Vallejo v. Allstate Vehicle and Property Insurance Company et al

Filing 10

OPINION & ORDER re 6 MOTION to Remand, Jeff Doll and Ronald Sledge terminated(Signed by Judge Micaela Alvarez) Parties notified.(BelindaSaenz, 7)

United States District Court
Southern District of Texas

ENTERED
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
MCALLEN DIVISION

May 23, 2017
David J. Bradley, Clerk

JORGE VALLEJO,

§
§
Plaintiff,
§
VS.
§ CIVIL ACTION NO. 7:17-CV-94
§
ALLSTATE VEHICLE AND PROPERTY §
INSURANCE COMPANY, et al,
§
§
Defendants.
§
OPINION & ORDER
The Court now considers the motion to remand,1 filed by Jorge Vallejo (“Plaintiff”), as
well as the response,2 filed by Allstate Vehicle and Property Insurance Company (“Allstate”),
Jeff Doll (“Doll”), and Ronald Sledge (“Sledge”) (collectively “Defendants”). After duly
considering the record and relevant authorities, the Court DISMISSES Doll and Sledge
WITHOUT PREJUDCE, and DENIES Plaintiff’s motion to remand.
I.

Background

Plaintiff alleges the following facts in his original petition.3 Plaintiff had an insurance
policy with Allstate, which covered his property located at 2606 East Jarilla Avenue, Hidalgo,
Texas 78557 (“the Property”).4 Plaintiff opened two insurance claims with Allstate following “a
fallen object event and a weather event which caused substantial damage to the Property[.]”5
Thereafter, “Allstate assigned dates of loss of February 6, 2016 and May 31, 2016 to the

1

Dkt. No. 6.
Dkt. No. 7.
3
Dkt. No. 1-4.
4
Id. at ¶ 12.
5
Id. at ¶ 14.
2

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claims.”6 Allstate selected Doll to adjust the February claim.7 On June 17, 2016, Doll sent
Plaintiff a letter concerning the review of Plaintiff’s claim,8 but “[d]espite acknowledging the
claim[,] . . . Doll did not schedule an inspection of the Property until July 11, 2016. As of July
28, 2016, the claim was still not processed[.]”9 Defendants then “attempted to delay processing
and payment of the claim by requesting an Examination Under Oath . . . to attempt to minimize
their failure to pay Plaintiff’s claims in a timely manner.”10
Although Plaintiff does not specifically indicate that Sledge was assigned to the May
2016 claim, Plaintiff contends that Sledge erroneously estimated the value of that claim and that
his estimate “failed to fully quantify Plaintiff’s damages, thus demonstrating that he did not
conduct a thorough investigation of Plaintiff’s claim.”11 Ultimately, Allstate denied Plaintiff’s
claims and “refused to issue a full and fair payment for the loss.”12
Plaintiff subsequently filed suit in state court against Defendants, alleging violations of
the Texas Insurance Code, breach of contract, and breach of the duty of good faith and fair
dealing.13 Defendants removed the case to this Court, asserting subject matter jurisdiction
pursuant to 28 U.S.C. § 1332(a).14 The Court now turns to its analysis of Plaintiff’s motion to
remand.

6

Id.
Id. at ¶ 15.
8
Id.
9
Id.
10
Id.
11
Id. at ¶ 16.
12
Id.
13
Id. at ¶¶ 29–51.
14
Dkt. No. 1, at p. 1.
7

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II.

Legal Standard

The removing party bears the burden of establishing whether federal jurisdiction exists,15
and the Court must resolve all doubts regarding whether removal jurisdiction is proper in favor
of remand.16 The Court does not have subject matter jurisdiction under 28 U.S.C. § 1332(a)
unless the parties are completely diverse and the amount in controversy exceeds $75,000.17
Generally, “the sum demanded in good faith in the initial pleading shall be deemed to be the
amount in controversy.”18
Further, the residency of non-diverse defendants who have been improperly joined is not
considered for diversity jurisdiction purposes.19 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.”20 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.”21 To determine whether a plaintiff has a reasonable basis for recovery, courts
evaluate the sufficiency of the pleadings against non-diverse parties under the federal pleading
standards.22
Twombly and Iqbal lay out a two-prong approach to Rule 12(b)(6) dismissal motions,23
which is relevant here for understanding what constitutes the baseline federal pleading

