Gutierrez v. Allstate Fire and Casualty Insurance Company et al

Filing 15

MEMORANDUM OPINION AND ORDER denying 7 Motion to Remand filed by Jesus Gutierrez. (Ordered by Judge Sidney A Fitzwater on 6/1/2017) (Judge Sidney A Fitzwater)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
JESUS GUTIERREZ,
Plaintiff,
VS.
ALLSTATE FIRE AND CASUALTY
INSURANCE COMPANY AND
BRANDON TARVER,
Defendants.

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Civil Action No. 3:17-CV-0636-D

MEMORANDUM OPINION
AND ORDER
In this removed action by plaintiff Jesus Gutierrez (“Gutierrez”) to recover for damage
to his residence resulting from a wind and hail storm, Gutierrez moves to remand based on
lack of complete diversity, citing the Texas citizenship of defendant Brandon Tarver
(“Tarver”), the insurance adjuster who adjusted his claim. Defendants Allstate Fire and
Casualty Insurance Company (“Allstate”) and Tarver oppose the motion on the basis that
Tarver has been improperly joined. Concluding that defendants have met their heavy burden
of establishing improper joinder, the court denies the motion to remand.
I
Gutierrez’s residence was insured under a policy issued by Allstate. Tarver was

assigned to adjust Gutierrez’s claim.1 Gutierrez alleges that Allstate and/or Tarver breached
the policy and various statutory and common law duties in connection with handling his
claim. He asserts that Allstate and Tarver misrepresented that some of the damage to the
residence was not covered under the policy, despite being caused by a covered occurrence,
in violation of Tex. Ins. Code Ann. § 541.060(a)(1) (West 2017); failed to attempt to settle
the claim in a fair manner, in violation of Tex. Ins. Code Ann. § 541.060(a)(2)(A); failed to
explain to Gutierrez why they offered an inadequate settlement, in violation of Tex. Ins. Code
Ann. § 541.060(a)(3); failed to affirm or deny coverage of Gutierrez’s claim within a
reasonable time, in violation of Tex. Ins. Code Ann. § 541.060(a)(4); refused to fully
compensate Gutierrez under the terms of the policy, in violation of Tex. Ins. Code Ann.
§ 541.060(a)(7); and failed to meet their obligations regarding timely acknowledging his
claim, beginning an investigation of his claim, and requesting all information reasonably
necessary to investigate his claim within the statutorily mandated deadline; failed to accept
or deny his entire claim within the statutorily mandated deadline of receiving all necessary
information; and failed to meet the obligation to pay a claim without delay, in violation of
Tex. Ins. Code Ann. § 542.056.2

1

The original petition does not specify whether Tarver was an employee of Allstate
or an independent adjuster. It alleges that he was “hired and/or assigned . . . to adjust the
claim.” P. Pet. ¶ 14.
2

Gutierrez alleges in ¶ 29 of his original petition that “Defendants have refused to pay
Plaintiff in full, despite there being no basis whatsoever on which a reasonable insurance
company would have relied to deny the ful1 payment.” P. Pet. ¶ 29 (emphasis added). But
it is clear from the same paragraph that Gutierrez is bringing a claim against Allstate, not
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Aside from the claims Gutierrez brings against Allstate, he asserts claims against
Tarver for violating various sections of the Texas Deceptive Trade Practices-Consumer Act
(“DTPA”), Tex. Bus. & Com. Code Ann. §§ 17.46-17.50 (West 2017); violating § 541 of the
Texas Insurance Code; conspiracy; and negligence, gross negligence, and negligent
misrepresentation.
Allstate removed this case based on diversity of citizenship, contending that Tarver,
a Texas citizen, has been improperly joined. Gutierrez moves to remand, maintaining that
Tarver was properly joined and that the parties are not completely diverse citizens.
II
For a case to be removed based on diversity jurisdiction, “all persons on one side of
the controversy [must] be citizens of different states than all persons on the other side.”
Harvey v. Grey Wolf Drilling Co., 542 F.3d 1077, 1079 (5th Cir. 2008) (quoting McLaughlin
v. Miss. Power Co., 376 F.3d 344, 353 (5th Cir. 2004)) (internal quotation marks omitted).
“The jurisdictional facts that support removal must be judged at the time of the removal.”
Gebbia v. Wal-Mart Stores, Inc., 233 F.3d 880, 883 (5th Cir. 2000) (citations omitted).
Moreover, under 28 U.S.C. § 1441(b), a case cannot be removed based on diversity
jurisdiction if any properly joined defendant is a citizen of the state in which the action is
brought (here, Texas).

