Cavazos et al v. Sussex Insurance Company et al
Filing
6
OPINION & ORDER re 5 Opposed MOTION to Remand, Brian Ring terminated. (Signed by Judge Micaela Alvarez) Parties notified.(bgarces, 7)
United States District Court
Southern District of Texas
ENTERED
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
MCALLEN DIVISION
November 02, 2016
David J. Bradley, Clerk
CLAUDIA CAVAZOS, et al,
§
§
Plaintiffs,
§
VS.
§ CIVIL ACTION NO. 7:16-CV-00576
§
SUSSEX INSURANCE COMPANY, et al, §
§
Defendants.
§
OPINION & ORDER
The Court now considers Claudia and Rosanna Cavazos’s (“Plaintiffs”) motion to
remand.1 After duly considering the motion, record, and relevant authorities, the Court DENIES
the motion.
I.
BACKGROUND
This is an insurance case. Plaintiffs’ residence was insured by Sussex Insurance
Company (“Defendant”), and the residence was allegedly damaged by a storm on March 25,
2015.2 Defendant Brian Ring (“Ring”) inspected the property and estimated damages.3 Plaintiffs
filed suit in state court on September 29, 2016, generally alleging various claims rooted in
underpayment,4 and Defendant removed the case to federal court on September 29, 2016.5 In the
removal notice, Defendant argues at length that this Court has diversity jurisdiction because
Ring, a Texas resident, was improperly joined.6 Plaintiffs subsequently moved to remand on
1
Dkt. No. 5.
Id.
3
Id.
4
Dkt. No. 1-2.
5
Dkt. No. 1.
6
Id. at pp. 3–8.
2
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October 28, 2016, arguing that Ring was properly joined, and therefore the Court lacks diversity
jurisdiction.7
II.
LEGAL STANDARD
The residency of non-diverse defendants who have been improperly joined is not
considered for diversity jurisdiction purposes.8 The Fifth Circuit recognizes two manners by
which improper joinder may occur: “(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 party in state
court.”9 The Fifth Circuit has interpreted the second manner to mean 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.”10 To determine whether a plaintiff has a reasonable basis for recovery, courts
evaluate the sufficiency of the pleadings against the non-diverse party under federal pleading
standards.11 The removing-party bears the burden of proving improper joinder.12
Although not technically a motion to dismiss, the Twombly and Iqbal two-prong
approach to 12(b)(6) dismissal motions governs the analysis.13 Thus, the plaintiff must first plead
“enough facts to state a claim to relief that is plausible on its face.”14 A claim has facial
plausibility when its factual content “allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.”15 Second, the plaintiff must prove the plausibility
of his claim with case-specific facts, not mere conclusions: “a pleading that offers labels and
7
Dkt. No. 1.
Salazar v. Allstate Texas Lloyd’s, Inc., 455 F.3d 571, 574 (5th Cir. 2006).
9
Smallwood v. Illinois Cent. R. Co., 385 F.3d 568, 573 (5th Cir. 2004).
10
Id. at 573.
11
Int'l Energy Ventures Mgmt., L.L.C. v. United Energy Group, Ltd., 818 F.3d 193, 208 (5th Cir. 2016).
12
Smallwood, 385 F.3d at 574.
13
Ashcroft v. Iqbal, 556 U.S. 662, 679 (“Our decision in Twombly illustrates the two-pronged approach.”).
14
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007) (emphasis added).
15
Ashcroft, 556 U.S. at 678.
8
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conclusions or a formulaic recitation of the elements of a cause of action will not do.”16 “Nor
does a complaint suffice if it tenders naked assertion[s] devoid of further factual enhancement.”17
Thus, although the Court must accept as true all well-pleaded facts, it need not accept as true
overt legal conclusions, or legal conclusions which have been “couched” as factual allegations.18
III.
APPLICATION
Defendant—the removing party—has carried its burden of proving that Ring was
improperly joined. There are no allegations of fraud in pleading the jurisdictional facts, so
Defendant instead argues that Plaintiffs’ actions against Ring are inadequately plead under
federal pleading standards. Defendant states: “Plaintiffs’ allegations against Ring do nothing
more than track the statutory language of his Insurance Code causes of action; they are barebone, conclusory, and over-generalized boiler-plate allegations devoid of substantive facts.”19
The Court agrees.
Plaintiffs levy the following claims against Ring: violations of Texas Insurance Code
Sections 541.060(a)(1),20 (a)(2)(A),21 (a)(3),22 (a)(4),23 and (a)(7);24 as well as fraud25 and
conspiracy to commit fraud.26 Plaintiffs largely track the statutory language of each Section 541
provision.27 Insofar as this is the case, these claims are inadequately plead because they
16
Ashcroft, 556 U.S. at 678.
Id.
18
Id. at 678, 129 (“Although for the purposes of a motion to dismiss we must take all of the factual allegations in the
complaint as true, we are not bound to accept as true a legal conclusion couched as a factual allegation.”).
19
Dkt. No. 1. at p. 5.
20
Dkt. No. 1-2 at p. 5.
21
Id.
22
Id.
23
Id.
24
Id. at p. 6.
25
Id. at p. 12.
26
Id.
