United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS November 3, 2006
FOR THE FIFTH CIRCUIT Charles R. Fulbruge III
Clerk
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No. 06-40442
Summary Calendar
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RODRIGO MARTINEZ, SR; DORA MARTINEZ,
Plaintiffs-Appellants,
versus
STATE FARM LLOYDS; STATE FARM LLOYDS, INC.,
Defendants-Appellees.
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Appeal from the United States District Court
for the Southern District of Texas
USDC No. 7:05-CV-271
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Before REAVLEY, GARZA, and BENAVIDES, Circuit Judges.
PER CURIAM:*
Appellants Rodrigo and Dora Martinez filed suit in state court against their
*
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should not be published and is not precedent except under the limited circumstances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.
insurer, State Farm Lloyd’s (“State Farm”), and its attorney-in-fact, State Farm
Lloyd’s, Inc. (“Lloyds, Inc.”) alleging breach of contract, violations of the Texas
Insurance Code, and a breach of the duty of good faith and fair dealing, all arising
out of State Farm’s actions on Appellants’ insurance claims. State Farm removed
the case to federal court, where the district court dismissed Lloyd’s, Inc., and
granted summary judgment to State Farm. We review both holdings de novo, and
affirm.
First, Appellants argue that the district court should not have dismissed
Lloyd’s, Inc. from the suit, because Lloyd’s, Inc., in a services agreement with State
Farm Fire & Casualty1, reserved the power to make final decisions concerning
claims adjustment and thus could be held liable for that entity’s actions.
State Farm sells insurance under a so-called “Lloyd’s plan,” which consists of
a group of underwriters who combine to issue insurance through an attorney in
fact—in this case, Lloyd’s, Inc. See TEX. INS. CODE ANN. § 941.001 (Vernon Supp.
2006). “The attorney in fact is ‘in effect the chief executive and managing agent of
the enterprise. . . .’” Royal Ins. Co. of America v. Quinn-L Capital Corp., 3 F.3d
877, 882 (5th Cir. 1993) (quoting Grace v. Rahlfs, 508 S.W.2d 158, 161 (Tex. Civ.
1
Pursuant to the services agreement, State Farm Fire & Casualty handles,
investigates, and pays or denies insurance claims made on State Farm policies. R.
124.
2
App.—El Paso 1974, writ ref’d n.r.e.)). The attorney-in-fact does not bear risks,
and has no contractual relationship with the insured, but acts as an agent for the
Lloyd’s group. See id.
Under Texas law, agents are generally not liable for contracts entered into on
behalf of a principal, or for any actions that are within the scope of their authority.
French v. State Farm Ins. Co, 156 F.R.D. 159, 162 (S.D. Tex 1994).
Consequently, unless Lloyd’s, Inc. was acting outside of the scope of its authority
with respect to Appellants’ claims, Lloyd’s Inc. is not individually liable. See
Arzehgar v. Dixon, 150 F.R.D. 92, 94–95 (S.D. Tex. 1993). Appellants have
included no claims of specific wrongdoing on the part of Lloyd’s Inc., nor any
claims that might suggest it acted outside of the scope of its authority. Any actions
that Lloyd's Inc. took were on behalf of the principal, State Farm. Therefore, the
district court properly dismissed Lloyd’s, Inc.
Second, Appellants argue that because State Farm discussed the possibility of
mediating the claims, the statute of limitations did not begin to run until January
2005. However, State Farm had communicated a final determination on all the
Martinezes’ claims by February 8, 2002, when State Farm sent the last of a series of
letters to Appellants describing its decisions. There is no evidence that State Farm
was attempting to string the insureds along “without denying or paying a claim...”
3
Murray v. San Jacinto Agency, Inc., 800 S.W.2d 826, 828 n.2 (Tex. 1990). Thus,
the Martinezes' cause of action began to accrue, at the latest, upon the issuance of
the February 8, 2002 letter. See Mangine v. State Farm Lloyds, 73 S.W.3d 467,
470–71 (Tex. App.—Dallas 2002, pet. denied) (holding issuance of "building
estimate" constituted a denial of claim and triggered the running of the limitations
period).
In order to bring suit under Texas law, a plaintiff must both file an action and
serve defendants with process. Boyattia v. Hinojosa, 18 S.W.3d 729, 733 (Tex.
App.—Dallas 2000, pet. denied). Appellants filed their claim within the statute of
limitations, in 2003, but failed to demonstrate due diligence in serving process. The
two-year statute of limitations had run by the time that Appellants finally managed
to serve State Farm on August 1, 2005. Therefore, the district court was correct to
grant summary judgment to State Farm.
AFFIRMED.
4