Tarver, for breach of the duty of good faith and fair dealing. See id. (“Allstate’s conduct
constitutes a breach of the common law duty of good faith and fair dealing.” And the cause
of action that he asserts for breach of the common law duty of good faith and fair dealing is
asserted only against Allstate. See id. ¶¶ 55-57.
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The doctrine of improper joinder is a narrow exception to the rule of complete
diversity, and it “entitle[s] a defendant to remove to a federal forum unless an in-state
defendant has been ‘properly joined.’” Smallwood v. Ill. Cent. R.R. Co., 385 F.3d 568, 573
(5th Cir. 2004) (en banc); see also Meritt Buffalo Events Ctr. LLC v. Cent. Mut. Ins. Co.,
2016 WL 931217, at *2 (N.D. Tex. Mar. 11, 2016) (Fitzwater, J.). The doctrine allows
federal courts to defend against attempts to manipulate their jurisdiction, such as by joining
nondiverse parties solely to deprive federal courts of diversity jurisdiction. See Smallwood,
385 F.3d at 576. Because “the effect of removal is to deprive the state court of an action
properly before it, removal raises significant federalism concerns.” Gasch v. Hartford
Accident & Indem. Co., 491 F.3d 278, 281 (5th Cir. 2007) (quoting Carpenter v. Wichita
Falls Indep. Sch. Dist., 44 F.3d 362, 365-66 (5th Cir. 1995)). Therefore, the removal statute
is strictly construed, with “any doubt about the propriety of removal [being] resolved in favor
of remand.” Id. at 281-82. In determining whether a party was improperly joined, the court
“resolve[s] all contested factual issues and ambiguities of state law in favor of the plaintiff.”
Id. at 281. The party seeking removal bears a heavy burden to prove improper joinder.
Smallwood, 385 F.3d at 574.
Improper joinder is established by showing that there was either actual fraud in the
pleading of jurisdictional facts or that the plaintiff is unable to establish a cause of action
against the nondiverse defendant in state court. Parsons v. Baylor Health Care Sys., 2012
WL 5844188, at *2 (N.D. Tex. Nov. 19, 2012) (Fitzwater, C.J.) (citing Smallwood, 385 F.3d
at 573). Under the second alternative—the one at issue in this case—the test for improper
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joinder is “whether the defendant has demonstrated 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.” Smallwood, 385 F.3d at 573; see also Travis v. Irby, 326 F.3d
644, 648 (5th Cir. 2003) (explaining that terms “no possibility” of recovery and “reasonable
basis” for recovery have essentially identical meaning, and holding that pleadings must show
more than “any mere theoretical possibility of recovery”). To assess “whether a plaintiff has
a reasonable basis of recovery under state law,”
[t]he court may conduct a [Fed. R. Civ. P.] 12(b)(6)-type
analysis, looking initially at the allegations of the complaint to
determine whether the complaint states a claim under state law
against the in-state defendant. Ordinarily, if a plaintiff can
survive a Rule 12(b)(6) challenge, there is no improper joinder.
That said, there are cases, hopefully few in number, in which a
plaintiff has stated a claim, but has misstated or omitted discrete
facts that would determine the propriety of joinder. In such
cases, the district court may, in its discretion, pierce the
pleadings and conduct a summary inquiry.
Smallwood, 385 F.3d at 573 (footnotes omitted).
When deciding whether a defendant has been improperly joined, a federal district
court must apply the federal pleading standard. See Int’l Energy Ventures Mgmt., L.L.C. v.
United Energy Grp. Ltd., 818 F.3d 193, 207-08 (5th Cir. 2016) (on rehearing). This standard
requires the plaintiff to 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). “A claim has facial plausibility
when the plaintiff pleads factual content that allows the court to draw the reasonable

