DeCluette et al v. State Farm Lloyds et al
Filing
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MEMORANDUM OPINION AND ORDER denying 4 Motion to Remand (Ordered by Judge Jane J Boyle on 2/19/2013) (Judge Jane J Boyle)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
RONALD DECLUETTE and
ANNIE DECLUETTE,
Plaintiffs,
V.
STATE FARM LLOYDS and
RUBEN GALLEGOS,
Defendants.
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CIVIL ACTION NO. 3:12-CV-4449-B
MEMORANDUM OPINION AND ORDER
Before the Court is Plaintiffs’ Motion to Remand (doc. 4), filed on November 19, 2012.
Because there is improper joinder of the in-state Defendant Ruben Gallegos, the Court concludes
that the Motion should be DENIED.
I.
BACKGROUND
According to Plaintiffs Ronald and Annie DeCluette (“Plaintiffs”), Plaintiffs purchased a
homeowner’s insurance policy from Defendant State Farm Lloyds (“State Farm”) to protect their
residence in the event of damage. Doc. 1-3, Original Pet. at 3. On April 3, 2012, storms struck Dallas
County and damaged Plaintiffs’ residential property. Id. Plaintiffs filed a claim with State Farm
against the insurance policy for various damages to the residential property resulting from the storm.
Id. Ruben Gallegos (“Gallegos”) was an employee of State Farm, serving as an insurance adjuster for
Plaintiffs’ claim. Id. Gallegos allegedly failed to thoroughly investigate and properly adjust Plaintiffs’
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property damage claims. Id. As a result of Gallegos’ allegedly improper adjustment of the claim, State
Farm denied a portion of Plaintiffs’ insurance claim. Id.
Consequently, Plaintiffs filed an Original Petition against both Defendants on August 13,
2012 in the County Court at Law No. 4 in Dallas County, Texas. Id. at 1. The Original Petition
asserts five causes of action against State Farm and one cause of action against Gallegos. Id. at 6-14.
Plaintiffs seek actual damages, consequential damages, punitive damages, additional damages
authorized by the Texas Insurance Code and Deceptive Trade Practices Act, prejudgment interest,
and attorney’s fees. Id. at 14-15. State Farm removed the case to federal court on the basis of
diversity jurisdiction under 28 U.S.C. § 1332(a). Doc. 1, Notice of Removal. Plaintiffs filed their
Motion to Remand (doc. 4) on November 19, 2012. State Farm filed a response to the motion but
no reply was filed within the timeline for filing the reply. Docs. 4 and 5. The Motion is now ripe for
review.
The parties agree that Plaintiffs and Gallegos are citizens of Texas, and State Farm is a citizen
of Illinois, Florida, and Pennsylvania.
II.
LEGAL STANDARD
A defendant may remove a state court action to federal district court if the district court has
original jurisdiction over the case and Congress has not expressly prohibited removal. 28 U.S.C. §
1441(a). “[T]he burden of establishing federal jurisdiction is placed upon the party seeking removal.”
Willy v. Coastal Corp., 855 F.2d 1160, 1164 (5th Cir. 1988). Because of significant federalism
concerns, removal jurisdiction is strictly construed. Id. When determining if a federal district court
has jurisdiction to hear a case on removal, “any doubt as to the propriety of removal should be
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resolved in favor of remand.” Gutierrez v. Flores, 543 F.3d 248, 251 (5th Cir. 2008) (internal
quotation marks omitted).
Notably, federal diversity jurisdiction cannot be defeated by an improperly joined, non-diverse
defendant.1 Borden v. Allstate Ins. Co., 589 F.3d 168, 171 (5th Cir. 2009). The party seeking removal
bears the burden of proving that the joinder of the non-diverse party was improper. Smallwood, 385
F.3d at 574. “[A]ll contested factual issues and ambiguities of state law [are resolved] in favor of the
plaintiff.” Gasch v. Hartford Accident & Indem. Co., 491 F.3d 278, 281 (5th Cir. 2007).
III.
ANALYSIS
Federal courts maintain original jurisdiction over those actions in which there is diversity
of citizenship and the amount in controversy exceeds $75,000. 28 U.S.C. § 1332(a). Accordingly,
a defendant that removes a case based on diversity “must demonstrate that all of the prerequisites
of diversity jurisdiction contained in 28 U.S.C. § 1332 are satisfied.” Smallwood, 385 F.3d at 572.
