Puente et al v. Pillar Insurance Company et al

Filing 14

MEMORANDUM AND ORDER GRANTED 7 Opposed MOTION to Remand (Signed by Judge Nancy F. Atlas) Parties notified.(sashabranner, 4)

United States District Court
Southern District of Texas

ENTERED
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
HECTOR PUENTE and TERESA
RIVERA,
Plaintiffs,
v.
PILLAR INSURANCE COMPANY
and MATTHEW GREENHOUSE,
Defendants.

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March 11, 2016
David J. Bradley, Clerk

CIVIL ACTION NO. 4:16-0138

MEMORANDUM AND ORDER
This insurance case was removed from the 295th Judicial District Court,
Harris County, Texas. The matter is before the Court on Plaintiffs Hector Puente
and Teresa Rivera’s (“Plaintiffs”) Motion to Remand (the “Motion”) [Doc. # 7].
Defendant Pillar Insurance Company (“Pillar”) filed a Response [Doc. # 10],1 to
which Plaintiff replied [Doc. # 11]. On March 7, 2016, the Court heard argument
on the Motion. See Hearing Minutes and Order [Doc. # 12]. The Motion is now
ripe for determination. After considering the parties’ briefing and oral arguments,
all matters of record, and the applicable legal authorities, the Court grants the
Motion.
1

Although Defendant Pillar and Defendant Matthew Greenhouse are represented by
the same counsel, the Response to the Motion was filed solely on behalf of Pillar.
See Doc. # 10, at 1.

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I.

BACKGROUND
Plaintiffs allege that they are the policyholders of a homeowner’s insurance

policy issued by Pillar. Exhibit A to Amended Notice of Removal, Plaintiffs’
Original Petition (the “Petition”) [Doc. # 4-1], at 2, ¶ 8. Plaintiffs also allege that
Defendant Matthew Greenhouse (“Greenhouse”) is an independent licensed Texas
insurance adjuster. Id., at 2, ¶ 4.2 Plaintiffs allege that they submitted a claim on
the policy, but that Defendants mishandled the claim in various ways, including
that Defendants “failed to properly adjust the claim and summarily improperly
denied the claim with obvious knowledge and evidence of serious cosmetic and
structural damage.” Id., at 3, ¶ 12.
Plaintiffs filed the Petition in the 295th Judicial District Court, Harris
County, Texas. The Petition asserts claims only under Texas state law. Defendant
Pillar removed the case to this Court pursuant to 28 U.S.C. §§ 1332(a)(1), 1441(a),
and 1446. Amended Notice of Removal [Doc. # 4], at 2, ¶ 2.1. Pillar is a Florida
corporation with its principal place of business in North Carolina. Id., at 2, ¶ 2.3.
Plaintiffs and Defendant Greenhouse are Texas citizens. Id., at 2, ¶ 2.2; id., at 4.
Defendant Pillar contends, however, that this Court has subject matter jurisdiction

2

Although Plaintiffs do not allege that Defendant Greenhouse is an independent
adjuster, Defendant Pillar represents that he is. See Response [Doc. # 10], at 2,
¶ 1.4.

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under 28 U.S.C. § 1332 because Plaintiffs improperly joined Defendant
Greenhouse in the Petition. Id., at 4–5.
II.

LEGAL STANDARD
“Federal courts are courts of limited jurisdiction.” Gunn v. Minton, __

U.S. __, 133 S. Ct. 1059, 1064 (2013) (quoting Kokkonen v. Guardian Life Ins. Co.
of Am., 511 U.S. 375, 377 (1994)); Hotze v. Burwell, 784 F.3d. 984, 999 (5th Cir.
2015); Scarlott v. Nissan N. Am., Inc., 771 F.3d 883, 887 (5th Cir. 2014). “They
possess only that power authorized by Constitution and statute, which is not to be
expanded by judicial decree.” Gunn, 133 S. Ct. at 1064 (quoting Kokkonen, 511
U.S. at 377). Any state court civil action over which the federal courts would have
original jurisdiction may be removed by the defendant to federal court. See 28
U.S.C. § 1441(a); Barker v. Hercules Offshore, Inc., 713 F.3d 208, 228 (5th Cir.
2013).
District courts have both federal question jurisdiction and diversity
jurisdiction. Federal question jurisdiction exists over “all civil actions arising
under the Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331.
A district court also has diversity jurisdiction over “civil actions where the matter
in controversy exceeds the sum of $75,000, exclusive of interest and costs, and is

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between citizens of different States.” 28 U.S.C. § 1332(a)(1).3 For purposes of
diversity jurisdiction, a corporation is a citizen of the state in which it was
incorporated and the state in which it has its principal place of business. See 28
U.S.C. § 1332(c)(1); Tewari De-Ox Sys., Inc. v. Mountain States/Rosen, LLC, 757
F.3d 481, 483 (5th Cir. 2014). A corporation’s principal place of business is “the
place where a corporation’s officers direct, control, and coordinate the
corporation’s activities.”

