Ample Business Investments, L.P. v. American States Insurance Company et al, No. 4:2010cv00802 - Document 9 (S.D. Tex. 2010)
Court Description: MEMORANDUM OPINION AND ORDER granting 7 Opposed MOTION to Remand. Case remanded to the 129th District Court of Harris County, Texas.(Signed by Judge Sim Lake) Parties notified.(hcarr, )
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IN THE UNITED STATES DISTR ICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION AMPLE BUSINESS INVESTMENTS, L .P ., Plaintiff, CIVIL ACTION NO . H-10-O802 AMERICAN STATES INSURANCE COMPANY , TAMAR IN RILEY, and RAYMOND GAYLORD ASHBY, Defendants . MEMORANDUM OPIN ION AND ORDER Ample Business Investments, ( nABI') brings this action ' against American States Insurance Company ( uASIC'), Tamarin Riley, ' and Raymond Gaylord Ashby alleging breach contract, violations the Texas Insurance Code , violation of the Texas Deceptive Trade Practices Act (A 'TDTPA' , and common 1aw fraud concerning D defendants' handling of ABI's insurance claim sustained during Hurricane Ike 2008 . property damage Pending before the court Docket Entry Plaintiff's Opposed Motion to Remand ( 7), which argues that removal on diversity grounds was improper because ABI and defendant Riley are both residents Ample Business Investments, L.P. v. American States Insurance Company et al Doc. 9 explained below , the court Texas . For the reasons grant ABI's motion . 1 . Factual and Procedural Background This action concerns a dispute over a Hurricane Ike insurance claim . On September 13, 2008, Hurricane Ike struck southeast Texas Dockets.Justia.com and damaged certain property owned Channelview, Texasx Texasx AB I at Sheldon Road limited partnership domiciled ASIC 3 damaged property was insured Indiana insurance ASIC an place of business Seattle, Washington .l After the hurricane ABI made a claim on the the propertyx insurance policy for damage employees Riley and Ashby individual who resides resides Aslc assigned its work on ABI's c1aim .6 Texasx Ashby Riley an an individual Alabamax A dispute arose between the parties over ASIC 'S handling the claim, and on January Harris County District Courtx 2010, ABI filed this action March 1O, 2010, ASIC removed the action to this court on the basis of diversity jurisdiction ( Docket Entry ASIC alleged in the Notice Removal that ABI was l plaintiff's Original Petition, Exhibit A attached to Notice of Removal of Action Under 28 U . C. 55 1332 and 1441( S. a) ( Diversity) ( nNotice of Removal/), Docket Entry No . 1, %% 12-13. ' 2Id . % 31d . % l Notice of Removal, Docket Entry No . 1, at % 4 . s plaintiff's Original Petition , Exhibit A attached to Notice of Removal, Docket Entry No . 1, % 14 . 6Id . % 7Id . % 8 Notice of Removal, Docket Entry No . g plaintiff's Original Petition, Exhib it A attached to Notice of Removal, Docket Entry No. 1, p . 1. seeking award greater than jurisdiction. o l $75,000 minimum for diversity total demand as of March 29, 2010, ASIC also alleged Notice complete diversity between the parties that date was $2,590,000. 1 1 Removal that there because nthe letter ABI confirmed this allegation Texas Defendant citizenship Riley disregarded because she has been improperly joined must be defeat YiVe rSiYY .Oi 2 On April 2010, ABI moved to remand , arguing that R iley was properly joined as a defendant ( Docket Entry Response on April ASIC filed a 2010 ( Docket Entry No. The issue before the court is whether Riley, a Texas citizen, was properly joined in the lawsuit, thereby defeating diversity jurisdiction. II . Applicable Law A. Standard of Review defendant has the right to remove case when federal jurisdiction exists and properly followed . burden federal court removal procedure U .S . . 5 1441 . The removing party bears the C of establishing that state court suit removable to federal court . See Delaado v . Shell O il Co ., properly F .3d 178 n.25 ( 5th Cir. 2000); see also Courv v . Prokr 85 F .3d 244, lNotice of Removal, Docket Entry No . o l Letter from William Lundquist l March 29, 2010, Docket Entry No . 5, p . 1 2Id at % Catherine Hanna , dated 248 ( 5th Cir. 1996) ( Tlhere nl a presumption against subject matter jurisdiction that must be rebutted by the party bringing an action to federal court./ '). Doubts about the propriety of removal are resolved in favor remand . Manquno v . Prudential Prop . & Cas. Insw 276 F.3d 720, 723 ( 5th Cir. 2002). B. Improper Joinder federal jurisdiction under 28 U .S .C . based on diversity of citizenship 1332, an action uremovable only if none of the parties in interest properly joined and served as defendants is citizen of the State in which ( thej action is brought.' 