Diversity jurisdiction requires a complete diversity of citizenship between Plaintiffs and
Defendants. 28 U.S.C. § 1332. Plaintiffs and Gallegos are all citizens of Texas. Diversity jurisdiction
is defeated and the action should be remanded to state court unless State Farm can prove that
Plaintiffs improperly joined Gallegos to defeat diversity. See McKee v. Kan. City S. Ry. Co., 358 F.3d
329, 333 (5th Cir. 2004) (noting diversity jurisdiction “cannot be destroyed by a plaintiff fraudulently
joining a non-diverse defendant”).
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The Fifth Circuit adopts the term “improper joinder” as “being more consistent with the statutory
language than the term ‘fraudulent joinder,’ which has been used in the past.” Smallwood v. Ill. Cent. R.R. Co.,
385 F.3d 568, 571 n.1 (5th Cir. 2004) (en banc).
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Improper joinder may be proved in two ways: (1) by demonstrating actual fraud in the
pleading of jurisdictional facts; or (2) by showing the inability of the plaintiff to establish a cause of
action against the improperly joined party in state court. Travis v. Irby, 326 F.3d 644, 647 (5th Cir.
2003). In the present case, only the latter is alleged. “If there is arguably a reasonable basis for
predicting that the state law might impose liability on the facts involved, then there is no [improper]
joinder.” Id. at 648 (internal quotation marks and alteration omitted). While the burden of showing
improper joinder is heavy, a reasonable basis requires more than “liability by the mere hypothetical
possibility that such an action could exist.” Griggs v. State Farm Lloyds, 181 F.3d 694, 701 (5th Cir.
1999).
To demonstrate improper joinder for failure to establish a cause of action, a showing that
“there is no possibility of recovery by the plaintiff against an in-state defendant, which stated
differently means that there is no reasonable basis for the district court to predict that the plaintiff
might be able to recover against an in-state defendant,” is required. Smallwood, 385 F.3d at 573. The
district court may “‘pierce the pleadings’ to consider summary judgment-type evidence in the record
. . . . [However,] the district court is not to apply a summary judgment standard but rather a standard
closer to the Rule 12(b)(6) standard” for improper joinder. McKee, 358 F.3d at 334 (citing Travis,
326 F.3d at 649).
The facts in the present case fit the pattern of Griggs and Dougherty v. State Farm Lloyds, No.
4:01CV0611A, 2001 WL 1041817 (N.D. Tex. Aug. 30, 2001). Plaintiffs’ characterization of the
pleading requirements inappropriately diminishes their burden. See Griggs, 181 F.3d at 699. In Griggs,
the Fifth Circuit denied a plaintiff’s motion to remand because the plaintiff failed to state any specific
actionable conduct against the defendant insurance agent, which did not meet even the most
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liberalized requirements of notice pleadings. Id. “Mentioning defendants and then failing to state
specific actionable conduct against them does not suffice to state a claim against them.” Bailey v.
State Farm Lloyds, No. CIV.A. H-00-3638, 2001 WL 34106907, at *6 (S.D. Tex. Apr. 12, 2001)
(concluding that the defendant insurance adjusters were improperly joined because the plaintiff
failed to state a claim by neglecting to allege any specific facts that the defendants made
misrepresentations or acted in bad faith as required under the Texas Insurance Code); see also
Dougherty, 2001 WL 1041817, at *2 (extending Griggs to deny the plaintiff’s motion to remand when
the plaintiff did not specifically state wrongful acts taken by the non-diverse defendant insurance
adjuster in a misrepresentation claim). Pleadings should “at least provide sufficient factual
information [so] that the defendant is able to prepare a defense.” Griggs, 181 F.3d at 699.
State Farm argues improper joinder because Plaintiffs fail to state a claim against Gallegos by
neglecting to state any specific facts to support their allegations against Gallegos. Doc. 1, Notice ¶
12; Doc. 5, Resp. ¶¶ 8-15. Plaintiffs’ Original Petition asserts causes of action against Gallegos for
unfair and deceptive acts actionable under Section 541.060(a) of the Texas Insurance Code. Doc.
1-3, Original Pet. at 12. Plaintiffs maintain that a valid state law cause of action has been properly
alleged under the Texas Insurance Code, supported by sufficient facts. Doc. 4, Mot. at 4, 6-11. The
issue is thus whether State Farm can prove that there is no reasonable basis to predict recovery by
Plaintiffs against Gallegos on this claim.
