Saenz v. IDS Property Casualty Insurance Company et al

Filing 9

ORDER granting 6 Motion to Remand. Action remanded to the 229th Judicial District Court, Duval County, Texas, the court from which it was removed.(Signed by Judge Nelva Gonzales Ramos) Parties notified.(mserpa, 2)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
CORPUS CHRISTI DIVISION
GILBERT SAENZ,
Plaintiff,
VS.
IDS PROPERTY CASUALTY
INSURANCE COMPANY, et al,
Defendants.

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§ CIVIL ACTION NO. 2:14-CV-338
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ORDER OF REMAND
This is an insurance coverage dispute arising from hail storm damage to Plaintiff
Gilbert Saenz’s home. The case was timely removed from state court on the basis of
diversity jurisdiction, with Defendants’1 allegation that the claims adjuster, Defendant
Travis Vanderloop, was improperly joined. Before the Court is Plaintiff’s Motion to
Remand (D.E. 6). For the reasons set out below, the Court GRANTS the Motion.
Diversity jurisdiction requires the citizenship of all plaintiffs to be diverse from
the citizenship of all defendants and the amount in controversy to exceed the sum or
value of $75,000, exclusive of interest and costs. 28 U.S.C. § 1332. It is undisputed that
the parties, with the exception of Defendant Vanderloop, are diverse and that the amount
in controversy exceeds the sum of $75,000. D.E. 1, pp. 2-3; D.E. 1-3, pp. 2, 20; D.E. 6,
p. 3. Therefore, the only issue for the Court is whether Defendant Vanderloop was
improperly joined such that his non-diverse citizenship may be disregarded.
1

Defendant ICA Adjusters, Inc. (ICA) removed this case with the consent of Defendant IDS Property
Casualty Ins. Co. D.E. 1, p. 1. Defendants Travis Vanderloop and Jessica Uliana had not been served.
The response to the Motion to Remand is filed on behalf of ICA by attorneys signing off as representing
both ICA and Vanderloop.

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On a motion to remand, “[t]he removing party bears the burden of showing that
federal jurisdiction exists and that removal was proper.” Manguno v. Prudential Prop. &
Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002). “Any ambiguities are construed against
removal because the removal statute should be strictly construed in favor of remand.” Id.
The strict construction rule arises because of “significant federalism concerns.” See
generally, Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108–09 (1941).
“The party seeking removal bears a heavy burden of proving that the joinder of the
in-state party was improper.” Smallwood v. Illinois Cent. R.R. Co., 385 F.3d 568, 574
(5th Cir. 2004) (en banc).

The removing party proves improper joinder by

demonstrating: (1) actual fraud in the pleading of jurisdictional facts; or (2) the inability
of the plaintiff to establish a cause of action against the non-diverse defendant in state
court. See Crockett v. R.J. Reynolds Tobacco Co., 436 F.3d 529, 532 (5th Cir. 2006)
(citing Travis v. Irby, 326 F.3d 644, 646–47 (5th Cir. 2003)); see also Boone v. Citigroup,
Inc., 416 F.3d 382, 388 (5th Cir. 2005). Only the second method is at issue here.
The motion to remand must be granted unless “there is absolutely no possibility
that the plaintiff will be able to establish a cause of action against the non-diverse
defendant in state court.” Griggs v. State Farm Lloyds, 181 F.3d 694, 699 (5th Cir.
1999). Plaintiff alleges that Defendant Vanderloop knowingly misrepresented policy
coverage, undervalued his claim, and failed to attempt in good faith to effectuate a
prompt, fair, and equitable settlement of the claim, making an executive decision that it
should be denied. Plaintiff’s causes of action are stated as: noncompliance with the
Texas Insurance Code’s unfair settlement prohibitions; common law fraud; and
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conspiracy to commit fraud. D.E. 1-3. See e.g., TEX. INS. CODE §§ 541.002, 541.060,
541.151; Liberty Mutual Ins. Co. v. Garrison Contractors, Inc., 966 S.W.2d 482, 484
(Tex. 1998). Claims similar to those of Plaintiff have been held sufficient to defeat
improper joinder claims in similar cases in all of the federal districts of Texas. See e.g.,
Tenner v. Prudential Ins. Co. of Am., 872 F.Supp. 1571, 1574 (E.D. Tex. 1994);
Blanchard v. State Farm Lloyds, 206 F.Supp.2d 840, 846–48 (S.D. Tex. 2001); Russell v.
State Farm Lloyds, 2001 WL 1326501 (N.D. Tex. 2001) (mem.); Bruner v. State Farm
Lloyds, 1999 WL 33290662 (W.D. Tex. 1999).
Defendants concede Plaintiff’s argument that Defendant Vanderloop is a “person”
subject to the requirements of the Texas Insurance Code.

