Calvary United Pentecostal Church v. Church Mutual Insurance Company et al
MEMORANDUM OPINION AND ORDER re 5 MOTION to Remand to State Court filed by Calvary United Pentecostal Church, Donny Brown and George Ben Hodges terminated. Plaintiff Calvary United Pentecostal Churchs Opposed Motion to Remand (Dkt. #5) is hereby DENIED. Signed by Judge Amos L. Mazzant, III on 9/14/15. (cm, )
United States District Court
EASTERN DISTRICT OF TEXAS
CALVARY UNITED PENTECOSTAL
CHURCH MUTUAL INSURANCE
COMPANY, DONNY BROWN, and
GEORGE BEN HODGES
CASE NO. 4:15-CV-365
MEMORANDUM OPINION AND ORDER
Pending before the Court is Plaintiff Calvary United Pentecostal Church’s Opposed
Motion to Remand (Dkt. #5). After reviewing the motion, the response, and the relevant
pleadings, the Court finds that the motion should be denied.
The present action arises out of an insurance claim made by Plaintiff for damages to its
property located at 305 Sherman Drive, Denton, Texas 76209 (the “Property”) (Dkt. #5 at p. 1).
Plaintiff made a claim against its insurance policy numbered 0195170-02-380667 (the “Policy”),
which was issued by Defendant Church Mutual Insurance Company (“Church Mutual”) (Dkt. #5
at p. 1; Dkt. #7 at pp. 1-2).
In its investigation and adjustment of the loss, Church Mutual retained an outside
adjuster, Defendant Donny Brown (“Brown”) with Team One Adjusting Services, LLC, to
inspect the property and prepare a report and estimate of the damage (Dkt. #7 at p. 2). Brown
completed his investigation, and concluded that the Property had sustained some hail damage,
for which he estimated repairs totaling $25,139.73 (Dkt. #2 at p. 2). Church Mutual also
assigned the case to Defendant George Ben Hodges (“Hodges”), an internal adjuster for Church
Mutual (Dkt. #7 at p. 2). Hodges reviewed Brown’s findings, and further adjusted the claim to
allow for repairs to the Property (Dkt. #7 at p. 2). Church Mutual issued payment to Plaintiff
totaling $17,285.38, which comprised Brown’s estimate less the deductible and applicable
depreciation (Dkt. #7 at p. 2).
Plaintiff retained its own adjuster, Lindsey Douglass (“Douglass”) of The Disaster
Advocates, Inc., to make an independent investigation and conclusion regarding the damage of
the Property (Dkt. #7 at p. 2).
Douglass reached a different conclusion following her
investigation, and found that the hail storm caused significant damage to the Property, which she
estimated at $964,124.98 (Dkt. #7 at p. 2).
Following Douglass’ results, Church Mutual retained an engineer, Steve Patterson
(“Patterson”) with Roof Technical Services, Inc., to re-inspect the Property, and provide an
additional opinion regarding the damage (Dkt. #7 at p. 2). On January 8, 2015, Patterson
inspected the Property, at which time Hodges was present (Dkt. #7 at p. 2).
Patterson’s inspection, Church Mutual determined, and advised Plaintiff, that its previous
evaluation of the damage remained unchanged (Dkt. #7 at p. 2).
On April 10, 2015, Plaintiff filed its Original Petition against Church Mutual, Brown, and
Hodges in the 362nd Judicial District Court, Denton County, Texas (Dkt. #2). On May 27, 2015,
Church Mutual removed the case to the Eastern District of Texas, alleging the improper joinder
of Brown and Hodges (Dkt. #1). On June 26, 2015, Plaintiff filed its Opposed Motion to
Remand, alleging that Brown and Hodges were properly joined; and therefore, complete
diversity did exist between the parties (Dkt. #5). On July 13, 2015, Church Mutual filed its
response (Dkt. #7).
A defendant may remove any civil action from state court to a district court of the United
States which has original jurisdiction.
28 U.S.C. § 1441.
District courts have original
jurisdiction over all civil actions that are between citizens of different states and involve an
amount in controversy in excess of $75,000, exclusive of interest and costs. 28 U.S.C. §
1332(a). The party seeking removal “bears the burden of establishing that federal jurisdiction
exists and that removal was proper.” Manguno v. Prudential Prop. and Cas. Ins. Co., 276 F.3d
720, 723 (5th Cir. 2002); Weaver v. Zuirch Am. Ins. Co., No. H-10-1813, 2010 WL 3910053, at
*1 (S.D. Tex. Oct. 1, 2010). The removal statute must “be strictly construed, and any doubt
about the propriety of removal must be resolved in favor of remand.” Gasch v. Hartford
Accident & Indem. Co., 491 F.3d 278, 281-82 (5th Cir. 2007). A district court is required to
remand the case to state court if, at any time before final judgment, it determines that it lacks
subject matter jurisdiction. See 28 U.S.C. § 1447(c); Groupo Dataflux v. Atlas Glob. Grp., L.P.,
541 U.S. 567, 571 (2004).
“When assessing whether diversity jurisdiction exists, a court must disregard non-diverse
citizenship of an improperly joined defendant.” Doucet v. State Farm Fire and Cas. Co., No.
