Mary'z Mediterranean Cuisine, Inc v. Blackboard Insurance Company et al Do not docket. This action is remanded to the 80th Judicial District Court of Harris County, Texas., No. 4:2018cv01790 - Document 12 (S.D. Tex. 2018)

Court Description: MEMORANDUM OPINION AND ORDER granting 4 MOTION to Remand. This action is remanded to the 80th Judicial District Court of Harris County, Texas. Case terminated on 8/27/2018. (Signed by Judge Sim Lake) Parties notified. (aboyd, 4)

Download PDF
Mary'z Mediterranean Cuisine, Inc v. Blackboard In...al District Court of Harris County, Texas. Doc. 12 United States District Court Southern District of Texas ENTERED August 27, 2018 IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION David J. Bradley, Clerk MARY'Z MEDITERRANEAN CUISINE, INC.,§ Plaintiff, v. BLACKBOARD INSURANCE COMPANY f/k/a HAMILTON INSURANCE COMPANY, TEXAS GENERAL INSURANCE, and MIR KHAN, Defendants. § § § § § § § § § § § CIVIL ACTION NO. H-18-1790 MEMORANDUM OPINION AND ORDER Plaintiff Mary'z Mediterranean Cuisine, Inc. ("Plaintiff" or "Mary'z") filed this action on April 11, 2018, in the 80th Judicial District Court Blackboard of Insurance Harris Company County, f/k/a Texas, against Hamilton Defendant Insurance Company ("Blackboard"), Texas General Insurance ("Texas General"), and Mir Khan ("Khan") (collectively, "Defendants") asserting claims for violations of the Texas Insurance Code, breach of contract, breach of the duty of good faith and fair dealing, violations of the Deceptive Trade Practices-Consumer Protection Act ("DTPA"), fraud, negligence, and negligent misrepresentation. 1 Blackboard timely 1 See Plaintiff's Original Petition & Jury Demand ("Original Petition"), Exhibit 1 to Notice of Removal, Docket Entry No. 1-1. Dockets.Justia.com action. 2 removed the Motion to Remand Pending before ("Motion to Remand") the court is Plaintiff's (Docket Entry No. 4) . For the reasons explained below, the Motion to Remand will be granted. Factual and Procedural Background3 I. Mary' z Avenue, is a Houston, commercial Texas business 77057 (the located at 8255 Richmond The Property "Property"). includes a dining and bar area, a full kitchen, storage, an office, a walk-in cooler, building. and a patio in the front Mary'z alleges that Blackboard, and back of the a casualty insurance company, and Texas General and Mr. Khan, insurance agents, marketed and sold a commercial property insurance policy to Mary' z (the "Policy"). Mary'z alleges that Mr. Khan and Texas General, with full knowledge of Mary'z' business operations, building design, and the Property's lack of an internal fire alarm, falsely represented to Mary' z that damages caused by fire would be covered by the Policy. On September 9, damaging the income. business 2017, a equipment fire started at the Property, and causing loss of business Soon thereafter Mary'z submitted a claim under the Policy to Blackboard for the damage to the business equipment and lost business 2 income. Mary' z alleges that Blackboard conducted an See Notice of Removal, Docket Entry No. 1. 3 See Original Petition, Exhibit 1 to Notice of Removal, Docket Entry No. 1-1. -2- unreasonable and inadequate investigation, wrongfully denied and delayed Mary'z claim, and has not yet provided full payment. Mary'z' Original Petition asserts claims for violations of the Texas Insurance Code, breach of contract, good dealing, faith negligence, and fair breach of the duty of violations of and negligent misrepresentation. the DTPA, fraud, On May 2 5 , 2 0 18 , Blackboard filed an Original Answer, asserting a general denial, specific denials, and affirmative defenses, 4 and filed its Notice of Removal on May 31, 2018, alleging that the court has diversity jurisdiction because Mary'z is a citizen of Texas, Blackboard is a citizen of Delaware or New York, General and defendants Khan and Texas both citizens of Texas were improperly joined because Mary'z is unable to establish a cause of action against them in state court. 5 On July 2, 2018, Mary'z filed the pending Motion to Remand asserting that Khan and Texas General were properly joined and that diversity Blackboard filed maintaining its a jurisdiction response position in that therefore opposition Texas does on General not exist. July 20, and Khan 6 2018, were improperly joined and requesting that the court deny the Motion to Remand entirely or sever the claims against Texas General and Khan 4 Defendant Hamil ton Insurance Company's Verified Answer to Plaintiff's Original Petition, Exhibit A to Notice of Removal, Docket Entry No. 2-2. 5 Notice of Removal, Docket Entry No. 1, pp. 2-3 6 Motion to Remand, Docket Entry No. 4, pp. 4-11. -3- ~~ 5-8. and remand only those claims. 7 Khan also filed a response urging the court not to sever Mary'z' claims against Khan and to dismiss them instead of remanding them to state court. 