28 ' Case may 1441 ( ). b resident defendant removed despite the presence removing defendant shows that the resident defendant was fraudulently or improperly joined. Salazar v. Allstate Texas Llovd's, Inc., F.3d ( 5th Cir. 2006) The burden of persuasion on those who claim fraudulent joinder a heavy one. Travis v. Irbv, 326 F. 3d 644, 649 ( 5th Cir. 2003) To establish that a nondiverse defendant has been improperly joined for the purpose defeating diversity jurisdiction the removing party must prove either that there has been actual fraud in the pleading of jurisdictional facts that there is reasonable cause of action against that party in state court . Smallwood v . Tl1 . Cent . R. R. Co w denied, 125 S.Ct. whether ( 5th ( 2005) 2004) banc), cert. ' Tl test for fraudulent joinder 'g he defendant has demonstrated that there the plaintiff against an in-state possibility of recovery nondiverse) defendant, no reasonable basis plaintiff might be the district court able recover against nondiverseq defendant.' Id. at 573. ' p redict that an in-state A11 factual allegations the state court petition are considered in the light most favorable the plaintiff, and contested fact issues are resolved the plaintiff's favor. Guillorv v . PPG Industries, Inc ., 308 ( 5th Cir. 2005). 111. Analy sis ABI has moved for remand, arguing that removal of this action was imp roper because it failed to meet the requirement that nnone of the parties in interest properly joined and served as defendants citizen of the State which such action 1441( b). ABI argues that because Riley Texas and because Riley was b rought .' ' citizen properly joined, diversity jurisdiction under 28 U.S. 5 1332 ( does not exist . ASIC argues that Riley's C. a) citizenship should not be considered because Riley was not properly joined. First, ASIC argues that ABI's actions nevidence a lack of intent to pursue individual claim s against Ri1ey .' 3 Second, ASIC '1 argues that ABI's complaint fails allege facts su fficient to support recovery against Riley . HDefendant American States Insurance Company's Response to Plaintiff's Motion to Remand ( MASIC'S Response'), Docket Entry / No . 8, p . 3 . Beeause the parties do dispute that the jurisdictional minimum has been met that Riley and ABI are b0th citizens Texas, the only issue contention joined. ASIC has whether Riley was p roperly alleged that there been fraud the pleading of jurisdictional facts. Therefore, in order to establish that Riley was improperly joined ASIC must prove that there reasonable possib ility that ABI will be able no estab lish a cause of action against Riley in state court . See Smallwood, 573. If ASIC fails to meet the nheavy' burden of estab lishing that ' Riley was joined improperly, the court must remand the action. See Travis, 326 F .3d at 649. A. ABl's Complaint Against Riley ABI's comp laint brings some claims only against ASIC , some claim s only against Riley and Ashby, and some claim s against a11 defendants . The allegations in ABI#s complaint concerning Riley are as follows: 15 . Subsequent to Plaintiff making the Claim , Defendant ASIC assigned its employees and/or agents Defendant Riley and Defendant Ashby to work on Plaintiff's Claim . A l1 Defendants failed to comply with the Policy, the Texas Insurance Code and Texas 1aw in handling Plaintiff's Claim . 21. Defendant Riley and Defendant Ashby were adjusters assigned by Defendant ASIC to adjust the Claim, and were charged with investigating the Claim and communicating with the insured about Policy term s . 22 . the Defendant Riley and Defendant Ashby were tasked with responsibility of conducting a thorough and reasonable investigation of Plaintiff's Claim , including fully quantifying: 1) the damage to the structure of Plaintiff's business; 2) Plaintiff's business personal property losses; and 3) Plaintiff's business income losses . 23 . Defendant Riley and Defendant A shby failed to fully quantify Plaintiff's damages, thus demonstrating that they did not conduct a thorough investigation of the Claim . These Defendants failed to fairly evaluate and adjust Plaintiff's Claim as they are obligated to do under the term s of the Policy and Texas law . By failing to properly investigate the Claim, and by undervaluing the claim , these Defendants engaged in unfair settlem ent practices by misrepresenting material facts to Plaintiff the true value of Plaintiff's covered loss . Defendant Riley and Defendant Ashby also failed to p rov ide Plaintiff a reasonab le exp lanation as to why Defendant ASIC was not compensating Plaintiff for the fu ll value of Plaintiff's covered losses . 