United States District Court, W.D. Texas, San Antonio Division
RICHARD LOPEZ, ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED; AND GLORIA LOPEZ, ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED; Plaintiffs,
PROGRESSIVE COUNTY MUTUAL INSURANCE COMPANY, APRIL HAGER, Defendants.
REPORT AND RECOMMENDATION OF UNITED STATES MAGISTRATE
ELIZABETH S. ("BETS Y") CHESTNEY, UNITED STATES
the Honorable United States District Judge Fred
Report and Recommendation concerns Plaintiffs' Motion to
Remand [#18]. All dispositive pretrial matters in this case
have been referred to the undersigned for disposition
pursuant to Western District of Texas Local Rule CV-72 and
Appendix C [#6]. The undersigned has authority to enter this
recommendation pursuant to 28 U.S.C. § 636(b)(1)(B). For
the reasons set forth below, it is recommended that
Plaintiffs' motion be denied.
Richard Lopez and Gloria Lopez (collectively,
“Plaintiffs”) bring this putative class action
against their insurer, Defendant Progressive County Mutual
Insurance Company (“Progressive”), and its
employee, Defendant April Hager (collectively
“Defendants”). This case was originally filed in
state court and subsequently removed to this Court by
Progressive under the “mass action” provisions of
the Class Action Fairness Act of 2005 (“CAFA”).
See 28 U.S.C. § 1332(d).
did not originally file this suit as a class action. Their
Original Petition against Defendants alleged individual
claims for violations of the Texas Deceptive Trade Practices
Act and fraud. (Orig. Pet. [#1-3] at 2-20.) Plaintiffs
amended their Petition twice prior to removal. (First Am.
Pet. [#1-17] at 2-15; Second Am. Pet. [#1-19] at 2-18.) The
First Amended Petition supplemented Plaintiffs'
allegations and added additional claims but did not assert
class claims. (First Am. Pet. [#1-17].) It was in
Plaintiffs' Second Amended Petition that Plaintiffs first
raised class action allegations seeking recovery on behalf of
other individuals. (Second Am. Pet. [#1-19] at 12-15.)
Progressive promptly removed Plaintiffs' Second Amended
Petition under CAFA, and Plaintiffs filed an Amended
Complaint [#8], which is the live pleading in this case.
their class action, Plaintiffs, who are insureds of
Progressive, seek to recover damages for the allegedly
unlawful assertion by Defendants of a right to reimbursement
based on a purported subrogation lien under the auto
insurance contracts between Progressive and Plaintiffs. (Am.
Compl. [#8] at 1.) Plaintiffs claim that they paid premiums
to Progressive to have Medical Payments Coverage included in
their policy so that in the event of a motor vehicle
collision, the Medical Payments Coverage would pay for
medical services received by the insureds. (Id. at
2- 3.) Plaintiffs allege that they were involved in a
motor-vehicle collision caused by Corina Hernandez, who was
insured by GEICO Choice Insurance Company
(“GEICO”), and suffered serious personal
injuries. (Id. at 3.) Plaintiffs received medical
care in conjunction with their injuries; accrued medical
bills for the services rendered; and those bills were paid by
Progressive directly to the health-care providers.
(Id.) Plaintiffs claim that Progressive subsequently
sent standardized letters to Plaintiffs' counsel and
GEICO asserting a right to reimbursement for these payments
in the event of any third-party personal-injury recovery or
settled their personal-injury claim with GEICO and Hernandez,
and Plaintiffs asked Progressive, through Hager, for a
statutory reduction of the claimed subrogation lien such that
Progressive would share the costs of attorney's fees and
litigation expenses as required by Texas law. (Id.
at 4.) Hager allegedly declined and reaffirmed
Progressive's claim for full reimbursement of
Plaintiffs' medical expenses. (Id.) Defendants
ultimately initiated arbitration proceedings against GEICO to
force GEICO to pay the entire amount directly to Progressive.
(Id.) GEICO was ordered by the arbitrator to pay,
and did pay, the entire $13, 406.68 in medical payments to
Progressive. (Id. at 6.) Plaintiffs filed this
lawsuit because Defendants allegedly refused to reduce the
claimed amount to share litigation fees and costs.
(Id.) It was only after the parties engaged in
discovery that Plaintiffs discovered facts that led them to
take the position that they argue in this suit-that
Defendants never had any rights to reimbursement in the first
instance. (Id.) Plaintiffs also learned through
discovery that Defendants have asserted subrogation liens on
over $3, 560, 510.00 of money paid under Medical Payments
Coverage policies in Texas from 2015 through November 2018
and have recovered over $1, 085, 222.00 from
Progressive's insureds through subrogation liens on
personal-injury recoveries. (Id.) Plaintiffs amended
their pleadings to add these allegations.
their Amended Complaint, Plaintiffs maintain that Defendants
do not have a contractual right of reimbursement to payments
made directly to health-care providers, as opposed to
payments made directly to Plaintiffs as the insureds.