15

Howery v. Allstate Ins. Co., 243 F.3d 912, 916 (5th Cir. 2001) (citation omitted).
Acuna v. Brown & Root, Inc., 200 F.3d 335, 339 (5th Cir. 2000).
17
28 U.S.C. § 1332(a).
18
Id. § 1446(c)(2).
19
Salazar v. Allstate Tex. Lloyd’s, Inc., 455 F.3d 571, 574 (5th Cir. 2006).
20
Smallwood v. Ill. Cent. R. Co., 385 F.3d 568, 573 (5th Cir. 2004).
21
Id.
22
Int’l Energy Ventures Mgmt., L.L.C. v. United Energy Grp., Ltd., 818 F.3d 193, 208 (5th Cir. 2016).
23
Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009) (“Our decision in Twombly illustrates the two-pronged approach.”).
16

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standard.24 First, the plaintiff must plead “enough facts to state a claim to relief that is plausible
on its face.”25 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.” 26 Second, the
plaintiff must prove the plausibility of his claim with case-specific facts, not mere conclusions:
“a pleading that offers labels and conclusions or a formulaic recitation of the elements of a cause
of action will not do.”27 “Nor does a complaint suffice if it tenders naked assertion[s] devoid of
further factual enhancement.”28 Thus, although courts must accept as true all well-pleaded facts,
they need not accept as true over legal conclusions, or legal conclusions which have been
“couched” as factual allegations.29
III.

Discussion

To determine whether the Court has jurisdiction, it will engage in an improper joinder
analysis for each cause of action against Doll and Sledge (the “in-state Defendants”). Here, the
only causes of action against the in-state Defendants are for alleged violations of Texas
Insurance Code §§ 541 and 542.30 As a preliminary matter, the Court notes Plaintiff cannot
maintain a § 542 cause of action against the in-state Defendants because that statutory section
explicitly applies only to insurers.31 Accordingly, the Court will now consider Plaintiff’s § 541
claims against the in-state Defendants.

24

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).
Id.
26
Iqbal, 556 U.S. at 678.
27
Id.
28
Id.
29
Id. (“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.”).
30
See Dkt. No. 1-4, at ¶¶ 29–36.
31
Tex. Ins. Code § 542.003(a) (providing that “[a]n insurer engaging in business in this state may not engage in an
unfair settlement practice”) (emphasis added).
25

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Plaintiff alleges that the in-state Defendants violated § 541.060(a)(1) by “misrepresenting
to Plaintiff material facts relating to the coverage at issue[.]”32 The Court acknowledges that
Plaintiff simply tracked the statutory language for this cause of action,33 which is insufficient to
survive the Rule 12(b)(6) legal standard.34 Elsewhere in the original petition, Plaintiff argues that
the in-state Defendants made misrepresentations about covered damage under the applicable
insurance policy.35 Although Plaintiff does not clearly identify any misrepresentations by Doll,
he does argue that “Sledge made numerous errors in estimating the value of Plaintiff’s May 2016
claim, all of which were designed to intentionally minimize and underpay the loss incurred by
the Plaintiff. The estimate provided by [] Sledge failed to fully quantify Plaintiff’s damages, thus
demonstrating that he did not conduct a thorough investigation of Plaintiff’s claim.” 36 Plaintiff
contends that such an incomplete investigation resulted in a wrongful denial of his claim, which
constitutes a misrepresentation of policy benefits.37 The Court finds that Plaintiff’s
misrepresentation claim fails to provide enough facts and is conclusory. Indeed, Plaintiff does
not identify any particular misrepresentations, merely noting that Sledge erred in estimating the
amount of damages to the Property. Without additional factual support, Plaintiff is unable to state
a claim upon which relief can be granted for his § 541.060(a)(1) cause of action.
Plaintiff’s causes of action pursuant to §§ 541.060(a)(2), (a)(3), and (a)(4) likewise fail to
survive the Rule 12(b)(6) legal standard. This Court has found that these sections apply only to

32

Dkt. No. 1-4, at ¶ 31.
Compare Dkt. No. 1-4, at ¶ 31 (“Defendants Doll and Sledge’s unfair settlement practice, as described above, of
misrepresenting to Plaintiff material facts relating to the coverage at issue, constitutes an unfair method of
competition and an unfair and deceptive act or practice in the business of insurance.”) with Tex. Ins. Code §
541.060(a)(1) (“It is an unfair method of competition or an unfair or deceptive act or practice in the business of
insurance to engage in the following unfair settlement practices with respect to a claim by an insured or beneficiary:
misrepresenting to a claimant a material fact or policy provision relating to coverage at issue[.]”).
34
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
35
Dkt. No. 1-4, at ¶ 18.
36
Id. at ¶ 16.
37
Id.
33

