by failing to pay
the Janiks’ claim within the prescribed five-day period after giving
notice of its intent to pay their claim. On or around February 15,
1994, AMICA and the Janiks reached an agreement whereby a total loss
would be claimed on the Janiks’ damaged personal property. Therefore,
9
The Janiks raise two additional points of error. First, the
Janiks claim that defense counsel engaged in improper jury argument when
referring to the Janiks’ attorney as stating that the case was about
“invisible” harm when the Janiks’ attorney in fact said “indivisible”
harm. The resulting error, if any, was cured by the district court’s
instructions to the jury. Second, the Janiks complain that the district
court’s rulings on motions for summary judgment, new trial, and post-
trial judgement as a matter of law collectively deprived them of their
Seventh Amendment right to trial by jury. This claim is meritless.
13
the Janiks would receive payment for the policy limit of $60,000.
However, Blackmon Mooring had submitted a bill for approximately $15,900
in expenses associated with the cleaning and moving of the Janiks’
personal property. Blackmon Mooring’s bill was to be paid out of the
$60,000 fund, and the Janiks would receive the remaining $44,100.
Confusion arose over whether or not the Janiks wanted AMICA to pay
Blackmon Mooring directly. The Janiks eventually paid Blackmoon Mooring
independently. Upon being informed of this payment, AMICA immediately
sent the Janiks a check payable to them in the amount of $60,000. Even
assuming arguendo that AMICA breached the policy by delaying payment to
the Janiks10, the Janiks have failed to establish any resulting damage
from such breach. The Janiks received payment for the policy limit and,
thus, the benefit of their bargain with AMICA. Under these facts, there
can be no recovery for this alleged breach of the policy.
We find that the district court committed no error in its
disposition of the Janiks’ claims against AMICA, IAS, and Noble.
Conclusion
The judgment of the district court is
AFFIRMED.
10
AMICA argues that the uncertainty surrounding the method of
paying Blackmon Mooring’s bill mitigated its duty to pay within five
days of notifying the Janiks that they would receive $60,000 in benefits
under the policy. In support of its position, AMICA relies on a
provision in the policy that states that, if payment of a claim requires
performance of an act by the insured, payment of the claim must be made
within five business days after the date such act is performed by the
insured. As we conclude that the Janiks suffered no injury from this
alleged breach, we need not address whether AMICA breached the policy.
14