Doctors Hospital at Renaissance, LTD. v. Employers Insurance Company of Wausau et al

Filing 14

OPINION AND ORDER OF REMAND re 8 Opposed MOTION to Remand. Case terminated on 01/07/22(Signed by Judge Micaela Alvarez) Parties notified.(klopez, 7)

Case 7:21-cv-00418 Document 14 Filed on 01/07/22 in TXSD Page 1 of 13
United States District Court
Southern District of Texas

ENTERED
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
MCALLEN DIVISION

January 07, 2022
Nathan Ochsner, Clerk

DOCTORS HOSPITAL AT
RENAISSANCE, LTD.,

§
§
§
Plaintiff,
§
§
VS.
§
§ CIVIL ACTION NO. 7:21-cv-00418
EMPLOYERS INSURANCE COMPANY §
OF WAUSAU; CHRISTOPHER
§
ALVAREZ; GSM INSURORS; and JIM
§
HANSEN,
§
§
Defendants.
§
OPINION AND ORDER
The Court now considers “Plaintiff Doctors Hospital at Renaissance, Ltd.’s Opposed
Motion to Remand”1 and Defendants Employers Insurance Company of Wausau’s and Christopher
Alvarez’s (Defendants’) response.2 The Court acknowledges Defendants’ earlier-filed motion to
dismiss,3 but the Court must first address its jurisdiction before adjudicating a motion on the merits.
The Court adds that, as a threshold matter, Defendants’ brief lacks numbered paragraphs entirely,
hindering the Court’s reference to Defendants’ arguments. The Court cautions Defendants that
future submissions should consistently number each paragraph to properly comply with the
Federal Rules of Civil Procedure.4 After considering Plaintiff’s motion to remand, the record, and
relevant authorities, the Court GRANTS Plaintiff’s motion and remands this case.

1

Dkt. No. 8.
Dkt. No. 13.
3 Dkt. No. 3.
4 FED. R. CIV. P. 7(b)(2) (“The rules governing captions and other matters of form in pleadings apply to motions and
other papers.”); FED. R. CIV. P. 10(b) (emphasis added) (“A party must state its claims or defenses in numbered
paragraphs, each limited as far as practicable to a single set of circumstances.”).
2

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I. BACKGROUND AND PROCEDURAL HISTORY
This is an insurance dispute. Plaintiff Doctors Hospital at Renaissance, Ltd. commenced
this case in the 139th District Court of Hidalgo County, Texas on September 24, 2021. 5 Plaintif f
alleges essentially that it procured an insurance policy, through Defendants GSM Insurors and its
agent Jim Hansen, effective May 2019 to May 2020 that Defendants represented would cover all
risks including “coverage for loss of business income (Time Element losses), civil authority,
decontamination, [and] payroll losses.”6 Plaintiff alleges that COVID-19-related losses are
covered under its insurance policy. 7 In April 2020, Plaintiff submitted a claim for insurance
coverage.8 In October 2020, after an investigation, Defendants Employers Insurance Company of
Wausau and its adjuster Christopher Alvarez denied insurance coverage. 9 Plaintiff alleges
violation of the Texas Insurance Code, negligence, violation of the Texas Deceptive Trade
Practices-Consumer Protection Act, fraud, conspiracy to commit fraud, breach of contract, and
breach of the covenant of good faith and fair dealing.10
Plaintiff’s process server served Defendant Employers Insurance Company of Wausau on
October 5, 2021,11 and Defendant Christopher Alvarez on October 12, 2021. 12 Those two
Defendants alone removed the case to this Court on November 1st. 13 Defendants promptly filed a

5

Dkt. No. 1-2 at 3.
Id. at 6, ¶¶ 15–18.
7 Id. at 11–12, ¶¶ 32–34.
8 Id. at 16, ¶ 43.
9 Id. at 18, ¶ 47.
10 Id. at 25–, ¶¶ 76–
11 Dkt. No. 1-1 at 4.
12 Id. at 11.
13 Dkt. No. 1; see Jernigan v. Ashland Oil Inc., 989 F.2d 812, 815 (5th Cir. 1993) (“[A]s a general rule, removal
requires the consent of all co-defendants. In cases involving alleged improper or fraudulent joinder of parties,
however, application of this requirement to improperly or fraudulently joined parties would be nonsensical, as
removal in those cases is based on the contention that no other proper defendant exists.”).
6

