942 F. Supp. 2d 637
E.D. Tex.2013Background
- Holmes, a Texas resident, sues multiple defendants for fraud, negligence, breach of contract, DTPA, and Texas Insurance Code violations.
- Acceptance is a Nebraska corporation with principal place of business in North Carolina; Wellington is a Texas corporation.
- Holmes and Acceptance are citizens of different states; Wellington’s Texas citizenship threatens complete diversity.
- Acceptance removed to federal court asserting diversity and amount in controversy over $75,000; Wellington allegedly improperly joined to defeat diversity.
- Holmes argues Wellington is properly joined; court reviews improper joinder under a Texas notice-pleading standard based on the state petition.
- Court concludes Wellington was improperly joined and that complete diversity exists, supporting removal; remand denied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Wellington was improperly joined to defeat diversity | Holmes argues Wellington properly joined | Acceptance asserts improper/j fraudulent joinder to defeat diversity | Wellington improperly joined; diversity exists |
| What pleading standard should evaluate improper joinder | Texas fair notice standard applies to Holmes's petition | Federal 12(b)(6) standard should apply | Texas pleading standard applied; sufficient to assess potential claims against Wellington |
Key Cases Cited
- Smallwood v. Illinois Cent. R.R. Co., 385 F.3d 568 (5th Cir.2004) (merits of joinder analyzed by piercing pleadings for improper joinder)
- Gasch v. Hartford Accident & Indem. Co., 491 F.3d 278 (5th Cir.2007) (standard for fraudulent or improper joinder; not mere merit of claims)
- Caterpillar Inc. v. Williams, 482 U.S. 386 (U.S. 1987) (removal tied to original jurisdiction; strong presumption against removal)
- Griggs v. Bank of Am.,”, 181 F.3d 699 (5th Cir.1999) (Texas notice-pleading standard; pleading sufficiency under state law)
- Hart v. Bayer Corp., 199 F.3d 239 (5th Cir.2000) (fraudulent joinder analysis guidance)
- Lincoln Prop. Co. v. Roche, 546 U.S. 81 (U.S. 2005) (complete diversity requirement; removal jurisdiction principles)