IRMA CARRILLO RAMIREZ, Magistrate Judge.
By Order of Reference, filed February 7, 2018 (doc. 7), before the Court for determination is Defendant State Farm Lloyds' Verified Motion to Abate, filed February 6, 2018 (doc. 5). Based on the relevant filings and applicable law, the motion is
This case arises out of a dispute over an insurance claim. (doc. 6 at 1.)
On January 26, 2016, Plaintiff's counsel sent a letter of representation to Defendants requesting various information relating to the claim. (doc. 6-3 at 3-4.) On March 15, 2016, he sent a demand letter asserting that the claim had been properly submitted, but Defendants "failed to pay for the damages; failed to properly account for all of the damages; and properly estimate the value of such damages." (doc. 6-4 at 3.) The letter stated that there was no reason to delay payment of the claim, and "withholding payment of undisputed benefits owed to [Plaintiff] even after receipt of this demand in an effort to effectuate a settlement is a clear violation of the contract." (Id.) Counsel estimated total damages in the amount of $29,806.64. (See id. at 5.) The letter further stated that its purpose was to resolve Plaintiff's claim, but if Defendants failed to respond to the letter with an acceptable settlement offer, counsel would recommend filing suit against Defendants. (Id.)
On December 6, 2017, Plaintiff filed his original petition against Defendants for breach of contract, breach of duty of good faith and fair dealing, violations of the Texas Insurance Code, and violations of the Texas Deceptive Trade Practices Act (DTPA). (See docs. 1-2 at 2, 5-8; 6 at 2.) On January 12, 2018, Defendants removed the action to federal court based on diversity jurisdiction. (See doc.1.)
On February 6, 2018, Defendants filed a verified motion to abate asserting that the case should be abated until Plaintiff provides proper notice as required under the Texas Insurance Code. (doc. 6 at 1-2.) Plaintiff did not respond to the motion, and it is now ripe for consideration.
Defendants contend that abatement is required under section 542.005 of the Texas Insurance Code because Plaintiff failed to provide them "with proper pre-suit notice in compliance with [s]ection 542A.003(c)." (doc. 6 at 3-4.)
Section 542A.003 of the Texas Insurance Code provides that "not later than the 61st day before the date a claimant files an action to which this chapter applies in which the claimant seeks damages from any person, the claimant must give written notice to the person." Tex. Ins. Code § 542A.003(a). The notice must provide: "(1) a statement of the acts or omissions giving rise to the claim; (2) the specific amount alleged to be owed by the insurer on the claim for damage to or loss of covered property; and (3) the amount of reasonable and necessary attorney's fees incurred by the claimant. . . ." Id. at § 542A.003(b). If notice is provided by an attorney or representative on the claimant's behalf, "the attorney or representative shall: (1) provide a copy of the notice to the claimant; and (2) include in the notice a statement that a copy of the notice was provided to the claimant." Id. at § 542A.003(c)(1). "The notice requirement is intended to give a defendant insurer a right and opportunity to make a settlement offer." Rodriguez v. Metro. Lloyds Ins. Co. of Tex., No. 5:15-CV-143-C, 2015 WL 12699855, at *4 (N.D. Tex. July 27, 2015) (citing Tex. Ins. Code § 541.156).
Section 542A.005 allows a defendant to file a plea in abatement "not later than the 30th day after the date the [defendant] files an original answer in the court in which the action is pending. . . ." Tex. Ins. Code § 542A.005(a)(1). "The party seeking abatement has the burden of proof to establish the allegations in its motion." In re Vanblarcum, No. 13-15-00056-CV, 2015 WL 1869415, at *1 (Tex. App.—Corpus Christi Apr. 22, 2015, pet. denied) (mem. op.) (citing cases); Southern Cty. Mut. Ins. Co. v. Ochoa, 19 S.W.3d 452, 468-69 (Tex. App.—Corpus Christi 2000, no pet.) (citing Flowers v. Steelcraft Corp., 406 S.W.2d 199, 199 (Tex. 1966)). If the person seeking abatement did not receive pre-suit notice as required by section 542A.003, "[t]he court shall abate the action. . . ." Id. at § 542A.005(b)(1). "Abatement is automatic and without court order if the defendant verifies the plea in abatement," alleges failure to comply with section 542A.003, "and the plaintiff does not controvert the verified plea [by filing an affidavit] before the 11th day after the plea in abatement is filed." Rodriguez, 2015 WL 12699855, at *4 (citing Tex. Ins. Code § 541.155(c)) (quotations omitted); see id. at § 542A.005(c). In either case, an abatement continues until "the 60th day after the date notice" is provided. Tex. Ins. Code § 542A.005(e)(1).
