United States District Court, E.D. Texas, Sherman Division
MEMORANDUM OPINION AND ORDER
L. MAZZANT UNITED STATES DISTRICT JUDGE
before the Court is Plaintiff Adaptive Modifications,
LLC's Motion to Remand (Dkt. #10). Having considered the
motion and the relevant pleadings, the Court finds that the
motion should be denied.
business purpose is to transform living spaces into
functional and accessible homes for the disabled and elderly
to promote independent living (Dkt. #10 ¶ 12).
Plaintiff's sole member is James Boren (Dkt. #10 ¶
7). In March 2015, Mr. Boren asked Defendant Dan Mitchell-a
retail insurance agent for Defendant Trimark Insurance Group
(“Trimark”)-to procure a commercial general
liability policy for Plaintiff (Dkt. #1 ¶ 7; Dkt. #10
Boren's meeting with Mr. Mitchell was short (Dkt. #10
¶ 13). Although Mr. Mitchell asked Mr. Boren few
questions, Mr. Boren remembers explaining to Mr. Mitchell
that he “performs all types of work, including minor
plumbing, installation of handrails and wall attachments,
attaching faucets and toilets, tilting work in bathroom
areas, and all other handyman type of work” on behalf
of Plaintiff (Dkt. #10 ¶¶ 12-13). Mr. Boren told
Mr. Mitchell that the general commercial liability policy
procured for Plaintiff must cover this work (Dkt. #10 ¶
13). Mr. Mitchell assured Mr. Boren that he would procure a
policy for Plaintiff that covered this work and any damages
that might occur (Dkt. #10 ¶ 13). The policy procured by
Mr. Mitchell allegedly covers only carpentry work (Dkt. #10
procure Plaintiff's policy, Mr. Mitchell applied to
Defendant Delta General Agency Corporation, North Texas
Branch (“Delta”) to underwrite the policy (Dkt.
#1 ¶ 7). Acting as a managing general agent, Delta
enabled Defendant Atlantic Casualty Insurance Company
(“Atlantic”) to issue Plaintiff's policy for
a period covering March 13, 2015, through March 13, 2016
(Dkt. #1 ¶¶ 6-7).
2015, Plaintiff participated in nonparty Amazon.com
Inc.'s (“Amazon”) “beta program for
services.” (Dkt. #1-5 ¶ 10). As part of this
program, Amazon contracted Plaintiff to perform handyman-type
jobs for customers who ordered products through Amazon. (Dkt.
#1-5 ¶ 10). In December 2015, nonparties Mr. and Ms.
Haberman ordered a faucet from Amazon and Amazon contracted
Plaintiff to install the faucet (Dkt. #1-5 ¶ 10; Dkt.
#10 ¶ 18). The faucet later leaked allegedly causing
damage to the Habermans' property (Dkt. #1-5 ¶ 10).
The Habermans reported the leak to Amazon and Amazon
contracted Plaintiff to install a new faucet. After
installing the new faucet, Amazon told Plaintiff it would
“handle the Habermans' matter.” (Dkt. #10
March 2017, the Habermans filed an underlying suit concerning
the alleged property damage caused by the leaking faucet
(Dkt. #1-5 ¶ 11). The Habermans served Plaintiff with
notice of the underlying suit in March 2018 (Dkt. #1-5 ¶
11). Plaintiff contacted Atlantic requesting Atlantic defend
and indemnify Plaintiff in the underlying suit pursuant to
the insurance policy (Dkt. #1-5 ¶ 11). Atlantic denied
Plaintiff's claim (Dkt. #1-5 ¶ 11).
on November 5, 2018, Plaintiff sued Defendants in the 219th
Judicial District Court of Collin County, Texas (Dkt. #1
¶ 1; Dkt. #1-5). Plaintiff alleges claims for violations
of Chapter 541 of the Texas Insurance Code, violations of
Section 17.46(b) of the Texas Deceptive Trade Practices Act
(“DTPA”), breach of contract, and negligence
against the Defendants (Dkt. #1-5 ¶¶ 12-24). On
December 13, 2018, Defendants removed the case to this Court
(Dkt. #1). On January 11, 2019, Plaintiff filed its motion to
remand (Dkt. #10). Defendants filed a response to the motion
on January 28, 2019 (Dkt. #16). Plaintiff did not file a
reply in support of the motion.
courts are courts of limited jurisdiction, possessing only
that power authorized by Constitution and statute.”
Gunn v. Minton, 568 U.S. 251, 256 (2013) (quoting
Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S.
375, 377 (1994)). “Only state court actions that
originally could have been filed in federal court may be
removed to federal court by the defendant.”
Caterpillar Inc. v. Williams, 482 U.S. 386, 392
(1987) (citing 28 U.S.C. § 1441(a)). “In an action
that has been removed to federal 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.” Humphrey v. Tex. Gas
Serv., No. 1:14-CV-485, 2014 WL 12687831, at *2 (E.D.
