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Grand Hotel Hospitality, LLC v. Certain Underwriters at Lloyd's of London

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

April 24, 2018

GRAND HOTEL HOSPITALITY LLC d/b/a GRAND HOTEL DALLAS, Plaintiff,
v.
CERTAIN UNDERWRITERS AT LLOYD'S OF LONDON ET AL., Defendants.

          MEMORANDUM OPINION AND ORDER

          JANE J. BOYLE UNITED STATES DISTRICT JUDGE

         Before the Court is Plaintiff Grand Hotel Hospitality LLC's (Grand Hotel) motion to remand. Doc. 6.For the reasons stated below, the Court GRANTS the motion and REMANDS this case to state court.

         I.

         BACKGROUND[1]

         This is a breach-of-contract case. On September 20, 2016, a fire severely damaged Grand Hotel. Doc. 1-3, Pl.'s Original Pet., 2. Defendant Certain Underwriters at Llyod's of London (Llyod's of London) is Grand Hotel's insurer. Grand Hotel sued Defendants Llyod's of London, McClarens, Inc., [2] and Brandon Weir in Texas state court, asserting claims for breach of contract, violations of the Texas Insurance Code and the Texas Deceptive Practices Act, and common-law bad faith. Id. at 4-5.

         Defendants removed on the basis of diversity jurisdiction. See Docs. 6, 14.Defendants assert in their notice of removal that the parties are completely diverse when disregarding the state citizenship of Brandon Weir, the insurance adjuster who evaluated Grand Hotel's loss. Doc. 14, Defs.' Am. Notice of Removal, 5-6. And it says the Court should overlook Weir's Texas citizenship because Grand Hotel improperly joined him as a defendant. Id. Grand Hotel filed a motion to remand, arguing Weir is a proper defendant because it pleaded an independent cause of action under the Texas Insurance Code against Weir. Doc. 6, Pl.'s Mot. to Remand, 12-16, see also Pl.'s Resp., 2-8. Grand Hotel's motion to remand is ripe for consideration.

         II.

         LEGAL STANDARDS

         “Federal courts are courts of limited jurisdiction.” Howery v. Allstate Ins. Co., 243 F.3d 912, 916 (5th Cir. 2001). District courts “must presume that a suit lies outside this limited jurisdiction, and the burden of establishing federal jurisdiction rests on the party seeking the federal forum.” Id.

         A. Removal Jurisdiction

         The federal removal statute, 28 U.S.C. § 1441(a), allows a defendant to remove any civil action to federal court if that action falls within the district court's original jurisdiction. This case was removed on the basis of diversity jurisdiction under 28 U.S.C. § 1332. A district court has diversity jurisdiction over “all civil actions where the matter in controversy exceeds the sum or value of $75, 000 . . . and is between . . . citizens of different States.” 28 U.S.C. § 1332(a)(1). But to invoke the statute, the parties must be completely diverse, meaning “each plaintiff must be of a different citizenship than each defendant.” Lowe v. Ingalls Shipbuilding, A Div. of Litton Sys., Inc., 723 F.2d 1173, 1177 (5th Cir. 1984).

         B. Improper Joinder

         If an in-state defendant is improperly joined, a court may disregard the in-state defendant's citizenship for the purpose of determining whether there is complete diversity. Cuevas v. BAC Home Loans Serv., LP, 648 F.3d 242, 249 (5th Cir. 2011). The burden to establish improper joinder is on the removing party, and it is a heavy one. Id.

         To establish improper joinder, the removing party must demonstrate “(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. Ry. Co., 385 F.3d 568, 573 (5th Cir. 2004). Defendants assert only the second method, under which the removing party meets its burden by showing that ‚Äúthere is no reasonable ...


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