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motion to dismiss on November 8th.14 On the response deadline to that motion, Plaintiff filed the
instant motion to remand.15 The motion has been briefed and is ripe for consideration. The Court
turns to the analysis.
II. D ISCUSSION
a. Legal Standard
District courts have limited jurisdiction and the authority to remove an action from state to
federal court is solely conferred by the Constitution or by statute. 16 “Removal [to federal court] is
proper only if that court would have had original jurisdiction over the claim.”17 While the Court
has jurisdiction to determine its jurisdiction, 18 it cannot exercise any “judicial action” other than
dismissal when the Court lacks jurisdiction.19

It is a “long-standing canon of statutory

interpretation that removal statutes are to be construed strictly against removal and for remand” 20
so the Court will resolve all legal and factual issues, doubts, and ambiguities in favor of remand, 21
because the exercise of jurisdiction over a removed case “deprives a state court of a case properly
before it and thereby implicates important federalism concerns.”22

14

Dkt. No. 3.
Dkt. No. 8.
16 Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994).
17 Heritage Bank v. Redcom Labs., Inc., 250 F.3d 319, 323 (5th Cir. 2001); accord Halmekangas v. State Farm Fire
& Cas. Co., 603 F.3d 290, 294 (5th Cir. 2010)
18 United States v. Ruiz, 536 U.S. 622, 628 (2002) (“[I]t is familiar law that a federal court always has jurisdiction to
determine its own jurisdiction.”).
19 Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 94 (1998).
20 Bosky v. Kroger Texas, LP, 288 F.3d 208, 211 (5th Cir. 2002) (quotation omitted).
21 Lorenz v. Tex. Workforce Comm’n, 211 F. App’x 242, 245 (5th Cir. 2006) (citing Guillory v. PPG Indus., 434
F.3d 303, 308 (5th Cir. 2005)); see also Rico v. Flores, 481 F.3d 234, 239 (5th Cir. 2007) (alterations in original)
(quoting Griggs v. State Farm Lloyds, 181 F.3d 694, 699 (5th Cir. 1999)) (“[T]he district court is ‘obliged to resolve
any contested issues of material fact, and any ambiguity or uncertainty in the controlling state law, in [the plaintiff’s]
favor.’”).
22 Frank v. Bear Stearns & Co., 128 F.3d 919, 922 (5th Cir. 1997); see Steel Co. v. Citizens for a Better Env't, 523
U.S. 83, 94 (1998); B., Inc. v. Miller Brewing Co., 663 F.2d 545, 548–49 (5th Cir. 1981) (“Where a federal court
proceeds in a matter without first establishing that the dispute is within the province of controversies assigned to it
by the Constitution and statute, the federal tribunal poaches upon the territory of a coordinate judicial system, and its
decisions, opinions, and orders are of no effect. . . . Thus, the trial court must be certain of its jurisdiction before
embarking upon a safari in search of a judgment on the merits.”).
15

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If the removing party claims federal diversity jurisdiction under 28 U.S.C. § 1332, the
removing party must demonstrate complete diversity: that each defendant is a citizen of a differe nt
state from each plaintiff23 and the amount in controversy exceeds $75,000. 24 Accordingly, “[w]hen
original federal jurisdiction is based on diversity . . . a defendant may remove only ‘if none of the
parties in interest properly joined and served as defendants is a citizen of the State in which such
action is brought.’”25 Citizenship, domicile, and residency are frequently conflated terms; for
diversity jurisdiction purposes, a person is a citizen of the state where that person resides and has
an intention to remain or make his or her home, and a business entity is typically a citizen of the
state both where it is incorporated and where it has its principal place of business.26 “The removing
party, the party seeking the federal forum, bears the burden of showing that federal jurisdic tio n
exists and that removal was proper,”27 and must overcome this Court’s presumption that cases lie
outside its narrow jurisdiction.28 “Each factual issue necessary to support subject matter
jurisdiction ‘must be supported in the same way as any other matter on which the plaintiff bears
the burden of proof, i.e., with the manner and degree of evidence required at the successive stages
of the litigation.’”29
If each defendant is not a citizen of a different state from each plaintiff, a party—usually a
removing defendant—may claim that the plaintiff improperly or fraudulently joined parties to

