Palma et al v. Allstate Texas Lloyd's et al

Filing 16

ORDER OF REMAND re: 8 MOTION to Remand. Case terminated on 1/8/14.(Signed by Judge Micaela Alvarez) Parties notified.(bgarces, 7)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
MCALLEN DIVISION
MIGUEL PALMA, et al,
Plaintiffs,
VS.
ALLSTATE TEXAS LLOYD'S, et al,
Defendants.

§
§
§
§ CIVIL ACTION NO. 7:13-CV-575
§
§
§
§

ORDER TO REMAND
The Court now considers the self-styled “Plaintiffs’ Motion to Remand,”1 filed by Miguel
Palma and Maria I. Palma (“Plaintiffs”). Allstate Texas Lloyd’s (“Allstate”) and Suzanne
Ehrhardt and Richard Thompson (“the Adjusters”) have filed a response,2 and Plaintiffs have
replied.3
After considering the motion, response, reply, record, and relevant authorities, the Court
GRANTS the motion and REMANDS the case to state court.
I.

Background

In April 2012, a hailstorm struck Plaintiffs’ residence.4 Plaintiffs submitted a claim to
their insurer Allstate, who assigned the Adjusters to the claim. Dissatisfied with the handling and
resolution of their claim, Plaintiffs filed suit in state court on August 23, 2013,5 and served
Defendants on September 21 and 24, 2013.6 In their complaint, Plaintiffs alleged that the
Adjusters improperly handled their claim:

1

Dkt. No. 8.
Dkt. No. 11.
3
Dkt. Nos. 12, 13.
4
Dkt. No. 1, Attach. 2 at p. 5.
5
Dkt. No. 1, Attach. 2.
6
Dkt. No. 1 at p. 2.
2

1/5

“On or about July 20, 2013, Ehrhardt conducted a substandard inspection of
Plaintiffs’ Property. For example Ehrhardt spent a mere forty-five (45) minutes
inspecting Plaintiffs’ entire Property for hail storm and/or windstorm damages. The
inadequacy of Ehrhardt’s inspection is further evidenced by her report, which failed
to include all of Plaintiffs’ hail storm and/or windstorm damages noted upon
inspection. Specifically, Ehrhardt failed to include the damages to the home’s
interior and fence in her report. Moreover, the damages that Ehrhardt actually
included in her report were grossly undervalued. Ehrhardt also improperly withheld
material sales tax and prospective contractors’ overhead and profit from her estimate
. . . . [Defendant Thompson] communicated with Plaintiffs by telephone regarding
their claim and/or reviewed reports, documents, and information regarding the claim.
Furthermore, in a phone conversation with Plaintiffs on July 29, 2013 when they
called to express their concern regarding Defendant Ehrhardt’s estimate, Thompson
told Plaintiffs that they needed to get an estimate from a contractor. Ultimately,
Thompson failed to thoroughly review Ehrhardt’s assessment of the claim and
ultimately approved and/or submitted an inaccurate report of the damages.”7
Plaintiffs alleged the Adjusters’ actions constituted unfair settlement practices in
violation of the Texas Insurance Code, §§541.060(a)(1)-(4), 541.060 (a)(2)(A), and 541.060
(a)(7).8 Defendants timely removed to this Court on October 17, 2013. While Defendants admit
that Texas law permits a cause of action against the Adjusters,9 they assert the Adjusters were
improperly joined because Plaintiffs failed to allege they performed any specific material acts.10
II.

Subject Matter Jurisdiction and Improper Joinder

The Court does not have subject matter jurisdiction under 28 U.S.C. § 1332 unless the
parties are completely diverse and the amount in controversy exceeds $75,000.11 Here, only
diversity is in question. The Court notes that “doubts regarding whether removal jurisdiction is
proper should be resolved against federal jurisdiction.”12 Moreover, the Fifth Circuit has
described the doctrine of improper joinder as “a narrow exception to the rule of complete

7

Dkt. No. 1, Attach. 2 at pp. 6-7.
Id. at pp. 8-9, 11-14.
9
Dkt. No. 11 at p. 7, ¶4.11.
10
Dkt. No. 1 at pp. 4-6.
11
28 U.S.C. 1332(a).
12
Acuna v. Brown & Root Inc., 200 F.3d 335, 339 (5th Cir. 2000) (citation omitted).
8

2/5

diversity, and the burden of persuasion on a party claiming improper joinder is a heavy one.”13
“[T]he Court must resolve all ambiguities of state law in favor of the non-removing party.”14
When considering whether a party was improperly joined, “[t]he court may conduct 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.”15 The Court
“determin[es] removal jurisdiction on the basis of claims in the state court complaint as it exists
at the time of removal.”16 In conducting the 12(b)(6)-type analysis in the improper joinder
context, the Court evaluates the petition under the state-court pleading standards,17 by which the
pleading must state a cause of action and give fair notice of the relief sought.18 The Supreme
Court of Texas has stated:
“In determining whether a cause of action was pled, plaintiff’s pleadings must be
adequate for the court to be able, from an examination of the plaintiff's pleadings
alone, to ascertain with reasonable certainty and without resorting to information
aliunde the elements of plaintiff’s cause of action and the relief sought with
sufficient information upon which to base a judgment.”19
III.

