B&B Car Wash and Mini Storage v. State Automobile Mutual Insurance Company et al
Filing
23
MEMORANDUM OPINION AND ORDER: Plaintiff B&B Car Wash and Mini Storage's Motion to Remand (Doc. 7 ) is GRANTED and this case is REMANDED to the 196th Judicial District Court of Hunt County, Texas, for further proceedings. (Ordered by Judge Jane J Boyle on 8/25/2016) (trk)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
B&B CAR
STORAGE,
WASH
AND
MINI
§
§
§
Plaintiff,
§
§
v.
§
§
§
STATE AUTOMOTIVE MUTUAL §
INSURANCE COMPANY, JENNIFER §
CALDWELL, and DANNY DUNCAN §
d / b/ a D U N C AN IN S U RAN CE §
AGENCY,
§
§
Defendants.
§
CIVIL ACTION NO. 3:16-CV-1800-B
MEMORANDUM OPINION AND ORDER
Before the Court is Plaintiff B&B Car Wash and Mini Storage’s Motion to Remand
(Doc. 7). For the following reasons, the Court GRANTS Plaintiff’s Motion and REMANDS this
case to the 196th Judicial District Court of Hunt County, Texas, for further proceedings.
I.
BACKGROUND
This is a case about an insurer allegedly denying coverage for an insured’s damaged
storage facility. Plaintiff B&B Car Wash and Mini Storage (“B&B”) alleges that it owns a car
wash, five storage buildings, and an RV shed (the “complex”) in Commerce, Texas. Doc. 5, Am.
Compl. ¶ 11. To protect its property, B&B purchased a State Automotive Mutual Insurance
Company (“State Auto”) policy from agents Jennifer Caldwell (“Caldwell”) and Danny Duncan
-1-
(“Duncan”).1 Id. ¶¶ 13–14; Doc. 8, Answer ¶¶ 11–12. The parties dispute the extent of that
policy, however, hence this lawsuit. B&B suggests it covers its entire complex. Doc. 5, Am.
Compl. ¶ 12. Defendants disagree. Doc. 8, Answer ¶ 10.
In any event, on or about March 27, 2014, B&B says a hail and wind storm struck and
severly damaged its property. Doc. 5, Am. Compl. ¶ 15. In response, B&B filed a claim with State
Auto, but State Auto partially denied it,2 insisting the policy only insured the car wash and one of
the storage facility’s buildings, not all of them. Id. ¶ 16; Doc. 5, Answer ¶ 14. So, after B&B’s
counsel sent the statutorily-required 60-day demand letter, it sued State Auto in state court,
filing its Original Petition on April 4, 2016. Doc. 5, Am. Compl. ¶¶ 17–18; see also Doc. 1-3, Pl.’s
Orig. Pet. and Req. for Disclosure.
After B&B filed its complaint, State Auto removed the case to this Court, arguing that,
because B&B is a Texas citizen3 and State Auto is an Ohio citizen,4 complete diversity—and thus
federal jurisdiciton—exists. Doc. 1, Notice of Removal ¶¶ 2.2–2.3. The next day, B&B amended
its complaint to add Caldwell and Duncan as additional defendants, based on the fact that they
sold it the insurance policy in question. Doc. 5, Am. Compl. ¶ 19. Thus, because Caldwell and
1
It is not entirely clear when, exactly, they did this, but the parties agree that the policy was in effect
from June 28, 2013, to June 28, 2014, so it was likely in early 2013. See Doc. 5, Am. Compl. ¶ 14; Doc. 8,
Answer ¶ 12.
2
According to B&B, at least. Defendants neither admit not deny whether State Auto partially denied
the claim. See Doc. 8, Answer ¶ 14.
3
State Auto alleges B&B is a Texas general partnership between Howard Barrow and John Barrow,
both of Greenville, Texas. Doc. 1, Notice of Removal ¶ 2.2.
4
State Auto indicates that it is a foreign company with its principal place of buisness in Ohio. Doc.
1, Notice of Removal ¶ 2.3.
-2-
Duncan are both Texas citizens—according to B&B, at least—B&B then moved to remand this
case back to state court on grounds that complete diversity no longer existed. Doc. 7, Mot. to
Remand. State Auto’s deadline for responding to B&B’s Motion has long since passed.