23

Corfield v. Dall. Glen Hills LP, 355 F.3d 853, 857 (5th Cir. 2003); see McLaughlin v. Miss. Power Co., 376 F.3d
344, 353 (5th Cir. 2004) (quotation omitted) (“[A]ll persons on one side of the controversy [must] be citizens of
different states than all persons on the other side.”).
24 Lincoln Prop. Co. v. Roche, 546 U.S. 81, 89 (2005) (citing 28 U.S.C. § 1332(a)(1)).
25 Gasch v. Hartford Acc. & Indem. Co., 491 F.3d 278, 281 (5th Cir. 2007) (quoting 28 U.S.C. § 1441(b)).
26 Wachovia Bank v. Schmidt, 546 U.S. 303, 318 (2006); MidCap Media Fin., L.L.C. v. Pathway Data, Inc., 929
F.3d 310, 313–14 (5th Cir. 2019); Acridge v. Evangelical Lutheran Good Samaritan So c’y, 334 F.3d 444, 451 (5th
Cir. 2003).
27 Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002); accord McNutt v. Gen. Motors
Acceptance Corp., 298 U.S. 178, 189 (1936).
28 Howery v. Allstate Ins. Co., 243 F.3d 912, 916 (5th Cir. 2001).
29 Sharkey v. Quarantillo, 541 F.3d 75, 83 (2d Cir. 2008) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 561
(1992)), quoted in MidCap Media Fin., 929 F.3d at 315 n.*.

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defeat federal diversity jurisdiction. The citizenship of an improperly joined party is then
disregarded in determining the Court’s jurisdiction. 30 The doctrine of improper joinder ensures
“that the presence of an improperly joined, non-diverse defendant does not defeat federal removal
jurisdiction premised on diversity.”31 There is a heavy burden upon the party claiming improper
or fraudulent joinder.32 The Fifth Circuit has “recognized two ways to establish improper joinder:
‘(1) actual fraud in the pleading of jurisdictional facts, or (2) inability of the plaintiff to establish
a cause of action against the non-diverse party in state court.’”33 The Court determines “whether
[the plaintiff] has any possibility of recovery against the party whose joinder is questioned. If there
is arguably a reasonable basis for predicting that the state law might impose liability on the facts
involved, then there is no fraudulent joinder. This possibility, however, must be reasonable, not
merely theoretical.”34
To test this reasonable basis for recovery, the Court may resolve the issue with a two-step
analysis. First, “[t]he court may conduct a [Federal Rule of Civil Procedure] 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.”35 The Court uses federal pleading
standards in assessing the state court complaint. 36 A Rule 12(b)(6) analysis “leaves intact the wellpleaded complaint doctrine with all its intended reach,”37 so the analysis accepts all well-pled facts
in the complaint as true and interprets those facts in the light most favorable to the plaintiff, then

30

Smallwood v. Ill. Cent. R.R., 385 F.3d 568, 572 (5th Cir. 2004) (en banc) (quoting 28 U.S.C. § 1441(b)).
Borden v. Allstate Ins. Co., 589 F.3d 168, 171 (5th Cir. 2009).
32 Travis v. Irby, 326 F.3d 644, 649 (5th Cir. 2003) (citing B., Inc. v. Miller Brewing Co., 663 F.2d 545, 549 (5th Cir.
1981)).
33 Smallwood, 385 F.3d at 573 (quoting Travis v. Irby, 326 F.3d 644, 647 (5th Cir. 2003)).
34 Travis, 326 F.3d at 648 (quoting Great Plains Tr. Co. v. Morgan Stanley Dean Witter & Co., 313 F.3d 305, 312
(5th Cir. 2002)).
35 Smallwood, 385 F.3d at 573.
36 Int'l Energy Ventures Mgmt. v. United Energy Grp., 818 F.3d 193, 200 (5th Cir. 2016).
37 Smallwood, 385 F.3d at 576.
31

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asks whether the plaintiff has alleged “enough facts to state a claim to relief that is plausible on its
face.”38 The Court does not make credibility determinations or discount the complaint’s factual
allegations.39 “A claim has facial plausibility when the plaintiff pleads factual content that allows
the court to draw the reasonable inference that the defendant is liable for the misconduct
alleged. . . . Threadbare recitals of the elements of a cause of action, supported by mere conclusory
statements, do not suffice.”40 If a complaint can survive a Rule 12(b)(6) analysis, there is no
improper joinder as to that party.41 “[T]he existence of even a single valid cause of action against
in-state defendants (despite the pleading of several unavailing claims) requires remand of the entire
case to state court.”42 But if “there is no reasonable basis for the district court to predict that the
plaintiff might be able to recover against an in-state defendant,” the party was improperly joined. 43
The focus of the inquiry on a motion to remand must “must be on the joinder, not the merits of the
plaintiff’s case.”44
In instances in which the propriety of joinder is still questionable after the Rule 12(b)(6)like analysis, or if the plaintiff has misstated or omitted facts that would determine the propriety
of joinder, the Court may in its discretion pierce the pleadings and conduct a “summary inquir y”
to consider “summary judgment-type evidence such as affidavits and deposition testimony” but
will not pretry factual issues.45