D.E. 8, p. 2.

Instead,

Defendants argue that (1) Vanderloop did not owe any duties to Plaintiff; (2) the
Plaintiff's pleadings are factually insufficient to support a claim against Vanderloop; and
(3) allegations of misrepresentation are not supported by actionable facts. Each of these
arguments will be addressed in turn.
First, Defendants rely on Natividad v. Alexis, Inc., 875 S.W.2d 695 (Tex. 1994),
for the proposition that Defendant Vanderloop did not owe duties to Plaintiff regarding a
good faith attempt to effectuate a prompt and fair settlement of a clear claim. Natividad,
however, addressed the common law duty of good faith and fair dealing. The Fifth
Circuit held that the holding in Natividad was limited to the common law duty it
addressed and did not preclude actions against an insurance claims adjuster under Texas
statutory provisions. Gasch v. Hartford Acc. & Indem. Co., 491 F.3d 278, 283 (5th Cir.
2007) (citing Garrison, 966 S.W. 2d at 482). Defendants claim that Plaintiff’s remaining
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allegations concern duties that Defendant Vanderloop did not have. However, Plaintiff
has made specific allegations against Defendant Vanderloop under the Texas Insurance
Code. The Court rejects Defendants’ first argument.
Second, Defendants’ argument that Plaintiff has not satisfied pleading rules relies
on Griggs, 181 F.3d at 694.2 In Griggs, the only pleading reference to the non-diverse
defendant was that she was the local agent for the insurance carrier. Id. at 699. There
were no allegations of any wrongful conduct on her part, but rather a “mention in
passing.” Id. Under that pleading, devoid of any allegations other than status, the
plaintiff had failed to show a reasonable possibility of recovery against the non-diverse
defendant. The Griggs court found improper joinder and denied remand.
The plaintiff suffered the same fate in Cortez v. Meritplan Ins. Co., 2013 WL
6835266, at *2 (S.D. Tex., Dec. 20, 2013). In Cortez, the plaintiff pled that the adjusting
company had conducted a “faulty investigation” and acted outside the scope of its
authority. While those allegations were deemed too broad to support a cause of action,
the pleading here is more specific, complaining that Defendant Vanderloop undervalued
the roof damage and failed to include other exterior and structural storm damage that
Plaintiff argues should have been included in the claim. Thus Cortez does not apply.

2

Defendants also cite Terrell v. Ace European Group Ltd., No. 1:09-cv-506, slip op. at 6 (E.D. Tex. Feb.
24, 2010) (emphasis added). The Terrell case, according to Defendants’ citation, relied on Bailey v. State
Farm Lloyd's, No. Civ. A. H-00-3638, 2001 WL 34106907, at *5 (S.D. Tex. Apr. 12, 2001). Like
Griggs, the Bailey case involved a pleading that did not allege any wrongful conduct on the part of the
non-diverse defendants. In fact, in Bailey, those defendants were not even named in the body of the
allegations.