1:09-CV-142, 2009 WL 3157478, at *4 (E.D. Tex. Sept. 25, 2009) (citing Smallwood v. Ill. Cent.
R.R. Co., 385 F.3d 568, 572-73 (5th Cir. 2004)). A defendant who contends that a non-diverse
party is improperly joined has a “heavy” burden of proof. Green v. Amerada Hess Corp., 707
F.2d 201, 205 (5th Cir. 1983); Great Plains Tr. Co. v. Morgan Stanley Dean Witter & Co., 313
F.3d 305, 312 (5th Cir. 2002). “In making its determination, the court must ordinarily evaluate
all of the factual allegations in the plaintiff’s state court pleadings in the light most favorable to
the plaintiff, resolving all contested issues of substantive fact in favor of the plaintiff.” Green,
707 F.2d at 205.
“The removing party must prove that there is absolutely no possibility that the plaintiff
will be able to establish a cause of action against the in-state defendant in state court, or that
there has been outright fraud in the plaintiff’s pleading of jurisdictional facts.” Great Plains Tr.,
313 F.3d at 312 (quoting Green, 707 F.2d at 205). After the court resolves all disputed questions
of fact and ambiguities in controlling state law in favor of the plaintiff, it determines whether the
plaintiff has any possibility of recovery against the party whose joinder is questioned. Great
Plains Tr., 313 F.3d at 312. If there is a reasonable basis for predicting that the state law might
impose liability on the facts of the case, then there is no fraudulent joinder. Id. Additionally,
“[t]he possibility of imposing liability must be reasonable,  and not merely theoretical.”
Stewart, 2007 WL 2749796, at *2 (citing Smallwood, 385 F.3d at 573 n. 9; Great Plains Tr., 313
F.3d at 312 (5th Cir. 2002); Badon v. RJR Nabisco, Inc., 236 F.3d 282, 286 n. 4 (5th Cir. 2000)).
A determination of improper joinder must be based on an analysis of the causes of action
alleged in the complaint at the time of removal. See Cavallini v. State Farm Mut. Auto Ins. Co.,
44 F.3d 256, 264 (5th Cir. 1995).
“A district court should ordinarily resolve [claims of]
improper joinder by conducting a Rule 12(b)(6)-type analysis.” McDonal v. Abbott Labs., 408
F.3d 177, 183 n.6 (5th Cir. 2005); see also Boone v. Citigroup, Inc., 416 F.3d 382, 388 (5th Cir.
2005). “[I]f a plaintiff can survive a Rule 12(b)(6)-type challenge, there is generally no improper
joinder.” Guillory v. PPG Indus., Inc., 434 F.3d 303, 309 (5th Cir. 2005) (citation omitted);
Smallwood, 385 F.3d at 573. The court, however, must carefully distinguish an attack on the
overall merits of the case from a showing that defendants were improperly joined in order to
defeat diversity. See Smallwood, 385 F.3d at 573; see also Gasch, 491 F.3d at 284. However,
the plaintiff must plead “enough facts to state a claim of relief that is plausible on its face.” Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). There are cases in which a further summary
inquiry is appropriate to “identify the presence of discrete and undisputed facts that would
preclude plaintiff’s recovery against the in-state defendant.” Smallwood, 385 F.3d at 573-74.
“In evaluating a claim of fraudulent joinder, we do not determine whether the plaintiff
will actually or even probably prevail on the merits of the claim, but look only for a possibility
that the plaintiff may do so.” Rodriguez v. Sabatino, 120 F.3d 589, 591 (5th Cir. 1997); see
Guillory, 434 F.3d at 308-09. “If that possibility exists, a good faith assertion of such an
expectancy in a state court is not a sham…and is not fraudulent in fact or in law.” B., Inc. v.
Miller Brewing Co., 663 F.2d 545, 550 (5th Cir. Unit A 1981) (citation omitted). “If there is
‘arguably a reasonable basis for predicting that the state law might impose liability on the facts
involved,’ then there is no fraudulent joinder,” and the case must be remanded for lack of
diversity. Great Plains Tr., 313 F.3d at 312 (citation omitted); Sid Richardson Carbon &
Gasoline Co. v. Interenergy Res. Inc., 99 F.3d 746, 751 (5th Cir. 1996).
The question for the Court is whether Church Mutual has shown that Plaintiff has no
possibility of establishing a valid cause of action against the non-diverse defendants, Brown and
Hodges. Church Mutual asserts that Brown and Hodges were improperly joined because “there
is no reasonable basis for predicting that Plaintiff might establish liability against [them].” (Dkt.