38

Doe ex rel. Magee v. Covington Cnty. Sch. Dist. ex rel. Keys, 675 F.3d 849, 854 (5th Cir. 2012) (en banc) (citing
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
39 Neitzke v. Williams, 490 U.S. 319, 327 (1989).
40 Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
41 Int'l Energy Ventures Mgmt., 818 F.3d at 200.
42 Gray ex rel. Rudd v. Beverly Enters.-Miss., Inc., 390 F.3d 400, 412 (5th Cir. 2004).
43 McDonal v. Abbott Labs., 408 F.3d 177, 183 (5th Cir. 2005) (quoting Smallwood, 385 F.3d at 573).
44 Int’l Energy Ventures Mgmt., 818 F.3d at 209–10 (quoting Smallwood, 385 F.3d at 573); see Smallwood, 385 F.3d
at 576 (emphasis added) (“When a defendant removes a case to federal court on a claim of improper joinder, the
district court's first inquiry is whether the removing party has carried its heavy burden of proving that the joinder
was improper. Indeed, until the removing party does so, the court does not have the authority to do more; it lacks the
jurisdiction to dismiss the case on its merits. It must remand to the state court .”).
45 Hart v. Bayer Corp., 199 F.3d 239, 246–47 (5th Cir. 2000); McDonal, 408 F.3d at 183 n.6.

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b. Analysis
1. Ripeness
In its original petition in state court (the live complaint in this case), Plaintiff alleges that
the non-diverse Texas Defendants GSM Insurors and its insurance agent Jim Hansen are liable to
Plaintiff under various causes of action for misrepresenting what insurance coverage they were
seeking to provide to Plaintiff and for misrepresenting the extent of the insurance coverage they
actually obtained.46 Defendants, in their notice of removal, claim that the in-state Defendants are
improperly joined as Plaintiff fails to state a claim against each,47 and because Plaintiff’s claims,
if any, are not ripe.48 The Court first addresses the ripeness issue.
In support of remand, Plaintiff argues that its claims against in-state Defendants GSM
Insurors and Jim Hansen are ripe because Defendant Employers Insurance Company of Wausau
has denied coverage and thus joinder of the in-state Defendants is proper.49 Defendants respond
that Plaintiff has not yet suffered any injury—i.e., only if it is ultimately determined that no
coverage exists will Plaintiff suffer injury, thus Plaintiff’s claims are not yet ripe. 50 The parties
argue about whether this Court should follow the holding of the Western District of Texas in Terry
Black's Barbecue, LLC v. State Automobile Mututal Insurance Co.51
First, the Court reminds the parties that no district court case is controlling. 52 Instead, the
Court begins with the Fifth Circuit’s standards for adjudicating whether claims are ripe:

46

See Dkt. No. 1-2 at 6, ¶¶ 16–18.
See Dkt. No. 1 at 8, ¶¶ 22–23.
48 Id. at 16, ¶¶ 37–38.
49 Dkt. No. 8 at 14–15, ¶¶ 38–39.
50 Dkt. No. 13 at 30, § C.
51 No. 1:20-CV-665-RP, 2020 WL 6537230 (W.D. Tex. Nov. 5, 2020).
52 See Camreta v. Greene, 563 U.S. 692, 709 n.7 (2011) (quoting 18 JAMES W M. M OORE ET AL ., M OORE ’S FEDERAL
PRACT ICE – CIVIL § 134.02[1][d] (3d ed. 2011)) (“A decision of a federal district court judge is not binding
47

