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Cohen v. Seneca Insurance Co. Inc.

United States District Court, N.D. Texas, Dallas Division

March 24, 2017

RONALD E. COHEN, et al., Plaintiffs,
v.
SENECA INSURANCE CO., INC., J.S. HELD, INC., HAAG ENGINEERING CO., and R. KEAN JENNER, Defendants.

          MEMORANDUM OPINION AND ORDER

          Sam A. Lindsay United States District Judge.

         Before the court is Plaintiffs' Motion to Remand and for Attorney's Fees, filed June 25, 2015 (Doc. 4). After considering the motion, briefing, record, and applicable law, the court grants Plaintiffs' Motion to Remand and denies Plaintiffs' request for attorney's fees.

         I. Background

         This lawsuit arises out of an insurer's alleged failure to properly adjust and pay all appropriate amounts for storm damage to Plaintiffs' commercial structures under an insurance policy. Plaintiffs are the owners of two commercial properties (collectively, the "Properties"), one located at 2021 North Town East Boulevard in Mesquite, Texas (the "Town East Property"), and the other located at 4901 Ross Avenue, Dallas, Texas (the "Ross Avenue Property"). Pis.' Sec. Am. Orig. Pet. 113, attached as Ex. 5 to Defs.' Not. of Removal (Doc. 1-5).[1]

         Plaintiffs purchased insurance policies from Defendant Seneca Insurance Company, Inc. ("Seneca"), effective December 1, 2011 to December 1, 2013 (the "Policies"), to insure the Properties. Id. ]f 14. Severe wind and hail damaged the Town East Property on April 3, 2012, and damaged the Ross Avenue Property on March 9, 2013 (collectively, the "Losses"). Id. Plaintiffs notified Seneca of the Losses in compliance with the terms of the Policies and fully complied with all conditions precedent for recovery under the Policies as a result of the Losses. Id. Seneca hired Defendants J.S. Held, Inc. ("J.S. Held") and Haag Engineering Company ("Haag") as "insurance adjusters and consultants" to "measure, document, estimate, and adjust the damage to the roofs of the Properties." Id. ]f 15. Haag, in turn, had its employee, Defendant R. Kean Jenner ("Jenner"), visit the Properties to "measure, document, and adjust the claim." Id. Jenner traveled to the Properties but failed and refused to conduct a thorough investigation. Id. ]f 16. At the Ross Avenue Property, Jenner found a "large number of small bare spots" on the roof, and attributed them to the "caustic effects of pigeon droppings." Id. At the Town East Property, Jenner found "a large number of circular chips" and attributed them to hail events that occurred "a long time ago." Id. In making this determination, Jenner noted a "modest number of bruises" in the roof membrane. Id. Defendant Haag had inspected the same roof in 2011 and found "no evidence of any hailfall, old or new, with hailstones sufficient to bruise" the roofing material. Id.

         Plaintiffs allege that, following Jenner's findings, J.S. Held, Haag, and Jenner, jointly and severally, "made a coverage determination that the hail damage was not covered and failed and refused to provide coverage for the Plaintiffs' Loss." Id. If 17. Plaintiffs further allege that "Defendants' failure to provide coverage under the terms of the policies in question is a breach of the policies, and violates the Texas Insurance Code and the Unfair Claims Settlement Practices Act." Id.

         On February 19, 2015, Plaintiffs filed their Original Petition in County Court at Law No. 1, Dallas County, Texas. On April 21, 2015, Plaintiffs filed their First Amended Original Petition, which was mistakenly labeled as their Second Amended Original Petition. See Pis.' Sec. Am. Orig. Pet., attached as Ex. 5 to Defs.' Not. of Removal (Doc. 1-5). For purposes of consistency, the court will continue to refer to the pleading at the time of removal as Plaintiffs' Second Amended Original Petition.

         Plaintiff Ronald Cohen ("Cohen") is a Texas citizen.[2] Plaintiffs Morben Realty Company, Inc. and Ronco Realty are both incorporated under the laws of Texas with principal places of business in Dallas County, Texas, and are, therefore, Texas citizens for purposes of diversity jurisdiction. 28 U.S.C. § 1332(c)(1). Plaintiff Mateo is alleged, on information and belief, to be a citizen of Texas.

         Defendant Seneca is incorporated under the laws of New York with its principal place of business in New York, New York, and is, therefore, a citizen of New York. Defendant J.S. Held is incorporated under the laws of Texas with its principal place of business in Dallas, Texas, and is, therefore, a citizen of Texas. Defendant Haag is incorporated under the laws of Texas with its principal place of business in Dallas, Texas, and is, therefore, a citizen of Texas. Defendant Jenner is a citizen of Texas.

         Plaintiffs assert that Seneca has not performed its contractual duties under the Policies and failed to settle their claims in a fair manner. Plaintiffs also contend that Defendants' failure to properly adjust and inspect, and later fully compensate them, constitute violations of the Texas Insurance Code. Plaintiffs allege causes of action for breach of contract, violations of Chapters 541 and 542 of the Texas Insurance Code, violations of Section 17.50(a)(4) of the Texas Business and Commerce Code ("DTPA"), common law bad faith, tortious interference, conspiracy, fraudulent misrepresentation, fraudulent inducement, and breach of fiduciary duty.

         On May 27, 2015, Defendants removed the case to this court, contending that complete diversity of citizenship exists between the parties and that the amount in controversy exceeds $75, 000, exclusive of costs and interest. Defendants contend that Haag, J.S. Held, and Jenner, all nondiverse parties, were improperly joined to defeat diversity jurisdiction, and, therefore, urge the court to disregard their citizenship. On June 25, 2015, Plaintiffs moved to remand the case to County Court at Law No. 1, Dallas County, Texas, arguing that the nondiverse Defendants were properly joined in this lawsuit, thereby requiring remand. The motion has been fully briefed and is ripe for adjudication.

         II. Applicable Legal Standards

         A. Removal Jurisdiction

         Federal courts are courts of limited jurisdiction and possess only that power authorized by the United States Constitution or by statute. Kokkonen v. Guardian Life Ins. Co. of Am.,511 U.S. 375, 377 (1994) (citations omitted). Unless Congress expressly provides otherwise, a defendant may remove a state court civil action to a federal district court if the district court has original jurisdiction over the action. 28 U.S.C. § 1441(a). A federal court has original jurisdiction over civil actions in which there is diversity of citizenship between the parties and the amount in controversy exceeds $75, 000, exclusive of interest and costs. 28 U.S.C. § 1332(a). The statute requires complete diversity of citizenship; that is, a district court cannot exercise subject matter jurisdiction if any plaintiff shares the same citizenship as any defendant. See Corfield v. Dallas Glen Hills LP,355 F.3d 853, 857 (5th Cir. 2003) (citing Strawbridge v. Curtiss, 7 U.S. (3 Cranch) 267 (1806)). In considering citizenship, however, the court considers only the citizenship of real and substantial parties to the litigation; it does not take into account nominal or formal ...


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