Sparky's Storage Solutions, Ltd. v. Lexington Insurance Company, 2:16-cv-00022

Plaintiff Sparky's Storage Solutions sued Lexington Insurance, McLarens, and individual adjuster Tim Fitzgerald over alleged underpayment of a hail-damage insurance claim.
Plaintiff alleges Fitzgerald performed a substandard inspection, prepared an estimate that omitted storm-related damages, and grossly undervalued losses; Lexington allegedly failed to supervise and approved the deficient adjustment.
Lexington removed to federal court invoking diversity jurisdiction; amount in controversy exceeds $75,000.
Fitzgerald is a Texas citizen and plaintiff is a Texas citizen, so complete diversity is lacking unless Fitzgerald was improperly joined.
Lexington argued Fitzgerald was improperly joined because plaintiff allegedly failed to plead a viable individual claim against him; plaintiff moved to remand.
The district court resolved factual disputes in plaintiff’s favor and found the petition plausibly alleged actionable conduct by Fitzgerald, so removal failed and the case was remanded to state court.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the in-state adjuster (Fitzgerald) was improperly joined so his citizenship can be disregarded for diversity	Petition alleges specific factual misconduct by Fitzgerald (substandard inspection, omitted damages, undervaluation) supporting individual liability under Tex. Ins. Code	Fitzgerald was improperly joined because petition fails to allege specific conduct making him individually liable	Court held Fitzgerald was properly joined; plaintiff pleaded a reasonable basis to recover against him, so removal fails
Burden to prove improper joinder	Plaintiff: if any reasonable basis to recover exists, remand required	Defendant: must show plaintiff has no reasonable possibility of recovery against the in-state defendant	Court enforced removing party’s heavy burden and found it unmet
Standard for evaluating pleadings on improper joinder	Allegations should be accepted and ambiguities resolved for plaintiff	Defendant wants dismissal-level scrutiny to show impossibility of recovery	Court applied Smallwood standard: if a reasonable basis exists, remand required; found allegations sufficient
Whether Texas Insurance Code permits suit against adjusters individually	Plaintiff: Texas law allows individual adjuster liability for Chapter 541 violations	Defendant: disputes that pleaded facts suffice to impose individual liability	Court cited Texas and Fifth Circuit precedent recognizing adjuster liability and found pleadings plausible

Smallwood v. Ill. Cent. R.R. Co., 385 F.3d 568 (5th Cir. 2004) (improper-joinder doctrine and standard for predicting possibility of recovery)
De Aguilar v. Boeing Co., 47 F.3d 1404 (5th Cir. 1995) (removal statute construed narrowly; heavy burden on removing party to prove improper joinder)
Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720 (5th Cir. 2002) (procedural standards for removal and remand)
Hornbuckle v. State Farm Lloyds, 385 F.3d 538 (5th Cir. 2004) (adjuster can be sued individually under Texas law for Insurance Code violations)
Liberty Mut. Ins. Co. v. Garrison Contractors, Inc., 966 S.W.2d 482 (Tex. 1998) (Texas law recognizing adjuster liability under Insurance Code)