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Nelson v. State Farm Lloyds

United States District Court, W.D. Texas, Austin Division

February 20, 2018

MELVIN NELSON, Plaintiff,
v.
STATE FARM LLOYDS and SHANE FORDHAM, Defendants.

          ORDER

          SAM SPARKS UNITED STATES DISTRICT JUDGE

         BE IT REMEMBERED on this day the Court reviewed the file in the above-styled cause, and specifically Plaintiff Melvin Nelson's Motion to Remand [#10] and Defendants State Farm Lloyds (State Farm) and Shane Fordham (collectively Defendants)' Response [#11] in opposition.[1] Having considered the documents, the governing law, and the case file as a whole, the Court now enters the following opinion and orders.

         Background

         Plaintiff is a Texas citizen and the named insured on an insurance policy issued by State Farm (the Policy). The Policy covers Plaintiffs real property located at 902 Glass Drive, Leander, Texas (the Property). State Farm is an unincorporated association whose underwriters are all citizens of the State of Illinois. Removal Noticef #1] ¶ 5. Mr. Fordham, a citizen of Texas, is an insurance adjuster. Id. ¶ 6.

         On April 20, 2016, a hail storm allegedly caused damage to the Property. Id. [#1-1] Ex. A (State Court Records) at 8. Plaintiff submitted a claim to State Farm for the damage, which included replacement of the Property's roof. Id. State Farm assigned Mr. Fordham to adjust the claim, and Mr. Fordham inspected the Property and adjusted Plaintiffs claim on State Farm's behalf. Id.

         On August 31, 2017, Plaintiff filed suit in Texas state court. Id. at 6. Plaintiff alleges Mr. Fordham violated Texas Insurance Code § 541.060 when he improperly evaluated the Property and failed to include the true cost of repairing the Property in his adjustment. Id. at 8, 32-39. In addition, Plaintiff alleges State Farm failed to review the adjustment and improperly denied coverage for the full extent of the Property's damages. Id. ¶¶ 14-16. As a result, Plaintiff contends State Farm wrongfully denied his claim, breached the insurance contract, violated multiple sections of the Texas Insurance Code, and breached its duty of good faith and fair dealing. Id. ¶¶ 40-52.

         State Farm removed the case to this Court, arguing the Court possesses diversity jurisdiction. According to State Farm, Mr. Fordham was improperly joined because Plaintiff failed to state a reasonable basis for recovering against Mr. Fordham. Plaintiff filed a motion for remand, which is ripe for a decision.

         Analysis

         I. Legal Standard

         "[T]he burden of establishing federal jurisdiction is placed upon the party seeking removal." Willy v. Coastal Corp., 855 F.2d 1160, 1164 (5th Cir. 1988). Moreover, because removal jurisdiction raises significant federalism concerns, courts must strictly construe removal jurisdiction. Id. Any doubts or ambiguities regarding the propriety of removal are construed against removal and in favor of remand to the state court. Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir* 2002). Here, State Farm invoked federal court diversity jurisdiction under 28 U.S.C. § 1332(a).

         District courts have diversity jurisdiction over civil actions between citizens of different states when the amount in controversy exceeds $75, 000.00. 28 U.S.C. § 1332(a). Section 1332 requires "complete diversity"-that is, the citizenship of every plaintiff must be different from that of every defendant. Caterpillar Inc. v. Lewis, 519 U.S. 61, 68 (1996). Parties upon whose citizenship diversity jurisdiction is grounded must be real and substantial parties to the controversy. Navarro Sav. Ass 'n v. Lee, AA6 U.S. 458, 460-61 (1980). Thus, the Court must "disregard nominal or formal parties and rest jurisdiction only upon the citizenship of the real parties to the controversy." Id.; see also Americold Realty Trust v. Conagra Foods, Inc., 136 S.Ct. 1012 (2016).

         II. Application

         The parties dispute whether Mr. Fordham, who is a nondiverse defendant, is properly joined. If Mr. Fordham is improperly joined, then this Court has subject matter jurisdiction.

         A nondiverse defendant is improperly joined if "(1) the plaintiff has stated a claim against a diverse defendant that he fraudulently alleges is nondiverse, or (2) the plaintiff has not stated a claim against a defendant that he properly alleges is nondiverse." Int'l Energy Ventures Mgmt., L.L.C v. United Energy Grp., Ltd.,818 F.3d 193, 199 (5th Cir. 2016) (emphasis in original). ...


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