Centaurus Unity, LP v. Lexington Insurance
766 F. Supp. 2d 780
S.D. Tex.2011Background
- Centaurus sues Lexington Insurance Co., Cunningham Lindsey, U.S., Inc., Allen & Associates, and individual adjusters in Harris County, Texas for alleged improper handling of a Hurricane Ike insurance claim.
- Centaurus obtained a commercial property policy from Lexington via Allen & Associates, covering wind, water, and business losses.
- Hurricane Ike damaged Unity Pointe Apartments in Sept. 2008; Centaurus submitted a claim investigated by Cunningham Lindsey for Lexington.
- Lexington removed the case to federal court based on diversity jurisdiction, asserting improper/fraudulent joinder of Texas defendants and that the amount in controversy exceeds $75,000.
- Centaurus moved to remand, arguing lack of complete diversity; the court granted remand after addressing improper/ fraudulent joinder and failure to show nondiverse joinder would defeat jurisdiction.
- The court held remand appropriate based on the presence of potentially viable claims against in-state defendants and proper application of joinder rules.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Adjuster Defendants were improperly joined | Centaurus argues there is a viable Texas Insurance Code/DTPA claim against in-state Adjusters | Lexington/Cunningham contend Adjusters have no duty and thus cannot be liable | Yes; at minimum viable claims exist against Adjusters under Texas Insurance Code and DTPA via tie-in statute |
| Whether Centaurus's claims against Cunningham are sufficiently specific | Petition alleges broad, unparticularized conduct by Adjusters | Claims are conclusory against Adjusters | Yes; petition contains actionable, specific allegations directed at in-state Adjusters |
| Whether fraudulent misjoinder applies to Allen & Associates | Allen & Associates joined to defeat diversity; misjoinder | No fraudulent misjoinder; joinder is proper | No; joinder not sufficiently egregious to be fraudulent under applicable standards |
| Whether removal violated diversity requirements given Allen & Associates and Lexington | Remand required due to lack of complete diversity | Nondiverse parties improperly joined or misjoined | Remand granted; federal jurisdiction lacked due to unresolved improper/ fraudulent joinder and incomplete diversity |
Key Cases Cited
- Smallwood v. Ill. Cent. R.R. Co., 385 F.3d 568 (5th Cir. 2004) (en banc: test for improper joinder; focus on joinder, not merits)
- Gasch v. Hartford Indemn. Co., 491 F.3d 278 (5th Cir. 2007) (adjusters engaged in business of insurance; subject to Insurance Code)
- Rankin Road, Inc. v. Underwriters at Lloyds of London, 744 F. Supp. 2d 630 (S.D. Tex. 2010) (viability of claims against in-state defendants supports remand)
- Gray v. Beverly Enterprises-Mississippi, Inc., 390 F.3d 400 (5th Cir. 2004) (single viable claim against in-state defendant supports remand)
- Manguno v. Prudential Prop. and Cas. Ins. Co., 276 F.3d 720 (5th Cir. 2002) (removal burden and standard; doubts resolved in favor of remand)