8 Subject Matter Jurisdiction II. A. Removal Jurisdiction Under 28 U.S.C. which a federal § 1441(a) any state court civil action over court would have removed to federal court. 491 F.3d 278, 281 original jurisdiction may be See Gasch v. Hartford Ace. & Indem. Co., (5th Cir. 2007). Federal courts have original jurisdiction over civil actions where the parties are diverse and the amount in controversy exceeds the sum or value of $7 5, 000, exclusive of interests and costs. jurisdiction requires court cannot plaintiffs defendants." complete diversity, exercise shares 28 U.S.C. § 1332(a). diversity the same Whalen v. that is, "a district jurisdiction if one of the citizenship as one of the state Carter, Diversity 954 F.2d 1087, 1094 (5th Cir. 1992). Removal jurisdiction depends on the plaintiffs' pleadings at the time of removal. S. Ct. 347, 349 Pullman Co. v. state court Jenkins, 59 (1939); Cavallini v. State Farm Mutual Auto Ins. Co., 44 F. 3d 256, 264 The removing party bears (5th Cir. 1995). 7 Blackboard Insurance Company f/k/a Hamilton Insurance Company Response to Plaintiff's Motion to Remand ("Blackboard's Response"), Docket Entry No. 7, pp. 2, 5 ~~ 4, 8. 8 Defendant Mir Khan's Response Remand, Docket Entry No. 9, pp. 2-3. -4- to Plaintiff's Motion to the burden of showing that subject matter jurisdiction exists and that the removal procedure was properly followed. Prudential Prop. 2002). & Cas. Co., 276 F.3d 720, 723 (5th Cir. Ambiguities or doubts are to be construed against removal and in favor of remand. B. Ins. Manguno v. Id. Improper Joinder The doctrine of improper joinder ensures that the presence of an improperly joined, non-diverse defendant does not defeat federal removal jurisdiction premised on diversity. 589 F.3d 168, improperly 171 (5th Cir. 2009). joined non-diverse matter jurisdiction. Borden v. Allstate, The defendant court may ignore in determining an subject Smallwood v. Illinois Central Railroad Co., 385 F.3d 568, 572 (5th Cir. 2004) (en bane), cert. denied, 125 S. Ct. 1825 (2005). A removing party attempting to prove improper joinder carries a heavy burden. Witter, Great Plains Trust Co. 313 F.3d 305, 312 v. Morgan Stanley Dean To establish that a (5th Cir. 2002). non-diverse defendant has been improperly joined in order to defeat diversity "' ( 1) ( 2) jurisdiction actual fraud the removing party in the pleading of must either jurisdictional facts inability of the plaintiff to establish a against the non-diverse party in state court.'" 854 F.3d 286, 289 (5th Cir. 2017) prove or cause of action Alviar v. Lillard, (quoting Mumfrey v. CVS Pharmacy, Inc., 719 F.3d 392, 401 (5th Cir. 2013)). -5- Only the second method is at issue in this case. Under this second type of improper joinder the court must determine "whether the defendant has demonstrated that there is no possibility of recovery by the plaintiff against an in-state [or non-diverse] defendant, which stated differently means that there is no reasonable basis for the district court to predict that the plaintiff might be able to recover against an in-state diverse] basis defendant." requires Citifinancial, "Accordingly, more Smallwood, than merely 344 Inc., to 385 F.3d at 573. F.3d determine a theoretical 458, whether defendant was properly joined, 461-62 an [or non- A reasonable basis. (5th in-state Ross Cir. or v. 2003). non-diverse '[t] he court may conduct a Rule 12 (b) (6) -type analysis, looking initially at the allegations of the complaint to determine whether the complaint states a claim under state law against the ... defendant.'" Alviar, 854 F.3d at 289 (quoting Smallwood, 385 F.3d at 573). Whether the plaintiff has alleged a "depends upon plaintiff [' s] Griggs v. and is tied allegations to the valid cause of action factual fit between and the pleaded theory of State Farm Lloyds, 181 F.3d 694, 701 the recovery." (5th Cir. 1999). Thus, a defendant can avoid remand by showing that a state court petition fails to allege "specific actionable conduct" sufficient to support a cause of action against a non-diverse defendant. at 699. Id. Mere formulaic recitations of violations of statutes that are not accompanied by specific allegations concerning the actions -6- of the individual defendant are not sufficient to create a reasonable basis to predict that the plaintiff will be able to recover against the individual. Moore v. State Farm Mutual Auto. Ins. Co., 2012 WL 3929930, at *4 (S.D. Tex. Sept. 6, 2012). In deciding whether a party unchallenged factual allegations, was improperly joined all including those alleged in the petition, are taken into account in the light most favorable to the plaintiff, Smallwood, 385 F.3d at 575, and all contested factual issues and ambiguities of state law are resolved in favor of the plaintiff. Gasch, 491 F.3d at 281. valid cause of action against a remand of the entire case to The existence of a single non-diverse defendant state court. Gray v. requires Beverly Enterprises-Mississippi, Inc., 390 F.3d 400, 412 (5th Cir. 2004); see also Whalen, 954 F.2d at 1094. III. Analysis In its Motion to Remand Mary' z argues that subject matter jurisdiction does not exist because complete diversity is lacking. Blackboard contends that Texas General and Khan were improperly joined in order to defeat diversity. 