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Fortress Iron LP v. The Travelers Indemnity Co.

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

May 14, 2019

FORTRESS IRON, LP, Plaintiff,
v.
THE TRAVELERS INDEMNITY COMPANY and JASON SPRADLIN Defendants.

          FINDINGS, CONCLUSIONS, AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE

          DAVID L. HORAN UNITED STATES MAGISTRATE JUDGE

         Plaintiff Fortress Iron, LP, (“Fortress”) has filed a motion to remand, see Dkt. No. 13, which United States District Judge Ed Kinkeade has referred to the undersigned United States Magistrate Judge for report and recommendation, see Dkt. No. 16. Defendant The Travelers Indemnity Company (“Travelers”) has filed a response, see Dkt. No. 14, and Fortress has filed a reply, see Dkt. No. 15.

         For the following reasons, the undersigned recommends that the motion for remand be granted.

         Background

         On October 24, 2018, Fortress filed its Original Petition in the C-68th Judicial District Court of Dallas County, Texas, styled Fortress Iron, LP v. The Travelers Indemnity Company and Jason Spradlin, Cause No. DC-18-16087 (the “State Court Action”). Fortress asserted claims against Travelers and its claims investigator/adjuster Jason Spradlin based on Travelers' denial of a property insurance claim. See Dkt. No. 1-1 at 9-18.

         On November 11, 2018, Travelers and Spradlin filed an answer, see Id. at 34-38, and Travelers filed a notice of election under Section 542A.006 of the Texas Insurance Code, see Id. at 40-41.

         On November 28, 2018, Travelers removed the case to federal court based solely on diversity jurisdiction under 28 U.S.C. § 1332(a). See Dkt. No. 1. Travelers contends that complete diversity exists because Fortress is a citizen of Texas, Travelers is a citizen of Connecticut, and Spradlin's Texas citizenship should be disregarded for purposes of diversity because he was improperly joined. See Dkt. No. 1. Travelers' improper joinder argument is based solely on its election under Texas Insurance Code Section 542A.006(c). See Id. at 3-4.

         On December 28, 2018, Fortress filed a motion to remand and argues that the voluntary-involuntary rule precludes removal of this action. See Dkt. No. 13. In its response, Travelers disagrees and argues that improper joinder is an exception to the voluntary-involuntary rule. See Dkt. No. 14.

         The undersigned now concludes that the motion for remand should be granted.

         Legal Standards

         I. Federal Jurisdiction and Removal

         A federal court's jurisdiction is limited, and federal courts generally may hear a case of this nature only if it involves a question of federal law or where diversity of citizenship exists between the parties. See 28 U.S.C. §§ 1331, 1332.

         A defendant may remove an action filed in state court to federal court on the basis of diversity if the action is one that could have originally been filed in federal court. See 28 U.S.C. § 1441(a). The removing party bears the burden of establishing jurisdiction. See Miller v. Diamond Shamrock Co., 275 F.3d 414, 417 (5th Cir. 2001).

         28 U.S.C. § 1332 creates federal subject matter jurisdiction where diversity of citizenship exists between the parties and the amount in controversy exceeds $75, 000. See 28 U.S.C. §§ 1332(a), (b). “A district court cannot exercise diversity jurisdiction if one of the plaintiffs shares the same state citizenship as any one of the defendants.” Corfield v. Dallas Glen Hills LP, 355 F.3d 853, 857 (5th Cir. 2003). To establish subject matter jurisdiction, “the party asserting federal jurisdiction must distinctly and affirmatively allege [ ] the citizenship of the parties.” Howery v. Allstate Ins. Co., 243 F.3d 912, 919 (5th Cir. 2001) (citation and internal quotations omitted). And, if no amount of damages was alleged in the state court petition, a removing ...


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