Nguyen v. State Farm Mutual Automobile Insurance Company et al

UNITED STATES DISTRJCT COURT
SOUTHERN DISTRJCT OF TEXAS
HOUSTON DIVISION
DUNG NGUYEN, 	§
§
Plaintiff, 	§
§
VS. 	§ 	CIVIL ACTION NO. 4:24-CV-04505
§
STATE FARM MUTUAL AUTOMOBILE§
INSURANCE COMP ANY AND 	§
INSURANCE AUTO AUCTIONS, INC., 	§
Defendants.
ORDER
Pending before this Court is Defendant State Farm Mutual Automobile Insurance
Company's ("State Farm") Motion for Abatement of Extra-Contractual Causes of Action and
for Separate Trials (Doc. No. 15). Plaintiff Dung Nguyen ("Plaintiff' or "Nguyen") filed a
response in opposition. (Doc. No. 17). Upon consideration of the pleadings, responses, and
relevant legal standards, the Court hereby denies State Farm's Motion for Abatement (Doc.
No. 15).
I. 	Factual Background
This case arises from an insurance dispute. In his Original Petition, Plaintiff alleges that
while he was attending a car show in Harris County, Texas, his 2005 Bentley Continental GT
was damaged. (Doc. No. 1-1 at 6). Plaintiff alleges that he reported the damage to his insurer,
State Farm, and State Farm took possession, custody, and control over the vehicle. (Id.). While
his vehicle was in State Farm's possession, Plaintiff alleges that State Farm brought his vehicle
to Defendant Insurance Auto Auctions, Inc. ("IAA") for an inspection and adjustment of his
United States District Court
Southern District of Texas
ENTERED
January 02, 2026
Nathan Ochsner, Clerk
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insurance claim. (Id.). At that time, Plaintiff alleges that "unknown individuals proceed[ ed] to
modify [his] car in an attempt to steal it." (Id.). Specifically, Plaintiff claims that the "car door
jam [vehicle identification number] Plate was swapped with a donor car," "the window
[vehicle identification number] Plate was swapped with a donor car," "the suspension [vehicle
identification number] was removed," "the Engine [vehicle identification number] Plate was
removed and ground down and hand etched with the donor car," "the car's [electronic control
unit] was removed," and the "door sticker [vehicle identification number] was removed." (Id.
at 7). Upon discovery of the purportedly stolen parts on his vehicle, Plaintiff alleged that he
opened another claim with State Farm for a stolen vehicle. (Id.). State Farm denied the claim,
asserting that the returned vehicle was the Plaintiffs vehicle. (Id.).
After State Farm denied his insurance claim for a stolen vehicle, Plaintiff filed his
Original Petition in Texas state court in Harris County, Texas against State Farm and IAA.
(Doc. No. 1-1 at 4). Shortly thereafter, IAA removed the case to this Court. (Doc. No. 1) . His
Original Petition, the live complaint in this case, pleads several different causes of action
against both Defendants State Farm and IAA. Plaintiff alleges that State Farm. breached the
insurance agreement, violated the Texas Insurance Code, and breached the common law duty
of good faith and fair dealing (Id. at 8-10). Plaintiff also alleges that both State Farm and IAA
violated the Deceptive Trade Practices Act and are liable for breach of bailment, conversion,
and negligence. (Id. at 11-13). State Farm filed this Motion for Abatement to sever the extra-
contractual causes of action from Plaintiffs claim for breach of contract and abate the litigation
of the extra-contractual causes of action.
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II. 	Legal Standards
Under Federal Rule of Civil Procedure 42(b), a court may order that claims be
separately tried "[f]or convenience, to avoid prejudice, or to expedite and economize." FED.
R. CIV. P. 42(b). The issue of whether separate trials are warranted in a diversity action is
governed by federal law, not Texas law. Houston McLane Co., Inc. v. Connecticut General
Life Ins. Co., 2006 WL 3050812, at* 1 (S.D. Tex. 2006). A district court has wide discretion
to sever a claim against a party into separate cases. See Applewhite v. Reichhold Chems ., Inc. ,
67 F.3d 571 , 573 (5th Cir. 1995); Brunet v. United Gas Pipeline Co., 15 F.3d 500, 505 (5th
Cir. 1994 ). Courts consider the following five factors in determining whether to sever claims
under Rule 21: ( 1) whether the claims arise out of the same transaction or occurrence; (2)
whether the claims present some common questions of law or fact; (3) whether settlement of
the claims or judicial economy would be facilitated; (4) whether prejudice would be avoided
if severance were granted; and (5) whether different witnesses and documentary proof are
required for the separate claims. Gonzales v. Allstate Vehicle & Prop. Ins. Co ., 2017 WL
7945689, at *2 (W.D. Tex. Sept. 14, 2017), report and recommendation adopted, 2017 WL
4678238 (W.D. Tex. Oct. 17, 2017).