#1 at p. 4).
The first question the Court must decide is whether it should apply the federal standard or
the less stringent Texas notice standard to examine Plaintiff’s state court petition. This issue has
not been decided by the Fifth Circuit. Eastern District of Texas courts have consistently held
that the federal pleading-sufficiency standard applies to analyzing improper joinder. See Doucet,
2009 WL 3157478, at *5, First Baptist Church of Mauriceville, Tex. v. Guideone Mut. Ins. Co.,
No. 1:07-CV-988, 2008 WL 4533729, at *4 (E.D. Tex. Sept. 29, 2008); King v. Provident Life
and Accident Ins. Co., No. 1:09-CV-983, 2010 WL 2730890, at *4 (E.D. Tex. June 4, 2010).
Therefore, the Court will follow the Eastern District pattern and follow the federal pleading
standard; but see Holmes v. Acceptance Cas. Ins. Co., 942 F. Supp. 2d 637, 646 (E.D. Tex.
The Court must determine whether Plaintiff has set forth “specific actionable conduct” to
support its claim against the non-diverse defendants. King, 2010 WL 2730890, at *4 (citing
Griggs, 181 F.3d at 699). “[W]hether the plaintiff has stated a valid state law cause of action
depends upon and is tied to the factual fit between the plaintiff’s allegations and the pleaded
theory of recovery.” Id. (quoting Griggs, 181 F.3d at 701) (emphasis in original).
This means that the state-court petition must allege facts sufficient to establish the
essential elements of each asserted cause of action. Tuchman v. DSC Communications Corp., 14
F.3d 1061, 1067 (5th Cir. 1994); Chemtreat, Inc. v. Chemtech Chem. Servs., LLC, No. 1:07-CV146, 2007 WL 4353420, at *5 (E.D. Tex. Dec. 7, 2007); Omda Oil and Gas, Inc. v. Young Oil,
Corp, No. 3:06-CV-439M, 2006 WL 1343640, at *2 (N.D. Tex. May 17, 2006). Merely lumping
diverse and non-diverse defendants together in undifferentiated liability averments of a petition
does not satisfy the requirement to state specific actionable conduct against the non-diverse
defendant. See Griggs, 181 F.3d at 699. Additionally, merely asserting a laundry list of
statutory violations without factual support as to how a non-diverse defendant violated the statute
will not suffice. Doucet, 2009 WL 3157478, at *5. However, the joinder of an in-state, nondiverse defendant is proper as long as the plaintiff’s petition contains factual allegations
sufficient to render one of the statutory claims plausible. Escaudra v. Geovera Speciality Ins.
Co., 739 F. Supp. 2d 967, 985 (E.D. Tex. 2010).
Church Mutual asserts that it removed this case to federal court based on improper
joinder because Plaintiff failed to plead any reasonable basis for predicting that Plaintiff might be
able to recover against Brown and Hodges. Plaintiff’s state court petition pleads boilerplate
language against Brown and Hodges, and does not allege any independent acts on their part
supported by facts that would support alleged violations of the Texas Insurance Code. Plaintiff
cannot rely upon a mere theoretical possibility of recovery. “To find a reasonable possibility that
a Texas court would allow recovery against an insurance adjuster, the plaintiff must demonstrate
that the adjuster, as an individual, committed the Texas Insurance Code violation…that caused
the harm.” Green v. Nationwide Mut. Ins. Co., No. A-12-CV-600 LY, 2012 WL 5188031, at *5
(W.D. Tex. Oct. 17, 2012). Plaintiff’s controlling petition fails to provide any factual fit to its
theory of recovery; it merely recites statutory language and states that Defendants violated it.
Although Plaintiff asserts that “Brown and Hodges made numerous errors in estimating
the value of Plaintiff’s claims,” which essentially amounted to an alleged underpayment of loss
incurred by Plaintiff, its allegations do not help to establish each essential element of any statelaw causes of action asserted against either non-diverse Defendant Hodges or Brown (Dkt. #1-2
at p. 3). The Court also finds that Plaintiff has not listed any “specific actionable conduct,” by
which its various causes of action would be supported. See Griggs, 181 F.3d at 699. Plaintiff
merely asserts the statutory language from the Texas Insurance Code to support its claim for
noncompliance. See TEX. INS. CODE §§ 541.002; 541.060; 541.151. Therefore, the Court finds
that Brown and Hodges were improperly joined because Plaintiff has failed to offer anything
other than conclusory allegations to hold them individually liable for any claim in the present
It is therefore ORDERED that Plaintiff Calvary United Pentecostal Church’s Opposed
Motion to Remand (Dkt. #5) is hereby DENIED. It is further ORDERED that Defendants
Donny Brown and George Ben Hodges be dismissed as improperly joined.
SIGNED this 14th day of September, 2015.
AMOS L. MAZZANT
UNITED STATES DISTRICT JUDGE
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