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insurers.38 However, even if this Court determined that these sections do apply to adjusters,
Plaintiff’s allegations nevertheless fail to state a claim. Here, again, Plaintiff improperly tracks
the statutory language of the Texas Insurance Code.39 Furthermore, each of these causes of
action are conclusory and lack sufficient factual support. Plaintiff’s only support for his §
541.060(a)(2) allegation is that “Defendants failed to make an attempt to settle Plaintiff’s claim
in a fair manner, although Defendants were aware of their liability to Plaintiff under the
Policy.”40 Not only does Plaintiff fail to differentiate between Allstate and the in-state
Defendants, but he also offers no facts to bolster his claim that the in-state Defendants were
aware of liability to Plaintiff or that they are even potentially responsible parties under §
541.060(a)(2).
Similarly, Plaintiff’s factual support for his § 541.060(a)(3) cause of action is
insufficient. In a conclusory fashion, Plaintiff contends that the in-state Defendants “failed to
offer Plaintiff adequate compensation, without any explanation why full payment was not being
38

See e.g., Lopez v. United Property & Casualty Ins. Co., 197 F.Supp.3d 944, 950 (S.D. Tex. July 11, 2016) (citing
state and federal cases that found §§ 541.060(a)(2)(A), (a)(3), and (a)(4) are inapplicable to insurance adjusters).
39
Compare Dkt. No. 1-4, at ¶ 32 (“Defendants Doll and Sledge’s unfair settlement practice, as described above, of
failing to attempt in good faith to effectuate a prompt, fair, and equitable settlement of the claim(s), even though
liability under the Policy is reasonably clear, constitutes an unfair method of competition and an unfair and
deceptive act or practice in the business of insurance.”) with Tex. Ins. Code § 541.060(a)(2)(A) (“It is an unfair
method of competition or an unfair or deceptive act or practice in the business of insurance to engage in the
following unfair settlement practices with respect to a claim by an insured or beneficiary: failing to attempt in good
faith to effectuate a prompt, fair, and equitable settlement of: a claim with respect to which the insurer’s liability has
become reasonably clear[.]”). Compare Dkt. No. 1-4, at ¶ 33 (“The unfair settlement practices of Defendants Doll
and Sledge, as described above, of failing to promptly provide the Plaintiff with a reasonable explanation of the
basis in the Policy, in relation to the facts or applicable law, for the offer of a compromise settlement of Plaintiff’s
claims, constitutes an unfair method of competition and an unfair and deceptive act or practice in the business of
insurance.”) with Tex. Ins. Code § 541.060(a)(3) (“It is an unfair method of competition or an unfair or deceptive act
or practice in the business of insurance to engage in the following unfair settlement practices with respect to a claim
by an insured or beneficiary: failing to promptly provide to a policyholder a reasonable explanation of the basis in
the policy, in relation to the facts or applicable law, for the insurer’s denial of a claim or offer of a compromise
settlement of a claim[.]”). Compare Dkt. No. 1-4, at ¶ 34 (“Defendants Doll and Sledge’s unfair settlement practice,
as described above, of failing within a reasonable time to affirm or deny coverage of the claim to Plaintiff or to
submit a reservation of rights to Plaintiff, constitutes an unfair method of competition and an unfair and deceptive
act or practice in the business of insurance.”) with Tex. Ins. Code § 541.060(a)(4)(A)–(B) (“It is an unfair method of
competition or an unfair or deceptive act or practice in the business of insurance to engage in the following unfair
settlement practices with respect to a claim by an insured or beneficiary: failing with a reasonable time to: affirm or
deny coverage of a claim to a policyholder; or submit a reservation of rights to a policyholder.”).
40
Dkt. No. 1-4, at ¶ 19.