Hertz Corp. v. Friend, 559 U.S. 77, 92–93 (2010);

Swindol v. Aurora Flight Scis. Corp., 805 F.3d 516, 519 (5th Cir. 2015); see also
MetroplexCore, L.L.C. v. Parsons Transp., Inc., 743 F.3d 964, 971 (5th Cir. 2014).
The removing party bears the burden of establishing both the existence of federal
subject-matter jurisdiction and that removal is otherwise proper. Vantage Drilling
Co. v. Hsin-Chi Su, 741 F.3d 535, 537 (5th Cir. 2014).
III.

ANALYSIS
A non-diverse defendant may be found to be improperly joined in an action

if there is either “actual fraud in the [plaintiff’s] pleading of jurisdictional facts” or
the removing defendant demonstrates that the plaintiff is unable to establish a
cause of action against the non-diverse defendant. Int’l Energy Ventures Mgmt.,

3

Plaintiffs do not dispute that the amount in controversy requirement is met in this
case. Cf. Amended Notice of Removal [Doc. # 4], at 3, ¶ 2.5 (“Plaintiffs’ dwelling
policy limit and the personal property policy limit are in excess of $75,000.”).

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L.L.C. v. United Energy Grp., Ltd., 800 F.3d 143, 148 (5th Cir. 2015); Mumfrey v.
CVS Pharm. Inc., 719 F.3d 392, 401 (5th Cir. 2013); Kling Realty Co. v. Chevron
USA, Inc., 575 F.3d 510, 513 (5th Cir. 2009) (citing Campbell v. Stone Ins., Inc.,
509 F.3d 665, 669 (5th Cir. 2007)). The Fifth Circuit repeatedly has explained that
the defendant seeking remand must demonstrate “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 recovery against an in-state defendant.” Smallwood v. Ill.
Cent. R.R. Co., 385 F.3d. 568, 573 (5th Cir. 2004); accord, e.g., Int’l Energy
Ventures, 800 F.3d at 149.
The party asserting improper joinder bears a heavy burden of persuasion.
See, e.g., Kling Realty, 575 F.3d at 514. “[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).4 “In this inquiry the motive or purpose
of the joinder of in-state defendants is not relevant.” Smallwood, 385 F.3d. at 574.
“Any contested issues of fact and any ambiguities of state law must be resolved in

4

There is some authority that a defendant must prove its assertion of fraudulent
joinder by clear and convincing evidence. Int’l Energy Ventures, 800 F.3d at 149
(citing Grassi v. Ciba-Geigy, Ltd., 894 F.2d 181, 186 (5th Cir. 1990)); see Parks v.
New York Times Co., 308 F.2d 474, 478 (5th Cir. 1962). This standard has not
been widely adopted and the Court does not rely on it here.

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[the plaintiff’s] favor.” Travis v. Irby, 326 F.3d 644, 649 (5th Cir. 2003) (citing
Griggs, 181 F.3d at 699); accord B., Inc. v. Miller Brewing Co., 663 F.2d 545, 549
(5th Cir. 1981).
To determine whether an in-state defendant has been improperly joined, the
Court usually “conduct[s] a Rule 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.” Smallwood, 385 F.3d at 573.5 The
parties dispute the applicable pleading standard for this analysis. Plaintiffs urge
the Court to apply the more lenient Texas notice pleading standard,6 while Pillar
submits that the more stringent federal “plausibility” pleading standard under
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009), controls the improper joinder

5

Under certain circumstances, the Court may “pierce the pleadings and conduct a
summary inquiry.” 385 F.3d at 573. No party has requested such a summary
inquiry in this case.

6

In Texas state court, a plaintiff’s petition must contain “a short statement of the
cause of action sufficient to give fair notice of the claim involved.” TEX. R. CIV.
P. 47(a). This “fair notice” pleading standard is satisfied if the opposing party
“can ascertain from the pleading the nature, basic issues, and the type of evidence
that might be relevant to the controversy.” Dallas Area Rapid Transit v. Morris,
434 S.W.3d 752, 760 (Tex. App.—Dallas 2014, review denied) (citing Low v.
Henry, 221 S.W.3d 609, 612 (Tex. 2007)). “A court will look to the pleader’s
intent ‘and the pleading will be upheld even if some element of a cause of action
has not been specifically alleged.’” Morris, 434 S.W.3d at 761 (quoting Roark v.
Allen, 663 S.W2d 804, 809 (Tex. 1982)).