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Defendants’ reliance on Eagle Oil3 is also misplaced. While there is some basis
for Defendants’ argument that a plaintiff must demonstrate the manner in which an
insurance claim investigation was insufficient when the evidence otherwise shows that
there was sufficient time to complete an adequate investigation or that a thorough
investigation had been done, that burden is not a pleading burden. Instead, it arises upon
trial or, in the case of Eagle Oil and the Maynard opinion on which it is based, at
summary judgment.
The adequacy of pleadings in federal court is governed by Bell Atlantic Corp. v.
Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 556 U.S. 662 (2009). Twombly and
Iqbal post-date most case law evaluating the sufficiency of a plaintiff's pleadings against
a defendant who is alleged to have been fraudulently joined. So the sharp contrast
between the new federal pleading rules and age-old Texas state requirements has not
been evaluated in this context in the Fifth Circuit. However, courts in the Southern
District of Texas have held that state standards are applied to the evaluation of improper
joinder claims when they are more lenient than federal standards. E.g., Stevenson v.
Allstate Texas Lloyd's, No. 11–cv–3308, 2012 WL 360089, *3 (S.D. Tex. Feb. 1, 2012);
Edwea, Inc. v. Allstate Ins. Co., No. H–10–2970, 2010 WL 5099607, 2010 U.S. Dist.
LEXIS 129582 (S.D. Tex. Dec. 8, 2010). This Court agrees.
Under the Texas “fair notice” standard for pleading, the question is whether the
opposing party can ascertain from the pleading the nature and basic issues of the
3

Eagle Oil & Gas Co. v. Travelers Prop. Cas. Co. of Am., Civ. A. No. 12-00133, 2104 WL 3406686, at
*22 (N.D. Tex. July 14, 2014) (citing Maynard v. State Farm Lloyds, 2002 WL 1461923, at *5 (N.D.
Tex. July 2, 2002)).

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controversy and what evidence will be relevant so as to prepare a defense. Horizon/CMS
Healthcare Corp. v. Auld, 34 S.W.3d 887, 896 (Tex.2000). The “fair notice” requirement
of Texas pleading relieves the pleader of the burden of pleading evidentiary matters with
meticulous particularity. E.g, Bowen v. Robinson, 227 S.W.3d 86, 91 (Tex. App.—
Houston [1st Dist.] 2006, pet. denied).
After reviewing the Plaintiff's Original Petition (D.E.1–3), the Court is of the
opinion that the pleading adequately informs the Defendants of the issues such that
discovery can be conducted and evidence can be developed in a proper defense. It thus
satisfies the Texas pleading requirements. If the pleading reveals a reasonable basis of
recovery on one cause of action, the court must remand the entire suit to state court. E.g.,
Gray ex rel. Rudd v. Beverly Enterprises–Miss., Inc., 390 F.3d 400, 412 (5th Cir. 2004).4
The Court rejects Defendants’ second argument.
Third, Defendants argue that Plaintiff has failed to identify particular
misrepresentations and that a cause of action based on misrepresentation cannot be shown
because a post-loss representation defeats the reliance element. Because Plaintiff has
alleged statutory causes of action in addition to misrepresentation, the Court need not
reach this argument. An improper joinder challenge is defeated if any cause of action
provides a basis for recovery. Gray, 181 F.3d at 694.

4

In the event that the pleadings are deemed insufficient, the ordinary procedure would be to pierce the
pleadings and make a determination on summary judgment-type evidence, which was not offered here.
Mumfrey v. CVS Pharmacy, Inc., 719 F.3d 392, 401-02 (5th Cir. 2013). At all stages, the burden of proof
remains on the Defendants. Id.

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For these reasons, the improper joinder challenge is rejected, the Motion to
Remand (D.E. 6) is GRANTED and the Court ORDERS this action be remanded to the
229th Judicial District Court, Duval County, Texas, the court from which it was removed.
ORDERED this 17th day of October, 2014.

___________________________________
NELVA GONZALES RAMOS
UNITED STATES DISTRICT JUDGE

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