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made[,]” and additionally “did not communicate that any future settlements or payments would
be forthcoming to pay for the entire loss covered under the Policy, nor did Defendants provide
any explanation for the failure to adequately settle Plaintiff’s claims.”41 Again, Plaintiff fails to
differentiate between the Defendants. Ultimately, there are not enough facts to draw a reasonable
inference that the in-state Defendants violated § 541.060(a)(3).
Plaintiff is also unable to state a claim under § 541.060(a)(4). Plaintiff attempts to support
this cause of action by arguing that “Defendants failed to affirm or deny coverage of [his] claims
within a reasonable time. Specifically, Plaintiff did not receive timely indication of acceptance or
rejection, regarding the full and entire claim, in writing from Defendants.”42 While Plaintiff
argues that the in-state Defendants failed to affirm or deny coverage within a reasonable time,
there are insufficient facts to suggest that the in-state Defendants violated § 541.060(a)(4).
Plaintiff asserts that Doll did not schedule an inspection of the Property until July 11, 2016 and
that the claim was not processed by the end of July 2016, even though Doll was assigned to
adjust Plaintiff’s claim in February 2016.43 Defendants, in turn, attached a June 2016 letter of
representation on behalf of Plaintiff, addressed to Allstate.44 The Court finds that Plaintiff has not
provided enough factual support that Doll, or anyone for that matter, violated § 541.060(a)(4) by
virtue of the fact that Plaintiff’s claim was not being processed by the end of July 2016. Plaintiff
has not demonstrated what would have constituted a reasonable time to affirm or deny coverage
for Plaintiff’s claim, and the record evidence reflects that contrary to Plaintiff’s contention,
Allstate and any potential adjusters were not even notified of Plaintiff’s claim until at least June
2016.

41

Id. at ¶ 20.
Id. at ¶ 21.
43
Dkt. No. 1-4, at ¶ 15.
44
Dkt. No. 1-8, at p. 70.
42

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Additionally, Plaintiff contends that Defendants “attempted to delay processing and
payment of the claim by requesting an Examination Under Oath.”45 Although the allegation is
against the Defendants generally, Plaintiff’s motion to remand specifies that Doll requested an
Examination Under Oath.46 However, Defendants explain that a non-party, David Thorsen, was
the adjuster assigned to Plaintiff’s claim, and that he made the examination request.47 As an
attachment to the original answer, Defendants provided the specific examination request that
Thorsen sent to Plaintiff.48 Ultimately, the Court finds that Plaintiff has not presented sufficient
factual support to state a claim under Rule 12(b)(6) for an alleged violation of § 541.060(a)(4).
Plaintiff’s final § 541 cause of action against the in-state Defendants is for an alleged
violation of § 541.060(a)(7).49 Specifically, Plaintiff claims that the in-state Defendants violated
the Texas Insurance Code by “refusing to pay Plaintiff’s claim without conducting a reasonable
investigation[.]”50 Plaintiff argues generally that “Defendants performed an outcome-oriented
investigation of Plaintiff’s claims, which resulted in a biased, unfair, and inequitable evaluation
of Plaintiff’s claims[.]”51 Again, this argument merely tracks the statutory language of the Texas
Insurance Code,52 and the original complaint is devoid of any factual enhancement that there was
an outcome oriented investigation conducted by the in-state Defendants. In fact, Plaintiff actually
argues that no investigation had occurred by the end of July 2016,53 and he offers no facts to

45

Dkt. No. 1-4, at ¶ 15.
Dkt. No. 6, at ¶ 2.
47
Dkt. No. 7, at ¶ 3.
48
Dkt. No. 1-8, at p. 8.
49
Dkt. No. 1-4, at ¶ 35.
50
Id.
51
Id. at ¶ 22.
52
Tex. Ins. Code § 541.060(a)(7) (“It is an unfair method of competition or an unfair or deceptive act or practice in
the business of insurance to engage in the following unfair settlement practices with respect to a claim by an insured
or beneficiary: refusing to pay a claim without conducting a reasonable investigation with respect to the claim[.]”).
53
See Dkt. No. 1-4, at ¶ 15 (“Despite acknowledging the claim on June 17, 2016, Defendant Doll did not schedule
an inspection of the Property until July 11, 2016. As of July 28, 2016, the claim was still not processed and Plaintiff
[] was still pending an estimate from Defendant Allstate. Therefore, Defendants Allstate and Doll have not promptly
paid the Plaintiff’s claim.”).
46

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suggest that there was any subsequent investigation. Accordingly, Plaintiff is unable to state a
claim for this cause of action as well.
IV.

Conclusion

Plaintiff has not adequately pled any claim against the in-state Defendants under the
federal pleading standards. Thus, Doll and Sledge were improperly joined in this case and their
residency is disregarded for purposes of diversity jurisdiction. Pursuant to Fifth Circuit dictate,54
Doll and Sledge are DISMISSED WITHOUT PREJUDICE. Because the only remaining
parties—Plaintiff and Allstate—are completely diverse, the Court has diversity jurisdiction over
this case. Accordingly, Plaintiff’s motion to remand is DENIED.
IT IS SO ORDERED.
DONE at McAllen, Texas, this 23rd day of May, 2017.
___________________________________
Micaela Alvarez
United States District Judge

54

Int’l Energy Ventures Mgmt., L.L.C., 818 F.3d 193, 209 (5th Cir. 2016).

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