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inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009). “The plausibility standard is not akin to a ‘probability requirement,’ but it
asks for more than a sheer possibility that a defendant has acted unlawfully.” Id.; see also
Twombly, 550 U.S. at 555 (“Factual allegations must be enough to raise a right to relief
above the speculative level[.]”). “[W]here the well-pleaded facts do not permit the court to
infer more than the mere possibility of misconduct, the complaint has alleged—but it has not
‘shown’—‘that the pleader is entitled to relief.’” Iqbal, 566 U.S. at 679 (alteration omitted)
(quoting Rule 8(a)(2)). Furthermore, under Rule 8(a)(2), a pleading must contain “a short
and plain statement of the claim showing that the pleader is entitled to relief.” Although “the
pleading standard Rule 8 announces does not require ‘detailed factual allegations,’” it
demands more than “labels and conclusions.” Iqbal, 566 U.S. at 678 (quoting Twombly, 550
U.S. at 555). And “‘a formulaic recitation of the elements of a cause of action will not do.’”
Id. (quoting Twombly, 550 U.S. at 555).
III
A
Allstate contends that Tarver has been improperly joined because Gutierrez has not
alleged a reasonable basis for the court to predict that he can recover against Tarver, and that
Tarver’s presence should therefore be ignored in determining whether there is complete
diversity. Relying on Tex. R. Civ. P. 91(a), as well as the federal pleading requirements set
forth in Twombly, described above, Allstate maintains that Gutierrez’s allegations do not
state a claim because they are comprised only of bare legal conclusions and a formulaic
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recitation of the elements of a cause of action, and that the claims against Tarver should be
disregarded for the purposes of determining diversity and dismissed as a matter of law.
B
1
Gutierrez cannot recover against Tarver under § 541.060(a)(1). Gutierrez alleges that
Allstate and Tarver misrepresented that some of the damages were not covered under the
policy, even though the damage was caused by a covered occurrence. “This court has
previously held that acts or omissions like this are not within the scope of § 541.060(a)(1)
because they do not relate to the ‘coverage at issue.’” Meritt Buffalo, 2016 WL 931217, at
*4 (quoting Mainali Corp. v. Covington Specialty Ins. Co., 2015 WL 5098047, at *4
(Fitzwater, J.)). “The misrepresentation must be about the details of a policy, not the facts
giving rise to a claim for coverage.” One Way Invs., Inc. v. Century Sur. Co., 2014 WL
6991277, at *4 (N.D. Tex. Dec. 11, 2014) (Fitzwater, J.) (quoting Messersmith v. Nationwide
Mut. Fire Ins. Co., 10 F.Supp.3d 721, 724 (N.D. Tex. 2014) (Solis, J.)).
2
Gutierrez cannot recover against Tarver under § 541.060(a)(2)(A). “An adjuster
‘cannot be held liable under this section because, as an adjuster, he does not have settlement
authority on behalf of the insurer.’”

