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Riojas v. Nationwide General Insurance Co.

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

April 16, 2019

CARLOS RIOJAS and CYNTHIA RIOJAS, a/k/a CYNTHIA COLLAZO, Plaintiffs,
v.
NATIONWIDE GENERAL INSURANCE COMPANY; DHI MORTGAGE CO., LTD.; DHI MORTGAGE CO., GP; LEZAM & ASSOCIATES, LLC; and BRITTANY PRESENT; Defendants.

          ORDER

          ROBERT PITMAN, UNITED STATES DISTRICT JUDGE.

         Before the Court is Plaintiffs Carlos and Cynthia Riojas's (the “Riojases”) Motion to Remand, (Dkt. 5), along with a response filed by Defendant Nationwide General Insurance Company (“Nationwide”) (Dkt. 7). Nationwide's response also asks the Court to dismiss the claims against Defendants DHI Mortgage Co., Ltd.; DHI Mortgage Co., GP (together, “DHI”); Lezam & Associates, LLC (“Lezam”); and Brittany Present (“Present”) (altogether, including Nationwide, “Defendants”). (Id. at 8-9). After considering the parties' arguments, the record, and the relevant law, the Court finds that the motion should be granted.

         I. BACKGROUND

         The Riojases filed this action against Defendants in the 98th Judicial District Court in Travis County, Texas, on August 22, 2018. (Orig. Pet., Dkt. 1-1, at 5). In the process of selling the Riojases a home loan in 2015, DHI (through its employee, Present), allegedly told the Riojases that DHI would secure homeowners' insurance for their home. (Id. at 7). Present then asked Lezam to obtain an insurance policy, and Lezam found one from Nationwide. (Id.). All of the defendants allegedly represented to the Riojases that the policy provided “full” coverage for their home, including water damage. (Id.).

         When a pipe burst in the Riojases' upstairs bathroom in October 2017, they reported the damage to Nationwide, which represented that the loss would be covered, told them to check into a hotel, and hired a remodeling company to repair to damage. (Id. at 7-8). After remodeling work had begun, Nationwide allegedly told the Riojases that the loss would not be covered. (Id. at 8). The Riojases then filed this action, asserting claims for breach of contract, breach of the duty of good faith and fair dealing, fraud, the Texas Insurance Code, the Texas Deceptive Trade Practices Act, negligent misrepresentation, and negligent procurement. (Id. at 9-12).

         On December 28, 2018, Nationwide removed this action to this Court. (Dkt. 1). The Riojases, Texas residents, are diverse from Nationwide, an Ohio resident. (Id. at 3). They are not diverse from DHI, Lezam, and Present, all of whom are also Texas residents. (Id.). But Nationwide says that all of the in-state defendants are improperly joined, both because the limitations period on the Riojases' claim expired before they filed suit, (id. at 6-7), and because insurers and their agents have no duty “to explain policy terms, ” (id. at 5). The Riojases now move to remand on the sole basis that Nationwide's removal was untimely. (Dkt. 5).

         II. LEGAL STANDARD

         A 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).

         However, “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 burden 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 4-7).

         Under 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). A Rule12(b)(6)-type analysis is appropriate here.

         In 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). The 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).

         III. DISCUSSION

         A notice of removal must be filed within 30 days after the defendant is formally served with a copy of the initial pleading setting forth the plaintiff's claim for relief. 28 U.S.C. § 1446(b)(1); Bd. of Regents of Univ. of Tex. Sys. v. Nippon Tel. & Tel. Corp., 478 F.3d 274, 278 (5th Cir. 2007). However, if the case stated by the initial pleading is not removable, a notice of removal may be filed within 30 days after the defendant receives any paper from which “it may first be ascertained that the case is one which is or has become removable.” 8 U.S.C. § 1446(b)(3). Unless the plaintiff waives this time limit or it should not apply for an equitable reason, “a defendant who does not timely assert the right to remove loses that right.” Brown v. Demco, Inc., 792 F.2d 478, 481 (5th Cir. 1986).

         The Riojases believe that Nationwide waived its right to remove because it waited more than 30 days from being served with the original petition to do so. (Mot. Remand, Dkt. 5, at 3-4). Nationwide responds that the case was not removable when the action was first filed because the limitations defense had not been pleaded by every in-state defendant ...


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