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Arlington Heights Memorial Post No 8234 Veterans of Foreign Wars of the United States v. Covington Specialty Insurance Co.

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

May 10, 2017

ARLINGTON HEIGHTS MEMORIAL POST NO. 8234 VETERANS OF FOREIGN WARS OF THE UNITED STATES, FORT WORTH, TEXAS, Plaintiff,
v.
COVINGTON SPECIALTY INSURANCE COMPANY, ENGLE MARTIN & ASSOCIATES, and EDWARD MARTIN SEWELL, JR., Defendants.

          MEMORANDUM OPINION AND ORDER

          JANE J. BOYLE UNITED STATES DISTRICT JUDGE

         Before the Court is Plaintiff's Motion to Remand. Doc. 9. For the reasons that follow, Plaintiff's Motion is GRANTED .

         I.

         BACKGROUND

         A. Factual Background[1]

         Plaintiff initially sued Defendants Covington Specialty Insurance Company, Engle Martin & Associates, and insurance adjuster Edward Martin Sewell, Jr. in Texas state court for violations of the Texas Insurance Code, violations of the Texas Deceptive Trade Practices Act, breach of contract, and breach of the duty of good faith and fair dealing. Doc. 10, App. in Supp. of Pl.'s Mot. to Remand, Pl.'s Orig. Pet. 6-10 [hereinafter Pl.'s Orig. Pet.].

         Plaintiff is a nonprofit organization that owns a piece of property, including a structure on that property, in Fort Worth, Texas (the Property). Doc. 10, Pl.'s Orig. Pet. 1, 3. Plaintiff insured the Property with a commercial property insurance policy (the Policy) issued by Covington. Id. at 3. The Policy allegedly provided coverage for damages to the Property caused by wind and hail. Id. at 3-4.

         On April 26, 2016, a wind and hail storm damaged the Property. Id. at 4. Plaintiff asserts that the damage included harm to the roof, exterior, and interior of the Property. Id. After the storm, Plaintiff submitted a claim to Covington. Id. Covington assigned Plaintiff's claim to Engle Martin & Associates, and Engle Martin assigned the claim to its employee-adjustor Sewell. Id. Plaintiff alleges that Engle Martin and Sewell failed to perform a thorough investigation of the claim. Id. Specifically, Plaintiff alleges that Sewell: (1) “did not prepare any estimates or scopes of damages to the Property or failed to provide those to the insured”; (2) “failed to hire any qualified experts to appropriately assess the damage”; (3) “delayed the claims process and failed to communicate with the insured”; and (4) “misrepresented the Policy's coverage.” Id. These inadequacies, Plaintiff alleges, resulted in Defendants wrongfully underpaying and denying its claims in July 2016. Id. at 5. Several months later, Plaintiff filed suit in state court. Doc. 1, Notice of Removal ¶ 1.

         B. Procedural Background

         Plaintiff filed its Original Petition in the 116th Judicial District Court of Dallas County, Texas in October 2016. Doc. 1, Notice of Removal ¶ 1. Defendants then removed the action to this Court on diversity grounds in November 2016. Doc. 1, Notice of Removal ¶ 3. Defendants argue that the Court has subject matter jurisdiction because Sewell, a Texas resident, was fraudulently joined as a defendant to defeat diversity jurisdiction. Id. ¶¶ 3-8. Plaintiff moved to remand the case, contending that Sewell is a proper, non-diverse defendant. Doc. 9, Pl.'s Mot. to Remand ¶¶ 1-2. Defendants responded (Doc. 18), but Plaintiff did not reply. The Motion is ripe for the Court's review.

         II.

         LEGAL STANDARD

         Federal courts are courts of limited jurisdiction. Howery v. Allstate Ins. Co., 243 F.3d 912, 916 (5th Cir. 2001). They possess only the power authorized by the Constitution and statute, which is not to be expanded by judicial decree. Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377 (1994) (citations omitted); see also McKee v. Kansas City S. Ry. Co., 358 F.3d 329, 337 (5th Cir. 2004). District courts “must presume that a suit lies outside this limited jurisdiction, and the burden of establishing federal jurisdiction rests on the party seeking the federal forum.” Howery, 243 F.3d at 916.

         A. Remova ...


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