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Arnold v. Allstate Fire & Casualty Insurance Co.

United States District Court, W.D. Texas, Austin Division

October 11, 2019

JESSICA ARNOLD
v.
ALLSTATE FIRE & CASUALTY INSURANCE COMPANY

          HONORABLE LEE YEAKEL UNITED STATES DISTRICT JUDGE

          REPORT AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE

          SUSAN HIGHTOWER UNITED STATES MAGISTRATE JUDGE

         Before this Court are Defendant Allstate Fire & Casualty Insurance Company's Motion to Dismiss, filed on May 29, 2019 (Dkt. No. 2); Plaintiff's Motion to Remand, filed on June 7, 2019 (Dkt. No. 5);[1] and the parties' related response and reply briefs. The District Court referred the above motions and related filings to the undersigned Magistrate Judge for Report and Recommendation pursuant to 28 U.S.C. § 636(b)(1), Federal Rule of Civil Procedure 72, and Rule 1 of Appendix C of the Local Rules of the United States District Court for the Western District of Texas (“Local Rules”).

         I. BACKGROUND

         Plaintiff Jessica Arnold (“Plaintiff”) brings this lawsuit based on a claim for underinsured motorist benefits (“UIM benefits”) under her insurance policy contract (the “Policy”) with Allstate Fire & Casualty Insurance Company (“Allstate”). Plaintiff alleges that she was injured in an October 2017 automobile accident and that the accident was caused by the negligence of underinsured driver Amy Elizabeth Szemkus (“Szemkus”).

         Plaintiff originally filed this lawsuit in state court on January 22, 2019, asserting negligence claims against Defendant Szemkus only. Dkt. No. 1-5. On April 22, 2019, Plaintiff amended her Original Petition to include claims against Allstate. Dkt. No. 1-3. See Arnold v. Allstate, C-1-CV-19-000665 (County Court at Law No. 2, Travis County, Tex. April 22, 2019).

         Plaintiff's First Amended Petition alleges that Allstate refuses to pay UIM benefits it is obligated to pay under the Policy. Dkt. No. 1-3. Plaintiff further alleges that on December 6, 2017, she notified Allstate of the automobile accident and basis of her claim for UIM benefits, but Allstate failed to timely acknowledge and commence an investigation of Plaintiff's claim and failed to attempt in good faith to settle, compelling her to initiate litigation. Id. Plaintiff asserts claims against Allstate for breach of contract and violations of the Texas Insurance Code, including the Prompt Payment of Claims Act and the Unfair Claim Settlement Act. Id. Plaintiff's First Amended Petition seeks monetary relief. Id.

         On May 17, 2019, Plaintiff consented to Defendant Szemkus' voluntary dismissal from the state court action, based on an agreement between the parties. Dkt. No. 1-7. On May 29, 2019, Allstate removed this lawsuit to federal court on the basis of diversity jurisdiction under 28 U.S.C. § 1332 and immediately moved for dismissal of Plaintiff's claims under Fed.R.Civ.P. 12(b)(6). Dkt. Nos. 1 and 2. Plaintiff opposes Allstate's Motion to Dismiss and argues that the case was improperly removed. Dkt. No. 6.

         On June 7, 2019, Plaintiff filed a Motion to Remand, contending that there is a lack of diversity between the parties. Dkt. No. 5. On June 18, 2019, Plaintiff filed “Plaintiff's Original Complaint Filed Subject to, and Subsequent to, Plaintiff's Motion to Remand” (“Second Amended Pleading”), in which Plaintiff restates her previous claims against Allstate and adds a cause of action seeking a declaratory judgment to establish the amount of benefits she is owed under her insurance policy. Dkt. No. 7.

         II. ANALYSIS

         The Court addresses the Motion to Remand and Motion to Dismiss in turn.

         A. Motion to Remand

         A defendant may remove any civil action from state court to a district court of the United States that has original jurisdiction. 28 U.S.C. § 1441. There are two principal bases on which a district court may exercise removal jurisdiction: the existence of a federal question and complete diversity of citizenship between the parties. 28 U.S.C. §§ 1331 and 1332. Here, Allstate alleges only diversity of citizenship as the basis of the Court's jurisdiction. A federal court may exercise diversity jurisdiction after removal only if three requirements are met: (1) the parties are of completely diverse citizenship; (2) none of the properly joined defendants is a citizen of the state in which the case is brought; and (3) the case involves an amount in controversy of more than $75, 000. See 28 U.S.C. §§ 1332(a), 1441(b)(2); Flagg v. Stryker Corp., 819 F.3d 132, 136 (5th Cir. 2016). If a party is improperly joined, a court may disregard the party's citizenship for purposes of determining subject matter jurisdiction. Smallwood v. Ill. Cent. R.R. Co., 385 F.3d 568, 572-73 (5th Cir. 2004) (en banc).

         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. The federal removal statute provides that even where a case was not initially removable, “a notice of removal may be filed within 30 days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable.” 28 U.S.C. § 1446(b)(3) (emphasis added); see also Weems v. Louis Dreyfus Corp., 380 F.2d 545, 547-48 (5th Cir. 1967). To ...


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