Norman Bloom v. Aftermath Pub Adjusters, Inc., et

Case: 17-41087 Document: 00514627491 Page: 1 Date Filed: 09/04/2018
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 17-41087 FILED
September 4, 2018
Lyle W. Cayce
Clerk
NORMAN BLOOM,
Plaintiff−Appellant,
versus
AFTERMATH PUBLIC ADJUSTERS, INCORPORATED;
MICHAEL BACIGALUPO,
Defendants−Appellees.
Appeal from the United States District Court
for the Southern District of Texas
Before SMITH, CLEMENT, and COSTA, Circuit Judges.
JERRY E. SMITH, Circuit Judge:
The parties agree that this case turns exclusively on whether Texas’s
special tolling rule in Hughes v. Mahoney & Higgins, 821 S.W.2d 154, 157 (Tex.
1991)—which suspends the statute of limitations on legal malpractice claims
until completion of the litigation from which they arise—extends to actions
against public adjusters. The district court thought not and dismissed the
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No. 17-41087
claims as untimely. We agree and affirm.
I.
Gracie Reese purchased a standard flood insurance policy from Fidelity
National Property and Casualty Company (“Fidelity”) for property in Galves-
ton damaged during Hurricane Ike. Per Reese’s affidavit, in the aftermath of
the storm, Fidelity sent an adjuster to her house. That adjuster prepared an
estimate and authorized payments of around $48,500 for building damage and
around $20,000 for content damage. Discontent with the authorized amounts,
Reese contracted with defendant Aftermath Public Adjusters, Inc. (“After-
math”), a Texas-licensed public adjusting firm, to assist.
Michael Bacigalupo was the licensed public adjuster assigned to the case.
After examining the house, he prepared a Proof of Loss and Detailed Repair
Estimate that stated, in effect, that Reese was entitled to additional amounts
of about $68,500 for building repairs and around $25,000 for damaged content.
In August 2009, Fidelity notified Reese in writing that her claim was
denied because no proof of loss had been submitted. In August 2010, Reese
sued Fidelity, alleging her claim was wrongfully denied. Nearly four years
elapsed, and in July 2014, Fidelity moved for summary judgment on the
ground that Reese had provided “absolutely no documentation” to support her
claim for additional payment. Reese chose not to respond, and on September 9,
2014, the court granted the motion.
On September 8, 2016, Reese filed this suit against Aftermath and Baci-
galupo, alleging negligence and breach of contract based on defendants’ failure
to submit proof of loss timely to Fidelity. Defendants moved for summary judg-
ment based on the relevant two- and four-year statutes of limitation, as
approximately seven years had passed since Reese had received notice of Fidel-
ity’s denial of her claim. Reese replied that under Hughes, 821 S.W.2d at 157,
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No. 17-41087
limitations were tolled until the conclusion of her suit against Fidelity. The
district court disagreed and rejected the claims as untimely.
Reese died before the district court entered final judgment, and her
grandson Norman Bloom was substituted as plaintiff. Bloom appeals.
II.
The sole question is whether the tolling rule from Hughes, 821 S.W.2d
at 157, reaches actions against public adjusters. Bloom says yes, or at the
least, that the question should be certified to the Texas Supreme Court. We
disagree.
When sitting in diversity, we apply the state’s statutes of limitation and
accompanying tolling rules. Vaught v. Showa Denko K.K., 107 F.3d 1137, 1145
(5th Cir. 1997). Where the contours of those rules are underdetermined, we
must make an Erie guess about how we expect the Texas Supreme Court would
decide. “We are emphatically not permitted to do merely what we think best;
we must do that which we think the [state] [s]upreme [c]ourt would deem best
. . . .” In re DePuy Orthopaedics, Inc., 888 F.3d 753, 765 n.5 (2018) (cleaned
up). As a practical matter, that judgment is informed chiefly by “(1) decisions
of the [state] [s]upreme [c]ourt in analogous cases, (2) the rationales and
analyses underlying [state] [s]upreme [c]ourt decisions on related issues, [and]
(3) dicta by the [state] [s]upreme [c]ourt.” Id. (quoting Centennial Ins. Co. v.
Ryder Truck Rental, Inc., 149 F.3d 378, 382 (5th Cir. 1998)).
