Lopez et al v. Allstate Vehicle and Property Insurance Company et al

Filing 14

MEMORANDUM OPINION AND ORDER - It is therefore ORDERED that Plaintiffs' Motion to Abstain and Remand (Dkt. 8 ) is hereby DENIED, and Gary Harbison is hereby DISMISSED. Signed by Judge Amos L. Mazzant, III on 4/4/2017. (baf, )

United States District Court
EASTERN DISTRICT OF TEXAS
SHERMAN DIVISION

AUGUSTINE LOPEZ, JAMIE LOPEZ
v.
ALLSTATE VEHICLE AND PROPERTY
INSURANCE COMPANY, GARY
HARBISON

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Civil Action No. 4:17-CV-00103
Judge Mazzant

MEMORANDUM OPINION AND ORDER
Pending before the Court is Plaintiffs’ Motion to Abstain and Remand (Dkt. #8). Having
considered the pleadings, the Court finds that the motion should be denied.
BACKGROUND
On or about April 1, 2016, a severe storm hit the Denton County, Texas area, causing
damage to Plaintiffs Augustine and Jaime Lopez’s property. Plaintiffs own a homeowners
insurance policy issued by Defendant Allstate Vehicle and Property Insurance Company
(“Allstate”). Shortly after the storm, Plaintiffs submitted a claim to Allstate against the policy for
damage to their property.
Allstate assigned Defendant Gary Harbison (“Harbison”) to adjust the claim. On or about
October 12, 2016, Harbison conducted an initial adjustment of the claim. Harbison found that
there was no damage from a covered peril to the property and noted that any damage occurred
prior to the inception of the Allstate policy. Plaintiffs allege that Allstate, through its agent,
Harbison, conducted a substandard and improper inspection and adjustment of the property.
Specifically, Plaintiffs allege that Harbison “had a vested interest in undervaluing the claims
assigned to him by Allstate in order to maintain his employment” and that “the disparity in the
number of damaged items in [Harbison’s] report compared to that of Plaintiffs’ public adjuster’s

is evidence of fraud on the part of Harbison.” Plaintiffs further argue that Harbison “had advanced
knowledge of what amount of damages he needed to find in order to either deny the claim or find
the claim below the deductible.” Plaintiffs state that Harbison made misrepresentations regarding
the amount of damage Plaintiffs’ property sustained and made misrepresentations during the
inspection regarding why the policy would not cover certain damage. Plaintiffs allege that Allstate
failed to assess the claim thoroughly and failed to perform its contractual duties under the policy.
Plaintiffs allege that the damage to their property is estimated at $30,646.73 and that they have not
received any amount from Allstate for the damage.
On January 12, 2017, Plaintiffs filed suit against Allstate and Harbison in the 211th District
Court, Denton County, Texas seeking damages that exceed $75,000 (Dkt. #8, Exhibit A).
Plaintiffs brought claims against Allstate for breach of contract, violations of the Texas Insurance
Code, breach of the duty of good faith and fair dealing, violations of the Texas Deceptive Trade
Practices Act, and fraud. Plaintiffs also brought claims against Harbison for violations of the Texas
Insurance Code, violations of the Texas Deceptive Trade Practices Act, fraud, negligence, and
gross negligence.
Plaintiffs are both citizens of the State of Texas. Allstate is an Illinois corporation with its
principal place of business in Illinois. Harbison is a citizen of the State of Texas. On February
13, 2017, Allstate removed the action to the Court asserting that the Court had diversity jurisdiction
over the matter because Plaintiffs improperly joined Harbison to the case (Dkt. #1).
On February 21, 2017, Plaintiffs filed their Motion to Abstain and Remand (Dkt. #8). On
March 7, 2017, Allstate filed a response (Dkt. #11). Plaintiffs did not file a reply.

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LEGAL STANDARD
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. The party
seeking removal “bears the burden of establishing that federal jurisdiction exists and that removal
was proper.” Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002);
Weaver v. Zurich Am. Ins. Co., No. Civ. A. 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 Trust Co. v. Morgan Stanley Dean Witter & Co., 313 F.3d
305, 312 (5th Cir. 2002) (citation omitted). “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.

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“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 Trust, 313 F.3d
at 312 (quoting Green, 707 F.2d at 205). After the Court resolves all disputed questions of fact
and all ambiguities in controlling state law in favor of the plaintiff, the Court determines whether
the plaintiff has any possibility of recovery against the party whose joinder is questioned. Id.
(citation omitted). 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. (citation omitted). This
possibility must be reasonable and not just theoretical. Id.
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.
Plaintiffs must plead “enough facts to state a claim to relief that is plausible on its face.”
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). 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 v.

