Insurance Lawyers Fighting Federal Court

Fort Worth insurance lawyers and those in Grapevine, Hurst, Euless, Bedford, and other parts of Tarrant County need to know how to handle Federal Court cases.
Insurance companies prefer to fight cases is Federal Court. When they remove a case that was filed in State Court to Federal Court, a lawyer needs to know some of the ways to get the case back into State Court and or prevent the removal in the first place.
A recent court opinion styled, Beverly Nichols v. Allstate Texas Lloyd’s is an example.
Nichols had a Homeowners Policy issued by Allstate. Her home was damaged by a wildfire and she made a claim for benefits. Allstate assigned Jimmy Stafford to adjust her claim. Nichols eventually sued Allstate and Stafford in State Court for failing to properly adjust her claim, delays in payments, and failure to adequately settle her claim.
In her lawsuit, she alleged causes of action against Allstate and Stafford jointly for conspiracy, fraud, unfair settlement practices under Texas Insurance Code, Section 541.060 and 542.051 et seq., and violations of the Texas Deceptive Trade Practices Act. As to Stafford individually, she alleged claims for negligence, gross negligence and negligent misrepresentation.
Allstate, pursuant to 28 U.S.C. Section 1446(a), removed the case to Federal Court, claiming that Stafford, a non-diverse defendant, was fraudulently sued in this case. This Motion to Remand resulted.
Allstate maintained that Nichols had no reasonable possibility of recovery against Stafford based on the allegations pled in her petition. Specifically, it contended that she failed to offer any specific facts in support of her claims against Stafford and as a result, she failed to make the required “factual fit” between her allegations and her asserted theories of recovery. Allstate further avers that Nichols’ allegations are conclusory and constitute nothing more than a verbatim recitation of the statutory language contained in Chapter 541 of the Texas Insurance Code. Thus, Allstate argues that Stafford had been fraudulently joined in this lawsuit for the sole purpose of defeating diversity and depriving the Court of subject matter jurisdiction. Therefore, Allstate contended that the Court should disregard Stafford’s citizenship for purposes of determining diversity jurisdiction and deny Nichols’ motion to remand.
Allstate did not appear to contest that it is possible to maintain a claim under Chapter 541 of the Texas Insurance Code against an adjuster in his individual capacity.
Instead, it contended that Nichols failed to offer any specific facts in support of her claims against Stafford to put him on notice of the allegations against him. It further maintained that Nichols’ alleged violations are nothing more than legal conclusions couched as factual allegations that do not demonstrate Stafford’s individual role in any of the alleged violations. As a consequence, it argued that no reasonable basis existed for predicting that she might be able to recover against Stafford based on the facts alleged by her in her petition. The Court disagreed.
In this case, it is undisputed that Stafford adjusted Nichols’ claim on Allstate’s behalf. As an adjuster for Allstate, Stafford was tasked with the responsibility of evaluating the claim in terms of legitimacy and value. Accordingly, Stafford 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.
In sum, Nichols’ alleged, in her lawsuit, that: (1) her property was damaged as a result of a wild fire; (2) her property was insured at all material times hereto under a policy issued by Allstate; (3) Allstate assigned Stafford to adjust her claim and/or inspect her property; and (4) Stafford allegedly mishandled her 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 Allstate’s reasons for offering an inadequate settlement and/ or denying payment. Based on these allegations, she alleged that Stafford’s conduct amounted to various violations of the Texas Insurance Code for which he can be held personally liable.
When resolving all factual disputes and ambiguities in Nichols’ favor as the Court is required to do, the Court determined that the assertions tended to suggest that Stafford, while acting as a “person” engaged in the business of insurance, performed and/or contributed in some way to Allstate’s investigation and/or decision relative to her claim. Assuming such, Stafford could potentially be held personally liable under § 541.060 of the Texas Insurance While the facts presented do not indisputably establish that Texas law will impose liability on Stafford for the causes of action alleged, Nichols’ is not required to make such a showing at this juncture. Instead, it is Allstate’s heavy burden to establish with certainty that Nichols’ has no reasonable possibility of recovery against Stafford individually. Allstate provided this Court with no such evidence from which it could forecast that Nichols’ had no reasonable possibility of recovery against Stafford in state court. For these reasons, the Court found that Allstate had not satisfied its burden of establishing that Stafford was improperly joined in the lawsuit and remand was, therefore, warranted.
Insurance companies, for reasons not discussed here except to say it is more favorable to them, will always try to fight in Federal Court rather than State Court.