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Sparlin v. State Farm Lloyds

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

March 27, 2018




         BE IT REMEMBERED on this day the Court reviewed the file in the above-styled cause, and specifically Plaintiff Jeanne Sparlin's Motion to Remand [#11] and Defendants State Farm Lloyds (State Farm) and Dale Marek (collectively Defendants)' Response [#12] in opposition. Having considered the documents, the governing law, and the case file as a whole, the Court now enters the following opinion and orders.


         Plaintiff is a Texas citizen and the named insured on two insurance policies issued by State Farm (the Policies). Removal Notice [#1-3] Ex. A (Pet.) ¶ 9. The Policies cover Plaintiffs real properties located at 619 Luther Dr. and 615 Luther Dr. Georgetown, Texas (the Properties). Id. ¶ 10. State Farm is an unincorporated association whose underwriters are all citizens of the State of Illinois. Removal Notice[ #1] ¶ 5. Mr. Marek, a citizen of Texas, is an insurance adjuster. Id. ¶ 6.

         On December 27, 2015, a hail and wind storm allegedly caused damage to the Properties. Pet. ¶ 11. Plaintiff submitted a claim to State Farm for the damage, which included replacement of a roof. Id. ¶ 12. State Farm assigned Mr. Marek to adjust the claim, and Mr. Marek inspected the Properties and adjusted Plaintiffs claim on State Farm's behalf. Id. ¶ 13.

         On August 22, 2017, Plaintiff filed suit in Texas state court. Removal Notice ¶2. Plaintiff alleges Mr. Marek violated Texas Insurance Code § 541.060 when he improperly evaluated the Properties, failed to include the true cost of repairing the Properties in his adjustment, used his own statements about the non-severity of damage to the Properties as a basis for denying coverage, and failed to provide an adequate explanation for the compensation Plaintiff received. Pet. at ¶¶ 33-36. 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. ¶¶ 16-28. 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. ¶¶ 42-53.

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


         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, 519U.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, 446 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 AmericoldRealty Tr. v. Conagra Foods, Inc., 136 S.Ct. 1012 (2016).

         II. Application

         The parties dispute whether Mr. Marek, who is a nondiverse defendant, is properly joined. If Mr. Marek 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). Because it is undisputed Mr. Marek is nondiverse, only the latter option is relevant. See id.

         When deciding whether a nondiverse defendant has been improperly joined because the plaintiff failed to state a claim against him, the court may conduct a Rule 12(b)(6)-type analysis. Int 7 Energy Ventures Mgmt., L.L.C v. United Energy Grp., Ltd.,818 F.3d 193, 200 (5th Cir. 2016). "To pass muster under Rule 12(b)(6), [a] complaint must have contained enough facts to state a claim to relief that is plausible on its face." Id. (citations and internal quotation marks omitted) (alternation in original). In deciding a motion to dismiss under Rule 12(b)(6), a court generally accepts as true all factual allegations contained within the complaint. Leatherman v. Tarrant Narcotics Intelligence & Coordination Unit,507 U.S. 163, 164 (1993). However, a court is not bound to accept legal conclusions couched as factual allegations. Papasan v. Allain,478 U.S. 265, 286 (1986). Although all ...

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