Black v. Chicago Title Insurance Company

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
J.B. BLACK, 	§
Plaintiff, 	§
§
v. 	§ 	CIVIL A CTION N O. 4:25-CV-06023
§
CHICAGO T ITLE I NSURANCE COMPANY, 	§
Defendant. 	§
MEMORANDUM AND RECOMMENDATION
Before the Court is Defendant’s Motion to Dismiss seeking to dismiss
Plaintiff’s Amended Complaint for failure to state a claim.1 ECF 21. For the reasons
discussed 	below, 	the 	Court 	RECOMMENDS 	that 	Defendant’s 	Motion 	be
GRANTED.
I. 	Factual and Procedural Background.
This case involves a dispute between Plaintiff and his former insurer, Chicago
Title Insurance Company, who allegedly issued a title insurance policy (“Policy”)
for a residential property (“Property”) Plaintiff owned in Spring, Texas. ECF 14 ¶¶
3, 8. Plaintiff contends that in December 2023, the Property was sold at a foreclosure
sale and that the foreclosure and related recorded instruments “created adverse
claims and rendered title unmarketable.” 	Id. ¶¶ 12-13. 	Plaintiff alleges that loss
1 The District Judge referred this case to the undersigned Magistrate Judge pursuant to 28 U.S.C.
§ 636(b)(1)(A) and (B), the Cost and Delay Reduction Plan under the Civil Justice Reform Act,
and Federal Rule of Civil Procedure 72. ECF 33.
United States District Court
Southern District of Texas
ENTERED
July 23, 2026
Nathan Ochsner, Clerk
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related to these title issues is covered under the Policy which provides coverage for
title defects or encumbrances and unmarketability. Id. ¶¶ 9, 13.
According to Plaintiff, in October 2024 he filed a claim with Defendant for
the loss, but Defendant denied coverage and then reaffirmed denial. 	Id. ¶¶ 13-15.
Plaintiff claims Defendant misapplied an exception covering liens and deeds of trust
and failed to analyze whether the loss was covered. Id. ¶¶ 16-17.
Plaintiff filed an original Complaint, which Defendant moved to dismiss.
ECF 1; ECF 13. 	Plaintiff then filed an Amended Complaint alleging claims for
breach of contract, breach of the duty of good faith and fair dealing, and violations
of the Texas Insurance Code. 	ECF 14 ¶¶ 21-25. 	Defendant then filed a second
Motion to Dismiss. ECF 21. Plaintiff filed a Response in opposition. ECF 22. The
Motion is ripe for adjudication.
II. 	Legal Standards.
To survive a Rule 12(b)(6) motion to dismiss, the plaintiff must plead “enough
facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly,
550 U.S. 544, 570 (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 conduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009); Gonzalez v. Kay, 577 F.3d 600, 603 (5th Cir. 2009). In reviewing a motion
to dismiss under Federal Rule of Civil Procedure 12(b)(6), this Court “accepts all
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well-pleaded facts as true, viewing them in the light most favorable to the plaintiff.”
Alexander v. AmeriPro Funding, Inc., 848 F.3d 698, 701 (5th Cir. 2017) (citing
Martin K. Eby Constr. Co. v. Dallas Area Rapid Transit, 369 F.3d 464, 467 (5th Cir.
2004)). However, the court does not apply the same presumption to conclusory
statements or legal conclusions. Iqbal, 556 U.S. at 678-79.
Generally, the court may consider only the allegations in the complaint and
any attachments thereto in ruling on a Rule 12(b)(6) motion. If a motion to dismiss
refers to matters outside the pleading, it is more properly considered as a motion for
summary judgment. See FED. R. CIV. P. 12(d). However, the court may take judicial
notice of public documents, and may also consider documents a defendant attaches
to its motion to dismiss under 12(b)(6) if the documents are referenced in the
plaintiff’s complaint and central to the plaintiff’s claims. See Norris v. Hearst
Trust, 500 F.3d 454, 461 n.9 (5th Cir. 2007); Collins v. Morgan Stanley Dean Witter,
224 F.3d 496, 498-99 (5th Cir. 2000); King v. Life Sch., 809 F. Supp. 2d 572, 579
n.1 (N.D. Tex. 2011).
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III. 	Analysis.
