United States District Court, S.D. Texas, Houston Division
MEMORANDUM OPINION AND ORDER
Miller Senior United States District Judge
before the court is plaintiff Greatland Investment,
Inc.'s motion to remand. Dkt. 6. Defendant Mt. Hawley
Insurance Company responded. Dkt. 11. Having considered the
motion, response, and applicable law, the court is of the
opinion that Greatland's motion to remand (Dkt. 6) should
an insurance coverage case. Greatland alleges that a storm
damaged Greatland's real property in August 2017. Dkt.
1-2 at 7. Greatland subsequently submitted a claim to Mt.
Hawley under an existing business insurance policy.
Id. Mt. Hawley then allegedly assigned Kevin
Mayfield, an insurance adjuster employed by Engle Martin
& Associates (“Engle Martin”), to
“inspect and adjust the claim.” Id.;
Dkt. 1 at 4. According to Greatland, Mayfield found that the
claim did not fall within Greatland's insurance policy
and Mt. Hawley refused to pay the claim. Id.
December 3, 2018, Greatland sent a demand letter stating its
intent to sue Mt. Hawley and Mayfield, among others. Dkt.
11-4 at 2. On January 15, 2019, Mt. Hawley responded and
notified Greatland that Mt. Hawley had elected to accept
liability for its employees, Engle Martin, and Engle Martin
employees under Texas Insurance Code § 542A.006. Dkt.
11-5 at 2. On March 1, 2019, Greatland filed suit against Mt.
Hawley and Mayfield in Texas state court for breach of
contract, noncompliance with the Texas Insurance Code, and
DTPA violations. Id. at 12-18.
Hawley removed the case to this court on diversity
jurisdiction grounds. Dkt. 1; 28 U.S.C. § 1332.
Greatland now moves to remand. Dkt. 6. The parties do not
dispute that the amount in controversy exceeds the $75, 000
jurisdictional threshold. See Dkt. 1-2 at 21 (state
court petition claiming at least $1, 000, 000 in damages).
However, Greatland argues that both itself and Mayfield are
Texas citizens and that therefore the parties are not
completely diverse. Dkt. 6. Mt. Hawley counters that it
elected to accept liability for Mayfield under Texas
Insurance Code § 542A.006. Dkt. 11 at 8. Thus, Mt.
Hawley argues that Mayfield is improperly joined and that
Mayfield's citizenship must be ignored for diversity
purposes. Dkt. 11 at 14. Because Mt. Hawley is a citizen of
Illinois, it contends that complete diversity exists between
the parties. Dkt. 1 at 3.
Standard of Review
Federal Rule of Civil Procedure 12(b)(1), a party can seek
dismissal of an action for lack of subject matter
jurisdiction. Fed.R.Civ.P. 12(b)(1). Subject matter
jurisdiction based on diversity jurisdiction requires that
(1) complete diversity exists among the parties, and (2) the
amount in controversy exceeds $75, 000. 28 U.S.C. §
1332. Generally, “[i]n determining whether the court
has subject matter jurisdiction, [the court] must accept as
true the allegations set forth in the complaint.”
Crane v. Johnson, 783 F.3d 244, 251 (5th Cir. 2015)
28 U.S.C. § 1441, a defendant may remove an action from
state court to federal court if the district would have had
original jurisdiction over that action. However, a case may
be removed despite a non-diverse defendant if the non-diverse
defendant was improperly joined for the purpose of destroying
diversity. Hornbuckle v. State Farm Lloyds, 385 F.3d
538, 542 (5th Cir. 2004). The burden to establish improper
joinder falls on the party that asserts it. Travis v.
Irby, 326 F.3d 644, 649 (5th Cir. 2003).
prove improper joinder, the removing party must demonstrate
that “there is no reasonable basis for the district
court to predict that the plaintiff might be able to
recover” against the non-diverse defendant.
Int'l Energy Ventures Mgmt., L.L.C. v. United Energy
Grp., Ltd., 818 F.3d 193, 200 (5th Cir. 2016) (quoting
Smallwood v. Ill. Cent. Ry. Co., 385 F.3d 568, 573
(5th Cir. 2004)). When determining whether a defendant is
improperly joined, the court must usually limit its inquiry
to the pleadings. Id.; see also Electro Grafix,
Corp. v. Acadia Ins. Co., No. SA-18-CA-589-XR, 2018 WL
3865416, at *3 (W.D. Tex. Aug. 14, 2018). However, “the
district court may, in its discretion, pierce the pleadings
and conduct a summary inquiry” if the plaintiff has
“misstated or omitted discrete facts that would
determine the propriety of joinder.”
Smallwood, 385 F.3d at 573.
542A.006(a) of the Texas Insurance Code provides that an
insurer may “elect to accept whatever liability an
agent might have to the claimant for the agent's acts or
omissions related to the claim by providing written notice to
the claimant.” Tex. Ins. Code Ann. § 542A.006(a)
(West Supp. 2018). If an insurer makes such an election prior
to the plaintiff filing suit, “no cause of action
exists against the agent related to the claimant's claim,
and, if the claimant files an action against the agent, the
court shall dismiss that action with prejudice.” §
542A.006(b). In that case, there is no reasonable basis to
predict that the plaintiff might be able to recover from the
agent-defendant, and the agent-defendant is improperly
joined. Electro Grafix, Corp., 2018 WL 3865416, at
*4; see also Stephens v. Safeco Ins. Co. of Indiana,
No. 4:18-cv-00595, 2019 WL 109395, at *7 (E.D. Tex. Jan. 4,
2019) (“[I]f the [§ 542A] election is made
pre-suit, an adjuster subsequently joined is joined when
state law mandates that there can be no viable claims against
him.”). Thus, federal courts are to disregard the