Mainali, 2015 WL 5098047, at *4 (quoting

Messersmith, 10 F.Supp.3d at 724).
3
Tarver cannot be held liable under either § 541.060(a)(3) or § 541.060(a)(4). An
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adjuster cannot be held liable under § 541.060(a)(3) because “an adjuster has no obligation
to provide a policyholder a reasonable explanation of the basis in the policy for the insurer’s
denial of a claim, or offer of a compromise settlement of a claim.” Id. at *4. Along the same
lines, “an adjuster cannot be held liable under [§541.060(a)(4)(A)] because an adjuster does
not have the authority on behalf of the insurer to affirm or deny coverage of a claim to a
policyholder.” Id. at *4 (quoting One Way, 2014 WL 6991277, at *5).
4
Gutierrez cannot recover against Tarver under § 541.060(a)(7).
Like [§ 541.060(a)(2)] the bad behavior that the statute target is
an insurer’s refusal to pay under certain circumstances. Those
who can be held liable are the insurance company or the
individual at the insurance company who refuses to pay the
claim, not the individual responsible for conducting the
investigation.
One Way, 2014 WL 6991277, at *4 (quoting Messersmith, 10 F.Supp.3d at 725).
5
Tarver cannot be held liable under § 542.056 because he cannot be held liable under
Chapter 542 of the Texas Insurance Code. Chapter 542 only applies to specifically listed
“insurers,” and, as an adjuster, Tarver is not an insurer. See Ministerio Int’l Lirios Del Valle
v. State Farm Lloyds, 2016 WL 5791550, at *4 (N.D. Tex. Oct. 4, 2016) (Fitzwater, J.).
6
Gutierrez cannot recover against Tarver under the DTPA based on the allegations in
his original petition. In his original petition, Gutierrez’s claims against Allstate and Tarver