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analysis.7 The Fifth Circuit recently held that the Texas state pleading standard
applies. Int’l Energy Ventures Mgmt., L.L.C. v. United Energy Grp., Ltd., 800 F.3d
143, 149 (5th Cir. 2015).
Pillar asserts that Greenhouse was improperly joined because Plaintiffs have
not alleged facts sufficient to state a claim against him under Texas state law.
Plaintiffs have asserted two Texas state law claims against both Pillar and
Greenhouse: (1) violations of the Texas Unfair Competition and Unfair Practices
Act, TEX. INS. CODE § 541.001 et seq.; and (2) violations of the Texas Prompt
Payment of Claims Act, TEX. INS. CODE § 542.001 et seq.8 Pillar argues that
Plaintiffs’ Petition alleges only facts regarding “Defendants” generally and made
no specific allegations regarding Greenhouse individually. Pillar contends that the
Petitioner has therefore failed to establish a cause of action against Greenhouse.
See Response [Doc. # 10], at 5–7.
Applying the Texas “fair notice” pleading standard, the Court is
unpersuaded by Defendant Pillar’s contention. Although Plaintiffs’ Petition is
highly general, there are comprehensible state law claims asserted against
7

The general federal pleading standard requires that the complaint “contain
sufficient factual allegations, as opposed to legal conclusions, to state a claim for
relief that is “plausible on its face.” See Ashcroft, 556 U.S. at 678; Patrick v. WalMart, Inc., 681 F.3d 614, 617 (5th Cir. 2012).

8

The remaining causes of action are asserted only against Pillar. See Petition [Doc.
# 4-1], at 5–6, ¶ 26.

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Greenhouse. Specifically, in paragraph 12 of the Petition, Plaintiffs allege conduct
that clearly pertains to the insurance adjuster. See Doc. # 4-1, at 3, ¶ 12 (alleging
that Defendants “failed to properly adjust the claim . . . with obvious knowledge
and evidence of serious cosmetic and structural damage”). Although Plaintiffs
refer to “Defendants” in the plural, the allegations are sufficient to alert Defendants
of Plaintiffs’ theory that Greenhouse, the adjuster, knowingly failed to perform his
duties to identify covered damage to Plaintiffs’ home. The Petition also alleges a
second pertinent claim, namely, that Defendants violated the Texas Unfair
Competition and Unfair Practices Act, TEX. INS. CODE § 541.060(1), (2), by
“misrepresent[ing] to Plaintiffs that the damage to the property was not covered
under the policy, even though the damage was caused by a covered occurrence”
and by “fail[ing] to make an attempt to settle Plaintiffs’ claim in a fair manner,
although they were aware of their liability to Plaintiffs under the policy.” See
Petition [Doc. # 4-1], at 3, ¶¶ 15–16.

These allegations give “fair notice” of the

subjects of the claims against Defendant Greenhouse.9

9

The Court does not condone Plaintiffs’ boilerplate pleading without differentiation
or specific allegations against each Defendant separately. It is noted that the
enactment of Texas Rule of Civil Procedure 91a may discourage these generalized
pleading practices. See TEX. R. CIV. P. 91a (“[A] party may move to dismiss a
cause of action on the grounds that it has no basis in law or fact. A cause of action
has no basis in law if the allegations, taken as true, together with inferences
reasonably drawn from them, do not entitle the claimant to the relief sought. A
cause of action has no basis in fact if no reasonable person could believe the facts
(continued…)
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Defendant Pillar has not otherwise argued that the allegations in these
paragraphs, if proven, would not be the basis for a claim under Texas state law
against Defendant Greenhouse.10 The Court therefore concludes the Petition gives
Defendants fair notice of Plaintiffs’ state insurance law claims. Cf. Gasch, 491
F.3d at 281–82 (“[A]ny doubt about the propriety of removal must be resolved in
favor of remand.”). Pillar has not made a showing of improper joinder.
The presence of potentially viable claims against a non-diverse defendant,
Greenhouse, deprives the Court of subject matter jurisdiction. The Court must
therefore remand the case to Texas state court.
IV.

CONCLUSION AND ORDER
Based on the foregoing, the Court concludes that it lacks subject matter

jurisdiction over this action. It is therefore
ORDERED that Plaintiffs Hector Puente and Teresa Rivera’s Motion to
Remand [Doc. # 7] is GRANTED. The Court will issue a separate Remand Order.
(continued…)
pleaded.”); see also Bart Turner & Assocs. v. Krenke, Civ. A. No. 3:13-2921,
2014 WL 1315896, at *3 (N.D. Tex. Mar. 31, 2014) (discussing potential impact
of Rule 91a on improper joinder analysis).
10

In the Amended Notice of Removal, Pillar argues that Plaintiffs cannot recover
from Greenhouse under the Deceptive Trade Practices Act because they “were not
‘consumers’ as to Greenhouse.” Doc. # 4, at 4. Pillar did not brief this argument
in its Response. In any event, Plaintiffs have pleaded an actionable claim under
the Texas Insurance Code and the presence of even a single claim against a nondiverse defendant suffices to defeat diversity jurisdiction.

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SIGNED at Houston, Texas, this _____ day of March, 2016.
11th

NAN Y F. ATLAS
SENIOR UNI
STATES DISTRICT JUDGE

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