Analysis

The complaint alleges facts sufficient to state a claim against the Adjusters
As stated above, the Court applies state pleading standards to removed complaints.
However, even if the Court did apply the federal Iqbal/Twombly pleading standards, as
Defendants request,20 Plaintiffs’ complaint would state a claim with adequate specificity to
withstand a Rule 12(b)(6) analysis. Plaintiffs alleged the Adjusters performed specific acts,
13

Campbell v. Stone Ins., Inc., 509 F.3d 665, 669 (5th Cir. 2007) (internal quotation marks and citations omitted).
Id.
15
Smallwood v. Ill. Cent. R.R. Co., 385 F.3d 568, 573 (5th Cir. 2004) (en banc) (citations omitted).
16
Cavallini v. State Farm Mut. Auto Ins. Co., 44 F.3d 256, 264 (5th Cir. 1995).
17
For Judge Rosenthal’s thorough explanation of why the Court uses the state court pleading standards in the
improper joinder context, see Edwea, Inc. v. Allstate Ins. Co., No. H-10-2970, 2010 WL 5099607 (S.D. Tex. Dec.
8, 2010).
18
Id. See also TEX. R. CIV. P. 45 & 47.
19
Stoner v. Thompson, 578 S.W.2d 679, 683 (Tex. 1979) (citation omitted).
20
See Dkt. No. 11 at pp. 7-8.
14

3/5

including performing a substandard inspection, ignoring certain damage to the property,
improperly withholding expenses from the damage estimate, and failing to properly review the
claim.21 These are far from conclusory legal allegations, and Plaintiffs clearly alleged the
Adjusters, not Allstate, performed these acts. Plaintiffs then matched their factual allegations to
specific causes of action under the Texas Insurance Code.22 This wealth of detail enables the
Court to ascertain the cause of action and relief sought from Plaintiffs’ pleadings alone, and thus
satisfies Texas’ notice pleading standards.
The complaint need not allege the Adjusters caused independent damages
In their response to the motion to remand, Defendants claim that Texas law requires
evidence of extracontractual harm as a condition on recovery for extracontractual damages, and
that as a result Plaintiffs must plead such harm in order to state a claim against the Adjusters.23
However, Defendants conflate an evidentiary requirement with a pleading standard. The Fifth
Circuit has indicated that allegations that the adjuster himself directly violated the insurance code
and caused damages satisfy Texas pleading requirements at this early stage of the proceedings.24
While Plaintiffs must demonstrate damages independent of the denial of insurance coverage to
recover from the Adjusters, Plaintiffs do not need to plead such damages to state a cause of
action against them. Here Plaintiffs specifically alleged the Adjusters violated the insurance
code, and that these violations resulted in Plaintiffs’ damages.25 This allegation suffices to state a
claim under state law against the Adjusters.

21

Dkt. No. 1, Attach. 2 at pp. 6-10.
Id. at pp. 11-14.
23
Dkt. No. 11 at pp. 4-7.
24
See Hornbuckle v. State Farm Lloyds, 385 F.3d 538, 544-45 (5th Cir. 2004) (finding that Texas would not allow
recovery, and thus remand was appropriate, “in the absence of evidence sufficient to sustain a finding that that
employee himself committed a violation of Article 21.21 (or the DPTA) (and that such violation was a cause of
damage or legally recognized harm to the plaintiff).” (emphasis in original)).
25
See Dkt. No. 1, Attach. 2 at pp. 14-19.
22

4/5

IV.

Holding

Plaintiffs have met Texas’ pleading standards for a viable claim by alleging specific facts
and causes of action against the Adjusters. Having reached this conclusion, the Court need not
address Defendants’ argument that Plaintiffs’ fraud, bad faith, and §541 claims do not meet the
requirements of Federal Rule of Civil Procedure 9(b).26 The Adjusters were not improperly
joined in this action. Accordingly, the parties are not completely diverse, and the Court lacks
jurisdiction. The Court REMANDS the case to state court.

IT IS SO ORDERED.
DONE this 8th day of January, 2014 in McAllen, Texas.

_______________________________
Micaela Alvarez
UNITED STATES DISTRICT JUDGE

26

Dkt. No. 11 at pp. 13-15.

5/5