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Smith v. Travelers Home and Marine Insurance Co.

United States District Court, S.D. Texas, Houston Division

November 16, 2017

Roydrick & Tamettica Smith, Plaintiffs,
The Travelers Home and Marine Insurance Company and Greg Allen Paul, Defendants.


          Gray H. Miller United States District Judge

         Pending before the court is plaintiffs Roydrick and Tamettica Smith's motion to remand. Dkt. 9. Having considered the motion, response, reply, complaint, and the applicable law, the court is of the opinion that the motion should be GRANTED, and the case should be REMANDED to the 189th Judicial District Court of Harris County, Texas.

         I. BACKGROUND

         On or about January 2, 2017, The Smiths' home (“the Property”) sustained damage from a hail storm. Dkt 1, Ex. C at ¶ 11. The storm allegedly caused damage to the roof, vents, flashings, windows, window screens, fascia, gutters, downspouts, HVAC system, shed, and fencing, and it compromised the integrity of the roof. Id. at ¶ 13. The Smiths contend that due to the compromised roof, water entered and caused damage to the dining room, game room, and bedroom. Id. The Smiths own a homeowner's insurance policy issued by defendant Travelers Home and Marine Insurance Company (“Travelers”). Id. at ¶ 9. The Smiths submitted a claim to Travelers, which then assigned defendant Greg Paul to adjust the claim. Id. at ¶14. Paul adjusted the claim on or around January 16, 2017, and found no damage from a covered peril to the roof of the property. Id. at ¶18.

         Plaintiffs claim that Paul's assessment undervalued the actual damage to the Property, which an independent adjuster hired to inspect the Property valued at $14, 434.48. Id. at ¶ 21.

         On May 30, 2017, the Smiths filed suit against Travelers in state court. Dkt. 9 . They asserted causes of action against both defendants under the Texas Insurance Code and the Texas Deceptive Trade Practices Act (“DTPA”), and they asserted separate claims against Paul for fraud, negligence, and gross negligence. Dkt 1, Ex. C. On June 30, 2017, Travelers removed the case to this court based on diversity jurisdiction. Dkt. 9. For purposes of diversity jurisdiction, the Smiths are citizens of Texas, and Travelers is a Connecticut corporation. Dkt. 1.

         It is undisputed that diversity jurisdiction exists between the Smiths and Travelers. However, Paul is a citizen of Texas, like Plaintiffs, thereby destroying complete diversity. Dkt. 1. Travelers argues that Paul is an improperly joined party and that Paul's citizenship thus should be disregarded in determining this court's jurisdiction. Dkt. 1.

         The Smiths respond that Paul is properly joined in this case and the motion for remand should be granted. Dkt. 9.

         II. Legal Standard

         A defendant may remove an action to federal court in instances where the court would have original jurisdiction over the case. 28 U.S.C. § 1441. Subject matter jurisdiction based on diversity jurisdiction requires that (1) complete diversity exists among the parties, and (2) the amount in controversy exceeds $75, 000. Id. § 1332. The presence of a non-diverse defendant does not prevent removal of a case if the non-diverse defendant was improperly joined. Hornbuckle v. State Farm Lloyd's, 385 F.3d 538, 542 (5th Cir. 2004). In instances where a non-diverse defendant has been improperly joined, i.e., without a legal basis to do so, a case may be removed despite the presence of a non-diverse defendant. Id. As the removing party, the defendant bears the “heavy burden” of demonstrating improper joinder. Travis v. Irby, 326 F.3d 644, 649 (5th Cir. 2003).

         There are two ways to establish improper joinder, “(1) actual fraud in the pleading of jurisdictional facts, or (2) inability of the plaintiff to establish a cause of action against the non-diverse party in state court.” Smallwood v. Ill. Cent. R.R. Co., 385 F.3d 568, 573 (quoting Irby, 326 F.3d at 646-47) (5th Cir. 2004) (en banc). The court may conduct a Rule 12(b)(6)- type analysis to determine whether the complaint states a claim under state law against the in-state defendant or “pierce the pleadings” and conduct a summary judgement inquiry. Id. It is left to the court's discretion to decide the procedure necessary in each case, but a summary judgement inquiry is only appropriate to identify the presence of discrete and undisputed facts that would preclude plaintiff's recovery. Id.

         In a Rule 12(b)(6)-type analysis, the court applies the federal pleading standard. Int'l Energy Ventures Mgmt., L.L.C. v. United Energy Grp., Ltd., 818 F.3d 193, 202 (5th Cir. 2013). To avoid dismissal, the plaintiff must plead “‘enough facts to state a claim to relief that is plausible on its face.'” Int'l Energy Ventures Mgmt., 818 F.3d at 208 (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 554, 570, 127 S.Ct. 1955 (2007)). A claim is deemed facially plausible “when the plaintiff pleads factual content that allows the court to draw the reasonable conclusion that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937 (2009). A plaintiff must plead more than labels and conclusions or a formulaic recitation of the elements of a cause of action in order to establish entitlement to relief. Twombly, 550 U.S. at 555. When a court determines that a nondiverse party has been improperly joined, that party must be dismissed without prejudice. Int'l Energy Ventures Mgmt., 818 F.3d at 209.

         III. ANALYSIS

         The court must first determine the method to establish improper joinder. Travelers makes no claim that fraud was committed; instead, Travelers argues that the Smiths cannot establish a cause of action against Paul. Dkt. 11. Therefore, the appropriate test to determine if joinder is improper is to establish whether it has been demonstrated “‘that there is no possibility of recovery by the plaintiff against an in-state defendant.'” Robinson v. Allstate Tex. Lloyds, No. H-16-1569, 2016 WL 3745962, at *2 (S.D. Tex. July 13, 2016) (Atlas, J.) (quoting Smallwood, 385 F.3d at 573). Travelers argues that the Smiths' allegations are non-specific, conclusory, and near verbatim quotations of the ...

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