50 F.4th 469
5th Cir.2022Background
- Advanced Indicator owned a Houston property insured for wind damage; policy excluded wear-and-tear/lack of maintenance.
- After Hurricane Harvey, Advanced claimed wind damage; Acadia’s engineer (Watson) and adjuster (Warren) concluded pre-existing deterioration, and Acadia denied the claim.
- Advanced sued Acadia and in-state adjuster Warren in Texas state court alleging breach, bad faith, and TPPCA violations; Acadia elected to accept liability for Warren under Tex. Ins. Code §542A.006 before removing to federal court.
- District court denied remand (striking Warren as improvidently joined), struck two of Advanced’s expert declarations, granted Acadia summary judgment on breach and extra-contractual claims, and dismissed bad-faith and TPPCA claims.
- The Fifth Circuit affirmed denial of remand (holding Acadia’s §542A.006 election rendered Warren improperly joined), reversed summary judgment on breach and related claims, and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Removability after insurer’s §542A.006 election | Acadia’s post‑filing election is a defendant act and cannot trigger removal under the voluntary‑involuntary rule | Election eliminated the claim against the in‑state agent before removal, so agent was improperly joined and removal was proper | Removal was proper: §542A.006 election made Warren improperly joined at removal; voluntary‑involuntary rule does not bar removal here (per Flagg/Crockett/Hoyt) |
| Application of the voluntary‑involuntary rule | The rule bars defendant actions from causing removability | Improper‑joinder doctrine is an exception when claim against in‑state defendant no longer has a possibility of recovery | Court followed precedent: improper‑joinder exception applies, so voluntary‑involuntary rule does not prevent removal in this context |
| Breach of contract — causation (did Harvey winds cause the damage?) | Advanced produced public‑adjuster and expert testimony that hurricane was the sole cause and prior reports showing the building was in good condition | Acadia relied on its engineer and adjuster concluding pre‑existing wear and deterioration caused loss | Summary judgment on breach was improper: genuine fact issues exist about causation and a reasonable jury could find Harvey caused the damage |
| Concurrent causation / segregation of covered vs excluded damage | Advanced’s evidence supports that the covered peril caused all (or segregable portion) of loss | Because pre‑existing wear/tear existed, Advanced cannot segregate covered vs noncovered losses and thus cannot recover | Court held triable dispute exists; concurrent‑causation doctrine did not bar recovery at summary judgment and other claims tied to breach (bad‑faith, TPPCA) were reversed and remanded |
Key Cases Cited
- Flagg v. Stryker Corp., 819 F.3d 132 (5th Cir. 2016) (improper‑joinder inquiry focuses on plaintiffs’ possibility of recovery at time of removal)
- Smallwood v. Illinois Cent. R.R. Co., 385 F.3d 568 (5th Cir. 2004) (standard for proving improper joinder)
- Crockett v. R.J. Reynolds Tobacco Co., 436 F.3d 529 (5th Cir. 2006) (improper joinder characterized as an exception to the voluntary‑involuntary rule)
- Hoyt v. Lane Constr. Corp., 927 F.3d 287 (5th Cir. 2019) (post‑filing dismissals of in‑state defendants can support removal when they show improper joinder)
- Weems v. Louis Dreyfus Corp., 380 F.2d 545 (5th Cir. 1967) (articulation of the voluntary‑involuntary rule)
- Celotex Corp. v. Catrett, 477 U.S. 317 (1986) (summary‑judgment standard)
- Overstreet v. Allstate Vehicle & Prop. Ins. Co., 34 F.4th 496 (5th Cir. 2022) (addresses unresolved questions about the concurrent‑causation doctrine)