Hidden Cove Park and Marina v. Lexington Insurance Company, 4:17-cv-00193

Two Texas plaintiffs (Hidden Cove Park & Marina and MQTXM LLC d/b/a Texoma Park & Marina) sued Lexington Insurance, AIG Claims, adjuster Glenn Hollmuller, and others alleging improper claim handling after 2015 storm damage to insured properties in Denton and Grayson Counties.
Plaintiffs asserted breach of contract, violations of Texas Insurance Code and Unfair Claims Practices Act, and bad-faith/breach of duty claims; adjuster Hollmuller was sued individually for unfair settlement practices.
Plaintiffs settled with co-defendant Champion (a Texas citizen); defendants then removed the action to federal court asserting complete diversity between the remaining parties.
Plaintiffs moved to remand, arguing lack of diversity because Hollmuller (an in-state citizen) remained a defendant; defendants argued Hollmuller was improperly joined.
The court analyzed improper joinder under the Fifth Circuit standard, applying a Rule 12(b)(6)-type plausibility inquiry to determine whether there was any reasonable basis for recovery against Hollmuller.
The court found plaintiffs’ allegations against Hollmuller were conclusory boilerplate (no factual allegations of independent, actionable conduct by the adjuster) and dismissed Hollmuller without prejudice; remand was denied.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether federal diversity jurisdiction exists after dismissal/settlement of a non-diverse co-defendant and/or improper joinder of in-state adjuster	Hollmuller is a proper defendant; presence defeats diversity and requires remand	Hollmuller was improperly joined; his Texas citizenship should be disregarded and diversity exists	Removal proper; remand denied because Hollmuller was improperly joined and dismissed
Whether Hollmuller can be individually liable under Texas Insurance Code for unfair settlement practices	Adjuster can be liable individually under Tex. Ins. Code when pleaded with factual specificity	Plaintiffs pled only boilerplate; no plausible factual basis to hold Hollmuller personally liable	Held that pleadings lack factual allegations showing independent actionable conduct by Hollmuller; claim not plausible
Proper standard for evaluating improper joinder	Plaintiffs rely on state-law claims surviving against in-state defendant	Defendants invoke heavy burden on improper joinder showing no reasonable basis for recovery	Court applied Rule 12(b)(6)-type analysis and Fifth Circuit improper-joinder precedent; required plausible factual allegations
Remedy for deficient pleading against in-state defendant	Plaintiffs sought remand to state court	Defendants sought dismissal of in-state defendant to preserve diversity	Court dismissed Hollmuller without prejudice and denied remand

Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720 (5th Cir.) (removing party bears burden to establish federal jurisdiction)
Gasch v. Hartford Accident & Indem. Co., 491 F.3d 278 (5th Cir.) (removal statute strictly construed; doubts resolved in favor of remand)
Grupo Dataflux v. Atlas Global Group, L.P., 541 U.S. 567 (U.S.) (federal jurisdiction must exist at all stages; remand required if jurisdiction lacking)
Smallwood v. Illinois Central R.R. Co., 385 F.3d 568 (5th Cir.) (improper-joinder doctrine; disregard non-diverse defendants if improperly joined)
Green v. Amerada Hess Corp., 707 F.2d 201 (5th Cir.) (heavy burden on party alleging improper joinder)
Great Plains Trust Co. v. Morgan Stanley Dean Witter & Co., 313 F.3d 305 (5th Cir.) (standards for proving improper joinder)
Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (U.S.) (plausibility pleading standard governs complaints)
Hornbuckle v. State Farm Lloyds, 385 F.3d 538 (5th Cir.) (adjusters may be ‘‘persons’’ under Texas Insurance Code and potentially individually liable)
Crockett v. R.J. Reynolds Tobacco Co., 436 F.3d 529 (5th Cir.) (improper-joinder analysis framed as two-prong test)
Int'l Energy Ventures Mgmt., L.L.C. v. United Energy Group, Ltd., 818 F.3d 193 (5th Cir.) (federal pleading standard applies when assessing improper joinder)