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A court should dismiss a case for lack of ripeness when the case is abstract or
hypothetical. The key considerations are the fitness of the issues for judicia l
decision and the hardship to the parties of withholding court consideration. A case
is generally ripe if any remaining questions are purely legal ones; conversely, a case
is not ripe if further factual development is required. However, even where an issue
presents purely legal questions, the plaintiff must show some hardship in order to
establish ripeness.53
Nevertheless, the Court addresses the holding of Terry Black’s Barbecue, upon which Defendants
rely to argue in favor of federal jurisdiction, to illuminate the controlling determination. In Terry
Black’s Barbecue, the restaurant plaintiff sued its insurer for denying coverage in light of the
plaintiff’s business losses occasioned by the COVID-19 pandemic.54 The parties, like the parties
here, disputed whether the case was properly in federal court because the plaintiff also sued its instate broker for misrepresentations.55 The court in Terry Black’s Barbecue relies on other federal
district court cases, in Texas and throughout the nation, holding that in-state insurance agents’
liability for misrepresenting coverage is dependent on whether the insured is actually not covered
by the insurance policy. In other words, some courts hold that an insurance agent cannot be liable
for a misrepresentation about coverage until a court ascertains that insurance coverage does not
exist for a loss the insured believed would be covered based on the agent’s representation.56 Terry
Black’s Barbecue goes on to conclude that the plaintiff’s negligence claims against the in-state
insurance broker were not ripe because coverage had not been judicially ascertained, and therefore
the plaintiff’s claims were not a reasonable basis for liability, so the in-state insurance broker was
improperly joined and remand was denied. 57

precedent in either a different judicial district, the same judicial district, or even upon the same judge in a different
case.”).
53 Choice Inc. of Texas v. Greenstein, 691 F.3d 710, 715 (5th Cir. 2012) (cleaned up).
54 Terry Black's Barbecue, LLC v. State Auto. Mut. Ins. Co., No. 1:20-CV-665-RP, 2020 WL 6537230, at *1 (W.D.
Tex. Nov. 5, 2020).
55 Id.
56 Id. at *4 (citing Monroe Guar. Ins. Co. v. Newtex Realty, LP, No. 3:18-CV-00256-L (BT), 2019 WL 1261138, at
*2 (N.D. Tex. Mar. 4, 2019) (collecting cases)).
57 Id. at *5.

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On the other hand, some district courts have held that claims against insurance brokers that
are contingent or alternative are nevertheless ripe.58 These courts hold that claims that are
contingent or alternative are distinct from claims that are hypothetical or speculative. One such
case pointed out that a potential beneficiary of a life insurance policy, “has standing to pursue a
breach of contract under Texas law upon the policyholder's death” even though policy benefits are
not yet judicially ascertained.59
This Court finds the latter line of cases more persuasive. One case distinguished Terry
Black’s Barbecue on the ground that it cited a case applying Florida insurance law.60 Indeed, Terry
Black’s Barbecue relied heavily on a Southern District of Florida case. 61 That Southern District of
Florida case in turn relied on another case from the same court. 62 Importantly, that last precedent
held that, under Florida law, “claims against an insurance agent for failing to procure coverage do
not accrue until the underlying action between the insured and the insurance company regarding
coverage has been resolved.”63 In contrast, the Texas Supreme Court has resolved the issue
differently:
[W]e are asked to decide whether, in a suit by an insured against its agent for
negligent breach of the agent's duty to obtain insurance, the injury-producing event
was the denial of coverage by the insurance company, or the final resolution of the
coverage dispute by the courts. We hold that [the plaintiff] sustained injury when
coverage was denied and, therefore, limitations commenced on that date because
all facts required for a cause of action existed at that time. 64
58

See Nova Cas. Co. v. Guzman, No. 3:20-CV-3440-B, 2021 WL 2014898, at *5 (N.D. Tex. May 20, 2021) (citing
C.C. Forbes, LLC v. Axis Surplus Ins. Co., No. 2:16-cv-94, 2016 WL 10706290, at *2 (S.D. Tex. May 31, 2016)
(Ramos, J.) & United of Omaha Life Ins. Co. v. Womack -Rodriguez, 461 F. Supp. 3d 455, 468–69 (W.D. Tex.
2020)).
59 United of Omaha Life Ins. Co., 461 F. Supp. 3d at 468 (citing Prudential Ins. Co. v. Durante, 443 S.W.3d 499,
509 (Tex. App.—El Paso 2014, pet. denied)).
60 SOME, Inc. v. Hanover Ins. Co., No. CV 21-493 (BAH), 2021 WL 2935893, at *6 (D.D.C. July 13, 2021).
61 Terry Black's Barbecue, 2020 WL 6537230, at *4 (citing JWC Hamptons, Inc. v. Empire Indem. Ins. Co., No.
0:19-CV-62232, 2020 WL 37571, at *3 (S.D. Fla. Jan. 3, 2020)).
62 JWC Hamptons, Inc., 2020 WL 37571, at *3 (citing Witkin Design Grp. v. Travelers Prop. Cas. Co. of Am., No.
16-20484-CIV-MORENO, 2016 WL 1572964, at *2 (S.D. Fla. Apr. 18, 2016)).
63 Witkin Design Grp., 2016 WL 1572964, at *2 (citing Blumberg v. USAA Cas. Ins. Co., 790 So. 2d 1061, 1065
(Fla. 2001)).
64 Johnson & Higgins of Tex., Inc. v. Kenneco Energy, Inc., 962 S.W.2d 507, 514 (Tex. 1998).