Therefore, the Motion is ripe for review.
II.
LEGAL STANDARD
A.
Removal Based on Diversity Jurisdiction
Federal courts are courts of limited jurisdiction. Howery v. Allstate Ins. Co., 243 F.3d 912,
916 (5th Cir. 2001). They possess only the power authorized by the Constitution and statute,
which is not to be expanded by judicial decree. Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375,
377 (1994) (citations omitted); see also McKee v. Kansas City S. Ry. Co., 358 F.3d 329, 337 (5th
Cir. 2004). District courts “must presume that a suit lies outside this limited jurisdiction, and the
burden of establishing federal jurisdiction rests on the party seeking the federal forum.” Howery,
243 F.3d at 916. When a party removes a suit to federal court on diversity grounds under 28
U.S.C. § 1332, the removing party must demonstrate that each element of § 1332 is met.
Furthermore, an action removable solely on the basis of diversity jurisdiction “may not be
removed if any of the parties in interest properly joined and served as defendants is a citizen of
the State in which such action is brought.” 28 U.S.C. § 1441(b)(2). “[A]ny doubt about the
propriety of removal must be resolved in favor of remand.” Gasch v. Hartford Acc. & Indem. Co.,
491 F.3d 278, 281–82 (5th Cir. 2007); Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720,
723 (5th Cir. 2002) (noting that any questions or ambiguities “should be strictly construed in
favor of remand”).
-3-
III.
ANALYSIS
B&B’s argument, though not a model of clarity, is not particularly complex. They argue
that Caldwell, Duncan, and B&B are all Texas citizens, meaning complete diversity no longer
exists, and the Court no longer has jurisdiction over this case. Doc. 7, Mot. to Remand 3–4.
B&B also seems to suggest that improper joinder, which might preclude remand, does not apply.
Id. They say this is so because, in order to establish improper joinder, a movant must show
“(1) [a]ctual fraud in the pleading of jurisdictional facts, or (2) [i]nability of the Plaintiff to
establish a cause of action against a non-diverse party in State Court.” Id. State Auto can show
neither, according to B&B, thus there is no improper joinder, no complete diversity, and no
federal jurisdiction. Id. (citing Smallwood, 385 F.3d at 573). This means the Court must remand
the case back to state court, they say. Id.
“Diversity jurisdiction is generally determined at the time of filing, or, in a case removed
from state court, at the time of removal.” Ellison Steel, Inc. v. Greystar Const. LP, 199 F. App’x
324, 327 (5th Cir. 2006) (citing Grupo Dataflux v. Atlas Global Group, L.P., 541 U.S. 567,
570–71) (1920)). “However, the later addition of a non-diverse defendant will destroy diversity
jurisdiction.” Id. (citing Doleac v. Michalson, 264 F.3d 470, 477 (5th Cir. 2001)). That said, “a
district court is prohibited by statute from exercising jurisdiction over a suit in which any party,
by assignment or otherwise, has been improperly or collusively joined to manufacture federal
diversity jurisdiction.” Smallwood, 385 F.3d at 572. But “[t]he burden of establishing fraudulent
or improper joinder rests on the party asserting it and is indeed a heavy burden.” Galveston Bay
-4-
Biodiesel, L.P. v. Ace Am. Ins. Co., 719 F. Supp. 2d 736, 738 (S.D. Tex. 2010) (citing Travis v.
Irby, 326 F.3d 644, 649 (5th Cir. 2003)).
Because State Auto has not even responded to B&B’s Motion to Remand, they have not
technically asserted fraudulent or improper joinder, let alone met their “heavy burden” to prove
it. Accordingly, the Court need not, and will not, scrutinize B&B’s claims, in detail, to determine
whether “there is no possibility of recovery by the plaintiff against an in-state defendant” or “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.” Smallwood, 385 F.3d at 573.
IV.
CONCLUSION
In light of the above, no diversity jurisdiction exists at this juncture. Therefore, this Court
may not hear this case. Accordingly, B&B’s Motion to Remand is GRANTED and this case is
REMANDED to the 196th Judicial District Court of Hunt County, Texas, for further
proceedings.
SO ORDERED.
SIGNED: August 25, 2016.
_________________________________
JANE J. BOYLE
UNITED STATES DISTRICT JUDGE
-5-
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?