Weatherford insurance lawyers will usually try to keep their lawsuits in the local State and County courts. Insurance companies will try to have the cases removed to Federal Court.
The United States District Court in McAllen, Texas, issued a ruling on September 17, 2013, in the case styled, Guerrero Investments LLC v. American States Insurance Company, et al, wherein the defendants had the case removed to Federal Court and the plaintiffs tried to have the case remanded to State Court.
Here is what the case tells us.
Plaintiff’s Original Petition alleges that it owns six properties in Hidalgo County that are insured by a policy with American States, America First, and American Economy (the “Defendant Insurers”). On an undisclosed date, the properties “sustained covered losses in the form of windstorm, hailstorm, and water damages resulting there from, including damage to the architectural finishes of the properties.” Plaintiff reported the losses to the Defendant Insurers and alleges that “despite the fact that all conditions precedent to Plaintiff’s recovery have occurred and/or have been performed, the Defendant Insurers have failed and refused to pay Plaintiff a just amount in accordance with their contractual obligations, agreements, and representations.” The only reference to Defendant Mason in the “Facts” section of Plaintiff’s pleading is the allegation that the Defendant Insurers and Mason “and/or its agents committed the actions alleged against Plaintiff in this complaint.” Plaintiff brings claims against the Defendant Insurers for breach of contract and breach of the duty of good faith and fair dealing, and against all Defendants for violations of the Texas Deceptive Trade Practices Act (“DTPA”) and Texas Insurance Code, and for conspiracy. The damages sought by Plaintiff include statutory penalties, punitive damages, and attorney’s fees. Defendants removed the case from state court on the grounds that the Court has diversity jurisdiction over the action, in that the amount in controversy exceeds $75,000, exclusive of interest and costs, and is between citizens of different States absent the improper joinder of non-diverse Defendant Mason. Upon consideration of the record, in light of the relevant law, the Court found that the Motion must be denied for the following reasons.
It is well-settled that “to determine whether jurisdiction is present for removal, the court must consider the claims in the state court petition as they existed at the time of removal.” Plaintiff does not dispute that the requisite amount in controversy exists, and the Court finds that it is facially apparent from Plaintiff’s original pleading that such amount exceeds the $75,000 jurisdictional minimum. “In addition to policy limits and potential attorney’s fees, items to be considered in ascertaining the amount in controversy when the insurer could be liable for those sums under state law are inter alia penalties, statutory damages, and punitive damages….”. Plaintiff also does not dispute that absent the joinder of Mason, complete diversity of citizenship would exist. 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. Defendants have not claimed any actual fraud; therefore, this Court’s inquiry was limited to whether a reasonable basis exists for predicting that Plaintiff might be able to recover against non-diverse Defendant Mason. “This means that there must be a reasonable possibility of recovery, not merely a theoretical one.” “Whether the plaintiff has stated a valid state law cause of action depends upon and is tied to the factual fit between the plaintiff’s allegations and the pleaded theory of recovery.” The Court agreed with Defendants that Plaintiff’s Original Petition does not identify a reasonable basis for recovery against Mason. The “Facts” section of the pleading makes no allegation specific to this Mason, and the sections setting forth Plaintiff’s causes of action against Mason amount to no more than conclusory recitations of the elements of Plaintiff’s DTPA, Insurance Code, and conspiracy claims. In other words, Plaintiff’s allegations lack the required “factual fit.” The Court therefore found that Mason’s joinder in this suit was improper and that it must be dismissed as a party, and that the Court has diversity jurisdiction over the action.
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