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Carrillo Funeral Directors, Inc. v. Ohio Security Insurance Co.

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

November 3, 2017




         Before the court is the plaintiff's motion to remand this case to the state court from which it was previously removed (docket entry 14). For the reasons stated below, the plaintiff's motion to remand is denied.

         I. BACKGROUND

         This case arose from the alleged mishandling of the plaintiff Carrillo Funeral Directors, Inc. (“Carrillo”)'s insurance claim for damage to its properties following a hailstorm. See Plaintiff's Original Petition (“Plaintiff's Petition”) ¶ 4.2, attached to Defendants' Notice of Removal (“Notice of Removal”) (docket entry 1). Upon discovery of roof damage following the storm, Carrillo filed an insurance claim with its insurer, Ohio Security Insurance Company (“Ohio Security”). Id. Ohio Security then assigned Julius John Horvath (“Horvath”), an individual adjuster, to investigate, inspect, and prepare a report on the claim. Id. ¶ 4.3. Carrillo contends that Horvath's inspection of the damaged property and the overall manner in which he handled the claim were insufficient, which resulted in Ohio Security underpaying and partially denying Carrillo's claim. Id. ¶ 4.4.

         On May 2, 2017, Carrillo filed this suit against Ohio Security and Horvath in the 192nd District Court of Dallas County, Texas, to recover damages resulting from the alleged mishandling of its insurance claim. See id. ¶¶ 5.1-11.2. On June 8, 2017, the defendants removed the case to this court based on diversity of citizenship, arguing that Carrillo improperly joined Horvath, a Texas citizen. See Notice of Removal ¶¶ 12-14. On July 10, 2017, Carrillo moved to remand this case to the state court, arguing that removal was improper because there is not complete diversity of citizenship. See Plaintiff Carrillo's Motion to Remand (“Plaintiff's Motion”) (docket entry 14).

         Because Carrillo does not dispute that the amount in controversy exceeds $75, 000, see generally Plaintiff's Motion, the only issue before the court is whether it was proper for Carrillo to join Horvath as a defendant

         II. ANALYSIS

         A. Legal Standards

         1. Removal Jurisdiction

         28 U.S.C. § 1441(a) permits the removal of “any civil action brought in a State 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.” Gutierrez v. Flores, 543 F.3d 248, 251 (5th Cir. 2008) (citation omitted). Accordingly, “any doubt as to the propriety of removal should be resolved in favor of remand.” Id. (citation and internal quotations omitted). The party seeking removal bears the burden of establishing federal jurisdiction. Willy v. Coastal Corporation, 855 F.2d 1160, 1164 (5th Cir. 1988).

         There are two principal bases upon which a district court may exercise removal jurisdiction: (1) the existence of a federal question, see 28 U.S.C. § 1331, and (2) complete diversity of citizenship among the parties. See 28 U.S.C. § 1332. Here, the defendants have alleged only diversity of citizenship as a basis for this court's jurisdiction. See Notice of Removal ¶ 8. The court can properly exercise jurisdiction on the basis of diversity of citizenship 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). In this case, there is not complete diversity because both Carrillo and Horvath are Texas citizens. See Plaintiff's Petition ¶ 2.3; Notice of Removal ¶ 11. The defendants, however, contend that removal is proper because the plaintiff improperly joined Horvath in this suit. Notice of Removal ¶ 11.

         2. Improper Joinder

         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. See McDonal v. Abbott Laboratories, 408 F.3d 177, 183 (5th Cir. 2005). The Fifth Circuit has recognized two grounds on which a court can find that a defendant was improperly joined: when “(1) there is actual fraud in pleading jurisdictional facts or (2) the plaintiff is unable to establish a cause of action against the nondiverse defendant.” Campbell v. Stone Insurance, Inc., 509 F.3d 665, 669 (5th Cir. 2007) (citation omitted). In this case, only the latter ground is at issue. See Notice of Removal at 3-4.

         “The party seeking removal bears [the] heavy burden of proving that the joinder of the in-state party was improper.” Smallwood v. Illinois Central RailroadCompany, 385 F.3d 568, 574 (5th Cir. 2004) (en banc), cert. denied, 544 U.S. 992 (2005). This burden requires the trial court to “resolve any contested issues of material fact, and any ambiguity or uncertainty in the controlling state law, in [the plaintiff's] favor.” Griggs v. State Farm Lloyds, 181 F.3d 694, 699 (5th Cir. 1999). To satisfy the second ground for improper joinder, the defendant must demonstrate 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.” Smal ...

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