"It is a long-recognized principle that federal courts sitting in diversity cases[, such as this one], `apply state substantive law and federal procedural law.'" Shady Grove Orthopedic Assoc., P.A. v. Allstate Ins. Co., 559 U.S. 393, 417 (2010) (quoting Hanna v. Plumer, 380 U.S. 460, 465 (1965)); see also Guzman v. Mem'l Hermann Hosp. Sys., No. H-07-3973, 2008 WL 5273713, at *14 (S.D. Tex. Dec. 17, 2008) (citing Hall v. GE Plastic Pacific PTE Ltd., 327 F.3d 391, 394 (5th Cir. 2003)) ("As a general rule, under the Erie doctrine, when a plaintiff asserts a state-law claim in federal court, the federal court applies state substantive law to adjudicate the claims but applies federal procedural law."). "Federal courts are not bound, however, to follow a state law that merely is in some sense substantive, if it is in conflict with the Federal Rules of Civil Procedure." Nelson v. Myrick, No. CIV.A.3:04-CV-0828-G, 2005 WL 723459, at *2 (N.D. Tex. Mar. 29, 2005) (citation and internal quotation marks omitted). If the federal rule in question is "sufficiently broad to cause a direct collision with the state law, or implicitly, to control the issue before the court," there is "no room for the operation of [the state] law." Burlington Northern R. Co. v. Woods, 480 U.S. 1, 4-5 (1987) (internal quotation marks omitted).
The Fifth Circuit does not appear to have considered whether sections 542A.003, 542A.005, or their predecessors are substantive or procedural laws, and whether they should be applied in federal court. Several federal district courts have applied prior versions of sections 542A.003 and 542A.005 in response to motions or pleas to abate without discussion of their applicability in federal court, however. See Landing Council v. Fed. Ins. Co., No. 4:15-1902, 2015 WL 13685337, at *4 (S.D. Tex. Oct. 14, 2015) (finding that the action should be abated for 60 days under section 541.155(d) where plaintiff failed to provide proper notice); Rodriguez, 2015 WL 12699855, at *5 (abating case where the plaintiff failed to provide proper pre-suit notice); Shaw v. Zurich Am. Ins. Co., No. 2:12-CV-00797-JRG, 2013 WL 12147665, at *1 (E.D. Tex. Mar. 19, 2013) (granting plea in abatement under section 541.155 for failure of notice); San Marcos Willow Springs, Ltd. v. United States Fire Ins. Co., No. A-08-CA-216-LY, 2008 WL 11334013, at *1 (W.D. Tex. May 30, 2008) (finding that an action was automatically abated under section 541.155).
The only district court in this circuit that appears to have considered the applicability of a prior version of section 542A.005 in federal court found that it should not be applied. See Gaytan v. Underwriters at Lloyds, No. DR-15-CV-017-AM-VRG, 2015 WL 13134990, at *1 (W.D. Tex. June 3, 2015). In Gaytan, the defendant filed a plea in abatement seeking to abate the case because the plaintiffs had not provided pre-suit notice as required under section 17.505 of the DTPA and the prior version of section 542A.005. Id.
Although the Fifth Circuit has not considered whether sections 542A.003, 542A.005, or their predecessors, are procedural or substantive, and whether they apply in federal court, it has considered a similar notice and abatement requirement in the context of a medical malpractice case. See Baber v. Edman, 719 F.2d 122, 123 (5th Cir. 1983). In Baber, the plaintiff filed her medical malpractice action in federal court based on diversity jurisdiction, and the defendant physician moved to dismiss her claims for failure to provide the required statutory notice prior to bringing suit. Id. at 122-23. The notice statute required a plaintiff asserting a health care liability claim to provide written notice to the defendant "at least 60-days before filing of a suit. . . ." Id. at 122 n. 1. The district court dismissed the suit without prejudice for failure to provide notice, and the Fifth Circuit subsequently stayed the proceedings to await the Texas Supreme Court's decision in a controlling case. Id. at 123.