III. 	Analysis
State Farm asks this Court to sever Plaintiffs contractual and extra-contractual claims
and, until the contractual claim reaches finality, to abate the Plaintiffs extra-contractual
claims. (Doc. No. 15). State Farm argues that severing and abating is necessary because the
contractual claim is dispositive, alleging that if the Court finds that Plaintiff cannot recover
under his breach of contract claim, his extra-contractual claims must be denied. (Id.). State
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Farm argues that severing the contractual and extra-contractual claims will avoid wasting time
of the parties, the Court, and the jury. (Id.).
In response, Plaintiff argues that his contractual and extra-contractual claims are based
on the same set of facts, and thus, severing the claims would not aid judicial efficiency. (Doc.
No. 17). While Plaintiff admits that his contractual claim could be dispositive of his case, he
argues that severing and abating would require the parties to reopen the discovery process and
have an entirely separate trial on the extra-contractual claims if Plaintiff prevails on his breach
of contract claim. (Id.). Plaintiff also emphasizes that State Farm has not presented any
evidence that it would be prejudiced by litigating these claims together. (Id.). After reviewing
the arguments and the relevant legal standards, the Court applies the Gonzelez five-factor
analysis and denies State Farm's request.
First, at this point in the litigation, it is not clear whether Plaintiffs contractual claim
would be dispositive of Plaintiffs extra-contractual claims. While it is generally true that "there
can be no claim for bad faith when an insurer has promptly denied a claim that is not in fact
covered," this does not preclude "the possibility that in denying the claim, the insurer may
commit some act, so extreme, that would cause injury independent of the policy claim." Jones
v. Allstate Texas Lloyds, 2017 WL 10129162, at *2 (E.D. Tex. Aug. 22, 2017); Republic Ins.
v. Stoker, 903 S.W.2d 338, 341 (Tex. 1995). Further, Plaintiff has alleged violations of the
DTPA and Texas Insurance Code, including alleged misrepresentations, which may survive
an adverse ruling on Plaintiffs contractual claims. See Jones , 2017 WL 10129162, at *2; Vail
v. Tex. Farm Bureau Mut. 	Ins., 754 S.W.2d 129, 136 (Tex. 1988) (stating that even an
uninsured plaintiff may bring a claim for violations of the Texas Insurance Code); USAA Tex.
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Lloyds Co . v. Menchaca , No. 14-0721, 2017 WL 1311752, at *4 (Tex. Apr. 7, 2017) ("An
insured's claim for breach of an insurance contract is ' distinct' and 'independent' from claims
that the insurer violated its extra-contractual common-law and statutory duties." ). At this early
stage, it is largely speculative as to whether Plaintiffs contractual claims could be dispositive
of all of Plaintiffs extra-contractual claims. See Eaglin v. Metro. Lloyds Ins. Co. of Tex., No.
4:15-CV-850, 2016 WL 7741730, at *2 (E.D. Tex. Apr. 28, 2016).
Second, State Farm ' s argument that severance and abatement would improve judicial
economy is somewhat unpersuasive. If this Court were to grant State Farm' s request and the
Plaintiff prevails on his breach of contract claim, then the parties would have to reopen the
discovery process for all of the extra-contractual claims. Jones, 2017 WL 10129162, at *2.
Additionally, this Court would have to empanel another jury and hold another trial to reach
finality on the extra-contractual claims, "causing unnecessary inconvenience to the members
of the public chosen for that second jury panel." Id. Finally, the Court and the Parties would
have to undertake the expense of preparing for a second trial. Such potential costs far outweigh
any speculative savings from severance. Id. The Court finds that subsequent proceedings
would be especially inefficient because both the contractual and extra-contractual claims
appear to arise from the same set of facts. " It will be more expeditious and economical to
prepare Plaintiffs contractual and extra-contractual claims concurrently." Id.
Lastly, the Court finds that State Farm did not present any evidence that litigating these
claims together would cause any prejudice to State Farm or IAA. While State Farm cited some
case law regarding the potential prejudice of evidence of a settlement offer, (Doc. No. 15) ,
State Farm did not present evidence that any settlement offer exists in this case. Plaintiff
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contends that there was no settlement offer. (Doc. No. 17). Without any evidence regarding
"whether prejudice would be avoided if severance were granted," the Court denies State
Farm' s request. Gonzales, 2017 WL 7945689, at *2.
After weighing the five factors, the Court finds that State Farm failed to present a
sufficient showing that this Court should sever and abate Plaintiffs extra-contractual claims.
This Court denies the request.
IV. 	Conclusion
For the foregoing reasons, the Court denies State Farm' s Motion for Abatement of
Extra-Contractual Causes of Action and for Separate Trials (Doc. No. 15).
It is so ordered.
Signed on this the 	:z_. \A- t day of January 2026.
A 	\ 	I\
I~ ~
Andrew S. Hanen
United States District Judge
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