United States District Court, W.D. Texas, Austin Division
PITMAN UNITED STATES DISTRICT JUDGE
the Court is Plaintiff Shrimad Holdings, L.P., d/b/a Quality
Inn & Suites' (“Quality Inn”) Motion to
Remand, (Dkt. 5), along with the parties' responsive
briefing. After considering the parties' arguments and
the relevant law, the Court agrees with Quality Inn that
remand is proper.
Inn filed this action in the 98th Judicial District Court of
Travis County, Texas, on August 23, 2017. (Orig. Pet., Dkt.
4-1). In its petition, Quality Inn asserts causes of action
arising under Texas law against Defendants Seneca Insurance
Company (“Seneca”) and David Carberry
“Defendants”). (Id. at 12-17). Quality
Inn alleges that one of its hotels was damaged in a storm and
that Seneca (the insurer) and Carberry (the adjuster) failed
to properly handle its insurance claim. (Id. at
3-11). Seneca removed the case to this Court on October 11,
2017, on the basis of this Court's diversity
jurisdiction. (Dkt. 1). In its notice of removal, Seneca
asserts that it is diverse from Quality Inn and that
Carberry-who is not-was improperly joined. (Id. at
defendant may remove any civil action from state court to a
district court of the United States that has original
jurisdiction. 28 U.S.C. § 1441(a). District courts have
original jurisdiction over all civil actions that are between
citizens of different states and involve an amount in
controversy in excess of $75, 000, exclusive of interest and
costs. 28 U.S.C. § 1332(a). Diversity jurisdiction
“requires complete diversity- if any plaintiff is a
citizen of the same State as any defendant, then diversity
jurisdiction does not exist.” Flagg v. Stryker
Corp., 819 F.3d 132, 136 (5th Cir. 2016) (citing
Strawbridge v. Curtiss, 7 U.S. (3 Cranch) 267, 2
L.Ed. 435 (1806)). When a properly joined defendant is a
resident of the same state as the plaintiff, removal is
improper. 28 U.S.C. § 1441(b)(2).
“the improper joinder doctrine constitutes a narrow
exception to the rule of complete diversity.”
Cuevas v. BAC Home Loans Servicing, LP, 648 F.3d
242, 249 (5th Cir. 2011). To establish improper joinder, the
removing party has the “heavy” burden,
id., to demonstrate either: “(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 (5th Cir. 2004).
Only the doctrine's second prong is before the Court
here. (Not. Removal, Dkt. 1, at 4; Resp. Mot. Remand, Dkt.
14, at 2).
the second prong of the improper joinder doctrine, a
defendant must establish “that there is no possibility
of recovery by the plaintiff against an in-state defendant,
” which stated differently means “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.” Smallwood, 385 F.3d at 573. A
court evaluates the reasonable basis of recovery under state
law by “conduct[ing] a Rule 12(b)(6)-type
analysis” or “pierc[ing] the pleadings and
conduct[ing] a summary inquiry.” Id.; see
also Int'l Energy Ventures Mgmt., L.L.C. v. United Energy
Grp., Ltd., 818 F.3d 193, 207 (5th Cir. 2016) (stating
that a court may use either analysis, but it must use one and
only one). The Court agrees with the parties that the
Rule12(b)(6)-type analysis is appropriate here. (See
Resp. Mot. Remand, Dkt. 14, at 4).
conducting a 12(b)(6)-type analysis, federal pleading
standards apply. Int'l Energy Ventures, 818 F.3d
at 207. Accordingly, a plaintiff must plead “enough
facts to state a claim to relief that is plausible on its
face.” Bell Atl. Corp. v. Twombly, 550 U.S.
544, 570 (2007). “A claim has facial plausibility when
the plaintiff pleads factual content that allows the court to
draw the reasonable inference that the defendant is liable
for the misconduct alleged.” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009). Although
“detailed factual allegations” are not necessary,
a plaintiff must provide “more than labels and
conclusions, and a formulaic recitation of the elements of a
cause of action will not do.” Twombly, 550
U.S. at 555. The statements in the complaint must be
sufficiently detailed to “give the defendant fair
notice of what the . . . claim is and the grounds upon which
it rests.” Id.
party seeking removal “bears the burden of establishing
that federal jurisdiction exists and that removal was
proper.” Manguno v. Prudential Prop. & Cas.
Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002). The removal
statute must “be strictly construed, and any doubt
about the propriety of removal must be resolved in favor of
remand.” Gasch v. Hartford Accident & Indem.
Co., 491 F.3d 278, 281-82 (5th Cir. 2007); see also
Hood ex rel. Mississippi v. JP Morgan Chase & Co.,
737 F.3d 78, 84 (5th Cir. 2013) (“Any ambiguities are
construed against removal and in favor of remand to state
court.”). A district court is required to remand the
case to state court if, at any time before final judgment, it
determines that it lacks subject matter jurisdiction. 28
U.S.C. § 1447(c).
parties agree that Quality Inn and Carberry are both Texas
residents. (Not. Removal, Dkt. 1, at 3; Mot. Remand, Dkt. 5,
at 1). This Court therefore lacks subject matter jurisdiction
unless Seneca can meet its heavy burden to establish that
Carberry was improperly joined. Seneca argues that Quality
Inn fails to state a claim against Carberry either because it
fails to allege sufficient facts to state a plausible claim
for relief against him or because it asserts claims against
him that are not actionable against insurance adjusters.
(Not. Removal, Dkt. 1, at 4-5). Quality Inn responds that,
among other things, insurance adjusters can be held liable
under the Texas Insurance Code and that it has alleged enough
facts to state a plausible claim for relief under that
statute. (Mot. Remand, Dkt. 5, at 4). The Court agrees with
Quality Inn. Its pleading against Carberry for violating
Texas Insurance Code Section 541.060(a)(2) is, by itself,
sufficient to state a plausible claim for relief against
Carberry. (Orig. Pet., Dkt. 4-1, at 16).
Texas Insurance Code defines a “person” subject
to liability under the code as any “individual . . .
engaged in the business of insurance”-explicitly
including adjusters. Tex. Ins. Code § 541.151(1);
id. § 541.002(2); see also Liberty Mut.
Ins. Co. v. Garrison Contractors, Inc., 966 S.W.2d 482,
486 (Tex. 1998) (holding that an insurer's employee who
“engage[s] in the business of insurance” is a
“person” for purposes of the Texas Insurance Code
and thus may be held liable individually under the code).
“The business of insurance includes the investigation
and adjustment of claims and losses.” Vail v. Tex.
Farm Bureau Mut. Ins. Co., 754 S.W.2d 129, 132 (Tex.
1988). Accordingly, the Fifth Circuit has recognized that
insurance adjusters may be held individually liable for
violations of the Texas Insurance Code. Gasch, 491
F.3d at 282.
Inn asserts that Carberry is individually liable under Texas
Insurance Code Section 541.060(a)(2) for “[n]ot
attempting in good faith to effectuate a prompt, fair, and
equitable settlement of an insurance claim submitted in which
liability has become reasonably clear.” (Orig. Pet.,
Dkt. 4-1, at 16). In support of that cause of action, Quality
Inn alleges a number of relevant facts. According to Quality
Inn, Carberry retained and oversaw an engineering firm that
“spent little time inspecting” the property and
limited the investigation “primarily to the roofs of
the main building.” (Id. at 6). Carberry and
the firm only conducted a limited visual check of a small,
unrepresentative sample of the roof. (Id.). They did
not conduct testing that would have identified the full
extent of the hail and wind damage to the roof, nor did they
inspect the building's interior for water damage.
(Id.). Accordingly, Carberry's report omitted
substantial damage to the roof, exterior vents, exterior air
conditioning units, gutters, spouts, screens, signs, and
interior guestrooms. (Id. at 6-7). Carberry also
underestimated the cost to repair or replace the limited
damage he did include in his estimate. (Id. at 7).
As a result, Quality Inn claims, Carberry “prepared an
estimate to misrepresent that no payment was due on the
insurance claim” in order “to ostensibly
effectuate settlement of [Quality Inn's] insurance
claim.” (Id.). In fact, ...