Dallas insurance lawyers who handle roof damage claims will want to ready this “Order” from a Fort Worth Federal Court. The style of the case is, Living Word Teaching Center v. Robert Morris Adams, Jr. and Allstate Insurance Company.
Living Word, a church, secured an insurance policy from Allstate covering its 5,000 square foot church. Living Word later built a large arena next to the church and sought additional coverage for the arena from Allstate. In December 2013, the arena suffered a collapse and was damaged. When Living Word filed an insurance claim with Allstate for the damage suffered, Allstate advised Living Word that the arena was not listed on the policy and therefore, was not covered.
Living Word brought the following claims against Defendants: (1) violations of the Texas Deceptive Trade Practices Act against Allstate insurance agent, Adams; (2) negligent misrepresentation against Adams; (3) negligence/negligent procurement against Adams; and (4) agency and vicarious liability against Adams and Allstate.
Defendants timely removed the suit to Federal Court, alleging diversity jurisdiction and arguing that Adams was improperly joined as a defendant. Living Word and Adams are both citizens of Texas, so there is no dispute that the presence of Adams as a defendant destroys diversity jurisdiction.
District courts have original jurisdiction in civil actions where the matter in controversy exceeds $75,000 and complete diversity exists between the parties according to 28 U.S.C. § 1332(a). Accordingly, a civil action filed in state court may be removed to the district court if the matter in controversy exceeds $75,000 and complete diversity exists between the parties, provided that no defendant is a resident of the forum state. Given that removal raises significant federalism concerns, any doubts about the propriety of removal are resolved in favor of remand.
To establish that a non-diverse defendant has been improperly joined to defeat diversity jurisdiction, the removing party must show (1) actual fraud in the pleading ofjurisdictional facts, or (2) inability of the plaintiff to establish a cause of action against the non-diverse party in state court. Texas follows a ‘fair notice’ standard for pleading, which looks to whether the opposing party can ascertain from the pleading the nature and basic issues of the controversy and what testimony will be relevant.
Living Word and Adams are both citizens of Texas. Thus, there is no dispute that the presence of Adams as a defendant destroys diversity jurisdiction. As a result, the question is whether Living Word sufficiently stated a valid state law cause of action against Adams.
Defendants contend that although Living Word brings suit against Adams individually and “expressly alleges . .. that Adams personally made the misrepresentations forming the basis of Plaintiff’s lawsuit, Plaintiff has changed its story . . . and now Plaintiff claims that it is really complaining about the conduct of an unidentified woman whom Plaintiff believes worked at ‘Adams’ office.'” Defendants further maintain that Living Word fails to state a claim against Adams because Living Word should have named Adams’ office, Adams Insurance and Financial Services, Inc., rather than Adams in his individual capacity. As a result, ”there is no reasonable possibility that Plaintiff can recover against Mr. Adams in this lawsuit.”
Living Word’s Original Petition provides sufficient notice against Adams under Rule 47 of the Texas Rules of Civil Procedure. Specifically, Living Word alleges violations of the Texas Deceptive Trade Practices Act, negligent misrepresentation, and negligence/negligent procurement against only Adams. Additionally, with respect to Living Words negligent misrepresentation, and negligence/negligent procurement claims, Living Word asserts that Adams “either individually or through his employees, agents andlor representatives” committed those acts.
Defendants have failed to show actual fraud in the pleading of jurisdictional facts or the inability of Living Word to establish a cause of action against Adams in state court. The Court finds that there is at least a reasonable basis “to predict that the plaintiff might be able to recover against an in-state defendant.” Defendants have failed to carry their heavy burden to establish fraudulent joinder; thus, diversity of citizenship does not exist, and this Court lacks subject-matter jurisdiction, requiring this case to be immediately remanded to state court under 28 U.S.C. § 1447(c).
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