20 F.4th 1040
5th Cir.2021Background
- Ticer (Law Office of Mark A. Ticer) was sued by former clients in 2014 and again in 2018 over the same attorney-fee dispute.
- Ticer sued Ironshore (out-of-state) in state court for defense/indemnity; Ironshore removed once and the suit was dismissed for failure to mediate.
- In 2019 Ticer sued Ironshore and Imperium (Texas insurer) for failing to defend/indemnify him in the 2018 suit; Ironshore removed alleging Imperium was improperly joined to defeat diversity.
- The district court initially cited procedural misjoinder, vacated that ruling, then conducted a Smallwood summary inquiry after allowing submission of the Imperium policy.
- The district court held the Imperium policy’s insuring-agreement and exclusions (incident/prior-claim) barred coverage, found Imperium improperly joined, denied remand, and dismissed Ticer’s claims against Imperium with prejudice.
- The Fifth Circuit affirmed the improper-joinder finding and denial of remand but vacated the dismissal with prejudice and remanded for dismissal without prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether district court properly treated joinder as improper (fraudulent) rather than procedural misjoinder | Ticer: district court erred and lacked basis to convert to improper-joinder analysis | Ironshore: removal notice raised improper-joinder; Smallwood controls and improper-joinder is appropriate | Court: district court did not abuse discretion; Smallwood governs and improper-joinder analysis was proper |
| Whether the court could pierce the pleadings and conduct a summary inquiry | Ticer: summary inquiry and considering the policy amounts to premature merits adjudication | Ironshore/Imperium: Smallwood permits limited piercing to resolve discrete, undisputed facts (the policy) | Court: summary inquiry was appropriate and not an abuse of discretion given the discrete policy evidence |
| Whether Imperium was improperly joined because policy precludes coverage (no reasonable basis for recovery) | Ticer: exclusions ambiguous or inapplicable; coverage should be assessed in state court | Ironshore/Imperium: policy’s "claims first made" requirement, incident exclusion, and prior-claim exclusion bar coverage for the Reed fee dispute | Court: policy unambiguous — claims were not first made during policy period and exclusions apply; no reasonable basis to recover against Imperium; Imperium improperly joined |
| Whether dismissal of Imperium claims should be with prejudice | Ticer: dismissal with prejudice is improper and denies relief on jurisdictional dismissal | Ironshore: argued dismissal appropriate after finding improper joinder | Court: dismissal must be without prejudice when a nondiverse party is dismissed for improper joinder; district court’s with-prejudice dismissal vacated |
Key Cases Cited
- Smallwood v. Ill. Cent. R. Co., 385 F.3d 568 (5th Cir. 2004) (framework for improper/fraudulent joinder and when courts may pierce the pleadings)
- Int'l Energy Ventures Mgmt., Ltd. v. United Energy Group, Ltd., 818 F.3d 193 (5th Cir. 2016) (Smallwood inquiry resolves jurisdictional issue not merits)
- Gray ex rel. Rudd v. Beverly Enters.-Miss., Inc., 390 F.3d 400 (5th Cir. 2004) (permitting consideration of extra-pleading evidence in limited summary inquiry)
- Gore Design Completions, Ltd. v. Hartford Fire Ins. Co., 538 F.3d 365 (5th Cir. 2008) (Texas "eight‑corners" rule for insurer's duty to defend)
- McDonal v. Abbott Labs., 408 F.3d 177 (5th Cir. 2005) (no reasonable basis of recovery means joinder is improper)
- Getty Oil Corp. v. Ins. Co. of N. Am., 841 F.2d 1254 (5th Cir. 1988) (burden of establishing diversity jurisdiction rests on removing party)
- Davidson v. Georgia-Pacific, LLC, 819 F.3d 758 (5th Cir. 2016) (standard of review: de novo review of improper-joinder determinations)