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Making A Claim Against The Adjuster

Making a claim against the adjuster handling the claim is an advantage in lawsuits, or at least that is what many attorneys believe.  A proper analysis of making a claim against an adjuster is discussed in this 2023 opinion from the Eastern District of Texas, Sherman Division.  The opinion is styled, Lawrence Family Fund, LLC v. Westchester Surplus Lines Insurance Company, et al.

This is a property damage claim alleged to have occurred when Lawrence incurred a theft.  A claim was made against Westchester and the adjuster Westchester hired to adjust the claim, Frederick Achala.  The lawsuit filed in State Court and Westchester removed the case to Federal Court asserting that Achala was improperly joined in the lawsuit in an effort to defeat diversity jurisdiction under 28 U.S.C. Section 1441 and 28 U.S.C. Section 1332.  Lawrence then filed this motion to remand claiming that Achala had not been improperly joined.

The statute permits the removal of any civil action brought in a State court of which the district courts of the United States have original jurisdiction.

If a party establishes improper joinder, the court may disregard the citizenship of that improperly joined defendant, dismiss the nondiverse defendant from the case, and exercise subject matter jurisdiction over the remaining diverse defendant.

Improper joinder may be established in two ways: (1) actual fraud in the pleading of jurisdictional facts, or (2) inability of the plaintiff to establish a cause of action against the nondiverse party in state court.  Here, because there is no claim of fraud in the jurisdictional
pleadings, only the latter option is in play.

For the latter option, a defendant must show, under a Rule 12(b)(6)type analysis, that there is absolutely no possibility that the plaintiff will be able to establish a cause of action against the nondiverse defendant in state court.

The burden of demonstrating improper joinder is a heavy one.  In deciding whether a non-
diverse party was improperly joined, federal courts must resolve all contested factual
issues and ambiguities of state law in favor of the plaintiff.  The removal statute is therefore to be strictly construed, and any doubt about the propriety of removal must be resolved in favor of remand.  Thus, the existence of even a single valid cause of action against a non-diverse defendant despite the pleading of several unavailing claims requires remand of the entire case
to state court.

Lawrence cites violation of Texas Insurance Code, Chapter 541 against Achala.  The Fifth Circuit and the Texas Supreme Court have both recognized that Texas law clearly authorizes Chapter 541 actions against insurance adjusters in their individual capacities.

The Texas Supreme Court has not specifically addressed the viability of such claims against an adjuster in their individual capacity.  However, the Court finds that Lawrence has at least “a single valid cause of action against Achala under Texas law.

To the extent there is any ambiguity in Texas law as to whether an adjuster can be individually liable for a Section 541.060(a)(7) claim, the Court must resolve the ambiguity in favor of remand.  The Court concludes that, as currently construed by Texas courts, Section 541.060(a)(7) of the Texas Insurance Code allows claims to be made against third-party claims adjusters, not just insurers.

In its state court petition, Lawrence alleges that Achala failed to verify, through a physical inspection of the property, Dr. Lawrence’s statement that Lawrence’s building did not have a functioning alarm system.  Lawrence alleges that because of this failure to investigate, Achala incorrectly concluded that the building did not have a functioning alarm system at the time of the burglary, and accordingly Westchester denied Lawrence’s insurance claimThese allegations point to a specific omission in Achala’s investigation—namely, his purported failure to independently verify Dr. Lawrence’s statement—that plausibly support Lawrence’s contention that the investigation was unreasonable.

Accordingly, since there is at least one claim against Achala that would survive a 12(b)(6)type analysis, the Court holds that Achala was not improperly joined.

 

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