Murray v. Twin City Fire Insurance Company

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA
DWAYNE MURRAY, CIVIL ACTION
Trustee for
The RWDY Liquidating Trust
VERSUS
TWIN CITY FIRE INSURANCE NO. 24-01037-BAJ-EWD
COMPANY
RULING AND ORDER
Before the Court is Defendant Twin City Fire Insurance Company's Motion
for Partial Judgment on the Pleadings (Doc. 28). Plaintiff Dwayne Murray, in
his capacity as Trustee of the RWDY Liquidating Trust ("RWDY'), opposes the
Motion. (Doc. 32). Defendant filed a Reply Memorandum. (Doc. 39). For the following
reasons, Defendant's Motion is DENIED.
I. BACKGROUND AND PROCEDURAL HISTORY
This is an insurance case. Plaintiff seeks to recover from Defendant for its
alleged failure to make payment as owed under three insurance policies following
significant employee theft. (Doc. 1-1). Plaintiff alleges the following.
Brian T. Owen, former Director, President, and largest shareholder of RWDY,
used RWDY funds to pay for personal expenses, including significant gambling debts.
(Id. at ^ 14, 17). Owen also entered into a series of financing arrangements known
as "merchant cash advances" under which Owen pledged RWDYs accounts
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receivables as security for loans. {Id. at ^ 43). Thereafter, RWDY filed for bankruptcy.
(Id. at ^ 45).
Eelevant to the instant Motion, Defendant insured RWDY under three
insurance policies: (1) the "First Policy" which provided coverage from July 23, 2020,
through July 23, 2021; (2) the "Second Policy," which provided coverage from
July 23,2021, through July 1, 2022; and (3) the "Third Policy," which provided
coverage from July 2, 2022, through July 1, 2023. (Id. at ^ 18-20). The three policies
are essentially identical in form, scope of coverage, terms, and conditions. (Id. ^ 21).
Plaintiff provided notice of employee theft and sworn proof of loss to Defendant.
(Id. ^ 47; 64). Defendant refused to adjust the claim, make payment, or otherwise
address the proof of loss. {Id. at ^ 67). Thus, Plaintiff filed this lawsuit in state court,
asserting the following causes of action against Defendant: (1) failure to pay the
employee theft claim; (2) breach of Endorsement Number 15 of each of the policies;
(3) bad faith under Louisiana law; (4) breach of the duty of good faith and fair dealing
under Texas law; (5) violation of the Texas Unfair Claim Settlement Practices Act;
and (6) violation of the Texas Prompt Payment of Claims Act. (See generally id.).
Defendant then removed the case to this Court, asserting diversity jurisdiction.
(Doc. 1 at 5).
Now, Defendant moves for partial judgment on the pleadings, asking the Court
to find that Plaintiff cannot recover under the First or Second Policies. (Doc. 28). For
the following reasons, the Motion will be denied.
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II. LEGAL STANDARD
Federal Rule of Civil Procedure 12(c) provides that "[a]fter the pleadings are
closed—but early enough not to delay trial—a party may move for judgment on the
pleadings." A motion brought pursuant to Rule 12(c) is designed to "dispose of cases
where the material facts are not in dispute and a judgment on the merits can be
rendered by looking to the substance of the pleadings and any judicially noticed facts.
Great Plains Tr. Co. v. Morgan Stanley Dean Witter & Co., 313 F. 3d 305, 312
(5th Cir. 2002) (citing Hebert Abstract Co. v. Touchstone Props., Ltd., 914 F.2d 74, 76
(5th Cir. 1990) (per curiam) (citing 5A Charles A. Wright & Arthur R. Miller,
Federal Practice and Procedure § 1367, at 509-10 (1990)). "[T]he central issue is
whether, in the light most favorable to the plaintiff, the complaint states a valid claim
for relief." Great Plains Tr. Co., 313 F.3d at 312 (internal citations omitted).
"Pleadings should be construed liberally, and judgment on the pleadings is
appropriate only if there are no disputed issues of fact and only questions of law
remain." Id. (internal citations omitted). The [district] court may dismiss a claim
when it is clear that the plaintiff can prove no set of facts in support of his claim that
would entitle him to relief." Id. (citing Jones v. Greninger, 188 F. 3d 322, 324
(5th Cir. 1999) (per curiam); Fee v. Herndon, 900 F.2d 804, 807 (5th Cir. 1990)).
"In analyzing the complaint, [the Court] will accept all well-pleaded facts as
true, viewing them in the light most favorable to the plaintiff." Id. at 312-13 (internal
citations omitted). The Court will not, however, "accept as true conclusory allegations
or unwarranted deductions of fact." Id. at 313 (citing Collins v. Morgan Stanley Dean
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Witter, 224 F.3d 496, 498 (5th Cir. 2000) (addressing Rule 12(b)(6) standard))
(quoting Tuchman v. DSC Comm. Corp., 14 F.3d 1061, 1067 (5th Cir. 1994)). "The
issue is not whether the plaintiff will ultimately prevail, but whether he is entitled
to offer evidence to support his claim. Thus, the court should not dismiss the claim
unless the plaintiff would not be entitled to relief under any set of facts or any possible
theory that he could prove consistent with the allegations in the complaint. Id.