24 . In summary, Defendant Riley and Defendant Ashby individually engaged in unfair settlement practices by : a) Misrepresenting to Plaintiff material facts or policy provisions issue; relating to the coverage at b) Failing to attempt in good faith to effectuate a prompt, fair, and equitab le settlement of the Claim, even though Defendant ASIC'S liability under the Policy was reasonably clear; c) Failing to promptly provide Plaintiff with a reasonable explanation of the basis in the Policy, in relation to the facts or app licable law , for Defendant ASIC 'S denial of the Claim or offer of a compromise settlement of the Claim; and/or d) Failing to conduct a reasonable investigation of Plaintiff's Claim . 25 . Each of the foregoing unfair practices was completed knowingly by Defendant Riley and Defendant A shby and was a producing cause of Plaintiff's injuries and damagesxl M plaintiff's Original Petition , Exhibit A attached to Notice of Removal, Docket Entry No . 1, %% 15, 21-25 . In addition, ABI asserted against all defendants claims of common 1aw fraud and of violation of the Texas Deceptive Trade Practices A Ct 0 B. ABl's Intent to Pursue Claim s Against Riley ASIC asserts that the first of three inquiries a court must consider in evaluating improper joinder is whether appears from the plaintiff actually intended sue the non-diverse defendantx6 support of this proposition ASIC cites First Baptist Church v . Guideone Mut . Ins . Co w WL 4533729, at 'the ( E.D. Tex . 2008) C' The court ascertains whether record intended support g sq any inference that actively pursue claims improperly joined defendantj.''). ' decision 2008 against ASIC the Southern District E plaintiffq allegedly pointed any Texas that requires this inquiry , however, and the Fifth Circuit case cited by ASIC does not actually identify the inquiry as an independent ground for finding improper joinder. See Griqqs v. State Farm Lloyds, 181 F. 694, 3d 699 ( 5th Cir. 1999) ( noting, after concluding that the plaintiff's pleadings do set forth actionable claims against the instate defendant , that nMoreover, the inference that Griggs intended Blum .' ') record does support any actively pursu e claim s against concludes that proper test 1 . %% 28-32 . 5ld 16 sIC's Response , Docket Entry No . 8, A - 8- 2-3 . improper joinder the one articulated in Smallwood, that defendant has shown that there whether the reasonab le p ossibility that the plaintiff will be able to estab lish a cause of action against the defendant in state court . Smallwood, 385 F .3d at 573 . Whether the plaintiff actually intends to pursue claims against the instate defendant merely a sub set of that test. In any event, the extent that ABI'S intent to pursue claims against Riley is relevant, the court concludes that the state court petition supports an inference that AB I intends to pursue claims against Riley . The fact that ABI'S complaint brings claims against Riley A shby individually paragraphs 21-25 supports this conclusionx? Riley is also named of Interested Persons ( Docket Entry No. a defendant in the Certificate submitted to the court on March ASIC argues that ABI'S failure Riley properly establishes that AB I does not intend Se rv e Pursue claims against Riley . ASIC presents a docket sheet from the Harris County District Clerk, dated March 2010, as evidence that ABI has not served R iley .1 This docket sheet does not establish that 8 did not serve Riley after that dater however, establish that ABI has made no efforts serve Riley . does A SIC has not shown that AB I does not intend to pursue claims against Riley . l 7see Plaintiff's Original Petition, Exhibit A attached Notice of Removal, Docket Entry No . 1, %% 21-25 . l 8Docket Sheet in Cause 201005441, March to Notice of Removal, Docket Entry No . 1 . 2010, Exhibit B C. The Sufficiency of ABl's Claims Against Riley In order to avoid remand ASIC must prove that there reasonable possibility that ABI will be able to establish no cause action against Riley in state court . The parties do not dispute that Texas 1aw recognizes a cause of action against an insurance adjuster for violations of the Texas Insurance Code and for common 1aw fraud . See , e .g ., Libertv Mutual Ins . Co . v . Garrison Contractors. Inc., 966 S. W.2d 482, 484 ( Tex. 1998); Gasch v. Hartford Accident & Indemnitv Cow 491 F.3d ( 5th 2007)7 Blanchard v. State Farm Llovds, 206 F. Supp .2d 840, 845 ( D. S. Tex . 