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Accordingly, to hold that Plaintiff’s claims against the in-state Defendants are unripe or
speculative at this time would contravene Texas state law. This is particularly important because,
in this diversity case, the Court would apply Texas’s substantive state law.65 Furthermore, “[a]
case is generally ripe if any remaining questions are purely legal ones; conversely, a case is not
ripe if further factual development is required.”66 Here, Defendants concede that Plaintiff’s claims
against the in-state Defendants will “come to fruition” if the legal question of whether Plaintiff
establishes its right to coverage is answered favorably to Plaintiff. 67 A judicial opinion ascertaining
coverage is hardly the “further factual development” contemplated by the Fifth Circuit to cause a
claim to ripen; Plaintiff’s claims against the in-state Defendants are presently ripe precisely
because they are “purely legal” questions. In summary, Defendant has improperly conflated a ripe
claim with a contingent one. Plaintiff’s claims are not subject to dismissal for unripeness.
2. Merits
Defendants also argue that none of Plaintiff’s claims against in-state Defendants GSM
Insurors and Jim Hansen state a claim. 68 Defendants must fulfill a tall order to substantiate that
none of Plaintiff’s numerous claims even possibly state a claim against any in-state Defendant. 69
The Court will therefore first look to Plaintiff’s simplest cause of action, negligence, to ascertain
if Plaintiff states any claim against Defendants GSM, Hansen, or both.
“To prevail on a common law negligence claim, a plaintiff must be able to prove three
elements: (1) a legal duty owed by one person to another; (2) a breach of that duty; and (3) damage

65

See W.R. Grace & Co. v. Cont'l Cas. Co., 896 F.2d 865, 873 (5th Cir. 1990).
New Orleans Pub. Serv., Inc. v. Council of City of New Orleans, 833 F.2d 583, 587 (5th Cir. 1987) (citing Thomas
v. Union Carbide Agr. Prod. Co., 473 U.S. 568, 581 (1985)).
67 Dkt. No. 1 at 17, ¶ 39.
68 Id. at 9, ¶ b; accord Dkt. No. 13 at 2.
69 See supra note 34.
66

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proximately caused by the breach.”70 “To establish a common-law negligence claim against an
insurance agent for breaching these duties, a plaintiff must be able to show that he requested a
specific type of insurance that the agent did not provide in accordance with the plaintiff's
expectations or that the plaintiff was wrongly led to believe that his policy provided protection
against a particular risk that it did not.”71 In its original petition, Plaintiff alleges that it sought,
through brokers GSM and Hansen, an insurance policy with coverage for, among other things,
“loss of business income,” including loss of business income resulting from “the necessary
suspension of business operations at the Property caused by a government order, civil authority
and other risks,” and Plaintiff believed that its insurance policy provided coverage for those risks
and losses.72 Plaintiff further alleges that Defendants GSM and Hansen “misrepresented to Plaintiff
that they had secured coverage that would have protected Plaintiff against losses such as that
sustained by COVID-19 along with the appropriate coverage for business interruption, civil
authority, decontamination, and payroll losses.”73 Plaintiff alleges that, as a consequence of
Defendants GSM’s and Hansen’s misrepresentations

about coverage, Plaintiff relied on

Defendants to its detriment and has suffered business interruption losses that are potentially not
covered by Plaintiff’s insurance policy. 74
In the face of these allegations that appear to establish a plausible, or at least possible,
negligence cause of action against the in-state Defendants, Defendants argue that Plaintiff