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recite the exact language of the DTPA and do not plausibly plead facts that support these
conclusory allegations. Additionally, the claims repeatedly refer to conduct of the defendants
without specifying any conduct undertaken by either one. Under the federal pleading
standard, “[t]hreadbare recitals of the elements of a cause of action, supported by mere
conclusory statements, do not suffice.” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at
555). Each of the allegations that relates to the DTPA claims are conclusory because they
fail to provide the court with some reasonable basis to predict that Gutierrez can recover
against Tarver. See Meritt Buffalo, 2016 WL 931217, at *5; see also Plascencia v. State
Farm Lloyds, 2014 WL 11474841, at *5 (N.D. Tex. Sept. 25, 2014) (McBryde, J.) (citations
omitted) (“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.”); DeCluette v. State Farm Lloyds, 2013 WL
607320, at *3 (N.D. Tex. Feb. 19, 2013) (Boyle, J.) (holding that plaintiff failed to show
reasonable basis to recover against adjuster by merely reciting elements of causes of action,
making only conclusory allegations, and “repeatedly refer[ring] to the allegedly wrongful
conduct as taken jointly by ‘Defendants’ . . . without specifying the conduct taken by each
[defendant] separately.”).
7
Gutierrez cannot recover against Tarver on the conspiracy claim. Gutierrez’s claim
against Tarver for conspiracy makes only conclusory allegations coupled with the
“[t]hreadbare recitals of the elements of the cause of action.” Iqbal, 556 U.S. at 678 (citing
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Twombly, 550 U.S. at 555). The claim includes word-for-word recitation of the elements of
a conspiracy claim, and it purports to rely on alleged violations of the DTPA, §§ 541 and 542
of the Texas Insurance Code, and other conclusory statements, including allegations of fraud
and unfair and deceptive insurance practices, to satisfy an element of conspiracy. With only
these assertions, Gutierrez has at best pleaded a theoretical possibility that Tarver can be
liable for conspiracy. There is therefore no reasonable basis for the court to predict that
Gutierrez can recover against Tarver for conspiracy.
8
Gutierrez has not plausibly pleaded that he can recover against Tarver for negligence
or gross negligence. He alleges in his original petition that
Tarver was negligent in giving advice to Plaintiff as to how he
could repair his property so as to prevent further damage to the
property. This advice as to how to repair Plaintiffs property was
negligent because Plaintiff could not properly repair the
property and prevent further damage by following Tarver’s
advice. Plaintiff’s property has sustained further damage as a
result. Tarver owed a duty to use reasonable care when he
undertook to advise Plaintiff as to how he could repair the
property so as to prevent further damage to the property.
Tarver breached this legal duty. The breach proximately caused
Plaintiff’s damages.
P. Pet. ¶ 62 (emphasis added). Although Gutierrez apparently recognizes that the existence
of a duty is an essential element of a negligence claim under Texas law, he has not
demonstrated that an insurance adjuster has a duty to an insured of the type he alleges, i.e.,
to use reasonable care when advising the insured how to repair his property so as to prevent
further damage, or even any duty at all. As the district court recognized in Zimmerman v.
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Travelers Lloyds of Texas Insurance Co., 2015 WL 3971415 (W.D. Tex. June 15, 2015):
Although the Texas Supreme Court has not addressed the issue
of whether an independent adjuster could be held liable for
negligence separate from good faith and fair dealings, the Fifth
Circuit has spoken to this issue. In Bui, a boat owner alleged
that the insurance adjuster who handled the owner’s claim for
boat damage acted negligently in preparing the claim. The Fifth
Circuit upheld the district court’s dismissal of the common law
negligence claim, holding that the adjuster owed no duty to the
insured under Texas law. The existence of a legal duty owed by
the defendant to the plaintiff is one of the necessary elements of
common law negligence in Texas. Because independent
adjusters, absent a contract or other special circumstances, owe
no duty to the insured in Texas, they cannot be held liable for
common law negligence. Texas law does not recognize a cause
of action for common law negligence by the insured against
independent insurance adjusters[.]
Id. at *5 (citations, brackets, and quotation marks omitted).
Accordingly, the court holds that Gutierrez has not plausibly pleaded that he can
recover against Tarver for negligence.
9
Gutierrez cannot recover against Tarver for negligent misrepresentation. Gutierrez’s
allegations against Tarver for negligent misrepresentation merely restate the elements for
negligent misrepresentation as a cause of action rather than identify particular facts that
would satisfy these elements. In Texas, the elements for a negligent misrepresentation claim
are
(1) defendant’s representation to a plaintiff in the course of
defendant’s business or in a transaction in which the defendant
had an interest; (2) defendant’s providing false information for
the guidance of others; (3) defendant’s failure to exercise
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reasonable care or competence in obtaining or communicating
information; (4) plaintiff’s justifiable reliance on defendant’s
representation; and (5) defendant’s negligent misrepresentation
proximately causing the plaintiff's injury.
Willis v. Marshall, 401 S.W.3d 689, 698 (Tex. App. 2013, no pet.); see also Fed. Land Bank
Ass’n of Tyler v. Sloane, 825 S.W.2d 439, 442 (Tex. 1991). The claims that Gutierrez alleges
against Tarver, including that he “supplied false information for the guidance of others” and
that he “did not exercise reasonable care or competence in obtaining or communicating the
information to” Gutierrez, do not provide any detail beyond merely reciting the elements
required of this claim. Because the pleading standard demands more than “labels and
conclusions,” Gutierrez has not sufficiently pleaded a claim against Tarver for negligent
misrepresentation. Iqbal, 566 U.S. at 678 (quoting Twombly, 550 U.S. at 555).
C
The court concludes that Gutierrez’s state-court petition does not show more than a
“mere theoretical possibility of recovery,” and therefore fails to provide a reasonable basis
for the court to predict that Gutierrez can recover against Tarver. See Smallwood, 385 F.3d
at 573; Travis, 326 F.3d at 648. Accordingly, because Allstate has met its heavy burden of
establishing that Tarver has been improperly joined, his Texas citizenship can be disregarded
for purposes of determining diversity of citizenship and removability. Because Gutierrez and
Allstate are completely diverse citizens, this case was properly removed.

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*

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For the foregoing reasons, the court denies Gutierrez’s motion to remand.
SO ORDERED.
June 1, 2017.

_________________________________
SIDNEY A. FITZWATER
UNITED STATES DISTRICT JUDGE

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