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Cruz v. State Farm Lloyds

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

December 18, 2017




         Before the Court is Plaintiff's Motion to Remand (ECF No. 11). For the following reasons, the Court GRANTS the Motion and REMANDS the case to the 134th Judicial District Court of Dallas County, Texas.

         I. BACKGROUND

         This action concerns a dispute over Defendants' denial of Plaintiff's insurance claim for property damage. Plaintiff, a Texas citizen, filed an Original Petition in the 134th Judicial District Court of Dallas County, Texas against Defendant State Farm Lloyds (“State Farm”), an Illinois and Arizona corporation, and Defendant Teresa Williams (“Williams”), a Texas citizen and individual adjuster employed with State Farm. Pl.'s Orig. Pet. [Docket Entry #1-1], Defs.' Notice of Removal at ¶ 9 [Docket Entry #1].

         Plaintiff alleges that his property, allegedly covered by an insurance policy issued by State Farm (“Policy”), sustained hail and/or wind storm damage on June 9, 2015. Pl.'s Orig. Pet. [Docket Entry #1-1] at ¶ 12. Plaintiff claims that he asked State Farm to cover the cost of repairs pursuant to the Policy. State Farm assigned Williams to adjust and investigate the claim. Id. at ¶ 15. Plaintiff alleges that State Farm wrongfully denied Plaintiff's claims for repairs and did not provide full coverage under his Policy. Id. at ¶ 21.

         Plaintiff filed suit in state court for common law fraud, conspiracy to commit fraud, and waiver against both State Farm and Williams. Id. at pp. 13-15. Plaintiff asserts the following causes of action against State Farm: (1) breach of contract based on failure to pay adequate compensation under the terms of the Policy; (2) violations of Sections 541 and 542 of the Texas Insurance Code; (3) breach of the common law duty of good faith and fair dealing; and (4) fraud. Id. at pp. 15-19. Plaintiff further asserts violations of Section 541 of the Texas Insurance Code against Williams. Id. at 9-12.

         State Farm and Williams removed the case to this Court, arguing that Williams was improperly joined because Plaintiff failed to state a claim against her and Williams' Texas citizenship should therefore be disregarded for purposes of diversity jurisdiction. Defs.' Notice of Removal [Docket Entry #1] at ¶ 9. Plaintiff moved to remand, arguing Williams was properly joined as a Defendant, and thus, there is not complete diversity. [Docket Entry #11 at ¶ 2].


         Removal of any civil action filed in state court over which district courts have original jurisdiction is proper under 28 U.S.C. § 1441(a). Federal courts have subject matter jurisdiction under 28 U.S.C. § 1332 only where there is diversity of citizenship between the parties and the amount in controversy exceeds $75, 000, exclusive of interest and costs. See 28 U.S.C. § 1332. Here, the parties do not appear to dispute that the amount in controversy exceeds $75, 000; therefore, subject matter jurisdiction exists if the matter in controversy is between citizens of different states. Id.; Halmekangas v. State Farm Fire and Cas. Co., 603 F.3d 290, 294 (5th Cir. 2010).

         The Fifth Circuit applies the federal court pleading standard to a plaintiff's state court petition for purposes of a removal and improper joinder analysis. Int'l Energy Ventures Mgmt., L.L.C. v. United Energy Grp., Ltd., 818 F.3d 193, 208 (5th Cir. 2016). “[T]he petition as filed in state court controls the inquiry.” See Cavallini v. State Farm Mut. Auto Ins. Co., 44 F.3d 256, 264 (5th Cir. 1995).

         A defendant can establish improper joinder by (1) showing either actual fraud in the pleading of jurisdictional facts or (2) an inability to establish a cause of action against the non-diverse defendant in state court. Waste Mgmt., Inc. v. AIG Specialty Ins. Co., No. CV H-16-3676, 2017 WL 3431816, at *3 (S.D. Tex. Aug. 9, 2017). The latter is applicable here. To prevail, the removing defendant must show that there is no possibility of recovery by the plaintiff against the in-state defendant in state court. Travis v. Irby, 326 F.3d 644, 649 (5th Cir. 2003). “If a nondiverse defendant has been properly joined, then the federal court has no jurisdiction and must remand the removed case.” Arrow Bolt & Elec., Inc. v. Landmark Am. Ins. Co., No. 3:17-CV-1894-M, 2017 WL 4548319, at *2 (N.D. Tex. Oct. 12, 2017) (Lynn, C.J.). If, on the other hand, the nondiverse defendant has been improperly joined, then remand must be denied, and the claims against the nondiverse defendant should be dismissed without prejudice. Id.

         To determine whether a plaintiff has a “reasonable basis for recovery under state law . . . [t]he court may conduct a Rule 12(b)(6)-type analysis.” Smallwood v. Ill. Cent. R.R. Co., 385 F.3d 568, 573 (5th Cir. 2004) (en banc); Anderson v. Georgia Gulf Lake Charles, 342 Fed.Appx. 911, 915 (5th Cir. 2009). To survive a 12(b)(6) challenge, the petition must contain sufficient facts to state a claim for relief that is plausible on its face. Arrow Bolt, 2017 WL 4548319 at *1. Disputed questions of fact are resolved in favor of the plaintiff, and the court must then decide whether the plaintiff has any possibility of recovery against the defendant whose joinder is questioned. Carriere v. Sears, Roebuck and Co., 893 F.2d 98, 100 (5th Cir 1990). If the court finds a reasonable basis to predict that plaintiff can potentially recover on any of the alleged causes of action, the court must remand the entire case. Roach v. Vehicle, No. 3:15-CV-3228-G, 2016 WL 795967, at *4 (N.D. Tex. Feb. 29, 2016) (Fish, J.).

         III. ANALYSIS

         There is a split of authority regarding whether an adjuster can be held liable under Tex. Ins. Code § 541.060(a)(2)(A). This Court has concluded that an insurance adjuster may be held personally liable for engaging in unfair settlement practices under § 541.060(a)(2). Martinez v. State Farm Lloyds, No. 3:16-CV-00040-M, 2016 WL 4427489, at *2 (N.D. Tex. Aug. 22, 2016) (Lynn, C. J.); Progressive Island, LLC v. Scottsdale Insurance Company, No. 3:13-CV-0741-M, 2013 WL 6065414, at *2-3 (N.D. Tex. Nov. 18, 2013) (Lynn, J.); See Denley Group, LLC v. Safeco Insurance Company of Indiana, No. 3:15-CV-1183-B, 2015 WL 5836226, at *3-4 (N.D. Tex. Sept. 30, 2015) (Boyle, J.) (finding that an insufficient investigation may well lead to a less than fair settlement of a claim); (Lopez-Welch v. State Farm Lloyds, No. 3:14-CV-2416-L, 2014 WL 5502277, at *8 (N.D. Tex. Oct. 31, 2014) (Lindsay, J.); Shade Tree Apartments, LLC v. Great Lakes Reinsurance (UK) PLC, No. A-15-CA-843-SS, 2015 WL 8516595, at *6 (W.D. Tex. Dec. 11, 2015). Contra Messersmith v. Nationwide Mut. ...

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