(Id. at 5.) Accordingly, Plaintiffs maintain that
Defendants have wrongfully claimed the right to recover money
paid to third-party health-care providers and have asserted a
subrogation lien to take money that belongs to Plaintiffs.
(Id. at 2.) Plaintiffs bring causes of action
against Defendants for violations of the Texas Insurance
Code, Tex. Ins. Code § 541.051, et seq., the
Texas Deceptive Trade Practices Act, Tex. Ins. Code §
541.141(2), and the Texas Civil Practice & Remedies Code
§ 12.002, and for conversion and theft. (Id. at
7-11.) Plaintiffs bring this lawsuit as a class action and
propose the following definition of the Class:
All individuals who had Medical Payments Coverage with their
Auto Insurance policy issued by Progressive County Mutual
Insurance Company in and subject to the laws of Texas, and
against whom Defendants asserted the existence of rights to
reimbursement, a subrogation lien, or demands for repayment
through a Sub41 letter from their personal injury recoveries
of money that was paid to anyone other than the insured
individuals from April 3, 2015 to the present.
(Id. at 11.)
now move to remand this action to state court, arguing that
their case must be remanded under the local-controversy and
home-state exceptions to CAFA [#18, #19]. Defendants
responded to the motion [#24], and Plaintiffs filed a reply
[#26]. Defendants have moved to strike a portion of
Plaintiffs' reply or for leave to file a sur-reply,
arguing that Plaintiffs raised an entirely new basis for
remand in their reply brief-the discretionary-jurisdiction
exception to CAFA [#27]. Plaintiffs did not respond to
Defendants' motion to strike, and the undersigned will
also recommend that the Court grant the motion as unopposed
and strike Section IV of Plaintiffs' reply in which
Plaintiffs argue for the first time CAFA's
Motion to Strike
Court should grant Defendants' motion to strike.
According to this Court's Local Rules, Plaintiffs'
response to the motion was due within seven days of the
motion's filing, on or before July 22, 2019. See
Loc. R. CV-7(e) (responses to nondispositive motions due
within seven days of motion's filing). To date,
Plaintiffs have not filed a response to the motion. Pursuant
to Local Rule CV-7(e), if there is no response filed within
the time period prescribed by the rules, the court may grant
the motion as unopposed. Moreover, Plaintiffs have waived the
ability to seek remand under CAFA's
discretionary-jurisdiction provision by raising only the
local-controversy and home-state exceptions in their motion
to remand. United States v. Jackson, 426 F.3d 301,
304 n.2 (5th Cir. 2005) (“Arguments raised for the
first time in a reply brief, even by pro se
litigants such as Jackson, are waived.”). Accordingly,
the undersigned has not considered Plaintiffs' argument
with respect to the discretionary-jurisdiction exception or
the proposed sur-reply attached to Defendants' motion to
Motion to Remand
Court should deny Plaintiff's motion to remand. CAFA
authorizes removal of a class action based on a modified
jurisdictional test for removal, “which requires the
removing defendant to prove minimal diversity and an
aggregated amount in controversy of $5, 000, 000 or
more.” Preston v. Tenet Healthsystem Memorial Med.
Ctr., Inc. (Preston I), 485 F.3d 793, 797 (5th Cir.
2007) (citing 28 U.S.C. § 1332(d)). “Minimal
diversity, ” for purposes of CAFA, means that
“any member of a class of plaintiffs” is a
citizen of a state or foreign state different from “any
defendant.” § 1332(d)(2). The parties do not
dispute that the aggregated amount in controversy in this
case satisfies the $5, 000, 000 threshold and that the
citizenship of the parties satisfies the liberal test for
argue, rather, that the local-controversy and home-state
exceptions set forth in CAFA, which are mandatory, apply and
this Court therefore must decline jurisdiction and remand
Plaintiffs' case to state court. These
mandatory-abstention provisions are “designed to draw a
delicate balance between making a federal forum available to
genuinely national litigation and allowing the state courts
to retain cases when the controversy is strongly linked to
that state.” Hollinger v. Home State Mut. Ins.
Co., 654 F.3d 564, 570 (5th Cir. 2011) (quoting Hart
v. FedEx Ground Package Sys., Inc., 457 F.3d 675, 682
(7th Cir. 2006)).
to the local controversy exception, the district court
“shall decline to exercise jurisdiction” when the
action meets the following criteria:
(A)(I) greater than two-thirds of the members of all proposed
plaintiff classes in the aggregate are citizens of the State
in which ...