Case: 23-50667 Document: 61-1 Page: 1 Date Filed: 07/24/2024
United States Court of Appeals
for the Fifth Circuit
____________
United States Court of Appeals
Fifth Circuit
No. 23-50667
____________ FILED
July 24, 2024
Christa Taylor, Lyle W. Cayce
Clerk
Plaintiff—Appellant,
versus
Root Insurance Company,
Defendant—Appellee.
______________________________
Appeal from the United States District Court
for the Western District of Texas
USDC No. 1:22-CV-1328
______________________________
Before Southwick and Duncan, Circuit Judges, and Kernodle,
District Judge. *
Leslie H. Southwick, Circuit Judge:
This appeal requires us to interpret an insurance policy. When the
plaintiff’s vehicle was damaged, her insurer paid her the vehicle’s actual cash
value in a total-loss settlement. The issue is whether her policy also required
the insurer to pay her the equivalent of what the sales tax would be on the
sale of an automobile at that price. The district court agreed with the insurer
_____________________
*
United States District Judge for the Eastern District of Texas, sitting by
designation.
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No. 23-50667
that the policy did not require payment of an amount representing sales tax.
We AFFIRM.
FACTUAL AND PROCEDURAL BACKGROUND
Christa Taylor purchased personal automobile insurance coverage
from Root Insurance Company, and it issued her a policy. The policy
contains two relevant provisions:
Limit of liability
A. Our limit of liability for loss will be the lesser of the:
1. Actual cash value of the stolen or damaged
property less the deductible; or
2. Amount necessary to repair or replace the
property with other property of like kind and
quality less the deductible.
....
Payment of loss
We may pay for loss in money or repair or replace the
damaged or stolen property. We may, at our expense,
return any stolen property to:
1. You; or
2. The address shown in this policy.
If we return stolen property we will pay for any damage
resulting from the theft. We may keep all or part of the
property at an agreed or appraised value.
If we pay for loss in money, our payment will include the
applicable sales tax for the damaged or stolen property.
We may settle any loss with you or the owner or
lienholder of the property.
Taylor filed a claim after a hailstorm damaged her vehicle. Root
determined the vehicle to be a total loss and elected to pay Taylor her
vehicle’s actual cash value ($22,750) in return for receiving its title.
Although Root made the payment “in money,” which the penultimate
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sentence in our above quote of the policy stated would include the
“applicable sales tax,” no amount of sales tax was paid.
On behalf of herself and as representative of a class, Taylor filed a
putative class action against Root asserting its failure to pay her sales tax in
the amount of $1,421.88 was a breach of the policy. She set forth causes of
action for breach of contract and violation of the Texas Prompt Payment of
Claims Act (“TPPCA”). See Tex. Ins. Code §§ 542.051–.061.
Root moved to dismiss Taylor’s claims under Federal Rule of Civil
Procedure 12(b)(6). In a report and recommendation, the magistrate judge
recommended the district court grant Root’s motion and deny Taylor’s
request for leave to amend her complaint. The district court conducted a de
novo review of the record, agreed with the magistrate judge, and dismissed
the suit. Taylor timely appealed.
DISCUSSION
We review de novo a district court’s grant of a Rule 12(b)(6) motion to
dismiss, viewing all facts in the light most favorable to the plaintiff. Ferrer &
Poirot, GP v. Cincinnati Ins., 36 F.4th 656, 658 (5th Cir. 2022). To survive
the motion, “a plaintiff must plead ‘enough facts to state a claim to relief that
is plausible on its face.’”
Id. (quoting Bell Atl. Corp. v. Twombly,
550 U.S.
544, 570 (2007)). “The district court’s interpretation of an insurance policy
is a question of law that we also review de novo.”
Id. at 658–59.
Where, as here, a federal court sits in diversity, it applies the forum
state’s choice of law rules. Delta Seaboard Well Serv’s, Inc. v. Am. Int’l
Specialty Lines Ins., 602 F.3d 340, 343 (5th Cir. 2010). The Texas Insurance
Code states that Texas law applies to insurance contracts payable to
inhabitants of the state, which Taylor is. Tex. Ins. Code art. 21.42. The
parties agree Texas law governs the policy’s interpretation.
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“In Texas, insurance policies are interpreted by the same principles
as contract construction.” Ferrer & Poirot, 36 F.4th at 659 (citation omitted).
