490 F.Supp.3d 1092
S.D. Tex.2020Background
- Plaintiffs Adan and Sandra Ramirez sued Allstate and adjuster David Backer in Texas state court for wind/hail damage, alleging breach of contract, violations of the Texas Insurance Code, and common-law bad faith.
- Backer and Plaintiffs are Texas citizens; Allstate is an Illinois citizen. Plaintiffs sued June 24, 2020.
- Allstate sent a Texas Insurance Code § 542A.006 election (accepting the agent’s liability) on August 4, 2020; defendants removed to federal court on August 5, 2020 asserting diversity jurisdiction.
- Plaintiffs moved to remand; Allstate moved to partially dismiss under Fed. R. Civ. P. 9(b) and 12(b)(6). Plaintiffs sought attorneys’ fees under 28 U.S.C. § 1447(c).
- The district court held Allstate’s § 542A.006 election rendered Backer effectively dismissed for diversity analysis, found the amount in controversy met the $75,000 threshold, and denied both the motion to remand and the motion to partially dismiss; Plaintiffs’ fee request was denied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Allstate’s post‑suit § 542A.006 election makes the in‑state adjuster improperly joined (voluntary‑involuntary rule) | Election after filing cannot retroactively defeat plaintiff’s chosen forum; voluntary‑involuntary rule prevents removal based on involuntary acts | Election irrevocably subsumes agent liability, precluding recovery against the in‑state adjuster so his citizenship is disregarded | Court held the § 542A.006 election, even made post‑complaint but pre‑removal, irreversibly precludes recovery against Backer and renders him improperly joined; remand denied |
| Amount in controversy (>$75,000) | Petition’s TRCP 47 range and lack of specific figure create ambiguity; amount not proven | Plaintiffs’ petition (requesting Level 3 discovery and alleging >$100,000) makes it facially apparent the amount exceeds $75,000 | Court found it facially apparent from the petition (and Level 3 discovery request) that the jurisdictional amount was met |
| Sufficiency under Rule 9(b) for statutory misrepresentation claims (Tex. Ins. Code) | Allegations that adjuster inspected property and misrepresented wind/hail damage suffice | Allegations are vague and conclusory, failing Rule 9(b) particularity | Court held the complaint sufficiently identifies who, what, when, and where to meet Rule 9(b); misrepresentation claims survive |
| Sufficiency under Rule 12(b)(6) for common‑law bad‑faith claim | Allegations show insurer had no reasonable basis, conducted outcome‑oriented investigation, and ignored covered damage | Allegations are too vague/conclusory to plead absence of a reasonable basis | Court held plaintiffs pleaded enough factual matter (investigation ignored covered damages; denial lacked reasonable basis) to state a plausible bad‑faith claim |
Key Cases Cited
- Smallwood v. Ill. Cent. R.R., 385 F.3d 568 (5th Cir. 2004) (en banc) (improper‑joinder test: no reasonable possibility of recovery against in‑state defendant)
- Hoyt v. Lane Constr. Corp., 927 F.3d 287 (5th Cir. 2019) (improper‑joinder exception to voluntary‑involuntary rule where state‑court disposition creates diversity and is unlikely reversible)
- Flagg v. Stryker Corp., 819 F.3d 132 (5th Cir. 2016) (discussion of improper joinder standard and burden on removing party)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility pleading standard under Rule 12(b)(6))
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (pleading must state a claim that is plausible on its face)
- Pullman Co. v. Jenkins, 305 U.S. 534 (1939) (removal jurisdiction assessed by the plaintiff’s pleading at time of removal)
- St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283 (1938) (amount‑in‑controversy legal certainty principle)