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Trentin v. Allstate Vehicle and Property Insurance Co.

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

May 14, 2019

ATHENA TRENTIN and ROBERT DYE, Plaintiffs,
v.
ALLSTATE VEHICLE AND PROPERTY INSURANCE COMPANY, Defendant.

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

          DAVID L. HORAN UNITED STATES MAGISTRATE JUDGE.

         This case has been referred to the undersigned United States magistrate judge for pretrial management under 28 U.S.C. § 636(b) and a standing order of reference from United States District Judge Ed Kinkeade. See Dkt. No. 9.

         Defendant Allstate Insurance Company (“Allstate”) has filed an Election of Legal Responsibility Pursuant to Texas Insurance Code § 542A.006');">542A.006. See Dkt. No. 6.

         Plaintiffs Athena Trentin and Robert Dye have filed a motion to remand, see Dkt. No. 7, and Allstate has filed a response, see Dkt. No. 10. Plaintiffs did not file a reply, and the time to do so has passed.

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

         Background

         On April 2, 2018, Plaintiffs purchased an insurance policy from Allstate. The policy was sold by Allstate agents Grant Galliford and Edith Aracely Cordero. According to Plaintiffs, Galliford and Cordero represented that their boathouse would be covered under the policy without reservation. See Dkt. No. 1-1 at 7.

         The boathouse was damaged on July 11, 2018 and Plaintiffs submitted a claim on July 12, 2018. Plaintiffs allege the boathouse was damaged by a windstorm and hail. On August 6, 2018, Allstate denied the claim because its investigation determined that the damage was the result of severe corrosion of carbon steel support columns caused by age and constant exposure to water and oxygen for many years. Allstate's stated reason for denying the claim was that corrosion was not a covered peril under the policy. See id.; Dkt. No. 8-1 at 1.

         On January 17, 2019 Plaintiffs filed their Original Petition in the 14th-A Judicial District Court of Dallas County, Texas, styled Athena Trentin and Robert Dye v. Allstate Vehicle and Property Insurance Company, Grant Galliford and Edith Aracely Cordero, Cause No. DC-00899 (the “State Court Action”). Plaintiffs assert claims against all three defendants for violations of the Texas Insurance Code and also assert claims against Allstate for breach of contract and violation of the Prompt Payment of Claims Act. See Dkt. No. 1-1.

         Defendants removed the case to federal court based solely on diversity jurisdiction under 28 U.S.C. § 1332(a). See Dkt. No. 1. They contend that complete diversity exists because Plaintiffs are citizens of Texas, Allstate is a citizen of Illinois and that the Texas citizenship of Galliford and Cordero should be disregarded for purposes of diversity because they have been improperly joined. See Id. at 2-4.

         After removal, Allstate filed its Election of Legal Responsibility Pursuant to Texas Insurance Code § 542A.006');">542A.006 (the “Election”) in which Allstate elects to accept legal responsibility for whatever liability its agents Galliford and Cordero might have to Plaintiffs under the insurance claim and seeks Galliford's and Cordero's dismissal with prejudice. See Dkt. No. 6; Tex. Ins. Code § 542A.006');">542A.006.

         Plaintiffs then filed their Motion to Remand. See Dkt. No. 7. Plaintiffs contend that the case should be remanded to State court because the parties are not diverse, that their joinder of non-diverse Defendants Galliford and Cordero was proper, and remand is required under the voluntary-involuntary rule. They also argue that Allstate's election to accept legal responsibility for the non-diverse Defendants does not preclude removal. See id.

         Allstate filed a response. See Dkt. No. 10. Allstate argues that removal is proper because Galliford and Cordero were improperly joined to defeat diversity jurisdiction and that Plaintiffs fail to state a claim against Galliford and Cordero. See id.

         The undersigned now concludes that the motion to remand should be granted and that the Court does not have jurisdiction to dismiss Galliford and Cordero under the Section 542A.006');">542A.006 election.

         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 ...


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