Naturally, our analysis begins with Hughes, in which clients sued their
attorney for negligence allegedly committed during past representation. See
Hughes, 821 S.W.2d at 155–56. The Texas Supreme Court, in reviving an
otherwise untimely claim, established the following special tolling rule:
“[W]hen an attorney commits malpractice in the prosecution or defense of a
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claim that results in litigation, the statute of limitations on the malpractice
claim against the attorney is tolled until all appeals on the underlying claim
are exhausted.” Id. at 157. In defending that new rule, the court explained
that the usual tolling principles “can force the client into adopting inherently
inconsistent litigation postures in the underlying case and in the malpractice
case,” a conflict the court deemed “untenab[le].” Id. at 156.
Though the “inconsistent positions” rationale would seem to sweep
broadly, the Texas Supreme Court has confirmed that the rule in Hughes
applies only to attorney malpractice. 1 For example, in Murphy v. Campbell,
964 S.W.2d 265, 272 (Tex. 1997), the court declined to extend Hughes to suits
against accounting firms. It emphasized that “Hughes does not hold that
limitations is tolled whenever a litigant might be forced to take inconsistent
positions. Such an exception to limitations would be far too broad. We ex-
pressly limited the rule in Hughes to attorney malpractice in the prosecution
or defense of a claim that results in litigation.” Id. 2 More recently, in Apex
Towing Co. v. Tolin, 41 S.W.3d 118, 119–20 (Tex. 2001), the court described
Hughes as a “bright-line rule” that tolls limitations “when an attorney commits
malpractice in the prosecution or defense of a claim that results in litigation.”
As a federal court sitting in diversity, it is not our place to second-guess the
wisdom of that line but instead to enforce it. See DePuy, 888 F.3d at 765 n.5. 3
1 Askanase v. Fatjo, 130 F.3d 657, 669 (5th Cir. 1997) (rejecting plaintiffs’ proposed
application of Hughes and explaining that “Hughes . . . stand[s] for the proposition that when
an attorney commits malpractice, the statute of limitations is tolled on the malpractice claim
until all appeals on the underlying claim are exhausted” (emphasis added)).
2Accord Hoover v. Gregory, 835 S.W.2d 668, 672 (Tex. App.—Dallas 1992, writ denied)
(“We interpret Hughes narrowly and decide that its application should be limited to cases
involving legal malpractice.”); Ponder v. Brice & Mankoff, 889 S.W.2d 637, 644–45 (Tex.
App.—Houston [14th Dist.] 1994, writ denied) (same).
3 Texas law does not leave victims of negligence and deception high and dry. Under
its “discovery rule,” which applies when “the nature of the plaintiff’s injury is both inherently
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Bloom’s lone reply is that public adjusters are actually lawyers in dis-
guise. Bloom concedes defendants are technically “non-lawyers,” but he insists
they effectively “provide[d] legal services,” because there was once a time when
Texas prohibited non-lawyers from engaging in public adjusting.
But that was then, and this is now. Even assuming Texas law previously
classified public adjusting as legal practice, under the relevant regime, these
defendants are non-lawyers who were not engaged in legal practice. By defini-
tion, Bloom’s claims cannot implicate the unique relationship that triggers the
bright-line rule from Hughes. Only Texas has the power to say where lawyer-
ing ends and adjusting begins, just as its courts have the sole power to decide
Hughes’s outer bounds. Accordingly, we reject Bloom’s proposed expansion.
Bloom alternatively requests that we certify the question to the Texas
Supreme Court. That decision turns on several factors, the most important of
which are “the closeness of the question and the existence of sufficient sources
of state law.” 4 But here Texas law is clear.
AFFIRMED.
undiscoverable and objectively verifiable,” the accrual period is deferred “until the plaintiff
knows or, by exercising reasonable diligence, should know of the facts giving rise to the
claim.” Wagner & Brown, Ltd. v. Horwood, 58 S.W.3d 732, 734 (Tex. 2001). In declining to
extend Hughes beyond its well-settled bounds, Texas courts demand of plaintiffs like Bloom
only that they exercise reasonable diligence and, after doing so, make a tactical choice of
whom to sue.
4Swindol v. Aurora Flight Scis. Corp., 805 F.3d 516, 522 (5th Cir. 2015) (quoting
Williamson v. Elf Aquitaine, Inc., 138 F.3d 546, 549 (5th Cir. 1998)).
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