(internal citations omitted).
III. DISCUSSION
Defendant's Motion asks the Court to dismiss Plaintiffs claims to the extent
Plaintiff seeks to recover under the First or Second Policies, arguing the following:
(1) The Insured s Application for coverage clearly reflects the insured
sought coverage on a "DISCOVERY' basis not a "LOSS SUSTAINED"
basis. By the Policies' own terms, the Application is "deemed" part of the
Policies;
(2) The terms of the coverage grant clearly and unambiguously only require
Twin City to pay for loss that is "discovered by the Insured during the
Policy Period"; and/or
(3) The First Policy and Second Policy contain a provision whereby the
insured notifies Twin City to cancel the prior year s Policy upon issuance
of a new policy. As such, the First and Second Policies are not available
for Plaintiff to pursue insomuch as the Insured cancelled them.
(Doc. 28 at 1).
Plaintiff opposes the Motion, arguing that the Court cannot consider the
Application for insurance coverage on a Rule 12(c) Motion. (Doc. 32 at 3). Plaintiff
argues that even if the Court considers the Application, Defendant's arguments fail
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on the merits because the policy language at issue is ambiguous and thus cannot be
summarily dismissed.1 (Id.).
Preliminarily, the Court must determine whether to consider the Application
for insurance coverage on the instant Rule 12(c) Motion. Plaintiff urges the Court to
find that the Application is improper evidence on a motion for judgment on the
pleadings. (Doc. 32 at 3). Plaintiff argues that if the Court considers the Application,
the Motion will be converted to a motion for summary judgment, in which case the
Motion is premature because Plaintiff is entitled to conduct discovery. (Id.). Plaintiff
contends that he specifically requires the following discovery to properly oppose
Defendant's Motion:
The Liquidating Trustee would, first and foremost, seek additional
discovery into whether this was the "complete" version of the
Application (it does not appear to be so), all communications between
RWDY and the broker related to this Application, and any similar
Applications requested or submitted in connection with the Second and
Third Policies. The Liquidating Trustee does not have firsthand
knowledge ofRWDY's and its broker's communications in relation to the
Application, and the Liquidating Trustee therefore intends to seek a
Rule 30(b)(6) deposition of the broker. The Liquidating Trustee has not
even seen any applications submitted in connection with the Second and
Third Policies.
{Id. at 6). In conjunction with the Opposition brief, Plaintiff presents the Affidavit of
Julie S. IMeaders, Plaintiffs Counsel, attesting that if the Court were to consider the
1 Alternatively, should the Court consider the Application and find the policy language
unambiguous, Plaintiff argues that Owen's thefts could be considered "discovered" during the
First and Second Policies because Owen's own knowledge could be imputed to the company,
and the insured s delayed notice based on the fact that other management did not discover
the thefts at that time does not preclude coverage as a matter of law. (Doc. 32 at 4).
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Application, Counsel cannot "present facts that are essential to opposing the Motion
because [Counsel has] not had an opportunity to discover them." (Doc. 32-1 v\\ 3).
Defendant responds that the Application is part of the Policies at issue under
the policy language, and therefore, the Court can properly consider it on a Rule 12(c)
Motion. (Doc. 39 at 1-2).
Since the filing of Defendant's Motion, discovery has been underway. The
record reflects that on February 26, 2026, the parties participated in a status
conference before the Magistrate Judge, during which the Magistrate Judge granted
an extension of the discovery deadline, with fact discovery to close on March 13, 2026.
(Doc. 43 at 3). The Magistrate Judge further granted Defendant leave to file a Motion
for Summary Judgment, which was entered into the record that same day. (Doc. 44).
Now, Defendant's Motion for Summary Judgment is pending before the Court,
and Plaintiff has an opportunity to oppose the Motion with the benefit of full
discovery. In these circumstances, the Court finds it appropriate to consider the
merits of Defendant's arguments on summary judgment with the benefit of a fully
developed factual record, rather than on the instant Mxition. Doing so resolves the
concerns raised by Plaintiff in response to Defendant's IVlotion for Judgment on the
Pleadings.
6
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IV. CONCLUSION
Accordingly,
IT IS ORDERED that Defendant Twin City Fire Insurance Company's
Motion for Partial Judgment on the Pleadings (Doc. 28) is DENIED
WITHOUT PREJUDICE.
Baton Rouge, Louisiana, this ' l~""^ay of March, 2026
JUDGE BRIAN A. J^CJtSON
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA
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