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MJ & JJ, LLC v. Clear Blue Specialty Insurance Co.

United States District Court, S.D. Texas, Corpus Christi Division

July 29, 2019




         In December 2018, Plaintiff MJ & JJ, LLC, d/b/a Peacock Manor Apartments (“Plaintiff”), filed this insurance action in Texas state court against Defendants Clear Blue Specialty Insurance Company (“Clear Blue”), Madsen, Kneppers & Associates, Inc. (“MKA”), Hylton Cruickshank, and Charles Jendrusch. See D.E. 1-1. Clear Blue removed the action to this Court on the basis of diversity jurisdiction. D.E. 1. MKA, Cruickshank, and Jendrusch (“the MKA Defendants”) filed a motion to dismiss (D.E. 23), and Plaintiff filed a motion to remand (D.E. 25). After initial review, the Court issued its Order (D.E. 31), converting the motion to dismiss to a motion for summary judgment. No. additional evidence was submitted by the deadline given. See D.E. 32.

         The parties agree that Jendrusch and Cruickshank are not diverse, but the MKA Defendants contend that they were improperly joined and that removal to federal court was thus proper. Although the motion to remand raises a jurisdictional question, the legal standard for the two motions is the same and they will be addressed together. For the reasons discussed further below, Plaintiff's motion to remand (D.E. 25) is DENIED and the MKA Defendants' motion to dismiss (D.E. 23) is GRANTED.


         On a motion to remand, “[t]he removing party bears the burden of showing that federal jurisdiction exists and that removal was proper.” Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002). “Any ambiguities are construed against removal because the removal statute should be strictly construed in favor of remand.” Id.

         Fraudulent joinder can be established by showing that the plaintiff is unable 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 defendant must demonstrate that there is no possibility of recovery by the plaintiff against the in-state defendant. Smallwood v. Ill. Cent. R.R. Co., 385 F.3d 568, 573 (5th Cir. 2004). This test is similar to the test for resolving a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). Travis, 326 F.3d at 648. However, the Court may “pierce the pleadings” and consider summary-judgment style evidence when addressing a motion to remand. Id. at 648-49; Smallwood, 385 F.3d at 573-74 (further discussing when a court may pierce the pleadings).

         Having converted the Rule 12 motion to a Rule 56 motion, the Court applies the summary judgment standard of review to the request to dismiss. Summary judgment is proper if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). A genuine issue exists “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The Court must view the facts in the light most favorable to the non-moving party and draw all reasonable inferences in its favor. Salazar-Limon v. City of Houston, 826 F.3d 272, 274-75 (5th Cir. 2016).

         The moving party bears the initial burden of showing the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the moving party demonstrates an absence of evidence supporting the nonmoving party's case, then the burden shifts to the nonmoving party to come forward with specific facts showing that a genuine issue for trial does exist. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). To sustain this burden, the nonmoving party cannot rest on the mere allegations of the pleadings. Anderson, 477 U.S. at 248.

         Here, although the motion to remand raises a jurisdictional question that this Court must address before considering the merits of the motion to dismiss, both motions ultimately require the same analysis, and the resolution of one dictates the resolution of the other. The motion to remand and accompanying responses merely cite to the parties' substantive arguments raised regarding the motion to dismiss. (See D.E. 25 at 7; D.E. 27 at 2-3; D.E. 30 at 1-2). As such, the two motions will be addressed together.


         a. Complaint and Claims

         On December 7, 2018, Plaintiff filed this lawsuit in the 156th District Court for San Patricio County, Texas. D.E. 1-1. Clear Blue removed the case to this Court on the basis of diversity jurisdiction, stating that, although Plaintiff, Cruickshank, and Jendrusch were all citizens of Texas, complete diversity existed because Cruickshank and Jendrusch were improperly joined and the claims against them should be disregarded for diversity purposes. D.E. 1 at 2-9.

         In its first amended complaint filed in this Court, Plaintiff alleges that it is the owner of a Clear Blue insurance policy for an apartment complex located in San Patricio County, Texas. D.E. 18 at 3. In August 2017, a hurricane caused extensive damage to the property's roof, along with substantial damage to the exterior and interior of the buildings. Plaintiff submitted an insurance claim to cover the costs of repairs. Id.

         Clear Blue assigned adjuster Joe Hornbeck to inspect the damage. Id. at 4. Hornbeck informed Plaintiff that there was severe damage and that he would submit an estimate including the full scope of damages to the roof, siding, interior electrical system, and sheetrock. Clear Blue then retained MKA, which assigned Cruickshank and Jendrusch to adjust the damages. Cruickshank and Jendrusch severely underscoped, undervalued, and denied the damage caused by the hurricane. They omitted almost all roof damage, allowed only minimum charges for interior ...

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