Dallas insurance attorneys and those in Garland, Mesquite, Richardson, Duncanville, and all over Dallas County need to keep up with recent court cases. Here is one from the U.S. Southern District Court, Houston Division.
The style is Herman J. Benton Jr. Revocable Trust v. Lexington Insurance Company et al. The opinion was issued on August 31, 2012.
This is a case that was filed in State District Court and removed to Federal District Court. A Motion to Remand was filed by attorneys for Benton.
Benton is the owner of a business owner’s insurance policy (the “Policy”) issued by Lexington. Benton’s property was substantially damaged by a wind storm.
Shortly after the storm, Benton filed a claim against the policy for damage to the interior, exterior, roof and other structures. Benton requested that Lexington cover the cost of repairs to the property pursuant to the Policy. Lexington assigned York Risk Services Group, Inc. (“York”) to adjust the plaintiff’s claim. York then assigned Shawn Bickett (“Bickett”) to adjust the claim. Benton contended that Lexington, York and Bickett wrongfully denied, undervalued and delayed its claim for property repairs.
Benton sued Lexington alleging that its claim for repairs of the property was improperly handled, underestimated, and wrongfully denied. Specifically, Benton alleged causes of action against the defendants jointly for unfair settlement practices under § 541.060 of the Texas Insurance Code, breach of the prompt payment provisions of the Texas Insurance Code, § 542.051 et seq., violations of the Deceptive Trade Practices Act, common law fraud and punitive damages. As to Lexington only, it alleges causes of action for breach of contract and breach of the duty of good faith and fair dealing.
Lexington subsequently removed the case to Federal Court on the basis of diversity jurisdiction, asserting that Bickett, a non-diverse defendant, had been improperly joined as a defendant in this action. Benton, in response, filed this instant motion to remand, alleging that removal of this case was improper in that Bickett was not improperly joined as a defendant in this action and complete diversity of citizenship is non-existent among the parties.
Benton argued that the Court lacks subject matter jurisdiction over this action because complete diversity of citizenship did not exist among the parties. It maintained that Bickett, a Texas resident, is a properly joined defendant in this case because the facts alleged against him are sufficient to state a viable claim against him. It further contends that Lexington’s contention that Bickett was added to this lawsuit solely for the purpose of depriving this Court of federal jurisdiction is without merit. Accordingly, it avers that Lexington has failed to meet its burden and this case should be remanded to the state court in which it was originally filed.
Having found that insurance adjusters are generally subject to liability under the Texas Insurance Code, the Court had to determine whether Bickett, was a “person” engaged in the insurance business with respect to the plaintiff’s claims against him. In this case, it is undisputed that Bickett adjusted Benton’s claim on Lexington and/or York’s behalf. As the adjuster, Bickett was tasked with the responsibility of evaluating Benton’s claim in terms of legitimacy and value. Accordingly, Bickett is a “person” subject to liability under Chapter 541 of the Texas Insurance Code since claims adjusters qualify as “persons” engaged in the business of insurance.
Next, theCourt had to determine whether Benton had alleged any potentially viable causes of action against Bickett as a result of his work as an adjuster on its claim. The Fifth Circuit has explained, however, that to establish a reasonable possibility that a Texas state court would permit recovery against an employee-adjuster for claims alleged under the Texas Insurance Code, the plaintiff must demonstrate that “the employee, himself, committed a violation that caused the harm.
In sum, Benton alleges in its petition that: (1) its property was damaged as a result of a wind storm; (2) the property was insured at all material times hereto under a Policy issued by Lexington; (3) Lexington and/or York assigned Bickett to adjust its claim and inspect its property; and (4) Bickett allegedly mishandled the claim, by inter alia, failing to fulfill his duties in the manner prescribed by the Texas Insurance Code, including misrepresenting the extent of the Policy’s coverage, failing to attempt a fair settlement, failing to explain Lexington’s reasons for offering an inadequate settlement, underestimating damages and/or denying payment. Based on these allegations, the plaintiff alleges that Bickett’s conduct amounts to violations of the Texas Insurance Code for which he can be held personally liable.
When resolving all factual disputes and ambiguities in the plaintiff’s favor as this Court is required to do, the Court determined that Benton’s assertions tended to suggest that Bickett, while acting as a “person” engaged in the business of insurance, performed and/or contributed in some way to Lexington and/or York’s investigation and/ or decision relative to the plaintiff’s claim. Assuming such, Bickett could potentially be held personally liable to Benton under § 541.060 of the Texas Insurance Code. Indeed, while the facts presented do not indisputably establish that Texas law will impose liability on Bickett for the causes of action alleged, the plaintiff is not required to make such a showing at this stage of the litigation. Instead, it is Lexington’s heavy burden to establish with certainty that the plaintiff has no reasonable possibility of recovery against Bickett individually. Lexington has provided this Court with no such evidence from which it could forecast that the plaintiff has no reasonable possibility of recovery against Bickett in state court. For these reasons, the Court found that Lexington has not satisfied its burden of establishing that Bickett was improperly joined in this lawsuit and remand is, therefore, warranted.
Understanding “remand” of cases is vital for insurance law attorneys.