A. Plaintiff fails to state a claim for breach of contract.
Under Texas law,2 the essential elements for a breach of contract claim are:
“(1) the existence of a valid contract; (2) performance or tendered performance by
the plaintiff; (3) breach of the contract by the defendant; and (4) damages sustained
by the plaintiff as a result of the breach.” Mullins v. TestAmerica, Inc., 564 F.3d 386,
418 (5th Cir. 2009) (citing Aguiar v. Segal, 167 S.W.3d 443, 450 (Tex. App.—
Houston [14th Dist.] 2005) (pet. denied)). A breach of contract claim must include
“the substance of the contract which supports the pleader’s right to recover.”
Bayway Servs., Inc. v. Ameri-Build Const., L.C., 106 S.W.3d 156, 160 (Tex. App.—
Houston [1st Dist.] 2003) (no pet.). 	A plaintiff meets this standard by identifying
the provisions alleged to have been breached or by providing factual allegations
regarding the terms of the contract. 	Henderson v. Wells Fargo Bank, 779 F. Supp.
3d 910, 916–17 (S.D. Tex. 2025).
Plaintiff alleges he and Defendant were parties to the Policy and that he
performed all conditions. 	ECF 14 ¶ 21. 	Plaintiff alleges Defendant breached the
contract by denying coverage without a reasonable investigation and refusing to pay
benefits owed under the terms of the Policy. 	Id. ¶ 22. Plaintiff claims as damages
2 Parties assume the use of Texas law. ECF 14 (bringing claims under Texas common law); ECF
21 at 4 (discussing claims under Texas law).
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the “covered policy benefits for title loss, diminution in value, and/or other loss
measured under the Policy, and other actual and consequential damages recoverable
under Texas law….” Id. ¶ 26.
Even assuming a valid contract exists between the Parties and that Plaintiff
fully performed under the agreement, Plaintiff still fails to state a claim for breach
of contract because he fails to plead facts sufficient to allege a breach or damages.
Plaintiff fails to identify a provision of the contract Defendant allegedly violated by
denying his claim based on a policy exception. ECF 14 ¶ 16. When purporting to
quote specific terms of the agreement, Plaintiff merely states that a deed of trust was
recorded, completely failing to provide enough facts to explain how that relates to
the alleged breach. 	Id. 	Plaintiff references the Policy and other documents
throughout but did not attach the Policy or any exhibits to either the original
Complaint or Amended Complaint, so the documents are not incorporated by
reference as claimed. ECF 22 at 2. Additionally, Plaintiff pleads no facts indicating
why Defendant’s investigation and consideration of his claim was unreasonable.
Although Plaintiff conclusorily alleges damages, he does not include any facts
linking any damages to an alleged breach. Therefore, Plaintiff failed to state a claim
for breach of contract.
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B. Plaintiff fails to state a claim for breach of the duty of good faith
and fair dealing.
“Under Texas law, there is a duty on the part of the insurer to deal fairly and
in good faith with an insured in the processing of claims.” 	Higginbotham v. State
Farm Mut. Auto. Ins. Co., 103 F.3d 456, 459 (5th Cir. 1997). “[A]n insurer will be
liable [for breach of duty] if the insurer knew or should have known that it was
reasonably clear that the claim was covered.” 	Universe Life Ins. Co. v. Giles, 950
S.W.2d 48, 56 (Tex. 1997). Where there is no reasonable basis for denying a claim,
an insurer breaches its duty. Id. at 50–51. A violation of the duty of good faith and
fair dealing turns not on whether the denial was proper, but on whether the denial
was reasonable. 	Higginbotham, 103 F.3d at 459. Still, “an insurer cannot insulate
itself from bad faith liability by investigating a claim in a manner calculated to
construct a pretextual basis for denial,” and can be liable if it fails to properly
investigate. State Farm Fire & Cas. Co. v. Simmons, 963 S.W.2d 42, 44 (Tex. 1998).
Plaintiff alleges Defendant breached the Texas common law duty of good
faith and fair dealing because it lacked a reasonable basis for the denial of his claim
and failed to reasonably investigate before denying coverage. Plaintiff specifically
alleges “Chicago Title misapplied [the lien or deed of trust exception] as a blanket
bar to coverage.” ECF 14 ¶ 17.
As stated above, Plaintiff fails to plead any facts regarding Defendant’s
investigation of the claim or to identify why the investigation was unreasonable.
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Plaintiff has alleged simply that he tendered a claim, Defendant acknowledged
receipt and began investigation, denied the claim, and denied it again on review.
