Insurance lawyers in Dallas can tell you that an insurance company that has been sued would prefer to litigate in Federal Court rather than State Court. Here is a case to keep in mind when trying to stay in out of Federal Court.
This case is out of the United States District Court, Southern District of Texas, McAllen Division. The style is, Bil-Sonic Trading Co., Inc. v. America First Insurance Company, et al, and the opinion was issued in 2013.
In this case, Bil-Sonic sued three defendants in State Court and the defendants had the court removed to Federal Court claiming the suit against was one defendant, Mason, was a fraudulent joiner solely for the purpose of defeating diversity jurisdiction. Bil-Sonic filed papers attempting to have the case removed back to State Court.
Here is some of what the Court stated.
The only reference to Defendant Mason in the “Facts” section of Plaintiff’s pleading is the allegation that that the Defendant Insurers and Mason “and/or its agents committed the actions alleged against Plaintiff in this complaint.” Id. 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. Plaintiff has moved to remand, claiming that Mason is a properly joined Defendant.
The Court stated 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. 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 is 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 agrees 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 Defendant, 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 finds that Mason’s joinder in this suit is improper and that it must be dismissed as a party, and that the Court has diversity jurisdiction over the action.
There are more than just one or two reasons why a State Court is better place for most people to wage litigation against an insurance company. An experienced Insurance Law Attorney knows this and can many times find ways to keep the case in State Court.
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