Federal Court And Underinsured Coverage

Weatherford lawyers who sue insurance companies need to know how to stay out of Federal Court if they want to properly represent their clients. It cannot always be done but understanding the law in these matters is important. A U.S. Northern District, Dallas Division case is good reading on this issue. The style of the case is, Felecia D.Davis v. Eduardo Vargas Reyes, et al.
Davis filed suit in State Court against Vargas for injuries arising from a car wreck. After Davis settled with Vargas, she amended her petition and added Amica Mutual Insurance (Amica) to this lawsuit, seeking underinsured benefits and she sued the Amica adjuster, Carolina Glenn. She then filed a second amended petition alleging that her claims against Vargas had been settled. Amica properly removed the case and alleged in its removal that Vargas, a Texas citizen, should be disregarded because the claim against him had already been settled. Amica is a citizen of Rhode Island and thus there was diversity of citizenship allowing the removal.
Davis contended that even though she had settled with Vargas, diversity of citizenship is determined as of the time she originally filed suit in State Court, meaning Vargas’ Texas citizenship precludes removal. Davis also contended the State Court had never entered an order dismissing the claims against Vargas so Vargas’ Texas citizenship cannot be disregarded.
This Court stated Davis incorrectly relies on the premise that diversity of citizenship is only determined as of the time she filed suit in Texas state Court. The propriety of removal is usually determined by examining the case at the time of removal. A case may be removed based on any voluntary act of the plaintiff that effectively eliminates the non-diverse defendant from the case. A binding and enforceable settlement agreement, for example, can remove a non-diverse defendant and make the balance of the case removable.
Here, as in her State Court first amended pleading, Davis alleged in her second amended petition, her live pleading, that her claims against Vargas had been settled. Under Texas law, this is a binding judicial admission because it is clear, deliberate, and unequivocal statement in a live pleading. Accordingly, Davis admitted that she had undertaken a voluntary act that eliminated Vargas – a non-diverse defendant – from the case. And because in her motion to remand Davis did not address Amica’s assertion that Glenn’s citizenship should be disregarded based on improper joinder, Davis did not demonstrate on this basis that the properly joined parties were not completely diverse at the time the case was removed.