70

Gann v. Anheuser-Busch, Inc., 394 S.W.3d 83, 88 (Tex. App.—El Paso 2012, no pet.) (citing IHS Cedars
Treatment Ctr. of DeSoto, Tex., Inc. v. Mason, 143 S.W.3d 794, 798 (Tex. 2004)).
71 Harding v. Higginbotham Ins. Agency, Inc., No. 5:17-CV-188-C, 2017 WL 11510643, at *2 (N.D. Tex. Dec. 11,
2017) (citing May v. United Servs. Ass'n of Am., 844 S.W.2d 666, 669–70 (Tex. 1992) & Moore v. Whitney-Vaky
Ins. Agency, 966 S.W.2d 690, 692 (Tex. App.—San Antonio 1998, no pet.)).
72 Dkt. No. 1-2 at 6–7, ¶¶ 16–18.
73 Id. at 21, ¶ 57.
74 Id. at 26–27, ¶ 81.

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nevertheless fails to state a claim. Defendants again point to a Western District of Texas case.75 In
Vizza Wash, LP v. Nationwide Mutual Insurance Co., the court held that the plaintiff failed to state
any negligence claim against the insurance brokers because the plaintiff there failed to point to any
specific request for coverage or specific misrepresentation by the broker about coverage. 76
However, Plaintiff points to another decision by the same court. 77 In POB, LP v. AMCO Insurance
Co., like the case here, the plaintiff alleged that an in-state insurance agent “sold a commercial ‘all
risk’ policy, ‘promising to indemnify Plaintiff for losses resulting from occurrences, including the
necessary suspension of business operations at the insured location caused by a government order,
civil authority and other risks.’”78 The Western District of Texas found this allegation to constitute
a specific misrepresentation and held that the plaintiff did have a possibility of recovery against
the in-state agent such that remand was necessitated.79 Defendants argue that this Court should
find Vizza Wash more persuasive than POB because, Defendant argues, Plaintiff “makes no
allegations that it requested a ‘specific type of insurance’ from GSM and Hansen that they did not
provide.”80 But on the contrary, as Plaintiff points out, Plaintiff alleges that Defendants GSM and
Hansen misrepresented that the insurance policy would provide coverage for “loss of business
income, civil authority, . . . [and] payroll losses” and Plaintiff believed it was purchasing a
commercial insurance policy that would provide coverage for “the necessary suspension of
business operations at the Property caused by a government order, civil authority and other

75

Dkt. No. 13 at 24–25, § iii (citing Vizza Wash, LP v. Nationwide Mut. Ins. Co., 496 F. Supp. 3d 1029 (W.D. Tex.
2020)).
76 Vizza Wash, LP, 496 F. Supp. 3d at 1035–36.
77 Dkt. No. 8 at 12, ¶ 33 (citing POB, LP v. AMCO Ins. Co., SA-20-CV-00836-XR, 2020 WL 8455502, at *1 (W.D.
Tex. Sept. 10, 2020)).
78 POB, LP, 2020 WL 8455502, at *2.
79 Id. at *3.
80 Dkt. No. 13 at 28.

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Case 7:21-cv-00418 Document 14 Filed on 01/07/22 in TXSD Page 13 of 13

risks.”81 Contrary to Defendants’ assertions,82 Plaintiff does not allege that it sought blanket
coverage for all possible losses or COVID-related losses; rather, Plaintiff specifically alleges that
the in-state Defendants wrongly led Plaintiff to believe that the relevant insurance policy would
provide coverage for losses occasioned by a government or civil authority order. Plaintiff makes
specific allegations.
III. CONCLUSION AND HOLDING
For the foregoing reasons, the Court holds that Plaintiff does allege a ripe claim and
reasonable basis to predict that state law will impose liability against the in-state Defendants GSM
Insurors and Jim Hansen for at least Plaintiff’s negligence claim. The Court holds that Defendants
GSM and Hansen were not improperly joined. Accordingly, the Court GRANTS Plaintiff’s
motion to remand83 and REMANDS this case to the 139th District Court of Hidalgo County,
Texas. This case is terminated in federal court and the Clerk of the Court is instructed to close this
case.
IT IS SO ORDERED.
DONE at McAllen, Texas, this 7th day of January 2022.
___________________________________
Micaela Alvarez
United States District Judge

81

Dkt. No. 8 at 12, ¶ 32 (citing Dkt. No. 1-2 at 6–7, ¶¶ 17–18).
See Dkt. No. 13 at 28–29.
83 Dkt. No. 8.
82

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