2001) ( citing Gricgs v . State Farm Lloyds, 181 F.3d ( 5th Cir. 1999)). ASIC argues that Riley was improperly joined because ABI's complaint only alleges Insurance Code boilerplate, and fails to allege any facts against Riley that could support liability for violations of the DTPA , Insurance Code , or common 1aw fraud . The court does not agree . ABI's complaint alleges that its p roperty was damaged , that Riley was tasked with handling communicating with ABI about the insurance claim and that Riley failed and fulfill these tasks to the standard required by the Texas Insurance Code . These allegations, p roven true , would create possibility that ABI could prevail ASIC has presented reasonab le claims against Riley . evidence disproving these allegations . Because the court must consider a1l allegations the state court petition plaintiff , the light most favorable - 10- se e Guillorv, no reasonable basis Riley . the court cannot conclude that there F .3d at predict that AB I might recover against Remand is therefore appropriate . This result is consistent with three recent Southern District similar facts . Texas opinions See Davis v . Travelers Llovds of Texas Ins. Co., 2009 WL 3255093 ( D. Tex . 2009); Leisure S. Life Senior Apartment Housinq II, Ltd . v . Llovds of London , 2009 WL 3834407 ( S.D. Tex.); CD MGmt. Corp . v. Nationwide Prop . & Cas. H-09-17O1 ( D . Tex . 2009). These cases each dealt S. Ins. Co ., claim s with Hurricane which the plaintiff brought claims similar to those in the present action against an insurance company and an instate claims adjuster. each case the defendant failed present evidence showing that the plaintiff had no reasonable recovering against the instate defendant, and possibility each case the court remanded the action to state court . ASIC points opinions three similar cases recent Southern District Texas which the court denied remand on the grounds that the instate insurance adjuster had been joined improperly . The court not persuaded that those opinions point a different result in this action, howeverr because those cases indicated unlikely . WL 1257802, defendant presented evidence that each of strongly recovery against the instate adjuster would 50th Jimenez v . Travelers Indemnitv Companv r 2010 ( S.D. Tex.), and in Lakewood Chiropractic Clinic v. Travelers Llovds Insurance Companv, 2009 WL 3602043, at *4 ( D. S. Tex.), the defendants presented evidence that the instate adjuster named as the defendant was not the adjuster who had analyzed and denied the claim . In Frisbv v . Lumbermens Mutual Casualtv Companv, 2007 WL 2300331, at *5 ( D. Tex.), the defendant presented deposiS. tion testimony by the plaintiff that the instate defendant made any untrue statements him, never failed nnever tell an important fact, and never made a statement in a way that led him to false conclusion .' ' In those cases the defendants provided evidence from wh ich the court could conclude that the plaintiff had no reasonable defendant . possibility recovering against the instate ASIC has provided the court with no such evidence . Furthermore , in Jimenez and Lakewood the p laintiffs' petitions provided less specificity about the claims against defendant than is present ABI's complaint . instate See Jimenez, 2010 WL 1257802, at *2; Lakewood , 2009 WL 3602043, at *3 . In 50th cases claims brought against the instate adjuster were brought jointly against the insurance company. ABI's complaint brings claim s against the individual defendants separately from the claims brought against ASIC against a11 defendants . The court concludes that while denial of remand was approp riate Jimenez, Lakewood, evidence presented Frisbv because the those cases, the pleadings pleadings and this action, the absence of any contrary evidence presented by ASIC , require remand . IV . Conclusion and Order For the reason explained above , the court concludes that ASIC has failed prove that ABI has recovering against Riley . reasonab le possibility Because ASIC has failed Riley was improperly joined, establish court lacks diversity jurisdiction over this action, and must therefore remand the action to state court . Plaintiff's Opposed Motion to Remand ( Docket Entry No . action is NRMAHRED GRANTED, and District Court of Harris County, Texas . the 129th The clerk will p rovide copy of this Memorandum Opinion and Order to the District Clerk of Harris County, Texas . SIGNED at Houston, Texas, on this 28th day of April, 2010 . f SIM LAKE UNITED STATES DISTRICT JUDGE - 13-
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