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Bloom v. Aftermath Public Adjusters, Inc.

United States Court of Appeals, Fifth Circuit

September 4, 2018

NORMAN BLOOM, Plaintiff-Appellant,

          Appeal from the United States District Court for the Southern District of Texas

          Before SMITH, CLEMENT, and COSTA, Circuit Judges.

          JERRY E. SMITH, Circuit Judge.

         The parties agree that this case turns exclusively on whether Texas's special tolling rule in Hughes v. Mahoney & Higgins, 821 S.W.2d 154, 157 (Tex. 1991)-which suspends the statute of limitations on legal malpractice claims until completion of the litigation from which they arise-extends to actions against public adjusters. The district court thought not and dismissed the claims as untimely. We agree and affirm.


         Gracie Reese purchased a standard flood insurance policy from Fidelity National Property and Casualty Company (“Fidelity”) for property in Galveston damaged during Hurricane Ike. Per Reese's affidavit, in the aftermath of the storm, Fidelity sent an adjuster to her house. That adjuster prepared an estimate and authorized payments of around $48, 500 for building damage and around $20, 000 for content damage. Discontent with the authorized amounts, Reese contracted with defendant Aftermath Public Adjusters, Inc. (“After-math”), a Texas-licensed public adjusting firm, to assist.

         Michael Bacigalupo was the licensed public adjuster assigned to the case. After examining the house, he prepared a Proof of Loss and Detailed Repair Estimate that stated, in effect, that Reese was entitled to additional amounts of about $68, 500 for building repairs and around $25, 000 for damaged content.

         In August 2009, Fidelity notified Reese in writing that her claim was denied because no proof of loss had been submitted. In August 2010, Reese sued Fidelity, alleging her claim was wrongfully denied. Nearly four years elapsed, and in July 2014, Fidelity moved for summary judgment on the ground that Reese had provided “absolutely no documentation” to support her claim for additional payment. Reese chose not to respond, and on September 9, 2014, the court granted the motion.

         On September 8, 2016, Reese filed this suit against Aftermath and Bacigalupo, alleging negligence and breach of contract based on defendants' failure to submit proof of loss timely to Fidelity. Defendants moved for summary judgment based on the relevant two- and four-year statutes of limitation, as approximately seven years had passed since Reese had received notice of Fidelity's denial of her claim. Reese replied that under Hughes, 821 S.W.2d at 157, limitations were tolled until the conclusion of her suit against Fidelity. The district court disagreed and rejected the claims as untimely.

         Reese died before the district court entered final judgment, and her grandson Norman Bloom was substituted as plaintiff. Bloom appeals.


         The sole question is whether the tolling rule from Hughes, 821 S.W.2d at 157, reaches actions against public adjusters. Bloom says yes, or at the least, that the question should be certified to the Texas Supreme Court. We disagree.

         When sitting in diversity, we apply the state's statutes of limitation and accompanying tolling rules. Vaught v. Showa Denko K.K., 107 F.3d 1137, 1145 (5th Cir. 1997). Where the contours of those rules are underdetermined, we must make an Erie guess about how we expect the Texas Supreme Court would decide. “We are emphatically not permitted to do merely what we think best; we must do that which we think the [state] [s]upreme [c]ourt would deem best . . . .” In re DePuy Orthopaedics, Inc., 888 F.3d 753, 765 n.5 (2018) (cleaned up). As a practical matter, that judgment is informed chiefly by “(1) decisions of the [state] [s]upreme [c]ourt in analogous cases, (2) the rationales and analyses underlying [state] [s]upreme [c]ourt decisions on related issues, [and] (3) dicta by the [state] [s]upreme [c]ourt.” Id. (quoting Centennial Ins. Co. v. Ryder Truck Rental, Inc., 149 F.3d 378, 382 (5th Cir. 1998)).

         Naturally, our analysis begins with Hughes, in which clients sued their attorney for negligence allegedly committed during past representation. See Hughes, 821 S.W.2d at 155-56. The Texas Supreme Court, in reviving an otherwise untimely claim, established the following special tolling rule: “[W]hen an attorney commits malpractice in the prosecution or defense of a claim that results in litigation, the statute of limitations on the malpractice claim against the attorney is tolled until all appeals on the underlying claim are exhausted.” Id. at 157. In defending that new rule, the court explained that the usual tolling principles “can force the client ...

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