United States District Court, N.D. Texas, Dallas Division
MEMORANDUM OPINION AND ORDER
FISH Senior United States District Judge
court, on its own motion, herein examines subject matter
jurisdiction in this case. For the reasons stated below, this
case is remanded to the state court from which it was
previously removed. The court set forth the background of
this case in a recent memorandum opinion and order.
See Memorandum Opinion and Order of February 14,
2017 (“Order”) (docket entry 11).
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.”)
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.
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 defendant, American
Automobile Insurance Company, has alleged only diversity of
citizenship as a basis for this court's jurisdiction.
See Second Amended Notice of Removal ¶ 2.2
(docket entry 32). 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).
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 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 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 Hutchins Warehouse Limited Partners
(“Hutchins”) is unable to establish a cause of
action against the non-diverse defendant, Rodger McMillan
(“McMillan”), 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).
case, both Hutchins and McMillan are citizens of
See Second Amended Notice of Removal ¶¶
2.3, 2.7. The court previously denied Hutchins's motion
to remand because it failed to state a claim against McMillan
in its original petition. See generally Order. The
court concluded that the defendants had met their heavy
burden of demonstrating that Hutchins improperly joined
McMillan. Id. at 12. Because McMillan was improperly
joined and not a party to the suit, this court had diversity
jurisdiction under 28 U.S.C. § 1332 and denied
Hutchins's motion for remand. See generally id.
The court will now determine whether Hutchins has
successfully stated a claim against McMillan in its first
amended complaint (“Amended Complaint”) (docket
court need not decide whether Hutchins has sufficiently
pleaded each cause of action; rather, if the court finds a
reasonable basis to predict that it can potentially recover
on any of these causes of action, the court must remand the
entire case. Smith-Manning v. State Farm Lloyds, No.
3:13-CV-3056-M, 2013 WL 5637539, at *2 (N.D. Tex. Oct. 14,
2013) (Lynn, J.) (quoting Gray ex rel. Rudd v. Beverly
Enterprises-Mississippi, Inc., 390 F.3d 400, 412 (5th
Cir. 2004) (“[The] holistic approach to removal
mandates that the existence of even a single valid cause of
action against in-state defendants, despite the pleading of
several unavailing claims, requires remand of the entire case
to state court.”)).
Hutchins asserts claims against McMillan under various
sections of Chapter 541 of the Texas Insurance Code.
See Amended Complaint ¶¶ 90-98. Hutchins
alleges that McMillan violated, inter alia, §
541.060(a)(1) by “misrepresenting to [Hutchins]
material facts relating to the coverage at issue, ” see
id. ¶ 93, and § 541.060(a)(7) by
“refusing to pay [Hutchins's] claim without
conducting a reasonable investigation.” Id.
Hutchins alleges that McMillan performed an outcome oriented
investigation, focusing on pre-existing damages that were not
caused by the tornado. Amended Complaint ¶¶ 23, 47;
see also Negrete v. Lloyds, No. DR-15-CV-114-AM,
2016 WL 8488287, at *8 (W.D. Tex. Sept. 27, 2016) (holding
that the plaintiff stated a claim under § 541.060(a)(1)
and § 541.060(a)(7) by alleging facts showing that the
adjuster undervalued the plaintiff's losses and conducted
an outcome-oriented investigation). Moreover, Hutchins
alleges that despite McMillan's knowledge of structural
damages to the interior building system and the need for
permanent repairs and/or a complete rebuild, McMillian has
refused to provide an estimate for those damages. Amended
Complaint ¶¶ 22-23, 27; see also Petree v.
Metropolitan Lloyds Insurance Company of Texas, No.
3:16-CV-0735-G, 2016 WL 4211764, at *2 (N.D. Tex. Aug. 9,
2016) (Fish, J.) (analyzing whether the plaintiff alleged
specific deficiencies in the adjuster's investigation).
Hutchins avers that its insurer accepted McMillan's
incomplete estimate as the final determined value of the
damaged property. See Amended Complaint ¶ 22;
see also Kris Hospitality LLC v. Tri-State Insurance
Company of Minnesota, No. SA-16-CV-01229-XR, 2017 WL
437424, at *3 (W.D. Tex. Jan. 31, 2017) (looking to whether
the plaintiff alleges facts connecting the adjuster's
actions to the plaintiff's alleged harm). Applying the
federal pleading standard in this case, the court concludes
that, taking the well-pleaded facts as true, Hutchins pled
factual content that allows the court to draw the reasonable
inference that McMillan violated § 541.060(a)(1) and
§ 541.060(a)(7) under the Texas Insurance Code. See
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009);
Avila v. Metropolitan Lloyds Insurance Company of
Texas, No. 3:16-CV-3007-L, 2017 WL 1232529, at *12-13
(N.D. Tex. Feb. 21, 2017) (Horan, M.J.) (looking to the
“specific factual allegations concerning the inadequacy
of the investigation” to determine whether the
plaintiff pled a claim under § 541.060(a)(7)),
report and recommendation adopted sub nom. Avila v.
Metropolitan Lloyds Insurance, No. 3:16-CV-3007-L, 2017
WL 1211339 (N.D. Tex. Apr. 3, 2017) (Lindsay, J.).
Hutchins has stated a potentially viable claim against
McMillan, complete diversity -- as required under 28 U.S.C.
§ 1332 -- is lacking, and this case must be remanded
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