Plaintiffs do not highlight any specific facts relating to Gallegos in support of unfair and
deceptive acts actionable under Section 541.060(a) of the Texas Insurance Code. They repeatedly
refer to the allegedly wrongful conduct as taken jointly by “Defendants” or “Defendant State Farm
and Gallegos,” without specifying the conduct taken by each separately. Doc. 1-3, Original Pet. at
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4-6; doc. 4, Mot. to Remand ¶¶ 6-9. Further, their allegations are merely conclusory and simply
recite the elements of the causes of action. Doc. 1-3, Original Pet. at 12-14; see doc. 4, Mot. ¶¶ 4145; cf. McNeel v. Kemper Cas. Ins. Co., No. 3:04-CV-0734, 2004 WL 1635757, at *3 (N.D. Tex. July
21, 2004) (denying motion to remand based on diversity because the plaintiffs presented specific
facts, through third party documents, showing the defendant insurance agent may have had no
reasonable basis for denying the insurance claim); cf. Yeldell v. Geovera Specialty Ins. Co., No. 3:12CV-1908-M, 2012 WL 5451822, at *4 (N.D. Tex Nov. 8, 2012) (granting motion to remand
brought by plaintiff who alleged that the properly served insurance agent mishandled the claim “in
several specific ways . . . [which] would create a reasonable possibility that [p]laintiff could prevail
in her claims”). “The mere hypothetical possibility that another cause of action might exist against
[the claim investigator] is insufficient to defeat the claim of [improper] joinder.” Dougherty, 2001 WL
1041817, at *2. State Farm has shown that there is no reasonable basis to predict recovery by
Plaintiffs against Gallegos on this claim.
Indeed, Plaintiffs did not make any attempts to serve Gallegos throughout these proceedings
nor did they respond to State Farm’s assertions about lack of service. See Griggs, 181 F.3d at 699
(denying remand in part because the insurance agent was never served); see also Dougherty, 2001 WL
1041817, at *2 (extending Griggs to deny the plaintiff’s motion to remand on diversity grounds when
the plaintiff did not make any attempts to serve the defendant insurance adjuster after referring to
the adjuster in the pleadings); cf. Warren v. State Farm Mut. Auto. Ins. Co., No. 3:08-CV-0768-D,
2008 WL 4133377, at *5 (N.D. Tex. Aug. 29, 2008) (distinguishing Griggs in part because “[t]here
is no evidence in the record that [the plaintiff] did not serve [the insurance adjuster] with the
petition, an omission that would tend to establish improper joinder”). The lack of service gives an
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inference that Plaintiffs do not intend to pursue their claims against Gallegos. See Dougherty, 2001
WL 1041817, at *2.
Finally, Plaintiffs have not attributed any facts to support their claim that they were damaged
by Gallegos’ actions specifically. Doc. 1-3, Original Pet. at 14-15. Instead, their damage claims arise
out of State Farm’s failure to pay Plaintiffs’ claim, which is insufficient to establish a claim for
damages against Gallegos. See Dougherty, 2001 WL 1041817, at *2 n.1. The facts in this case align
closely with the facts in Dougherty, in which the court denied a motion to remand because the
plaintiff failed to point to specific acts of the defendant insurance adjuster relevant to damages, and
presented facts that only supported damages caused by the defendant insurance company’s breach
of contract, i.e., the failure to pay the plaintiff’s insurance claim. Id. Because the insurance adjuster
was also never served, the court determined that the plaintiff did not make an adequate attempt to
show that he had a legitimate cause of action against the adjuster and found that the defendant
adjuster was improperly joined to defeat diversity. Id. Like the plaintiff in Dougherty, Plaintiffs’ claim
for damages arises out of State Farm’s denial of the insurance claim. Therefore, Plaintiffs’ claim for
damages against Gallegos is not valid.
Accordingly, the Court determines that Plaintiffs have improperly joined Gallegos because
of lack of proper service and failure to allege facts to support a cause of action against Gallegos,
specifically and individually.
IV.
CONCLUSION
For the reasons stated above, the Court DENIES Plaintiffs’ Motion to Remand.
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SO ORDERED.
SIGNED: February 19, 2013.
_________________________________
JANE J. BOYLE
UNITED STATES DISTRICT JUDGE
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