United States District Court, S.D. Texas, Houston Division
MEMORANDUM AND OPINION
ROSENTHAL CHIEF UNITED STATES DISTRICT JUDGE.
November 2018, Fredric and Lillian Muratore sued Texas
Farmers Insurance Company and McKenzie Shoaf in state court,
asserting common-law negligence, negligent-representation,
and contract-breach claims based on flood damage that the
plaintiffs' home sustained during Hurricane Harvey.
(Docket Entry No. 1-2). The defendants removed. (Docket Entry
No. 1). The plaintiffs have moved to remand, challenging this
court's federal-question jurisdiction. (Id. at
6-11; Docket Entry No. 7). For the reasons explained below,
the court finds that removal was improper and grants the
motion to remand. (Docket Entry No. 7). A remand order is
plaintiffs own a home in Spring, Texas. (Docket Entry No. 1-2
at 3). In 2000, they purchased flood insurance from Texas
Farmers, as their mortgage required. (Id.; Docket
Entry No. 11 -1 at 3). The plaintiffs renewed the policy each
year until 2015, when they paid off their mortgage. (Docket
Entry No. 1-2 at 3). The policy expired in May 2016. (Docket
Entry No. 11-1 at 3).
plaintiffs asked McKenzie Shoaf, an:nsurance agent, to
purchase a less expensive flood insurance policy for their
home. (Docket Entry No. 1-2 at 3). They purchased a Texas
Farmers policy, which was issued in July 2016. (Docket Entry
No. 11-1 at 3, 6). The plaintiffs allege that they asked
Shoaf for a policy with at least $265, 000 in coverage.
(Docket Entry No. 1-2 at 3). The new policy covered up to
$400 in flood damage. (Id. at 4; Docket Entry No.
11-1 at 3).
August 2017, the plaintiffs' home sustained $250, 000 in
flood damage during Hurricane Harvey. (Docket Entry No. 1-2
at 3). The plaintiffs allege that they did not discover the
policy's $400 limit until they submitted a claim to Texas
Farmers. (Id. at 3-4). The company initially denied
the claim, but then sent the plaintiffs checks totaling $400.
(Id. at 4).
November 2018, the plaintiffs sued Texas Farmers and Shoaf in
state court. (Id. at l). In the notice of removal,
the defendants asserted that this case presents a federal
question because the plaintiffs' standard flood insurance
policy issued in July 2016 under the National Flood Insurance
Program, and federal law preempts state-law claims arising
out of a National Flood Insurance Program policy. (Docket
Entry No. 1 at 6-8). The plaintiffs timely moved to remand,
arguing that their only claims are under Texas law and that
federal-question jurisdiction is not present. (Docket Entry
No. 7). The plaintiffs assert that federal preemption does
not apply because their claims arise from policy procurement,
not claims handling. (Id. at 2).
The Legal Standards
may remove a state-court action to federal court when they
have articulated a basis for federal jurisdiction and removal
is procedurally proper. 28 U.S.C. §§ 1441, 1446(b).
The removal statute is strictly construed and ambiguities are
interpreted in favor of remand. Manguno v. Prudential
Prop. & Cas. Ins. Co., 216 F.3d 720, 723 (5th Cir.
2002). The "removing party bears the burden of showing
that federal jurisdiction exists and that removal was
proper." Baker v. Hercules Offshore, Inc., 713
F.3d 208, 212 (5th Cir. 2013) (quoting Manguno, 276
F.3d at 723).
the parties here are all Texas domiciliaries, removal
jurisdiction must be based on a federal question."
Quinn v. Guerrero, 863 F.3d 353, 358 (5th Cir.
2017). Federal-question jurisdiction exists if a plaintiffs
well-pleaded complaint includes a claim arising under
federal. Id. at 358-59 (citing Bernhard v.
Whitney Nat'l Bank, 523 F.3d 546, 551 (5th Cir.
2008)); 28 U.S.C. § 1331. '"[T]he plaintiff
[is] the master of the claim,' so he may confine his
arguments to those arising under state law even if federal
claims are available." Id. at 359 (quoting
Caterpillar Inc. v. Williams, 482 U.S. 386, 391-92
(1987)). Removal jurisdiction is based on the claims in the
operative state-court petition when the case is removed.
Louisiana v. Am. Nat 7 Prop. Cas. Co., 746
F.3d 633, 636-37 (5th Cir. 2014).
plaintiffs argue that their claims do not arise from the
National Flood Insurance Program policy, but from the
defendants' failure to procure enough insurance coverage
to protect the value of the home and its contents. (Docket
Entry No. 7 at 2). According to the plaintiffs, Texas Farmers
and Shoaf "made a tortious misrepresentation wien
procuring coverage." (Id. at 3). The plaintiffs
do not dispute that Texas Farmers paid them the $400 limit
under the policy. (Id. at 4). The plaintiffs argue
that because the state-court petition alleges causes of
action related to policy procurement and not claim handling,
neither the National Flood Insurance Program nor a standard
flood insurance policy is implicated, and no federal question
exists. (Id. at 7-8).
defendants respond that the court has federal-question
jurisdiction because federal law governs the policy. (Docket
Entry No. 11 at 3, 7-9). This case concerns claim handling
and the plaintiffs' state-law causes of action are
preempted, the defendants contend, because the plaintiffs
asserted contract breach, and the standard flood insurance
policy was the only contract between Texas Farmers and the
plaintiffs at the time of loss. (Id. at 1-3, 13).
National Flood Insurance Act, 42 U.S.C. § 4001 , et
seq., established the National Flood Insurance Program
"to make flood insurance available on reasonable terms
and to reduce fiscal pressure on Federal flood relief
efforts." Campo v. Allstate Ins. Co., 562 F.3d
751, 754 (5th Cir. 2009). The Program's
"Write-Your-Own" policies allow private insurers
like Texas Farmers to sell flood insurance underwritten by
the federal government. Id. FEMA regulations specify
the terms and ...