Insurance lawyers in the Dallas and Fort Worth area know that insurance companies prefer to litigate cases in Federal Court while the opposite is true for lawyers representing an insured. A recent Northern District, Dallas Division case deals with suing the agent in Federal Court. The case is styled, B&B Car Wash and Mini Storage v. State Automotive Mutual Insurance Company, Jennifer Caldwell, and Danny Duncan d/b/a Duncan Insurance Agency.
This is a case about State Auto allegedly denying coverage for B&B’s wind and hail damaged storage facility. B&B owns a car wash, five storage buildings, and an RV shed. B&B purchased a State Auto policy from agents Jennifer Caldwell and Danny Duncan. The parties dispute the extent of coverage provided by that policy. B&B says it covers the entire complex and the defendants disagree.
After B&B filed its complaint, State Auto removed the case to Federal Court, arguing that, because B&B is a Texas citizen and State Auto is an Ohio citizen, complete diversity exists, and thus, federal jurisdiction. The next day, B&B amended its complaint to add Caldwell and Duncan as additional defendants, based on the fact that they sold the policy in question. Thus, because Caldwell and Duncan are both Texas residents, B&B filed a motion to remand the case to State Court since diversity jurisdiction no longer existed.
When a party removes a suit to Federal Court on diversity grounds under 28 U.S.C., Section 1332, the removing party must prove each element of the statute. Furthermore, an action removable solely on the basis of diversity jurisdiction may not be removed if any of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought.
B&B argues that Caldwell, Duncan, and B&B are all Texas citizens, meaning complete diversity jurisdiction no longer exists. B&B also states that improper joinder, which might preclude remand, does not apply. They say this is so because, in order to establish improper joinder, a movant must show (1) actual fraud in the pleading of jurisdictional facts, or (2) inability of the Plaintiff to establish a cause of action against a non-diverse party in State Court. State Auto can show neither, according to B&B, thus there is no improper joinder, no complete diversity, and no federal jurisdiction. Thus, the case must be remanded to State Court.