“We begin with the language of the policy because it is ‘presume[d] parties
intend what the words of their contract say.’” Terry Black’s Barbecue, L.L.C.
v. State Auto. Mut. Ins.,
22 F.4th 450, 454 (5th Cir. 2022) (alteration in
original) (citation omitted). A policy is ambiguous when it “is subject to
more than one reasonable interpretation.”
Id. at 455. “Where a policy’s
terms can be given definite or certain legal meanings, it is unambiguous.
‘The paramount rule is that courts enforce unambiguous policies as
written.’” Ferrer & Poirot,
36 F.4th at 659 (footnotes and citations omitted).
Taylor’s primary challenge is to the dismissal of her breach of contract
claim. A Texas breach of contract claim has four elements: “(1) a valid
contract, (2) plaintiff’s performance, (3) defendant’s breach, and (4)
resulting damages.” Wease v. Ocwen Loan Servicing, L.L.C., 915 F.3d 987,
993 (5th Cir. 2019). The parties dispute the breach element.
Taylor contends Root breached the policy by failing to pay her an
amount representing sales tax in addition to her vehicle’s actual cash value.
She highlights the policy’s “Payment of loss” provision, which explains: “If
we pay for loss in money, our payment will include the applicable sales tax
for the damaged or stolen property.” The parties agree Root paid for
Taylor’s loss in money. Taylor maintains the amount of applicable sales tax
is determined by this statutory language: “A tax is imposed on every retail
sale of every motor vehicle sold in this state. . . . The tax rate is 6 ¼ percent
of the total consideration.” Tex. Tax Code § 152.021. Based on her
vehicle’s $22,750 actual cash value, claims entitlement to $1,421.88, or the
6.25 percent retail sales tax on the value of her vehicle. She agrees, though,
that no tax in any amount is due to the State as a result of the payment to her.
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The plain language of the policy requires Root to pay only the
“applicable sales tax,” and there is no sales tax applicable here. The Texas
Tax Code imposes a 6.25 percent tax “on every retail sale” of a motor
vehicle, id., but a total-loss settlement “is not considered a sale” under Texas
law, 34 Tex. Admin. Code § 3.62. Taylor identifies no other sales tax
that could apply. Additionally, Root satisfied its obligation to pay Taylor the
actual cash value of the vehicle. We so hold because, as Taylor concedes and
as this court recently held, actual cash value, which is the equivalent of “fair
market value[,] does not include the taxes and fees payable to purchase a
replacement vehicle” under Texas law. Singleton v. Elephant Ins.,
953 F.3d
334, 336–37 (5th Cir. 2020).
In support of her view, Taylor identifies two federal district court
decisions from other states addressing language nearly identical to the policy
and concluding the provisions require the insurer to pay some amount of sales
tax. See Romaniak v. Esurance Prop. & Cas. Ins., No. 1:20-CV-02773, 2021
WL 4171040 (N.D. Ohio Sept. 14, 2021); Rawlins v. Esurance Prop. & Cas.
Ins., No. 4:21-CV-660 RLW,
2022 WL 225618 (E.D. Mo. Jan. 26, 2022).
Both cases were decided within the framework of the laws of different states,
and neither assists in discerning the amount of sales tax applicable under the
policy nor provides guidance on how Texas law affects the inquiry. See
Romaniak,
2021 WL 4171040, at *3 (construing Ohio law); Rawlins,
2022 WL
225618, at *3 (construing Missouri law).
Regarding Taylor’s remaining contentions, she asserts Root violated
the TPPCA because it did not pay her the claimed sales tax amount within
the Act’s requisite timeframe. As already discussed, there is no applicable
sales tax, so Root did not violate the TPPCA by failing to pay money it does
not owe. We agree with another panel of this court that a TPPCA violation
exists only if the insurer is liable for a claim under a policy. Tremago, L.P. v.
Euler-Hermes Am. Credit Indem. Co., 602 F. App’x 981, 983 (5th Cir. 2015).
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Also, Taylor provides no analysis or caselaw in support of her
contention that the district court erred in rejecting her request for leave to
amend her complaint. She, therefore, forfeits the contention by failing to
provide adequate briefing. See Fed. R. App. P. 28(a)(8) (requiring
appellant to include her “contentions and the reasons for them, with citations
to the authorities and parts of the record on which the appellant relies”).
AFFIRMED.
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