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Nabors v. American Reliable Insurance Co.

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

June 7, 2017

ROBIN NABORS, Plaintiff,
v.
AMERICAN RELIABLE INSURANCE COMPANY, ET AL., Defendants.

          MEMORANDUM OPINION AND ORDER

          A. JOE FISH SENIOR UNITED STATES DISTRICT JUDGE

         Before the court is the defendants' motion to abate proceedings and compel appraisal (docket entry 12). For the reasons stated below, the defendants' motion is granted.

         I. BACKGROUND

         This is a dispute over an insurance policy[1] issued to the plaintiff, Robin Nabors (“Nabors”), by the defendant, American Reliable Insurance Company (“American”), covering water damage to Nabors's home. See Plaintiff's Original Petition (“Original Petition”) at 2-3 (docket entry 1-1). After an April 2015 hail storm damaged Nabors's home, American assigned the defendant, Scott Monell (“Monell”), to adjust Nabors's claim and inspect the damage. Id. at 3. The defendants have not yet paid Nabors under the policy. Id.

         On March 6, 2017, Nabors commenced this action in the 40th Judicial District Court of Ellis County, Texas. Defendants' Notice of Removal (“Notice”) at 1 (docket entry 1); Original Petition at 1. Nabors seeks a declaratory judgment regarding the scope of the policy's coverage as well as damages for breach of contract and violations of the Texas Insurance Code against American. Original Petition at 3-4. Nabors seeks relief for violations of the Texas Insurance Code against Monell. Id. at 5. On March 20, 2017, the defendants removed the case to federal court based on diversity jurisdiction. Notice at 2. On April 12, 2017, the defendants filed the instant motion to abate proceedings and compel appraisal. Defendants' Motion to Abate (“Motion”) (docket entry 12). On May 3, 2017, Nabors filed a timely response. Plaintiff's Response in Opposition to Defendants' Motion to Abate (docket entry 19); Plaintiff's Brief in Support of Its Response in Opposition to Defendants' Motion to Abate (“Plaintiff's Brief”) (docket entry 18). On May 12, 2017, the defendants filed a timely reply. Defendants' Reply in Support of Their Motion to Abate (“Reply”) (docket entry 20). The motion is now ripe for decision.

         II. ANALYSIS

         A. Jurisdiction: Whether Monell Is Improperly Joined

         1. Legal Standard

         The court may sua sponte raise the issue of its jurisdiction at any time during the course of litigation. In re Bass, 171 F.3d 1016, 1021 (5th Cir. 1999) (“Federal courts must be assured of their subject matter jurisdiction at all times and may question it sua sponte at any stage of judicial proceedings”) (emphasis added).

         28 U.S.C. § 1441(a) permits the removal of “any civil action brought in a [s]tate court of which the district courts of the United States have original jurisdiction.” 28 U.S.C. § 1441(a). The statute allows a defendant to “remove a state court action to federal court only if the action could have originally been filed in federal court.” Anderson v. American Airlines, Inc., 2 F.3d 590, 593 (5th Cir. 1993). However, the removal statute must be strictly construed because “removal jurisdiction raises significant federalism concerns.” Willy v. Coastal Corporation, 855 F.2d 1160, 1164 (5th Cir. 1988); see also Gutierrez v. Flores, 543 F.3d 248, 251 (5th Cir. 2008). Therefore, “any doubts concerning removal must be resolved against removal and in favor of remanding the case back to state court.” Cross v. Bankers Multiple Line Insurance Company, 810 F.Supp. 748, 750 (N.D. Tex. 1992) (Means, J.); see also Shamrock Oil & Gas Corporation v. Sheets, 313 U.S. 100, 108-09 (1941). The party seeking removal bears the burden of establishing federal jurisdiction. Willy, 855 F.2d at 1164.

         There are two principal bases upon which a district court may exercise removal jurisdiction: the existence of a federal question, see 28 U.S.C. § 1331, and complete diversity of citizenship among the parties. See 28 U.S.C. § 1332. Here, the removing defendants have alleged only diversity of citizenship as a basis for this court's jurisdiction.[2] See Notice at 2. The court can properly exercise jurisdiction on the basis of diversity of citizenship after removal only if three requirements are met: (1) the parties are of completely diverse citizenship, see 28 U.S.C. § 1332(a); (2) none of the properly joined defendants is a citizen of the state in which the case is brought, see 28 U.S.C. § 1441(b); and (3) the case involves an amount in controversy of more than $75, 000, see 28 U.S.C. § 1332(a).

         However, as the defendants contend, even if a defendant has the same citizenship as the plaintiff, a federal court can still exercise removal jurisdiction over an action if the court finds that the plaintiff improperly joined the non-diverse defendant. A defendant can satisfy the requirements for improper joinder by demonstrating that “there is no possibility of recovery by the plaintiff against an instate 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 instate defendant.” Smallwood v. Illinois Central Railroad Company, 385 F.3d 568, 573 (5th Cir. 2004) (en banc), cert. denied, 544 U.S. 992 (2005). To determine whether Nabors is unable to establish a cause of action against the non-diverse defendant, Monell, the court should conduct a Rule 12(b)(6)-type analysis. Id. “[T]he Rule 12(b)(6) analysis necessarily incorporates the federal pleading standard articulated in Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007).” International Energy Ventures Management, L.L.C. v. United Energy Group, Ltd., 818 F.3d 193, 200 (5th Cir. 2016) (emphasis in original).

         2. Application

         The defendants contend that Monell is improperly joined because there is no possibility that Nabors can recover from Monell under the Texas Insurance Code. Notice at 4. First, the defendants contend that Nabors failed to plead an injury independent from the denial of policy benefits. Id. (citing Mital Hospital, Inc. v. Evanston Insurance Company, No. 4:16-CV-0893-A, 2016 WL 7165976, at *4 (N.D. Tex. Dec. 6, 2016) (McBryde, J.)). The defendants further contend that Nabors's claims under § 541.060(a)(2)(A) and § 541.060(a)(7) of the Texas Insurance Code fail because Monell has no authority to settle Nabors's claim under the policy. Id. at 4-5. ...


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