Following the Texas Supreme Court's finding that the proper remedy was to stay the case, rather than dismiss it, the Fifth Circuit reversed the district court's decision. Id. It stated:
Id. (citations omitted). Having determined that the Texas notice statute should be applied in federal court, the Fifth Circuit remanded the case "to the district court with instructions to stay proceedings for sixty days." Id. (citing Schepps, 652 S.W.2d at 936, 938); see also Redmond v. Astrazeneca Pharm. LP, 492 F.Supp.2d 575, 577-78 (S.D. Miss. 2007) (finding, based on Baber, that the presuit notice requirement a similar Mississippi statute for health care liability claims also did not conflict with any federal procedural law because it "`impose[d] special requirements that must be met before a suit [could] be filed. . . .'") (emphasis in original).
The Fifth Circuit has also applied the DTPA's nearly identical notice requirement without considering its applicability in federal court, and determined that abatement is the proper remedy for failure to provide notice. See Oppenheimer v. Prudential Sec. Inc., 94 F.3d 189, 194 (5th Cir. 1996) (citing Hines v. Hash, 843 S.W.2d 464, 469 (Tex. 1992)) (determining that the district court erred when it dismissed, rather than abated, the plaintiff's DTPA claims for insufficient notice); Int'l Nickel Co., Inc. v. Trammel Crow Distrib. Corp., 803 F.2d 150, 156 (5th Cir. 1986) (determining that the plaintiff failed to provide notice as required under the DTPA, and that "the proper remedy is not dismissal of the DTPA claims but abatement of the suit until the notice requirement is satisfied.").
The Fifth Circuit's application of similar notice and abatement requirements in medical malpractice and DTPA cases is instructive. The purpose of the similar notice and abatement requirements of sections 542A.003 and 542A.005 is also to encourage settlement of disputes without litigation. See Potts, 2018 WL 1046626, at *7 (citing cases); Ross, 2011 WL 11201, at *1 n. 1 (citing Cleo Bustamante Enters., Inc., 2005 WL 1586994, at *1). As in Baber, "it would frustrate the purposes of the statute" for Plaintiff to fail to provide proper pre-suit notice to Defendants. 719 F.2d at 123. For this reason, the notice statute for actions brought under the Texas Insurance Code likewise presents a procedural requirement that "is so intertwined with Texas's substantive policy" that "federal courts sitting in diversity must enforce its requirements." See id. The procedural requirement that an action under the code be abated for lack of proper notice "is no less substantive than the requirement that notice be given." Redmond, 492 F. Supp. 2d at 578 (citing cases); see Tex. Ins. Code § 542A.005. Accordingly, although sections 542A.003 and 542A.005 present procedural requirements, their relationship to Texas's substantive policy for claims brought under the Texas Insurance Code requires that they be applied in federal court.
Here, Defendants filed their motion to abate on February 6, 2018, within 30 days of filing their answer. (See docs. 1-8; 6.) Defendants' motion was verified, and alleged that Plaintiff did not provide proper pre-suit notice as required under section 542A.003. (docs. 6; 6-2.) Specifically, Defendants asserted that Plaintiff "failed to provide `a statement of the acts or omissions giving rise to the claims,' failed to provide `the amount of reasonable and necessary attorney's fees incurred. . .,' and failed to include a statement that a copy of the notice was provided to the claimants." (doc. 6 at 3-4.) Plaintiff did not controvert the motion by filing a affidavit "before the 11th day after the date" Defendants filed their motion. See Tex. Ins. Code § 542A.005(c). Accordingly, this action automatically abated under the Texas Insurance Code on February 17, 2018, eleven (11) days after Defendants filed their verified motion, and will remain in abatement until "the 60th day after the date" proper pre-suit notice is provided. See id. at §§ 542A.005(a), (e)(1); San Marcos Willow Springs, Ltd., 2008 WL 11334013, at *1 (action automatically abated where the defendant's motion was "verified, allege[d] that [d]efendant did not receive the require[d] notice, and was not controverted by an affidavit from [the p]laintiff filed within eleven days of the motion to abate."); see also Villarreal v. Scottsdale Ins. Co., No. B:12-152, 2012 WL 13048213, at *1 (S.D. Tex. Dec. 10, 2012) (recognizing that the case was previously abated automatically in state court where the defendant filed a verified plea in abatement alleging failure to provide notice, and the plea was not challenged by the plaintiffs); Grimes & Assoc., Consulting Eng'r, LP v. Nautilus Ins. Co., No. 5:10-CV-134-C, 2010 WL 11565406, at *1 (N.D. Tex. Dec. 22, 2010) (considering a motion to re-open a case that was automatically abated by that court after the plaintiff failed to respond to the defendants' verified plea of abatement).
Defendants' motion to abate is