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State Farm Lloyds, 181 F.3d 694, 699 (5th Cir. 1999). 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, non-diverse
defendant is proper as long as the plaintiff’s petition contains factual allegations sufficient to
render one of the statutory claims plausible. Escuadra v. Geovera Specialty Ins. Co., 739 F. Supp.
2d 967, 985 (E.D. Tex. 2010).
ANALYSIS
A defendant alleging improper joinder has the heavy burden of demonstrating either (1)
actual fraud in the pleading of jurisdictional facts or (2) the plaintiff’s inability to establish a cause
of action against the non-diverse party in state court. Crockett v. R.J. Reynolds Tobacco Co., 436
F.3d 529, 532 (5th Cir. 2006) (quoting Travis v. Irby, 326 F.3d 644, 646-47 (5th Cir. 2003)). Under
the second prong, which provides the relevant inquiry in this case, the standard is whether the
defendant has demonstrated that there is no reasonable basis to predict that the plaintiff might be
able to recover against the in-state defendant. See Smallwood, 385 F.3d at 573. Therefore, the
question for the Court is whether Allstate has shown that Plaintiffs have no possibility of
establishing a valid cause of action against the non-diverse defendant, Harbison.
First, the Court must decide which standard to apply in the examination of Plaintiffs’ state
court petition. Although this Court has applied the federal pleading standard in addressing the
question of improper joinder in past decisions, other courts have applied the lesser state court
standard. The Fifth Circuit recently clarified that the federal pleading sufficiency standard applies
to analyzing improper joinder. See Int'l Energy Ventures Mgmt., L.L.C. v. United Energy Grp.,
Ltd., 818 F.3d 193, 208 (5th Cir. 2016).

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Plaintiffs bring claims against Harbison for violations of the Texas Insurance Code,
violations of the Texas Deceptive Trade Practices Act, fraud, negligence, and gross negligence.
Plaintiffs have not alleged enough facts to state a claim to relief that is plausible on its face under
any of these causes of action.
Texas Insurance Code
Allstate correctly asserts that, under Texas law, an insured may have a valid cause of action
against an insurance adjuster under the proper circumstances, but only if sufficient facts exist, and
are pleaded, involving allegedly harmful conduct by the adjuster toward Plaintiff. Texas law does
permit adjusters, like Harbison, to be held individually liable for violations of the Texas Insurance
Code, Chapter 541. See Tex. Ins. Code § 541.002(2) (defining “person” to include “adjuster”); see
also Hornbuckle v. State Farm Lloyds, 385 F.3d 538, 544-45 (5th Cir. 2004). But for an adjuster
to be held individually liable, they have to have committed some act that is prohibited by the
section, not just be connected to an insurance company’s denial of coverage.
There are no such allegations in this case. Plaintiffs’ Original Petition alleges only that
Allstate insured Plaintiffs, that a storm in April 2016 damaged Plaintiffs’ insured property, that
Plaintiffs submitted a claim for that damage to Allstate, and that Allstate utilized Harbison to
investigate the claim.

Plaintiffs assert only boilerplate allegations that Harbison failed to

thoroughly investigate the claim, made misrepresentations and omissions regarding the amount of
damage and cost of repair, and conducted an outcome-oriented investigation. No additional facts
are alleged. General allegations that Harbison’s investigation caused Plaintiffs harm because it
resulted in an underevaluation of the claims is not sufficient because there are no factual allegations
of independent conduct on Harbison’s part, which caused Plaintiffs any harm.

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Plaintiffs cause of action under Texas Insurance Code, Chapter 542 likewise fails because
Chapter 542 only applies to specifically listed “insurers,” and Harbison, an adjuster, is not an
insurer. See Ministerio Int'l Lirios Del Valle v. State Farm Lloyds, No. 3:16-CV-1212-D, 2016
WL 5791550, at *4 (N.D. Tex. Oct. 4, 2016).
Deceptive Trade Practices Act
Plaintiffs have not alleged enough facts to state a claim to relief that is plausible on its face
under the Texas Deceptive Trade Practices Act. Plaintiffs only make boilerplate allegations that
Harbison failed to “write up an estimate reflecting the proper repair of Plaintiffs’ Property when
liability [became] reasonably clear,” that Harbison represented that his adjusting and investigative
services had characteristics they did not possess, that his services were of a particular standard
when they were of another, and that Harbison’s actions were unconscionable. Plaintiffs do not
allege any specific, factual allegations that would state a plausible claim for a violation of the
Texas Deceptive Trade Practices Act.
Fraud and Negligence
Plaintiffs vaguely allege that Harbison made fraudulent and negligent misrepresentations
regarding the amount of damage to Plaintiffs’ property and regarding why the policy would not
cover certain damage. However, Plaintiffs fail to specify a single alleged misrepresentation in
either the Original Petition or Motion to Remand. The misrepresentation must be about the details
of a policy, not the facts giving rise to a claim for coverage. General allegations that Harbison’s
investigation caused Plaintiffs harm because it resulted in an underevaluation of the claims is not
sufficient because there are no factual allegations of independent conduct on Harbison’s part,
which caused Plaintiffs any harm. Additionally, “Texas law does not recognize a cause of action

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for negligent claims handling.” Rooters v. State Farm Lloyds, 428 F. App'x 441, 448 (5th Cir.
.

2011). Plaintiffs thus fail to state a plausible claim of fraud or negligence.
CONCLUSION
It is therefore ORDERED that Plaintiffs’ Motion to Abstain and Remand (Dkt. #8) is
hereby DENIED, and Gary Harbison is hereby DISMISSED.
SIGNED this 4th day of April, 2017.

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AMOS L. MAZZANT
UNITED STATES DISTRICT JUDGE

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