27
See id. at pp. 5–6 (Concerning Section 541.060(a)(2)(A), “Ring failed to make and attempt to settle Plaintiffs’
claim in a fair manner.” Concerning Section 541.060(a)(3), “Ring failed to explain the reasons for their offer of an
inadequate settlement.” Concerning Section 541.060(a)(4), “Ring failed to affirm or deny coverage of Plaintiffs’
17
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constitute overt legal conclusions. In addition to overt statutory tracking, Plaintiffs also
globularly and indiscriminately support all of their Section 541 claims against Ring with the
following statements:
“[Ring] failed to perform a thorough investigation”;28
“[Ring] failed to include all of the damages”;29
“[Ring] underestimated and undervalued the cost of repairs . . . ”;30
“[Ring] improperly adjusted [Plaintiffs’ claim]”;31
“[Ring] misrepresented to Plaintiffs that the damage to the property was not
covered under the policy . . . .”32
These statements do not render Plaintiffs’ Section 541 claims well-plead because they are
merely “naked assertions devoid of further factual enhancement.”33 For example, Plaintiffs do
not explain in even an elementary fashion how Ring failed to perform a thorough investigation,
what damages Ring omitted from the estimate, why such damages should have been included, or
what specific misrepresentations Ring made to Plaintiffs and why they were misrepresentations.
Consequently, the above-listed allegations are inadequately plead because they are conclusory.
As another district court has stated under very similar circumstances, “[t]hese factual allegations
are not pled with enough specificity to distinguish particular facts from legal conclusions.”34
claim within a reasonable time.” Concerning Section 541.060(a)(7), “Ring refused to fully compensate Plaintiffs . . .
even though . . . Ring performed failed to conduct a reasonable investigation.”).
28
Dkt. No. 1-2 at p. 3.
29
Id.
30
Id.
31
Id. at p. 4.
32
Id.
33
Ashcroft, 556 U.S. at 678.
34
Johnson v. The Travelers Home & Marine Ins. Co., CV H-16-449, 2016 WL 4061146, at *2 (S.D. Tex. July 29,
2016).
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Plaintiffs’ fraud claim is also conclusory because it merely tracks the language of the
common law elements of fraud without “further factual enhancement.”35 The elements of fraud
include: “[1] material misrepresentation, [2] which was false, [3] and which was either known to
be false when made or was asserted without knowledge of its truth, [4] which was intended to be
acted upon, [5] which was relied upon, and [6] which caused injury.” 36 In a similar fashion, the
entirety of Plaintiffs’ fraud claim is as follows:
Each and every one of the representations, as described above, concerned material
facts for the reason that absent such representations, Plaintiffs would not have
acted as they did, and which Defendants Sussex and Ring knew were false or
made recklessly without any knowledge of their truth as a positive assertion. The
statements were made with the intention that they should be acted upon by the
Plaintiffs, who in turn acted in reliance upon the statements, thereby causing
Plaintiffs to suffer injury and constituting common law fraud.37
As Defendant points out, Plaintiffs’ reference to “representations, as described above” seems to
refer to their previous statement that “[Ring] misrepresented to Plaintiffs that the damage was not
covered under the Policy.”38 But this is itself a conclusory statement, because Plaintiffs never
explain what damage was covered by the policy that Ring stated was not covered. The remainder
of Plaintiffs’ claim is a discombobulated recitation of the elements of fraud. In short, Plaintiffs’
fraud claim is inadequately plead under federal pleading standards.
Finally, Plaintiffs’ claim of conspiracy to commit fraud is also inadequately plead
because it is conclusory. The elements of conspiracy are: “(1) two or more persons; (2) an object
to be accomplished; (3) a meeting of the minds on the object or course of action; (4) one or more
35
Ashcroft, 556 U.S. at 678.
Sears, Roebuck & Co. v. Meadows, 877 S.W.2d 281, 282 (Tex. 1994).
37
Dkt. No. 1-2 at p. 12.
38
Dkt. No. 1-2 at p. 4.
36
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unlawful, overt acts; and (5) damages as a proximate result.”39 In turn, the entirety of Plaintiffs’
conspiracy claim is as follows:
Defendants Sussex and Ring were members of a combination of two or more
persons whose object was to accomplish an unlawful purpose or a lawful purpose
by unlawful means. In reaching a meeting of the minds regarding the course of
action to be taken against Plaintiffs, Defendants Sussex and Ring committed an
unlawful, overt act to further the object or course of action. Plaintiffs suffered
injury as a proximate result.”
This too is nothing more than a messy recitation of the elements of conspiracy. Thus, it is a legal
conclusion and inadequately plead under federal pleading standards. In sum, all of Plaintiffs’
claims against Ring are inadequately plead under federal pleading standards, and thus Ring was
improperly joined in this case.
IV.
HOLDING
The Court has diversity jurisdiction in this case because Ring was improperly joined.
Plaintiffs’ remand motion is DENIED. Furthermore, and pursuant to Fifth Circuit dictate,40 Ring
is DISMISSED WITHOUT PREJUDICE from the case.
IT IS SO ORDERED.
DONE at McAllen, Texas, this 2nd day of November, 2016.
___________________________________
Micaela Alvarez
United States District Judge
39
40
Tri v. J.T.T., 162 S.W.3d 552, 556 (Tex. 2005).
Int'l Energy Ventures Mgmt., L.L.C., 818 F.3d at 209.
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