10 F. Supp. 3d 721
N.D. Tex.2014Background
- Jeff and Jan’s Coin Laundry sued Nationwide and claims adjuster Felicia Zimmer in Texas state court after hail damaged its premises and Nationwide denied coverage.
- Coin Laundry alleges violations of the Texas Insurance Code (including §541.060), the Prompt Payment of Claims Act, the DTPA, and common-law claims (breach of contract, negligence, fraud). Plaintiffs seek $100,000–$200,000.
- Nationwide removed to federal court based on diversity jurisdiction; Nationwide is Ohio-domiciled, but Zimmer and Coin Laundry are Texas domiciliaries.
- Nationwide contends removal is proper because Zimmer was improperly joined and thus should be disregarded for diversity purposes.
- The district court analyzed whether Coin Laundry could reasonably recover from Zimmer under the pleaded causes of action and concluded Coin Laundry stated no viable claims against Zimmer.
- The court therefore found improper joinder, retained diversity jurisdiction, and denied Plaintiff’s motion to remand.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Zimmer is properly joined | Zimmer committed actionable wrongdoing as pleaded, so her presence prevents removal | Zimmer is improperly joined because no plausible claim exists against her individually | Zimmer is improperly joined; removal proper |
| Liability under Texas Insurance Code §541 | Adjuster Zimmer violated §541 by misrepresenting damage and refusing reasonable investigation/settlement | §541 claims target insurers or those who effectuate settlements; Zimmer only inspected and lacked settlement authority | §541 claims as pleaded do not state viable causes against Zimmer |
| Prompt Payment of Claims Act / DTPA / Contract / Negligence / Fraud | These statutory and common-law claims can reach Zimmer | Claims either apply only to insurers or rest on contractual/settlement duties Zimmer did not owe | These claims cannot be maintained against Zimmer as pleaded |
| Standard for improper joinder | Coin Laundry can amend or rely on facts in its remand motion to show a claim against Zimmer | Court must assess pleaded complaint; cannot add contrary factual assertions from the motion | Court uses Rule 12(b)(6)-style evaluation of the complaint and rejects extra-motion facts; finds no reasonable basis to recover against Zimmer |
Key Cases Cited
- St. Paul Reins. Co. v. Greenberg, 134 F.3d 1250 (5th Cir. 1998) (party invoking federal jurisdiction bears burden)
- St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283 (1938) (jurisdictional facts assessed as of complaint filing)
- Smallwood v. Ill. Cent. R. Co., 385 F.3d 568 (5th Cir. 2004) (improper-joinder framework and Rule 12(b)(6)-type analysis)
- Travis v. Irby, 326 F.3d 644 (5th Cir. 2003) (articulating improper-joinder tests)
- Hornbuckle v. State Farm Lloyds, 385 F.3d 538 (5th Cir. 2004) (adjusters may be "persons" subject to the Texas Insurance Code)
- U.S. Fire Ins. Co. v. Confederate Air Force, 16 F.3d 88 (5th Cir. 1994) (misrepresentation under §541 must relate to coverage terms)
- Lovelace v. Software Spectrum, Inc., 78 F.3d 1015 (5th Cir. 1996) (limits on materials considered in Rule 12(b)(6)-style review)