United States District Court, S.D. Texas, Houston Division
Rosenthal Chief United States District Judge
Vyas and Davis Vyas-together, “Vyas”-sued Atain
Specialty Insurance Company and Team One Claims in Texas
state court, alleging that these defendants unreasonably
investigated and underpaid an insurance claim for storm
damage to their hotels. (Docket Entry No. 1-2 at 9). Atain
Insurance removed based on diversity jurisdiction, asserting
that Team One was improperly joined. (Docket Entry No. 1).
Vyas moved to remand, arguing that the court lacks diversity
jurisdiction because Team One is a proper defendant. Atain
Insurance responded and submitted documents. (Docket Entry
Nos. 6, 9-10).
careful review of the state-court pleadings, the notice of
removal, the motion to remand, response, and the properly
considered documents, the court concludes that there was
improper joinder and denies the motion to remand. The reasons
are explained in detail below.
allegations are straightforward and all too familiar. Vyas
alleges that a February 2018 storm damaged some hotels they
owned. Although they timely filed an insurance claim, Atain
Insurance “overlooked or ignored” the property
damage and paid too little. (Docket Entry No. 1- 2 at 9).
Team One investigated the claim on Atain Insurance's
behalf. (Id.). Vyas alleges that Team One “was
unable or unwilling to perform or complete a reasonable
inspection” and missed storm damage to two hotels.
(Id.). Vyas alleges that the Casa Loma Motel had
“exterior damage to the property, including damage to
the built-up 3 ply roof, roll roof, soft metal and gutters,
as well as stucco damage to the exterior elevations, ”
and that the Holiday Plaza Motel had “exterior damage
to the property, ” including damage to the roofs of
buildings 1-4, a storage shed, and a laundry room; exterior
elevation damage; and damage to rooms 204, 205, 219, 245, and
248, all of which Team One omitted or undervalued.
(Id. at 9-10). Vyas alleges that Team One's
“unreasonable investigation led to the wrongful
underpayment and/or denial of [the] claim, ” and that
Atain Insurance ratified Team One's findings and actions.
(Id. at 10, 16).
January 2019, Vyas sued in the 85th Judicial District Court
of Brazos County, Texas, asserting a contract-breach claim
and violations of the Texas Insurance Code and the Texas
Deceptive Trade Practices Act against Atain Insurance and
Team One. (Id. at 13, 16-17). Atain Insurance timely
removed on the basis that it is not a Texas citizen and that
Vyas improperly named Team One as a defendant because Atain
Insurance had accepted “whatever liability” Team
One had to Vyas for its “acts or omissions related to
the claim.” (Docket Entry No. 1 at 3 (quoting Tex. Ins.
Code 542A.006(a))). Atain Insurance submitted a November 2018
letter it sent to Vyas, stating that:
Pursuant to section 542A.006(b) of the Texas Insurance Code,
Atain [Insurance] accepts any liability that Robert
Gutierrez, Team One Adjusting Services, Scott Abraham, [or]
EnVista Forensics may have for their purported acts or
omissions related to this claim.
(Docket Entry No. 1-2 at 38).
Vyas has moved to remand, arguing that § 542A.006
permits “insurers to assume responsibility for their
agent-adjusters without allowing insurers to claim complete
diversity when they assume responsibility for a non-diverse
adjuster.” (Docket Entry No. 6 at 4). Atain Insurance
responds that Vyas relies on cases involving insurers that
elected to accept liability only after the lawsuit had been
filed in state court, while Atain Insurance elected to accept
liability for Team One months before suit was filed. (Docket
Entry No. 9 at 3-5). As a result, Atain Insurance argues,
Vyas's claims against Team One had no possibility of
success when Vyas sued Team One. (Id. at 3).
parties' arguments are considered below.
The Legal Standard
remove a case based on diversity, the diverse defendant must
demonstrate that all of the prerequisites of diversity
jurisdiction contained in 28 U.S.C. § 1332 are
satisfied.” Smallwood v. Ill. Cent. R.R. Co.,
385 F.3d 568, 572 (5th Cir. 2004) (en banc). “A case
may be removed pursuant to 28 U.S.C. § 1332 if there is
complete diversity of citizenship and the amount in
controversy is greater than $75, 000 exclusive of interests
and costs.” Allen v. Walmart Stores, L.L.C.,
907 F.3d 170, 183 (5th Cir. 2018).
district court is prohibited by statute from exercising
jurisdiction over a suit in which any party, by assignment or
otherwise, has been improperly or collusively joined.”
Smallwood, 385 F.3d at 572 (emphasis omitted)
(citing 28 U.S.C. § 1359). Improper joinder can be
established by showing the “inability of the plaintiff
to establish a cause of action against the non-diverse party
in state court.” Travis v. Irby, 326 F.3d 644,
647 (5th Cir. 2003). The issue is “whether the
defendant has demonstrated that there is no possibility of
recovery by the plaintiff against an instate 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.
burden of persuasion on those who claim improper joinder is a
heavy one.” Davidson v. Georgia-Pacific,
L.L.C., 819 F.3d 758, 765 (5th Cir. 2016) ...