ECF 14 ¶¶ 13-15. Further, Plaintiff fails to allege that Defendant’s liability for the
alleged loss was reasonably clear because none of the allegations state the terms of
coverage or the nature of Plaintiff’s claim. 	See Luna v. Nationwide Prop. & Cas.
Ins. Co., 798 F. Supp. 2d 821, 830–31 (S.D. Tex. 2011) (dismissing plaintiff’s breach
of duty claim because he failed to plead facts showing insurer’s liability was
reasonably clear, that the claims were covered under particular provisions of the
policy, or that the insurer’s decision was unreasonable given the information it had
at the time it denied his claim). Plaintiff’s bare allegation that Defendant denied the
claim due to misapplication of an exception indicates only that coverage was not
reasonably clear. For these reasons, Plaintiff’s claim for breach of the duty of good
faith and fair dealing should be dismissed.
C. Plaintiff fails to state a claim under the Texas Insurance Code.
Plaintiff brings four claims under the Texas Insurance Code, three of which
allege violations of Section 541.060 which prohibits unfair settlement practices.
T EX. I NS. CODE § 541.060. 	Specifically, Plaintiff alleges violations of Section
541.060(a)(1), prohibiting misrepresentation of material facts or policy provisions;
Section 541.060(a)(2)(A), requiring good faith attempts to settle a claim when
liability is reasonably clear; and Section 541.060(a)(7), refusing to pay a claim
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without conducting a reasonable investigation. 	Plaintiff’s fourth claim alleges a
violation under Chapter 542 which regulates the processing and settlement of claims.
T EX. I NS. CODE ch. 542.
1. Plaintiff fails to state a claim under Section 541.060.
Section 	541.060(a)(1) 	prohibits 	an 	insurer 	from 	“misrepresenting 	to 	a
claimant a material fact or policy provision relating to coverage at issue.” T EX. I NS.
CODE § 541.060(a)(1). “The misrepresentation must be about the details of a policy,
not the facts giving rise to a claim for coverage.” 	Messersmith v. Nationwide Mut.
Fire Ins. Co., 10 F. Supp. 3d 721, 724 (N.D. Tex. 2014). In his Amended Complaint,
Plaintiff merely states Defendant violated subsection (a)(1) (ECF 14 at ¶ 24), but in
his 	Response 	he 	explains 	that 	Defendant’s 	“communications 	and 	conduct
misrepresented coverage.” ECF 22 at 3. Even construed liberally, Plaintiff’s vague
and conclusory allegations fail to identify a misrepresentation of a policy detail or a
fact relevant to determining coverage. 	Therefore, the misrepresentation claim
should be dismissed.
Section 541.060(a)(2)(A) prohibits an insurer from “failing to attempt in good
faith to effectuate a prompt, fair, and equitable settlement of . . . a claim with respect
to which the insurer’s liability has become reasonably clear.” T EX. I NS. CODE §
541.060(a)(2)(A). As explained above, Plaintiff has failed to plead facts indicating
Defendant’s liability for the alleged loss was reasonably clear. Plaintiff also failed
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to plead any facts regarding Defendant’s settlement procedures. 	Therefore, the
claim should be dismissed. See Abood Grp., Inc. v. Hartford Underwriters Ins. Co.,
No. 3:23-CV-01838-K, 2024 WL 4378437, at *4–5 (N.D. Tex. June 10, 2024)
(dismissing a subsection (a)(2)(A) claim because plaintiff failed to plead any facts
showing Defendant’s settlement efforts and that liability was reasonably clear).
Section 541.060(a)(7) prohibits insurers from “refusing to pay a claim without
conducting a reasonable investigation with respect to the claim.” T EX. I NS. CODE §
541.060(a)(7). As explained above, Plaintiff merely pleads that Defendant failed to
fully investigate whether the alleged loss was covered. ECF 14 ¶ 17; ECF 22 at 3
(arguing that Plaintiff failed to investigate or address the specific defect theory
Plaintiff presented). Plaintiff’s conclusory allegations amount to a recitation of the
statute, so his claim should be dismissed. See Tiras v. Encompass Home & Auto Ins.
Co., No. 4:10-CV-03266, 2011 WL 5827298, at *4 (S.D. Tex. Nov. 17, 2011)
(dismissing a subsection (a)(7) claim where plaintiff failed to offer facts showing
defendants’ investigation was unreasonable).
2. Texas Insurance Code Chapter 542 does not apply to title
insurance.