Tex. Dec. 11, 2014) (citations omitted). The Court
“must presume that a suit lies outside [its] limited
jurisdiction, ” Howery v. Allstate Ins. Co.,
243 F.3d 912, 916 (5th Cir. 2001), and “[a]ny
ambiguities are construed against removal and in favor of
remand to state court.” Mumfrey v. CVS Pharmacy,
Inc., 719 F.3d 392, 397 (5th Cir. 2013) (citing
Manguno v. Prudential Prop. & Cas. Ins. Co., 276
F.3d 720, 723 (5th Cir. 2002)). “When considering a
motion to remand, the removing party bears the burden of
showing that federal jurisdiction exists and that removal was
proper.” Humphrey, 2014 WL 12687831, at *2
(quoting Manguno, 276 F.3d at 723).
removed this case pursuant to 28 U.S.C. § 1441 arguing
the Court may exercise diversity jurisdiction under 28 U.S.C.
§ 1332 (Dkt. #1 ¶ 3). The parties do not dispute
that complete diversity-required to establish original
jurisdiction under § 1332-does not exist as Plaintiff
and Defendants Trimark, Delta, and Mr. Mitchell are citizens
of Texas (collectively, “Texas Defendants”) (Dkt.
#1-5 ¶¶ 4, 5-8). However, Defendant Atlantic-a
citizen of North Carolina-claims that Plaintiff improperly
joined the Texas Defendants to defeat diversity jurisdiction
(Dkt. #1 ¶ 3; Dkt. #16). Accordingly, Defendants contend
the Court may exercise diversity jurisdiction after
dismissing the improperly joined defendants.
avoid removal and to preserve their venue choice, plaintiffs
sometimes join non-diverse parties for the sole purpose of
defeating diversity jurisdiction. 13F Charles Alan Wright et
al., Federal Practice and Procedure § 3641.1
(3d ed. 1998). “[T]he improper joinder doctrine
constitutes a narrow exception to the rule of complete
diversity” allowing a defendant to challenge a
plaintiff's attempt to join a diversity-destroying party.
Cuevas v. BAC Home Loans Servicing, LP, 648 F.3d
242, 249 (5th Cir. 2011) (citing McDonal v. Abbott
Labs., 408 F.3d 177, 183 (5th Cir. 2005)). 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) (en banc) (quoting Travis v.
Irby, 326 F.3d 644, 646-47 (5th Cir. 2003)). In other
words, if a defendant demonstrates that the plaintiff either
fraudulently pleaded jurisdictional facts concerning the
non-diverse party or the plaintiff is unable to establish a
cause of action against the non-diverse party, the defendant
may remove the case under the improper joinder exception to
the complete diversity rule.
the second prong-inability to establish a cause of action
against the non-diverse party-the test is “whether the
defendant has demonstrated 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.
Courts resolve this question by conducting a Federal Rule of
Civil Procedure 12(b)(6) analysis or piercing the pleadings
and conducting a summary inquiry. River of Life Assembly
of God v. Church Mut. Ins. Co., 1:19-CV-49-RP, 2019 WL
1468933, at *1 (W.D. Tex. Apr. 3, 2019) (quoting
Smallwood, 385 F.3d at 573) (citing Int'l
Energy Ventures Mgmt., L.L.C. v. United Energy Grp.,
Ltd., 818 F.3d 193, 201 (5th Cir. 2016)).
choose to either perform a Rule 12(b)(6) analysis or pierce
the pleadings and conduct a summary inquiry, “but it
must use one and only one of them, not neither or
both.” Int'l Energy, 818 F.3d at 207
(emphasis in original). If a court chooses the 12(b)(6)
route, the court applies the federal pleading standards.
Id. at 207-08. A court should only choose to pierce
the pleadings and conduct a summary inquiry to
“identify the presence of discrete and undisputed facts
that would preclude [a] plaintiff's recovery against the
in-state defendant.” Smallwood, 385 F.3d at
573-74. Under either inquiry, “the motive or purpose of
the joinder of the in-state defendants is not
relevant.” Id. The decision concerning whether
to apply the 12(b)(6) analysis or to pierce the pleadings and
conduct a summary inquiry is within the discretion of the
trial court. Davidson v. Georgia-Pac, L.L.C., 819
F.3d 758, 765 (5th Cir. 2016) (quoting Smallwood,
385 F.3d at 573). The Fifth Circuit “has consistently
found improper joinder where a non-jurisdictional affirmative
defense (such as statute of limitations) conclusively bars
the plaintiffs claims against the non-diverse
defendant.” Flagg v. Stryker Corp., 819 F.3d
132, 139 n.32 (5th Cir. ...