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Gutierrez v. Allstate Fire and Casualty Insurance Co.

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

June 1, 2017




         In this removed action by plaintiff Jesus Gutierrez (“Gutierrez”) to recover for damage to his residence resulting from a wind and hail storm, Gutierrez moves to remand based on lack of complete diversity, citing the Texas citizenship of defendant Brandon Tarver (“Tarver”), the insurance adjuster who adjusted his claim. Defendants Allstate Fire and Casualty Insurance Company (“Allstate”) and Tarver oppose the motion on the basis that Tarver has been improperly joined. Concluding that defendants have met their heavy burden of establishing improper joinder, the court denies the motion to remand.


         Gutierrez's residence was insured under a policy issued by Allstate. Tarver was assigned to adjust Gutierrez's claim.[1] Gutierrez alleges that Allstate and/or Tarver breached the policy and various statutory and common law duties in connection with handling his claim. He asserts that Allstate and Tarver misrepresented that some of the damage to the residence was not covered under the policy, despite being caused by a covered occurrence, in violation of Tex. Ins. Code Ann. § 541.060(a)(1) (West 2017); failed to attempt to settle the claim in a fair manner, in violation of Tex. Ins. Code Ann. § 541.060(a)(2)(A); failed to explain to Gutierrez why they offered an inadequate settlement, in violation of Tex. Ins. Code Ann. § 541.060(a)(3); failed to affirm or deny coverage of Gutierrez's claim within a reasonable time, in violation of Tex. Ins. Code Ann. § 541.060(a)(4); refused to fully compensate Gutierrez under the terms of the policy, in violation of Tex. Ins. Code Ann. § 541.060(a)(7); and failed to meet their obligations regarding timely acknowledging his claim, beginning an investigation of his claim, and requesting all information reasonably necessary to investigate his claim within the statutorily mandated deadline; failed to accept or deny his entire claim within the statutorily mandated deadline of receiving all necessary information; and failed to meet the obligation to pay a claim without delay, in violation of Tex. Ins. Code Ann. § 542.056.[2]

         Aside from the claims Gutierrez brings against Allstate, he asserts claims against Tarver for violating various sections of the Texas Deceptive Trade Practices-Consumer Act (“DTPA”), Tex. Bus. & Com. Code Ann. §§ 17.46-17.50 (West 2017); violating § 541 of the Texas Insurance Code; conspiracy; and negligence, gross negligence, and negligent misrepresentation.

         Allstate removed this case based on diversity of citizenship, contending that Tarver, a Texas citizen, has been improperly joined. Gutierrez moves to remand, maintaining that Tarver was properly joined and that the parties are not completely diverse citizens.


         For a case to be removed based on diversity jurisdiction, “all persons on one side of the controversy [must] be citizens of different states than all persons on the other side.” Harvey v. Grey Wolf Drilling Co., 542 F.3d 1077, 1079 (5th Cir. 2008) (quoting McLaughlin v. Miss. Power Co., 376 F.3d 344, 353 (5th Cir. 2004)) (internal quotation marks omitted). “The jurisdictional facts that support removal must be judged at the time of the removal.” Gebbia v. Wal-Mart Stores, Inc., 233 F.3d 880, 883 (5th Cir. 2000) (citations omitted). Moreover, under 28 U.S.C. § 1441(b), a case cannot be removed based on diversity jurisdiction if any properly joined defendant is a citizen of the state in which the action is brought (here, Texas).

         The doctrine of improper joinder is a narrow exception to the rule of complete diversity, and it “entitle[s] a defendant to remove to a federal forum unless an in-state defendant has been ‘properly joined.'” Smallwood v. Ill. Cent. R.R. Co., 385 F.3d 568, 573 (5th Cir. 2004) (en banc); see also Meritt Buffalo Events Ctr. LLC v. Cent. Mut. Ins. Co., 2016 WL 931217, at *2 (N.D. Tex. Mar. 11, 2016) (Fitzwater, J.). The doctrine allows federal courts to defend against attempts to manipulate their jurisdiction, such as by joining nondiverse parties solely to deprive federal courts of diversity jurisdiction. See Smallwood, 385 F.3d at 576. Because “the effect of removal is to deprive the state court of an action properly before it, removal raises significant federalism concerns.” Gasch v. Hartford Accident & Indem. Co., 491 F.3d 278, 281 (5th Cir. 2007) (quoting Carpenter v. Wichita Falls Indep. Sch. Dist., 44 F.3d 362, 365-66 (5th Cir. 1995)). Therefore, the removal statute is strictly construed, with “any doubt about the propriety of removal [being] resolved in favor of remand.” Id. at 281-82. In determining whether a party was improperly joined, the court “resolve[s] all contested factual issues and ambiguities of state law in favor of the plaintiff.” Id. at 281. The party seeking removal bears a heavy burden to prove improper joinder. Smallwood, 385 F.3d at 574.

         Improper joinder is established by showing that there was either actual fraud in the pleading of jurisdictional facts or that the plaintiff is unable to establish a cause of action against the nondiverse defendant in state court. Parsons v. Baylor Health Care Sys., 2012 WL 5844188, at *2 (N.D. Tex. Nov. 19, 2012) (Fitzwater, C.J.) (citing Smallwood, 385 F.3d at 573). Under the second alternative-the one at issue in this case-the test for improper joinder is “whether the defendant has demonstrated that there is no possibility of recovery by the plaintiff against an in-state defendant, which stated differently means that there is no reasonable basis for the district court to predict that the plaintiff might be able to recover against an in-state defendant.” Smallwood, 385 F.3d at 573; see also Travis v. Irby, 326 F.3d 644, 648 (5th Cir. 2003) (explaining that terms “no possibility” of recovery and “reasonable basis” for recovery have essentially identical meaning, and holding that pleadings must show more than “any mere theoretical possibility of recovery”). To assess “whether a plaintiff has a reasonable basis of recovery under state law, ”

[t]he court may conduct a [Fed. R. Civ. P.] 12(b)(6)-type analysis, looking initially at the allegations of the complaint to determine whether the complaint states a claim under state law against the in-state defendant. Ordinarily, if a plaintiff can survive a Rule 12(b)(6) challenge, there is no improper joinder. That said, there are cases, hopefully few in number, in which a plaintiff has stated a claim, but has misstated or omitted discrete facts that would determine the propriety of joinder. In such cases, the district court may, in its discretion, pierce the pleadings and conduct a summary inquiry.

Smallwood, 385 F.3d at 573 (footnotes omitted).

         When deciding whether a defendant has been improperly joined, a federal district court must apply the federal pleading standard. See Int'l Energy Ventures Mgmt., L.L.C. v. United Energy Grp. Ltd., 818 F.3d 193, 207-08 (5th Cir. 2016) (on rehearing). This standard requires the plaintiff to plead enough facts “to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “The plausibility standard is not akin to a ‘probability requirement, ' but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id.; see also Twombly, 550 U.S. at 555 (“Factual allegations must be enough to raise a right to relief above the speculative level[.]”). “[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not ‘shown'-‘that the pleader is entitled to relief.'” Iqbal, 566 U.S. at 679 (alteration omitted) (quoting Rule 8(a)(2)). Furthermore, under Rule 8(a)(2), a pleading must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Although “the pleading standard Rule 8 announces does not require ‘detailed factual allegations, '” it demands more than “labels and conclusions.” Iqbal, 566 U.S. at 678 (quoting Twombly, 550 U.S. at 555). And “‘a formulaic recitation of the elements of a cause of action will not do.'” Id. (quoting Twombly, 550 U.S. at 555).



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