Plaintiff brings a claim for a violation of Chapter 542 but fails to specify a
particular section of the Texas Insurance Code he claims was violated. 	ECF 14 ¶
25. 	Plaintiff alleges Defendant “failed to timely pay benefits owed” under a title
insurance policy (id. ¶¶ 3, 25), so the Court presumes Plaintiff’s claim arises under
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the section prohibiting delay in payment. 	T EX. I NS. CODE § 542.058. 	Regardless,
Plaintiff fails to state a claim because Chapter 542 does not apply to title insurance.
T EX. I NS. CODE § 542.053(a)(3); Hall CA-NV, LLC v. Old Republic Nat'l Title Ins.
Co., No. 3:18-CV-0380-B, 2018 WL 2984867, at *3 (N.D. Tex. June 14, 2018).
Therefore, Plaintiff’s claim under Chapter 542 should be dismissed.
D. Dismissal should be with prejudice and leave to amend should be
denied.
Defendant seeks dismissal of Plaintiff’s claims with prejudice because
amendment would be futile. ECF 21 at 5-6. In his Response, Plaintiff seeks leave
to amend under Federal Rule of Civil Procedure 15(a)(2) and asserts that amendment
could cure any defects with his claims. ECF 22 at 4.
Dismissal 	with 	prejudice 	is 	appropriate 	when 	a 	plaintiff 	has 	had 	an
opportunity to state his best case and still cannot establish a cause of action. Schiller
v. Physicians Res. Grp. Inc., 342 F.3d 563, 567 (5th Cir. 2003) (affirming dismissal
with prejudice where plaintiffs had multiple chances to amend their complaint). See
also Jacquez v. Procunier, 801 F.2d 789, 793 (5th Cir. 1986) (establishing the best-
case rule and noting that a plaintiff is more likely to have pleaded his best case when
he is aware of pleading requirements).
Plaintiff’s original Complaint and Amended Complaint bring identical claims.
Compare ECF 1 with ECF 14. 	Plaintiff filed his Amended Complaint in direct
response to Defendant’s first Motion to Dismiss. 	See ECF 15. The first Motion to
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Dismiss and the pending Motion raise substantially similar defects except for the
inapplicability argument regarding Plaintiff’s Chapter 542 claim, amendment of
which is futile. Compare ECF 13 with ECF 21. Plaintiff was on notice of the defects
with his claims and failed to cure. 	Plaintiff’s request for leave to amend does not
indicate what additional information could be provided to salvage his claims.
Therefore, Plaintiff has pleaded his best case and his Amended Complaint should be
dismissed with prejudice. See Williams v. X Corp., No. 4:25-CV-1084-P, 2026 WL
885208, at *4 n.4 (N.D. Tex. Mar. 16, 2026) (dismissing with prejudice where Court
gave plaintiff opportunity to amend prior to considering the motion to dismiss),
report and recommendation adopted, No. 4:25-CV 01084-P, 2026 WL 885048
(N.D. Tex. Mar. 31, 2026).
Similarly, although leave to amend should be freely given (FED. R. CIV. P.
15(a)(2)), it can also be denied for an appropriate reason “such as undue delay, bad
faith or dilatory motive on the part of the movant, repeated failure to cure
deficiencies by amendments previously allowed, undue prejudice to the opposing
party by virtue of allowance of the amendment, [or] futility of amendment.” Foman
v. Davis, 371 U.S. 178, 182 (1962). As explained above, Defendant’s prior Motion
to Dismiss put Plaintiff on notice of his pleading deficiencies. Despite the chance
to amend his claims, Plaintiff failed to cure the deficiencies or heed the general
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requirement to plausibly allege his claims. Therefore, leave to amend should be
denied.
IV. 	Conclusion and Recommendation.
For the reasons stated above, the Court RECOMMENDS that Defendant’s
Motion to Dismiss (ECF 21) be GRANTED and Plaintiff’s claims be DISMISSED
WITH PREJUDICE.
The 	Clerk 	of 	the 	Court 	shall 	send 	copies 	of 	the 	memorandum 	and
recommendation to the respective parties, who will then have fourteen days to file
written objections, pursuant to 28 U.S.C. § 636(b)(1)(C). 	Failure to file written
objections within the time period provided will bar an aggrieved party from attacking
the factual findings and legal conclusions on appeal. Douglass v. United Servs. Auto.
Ass’n, 79 F.3d 1415, 1428-29 (5th Cir. 1996) (en banc), superseded by statute on
other grounds.
Christina A. Bryan
United States Magistrate Judge
Signed on July 23, 2026, at Houston, Texas.
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