9 Because the burden is on the removing party to establish that a state court suit is properly removable, see Gasch, 491 F.3d at 281, to avoid remand Blackboard must show that there is no reasonable basis predict that Mary' z may recover on even a 9 for court to single claim against Notice of Removal, Docket Entry No. 1, p. 3 -7- the ~ 8. Texas General and Khan. A. See Gray, 390 F.3d at 412. Mary'z' Allegations Against Texas General and Khan Mary' z Original Petition alleges some claims only against Blackboard and some claims only against Texas General and Khan. The petition refers to Blackboard, collectively as "Defendants." Texas General, and Khan The factual allegations concerning Texas General and Khan include: 4. 2 On or before September 9, 2017, Mr. Khan, Texas General, and Blackboard marketed and sold a Commercial Property Policy 4.3 . With full knowledge of Plaintiff's business, including the building protection design, and the way in which the Property was utilized, Mr. Khan, Texas General, and Blackboard marketed and sold the Policy to Mary'z. 4.8 Mr. Khan and Texas General, the agent and agency that sold the Policy to Mary' z, claimed and falsely represented to Mary'z that damages caused by fire, among other things, would be, and indeed are covered by the Policy based on the known facts about the business, including the lack of an internal fire alarm system. Plaintiff trusted and relied upon the experience of Mr. Khan and Texas General to procure the appropriate coverage for its specialized business needs, and Mr. Khan and Texas General acted as the agent of Blackboard in connection with the procurement of coverage. Mr. Khan and Texas General led Mary'z to believe that the insurance policy secured would cover their business personal property and business income in the event of standards perils, including a fire loss. 10 10 0riginal Petition, Exhibit 1 to Notice of Removal, Entry No. 1-1, pp. 3-5 ~~ 4.2, 4.3, 4.8. -8- Docket Based on these factual allegations Mary'z asserts claims against Texas General and Khan for violations of the Texas Insurance Code §§ 541.061 and misrepresentation, 11 541.002, negligence, negligent and asserts claims against all defendants for violations of the DTPA and common law fraud. B. and 12 Sufficiency of the Allegations Against Texas General and Khan Blackboard argues that (1) Mary'z cannot recover against Texas General and Khan because they were merely insurance agents who had no involvement in the adjustment of the claim or decision to pay; 13 (2) Mary'z has only pled a cause of action for negligence against Texas General and Khan but has failed to plead that they owed any legal duty owed to it; 14 and that (3) Plaintiff cannot recover in this action because Mary'z' claims against Texas General and Khan are contradictory to its claims against Blackboard. 15 Mary' z argues that under Texas law, Texas General and Khan, as insurance agents, are subject to liability for negligence, negligent misrepresentation, and for violations of the Texas Insurance Code and the DTPA and that Mary' z has pled sufficient facts 11 Id. at 6-7, 10 <[<[ 5.7, 5.8, 5.9, 5.10, 13.2, 14.2. 12 Id. at 9-10 <[<[ 11.2, 12.2. 13 Notice of Removal, Docket Entry No. 1, p. 4. 14 Id. at 5. 15 Blackboard' s Response, Docket Entry No. 7, p. 4. -9- in its Original Petition. 16 Blackboard and Khan do not respond to the authorities Mary'z has cited. To prevail on a negligence claim Mary'z must establish that a duty was owed, a breach of that duty, resulting from the breach. and damages proximately Insurance Network of Texas v. Klowesel, 266 S.W.3d 456, 467 (Tex. App.--Corpus Christi-Edinburg, 2008). In Texas, "an insurance agent who undertakes to procure insurance for another owes a duty to a client to use reasonable diligence in attempting to place the requested insurance and to client promptly if unable Association of America, to do so." May v. 844 S.W.2d 666, 669 inform the United Services (Tex. 1992). Texas courts have also held agents liable for negligence when the agent wrongly led clients to believe their policy provided protection against a particular risk that was in fact excluded from the policy's coverage. Rainey-Mapes v. Queen Charters, Inc. 729 S.W.2d 907, App.--San Antonio 1987, 913-14 (Tex. writ dism'd by agr.) (implicitly affirmed by May, 844 S.W.2d at 670). The Texas Insurance Code prohibits any "person" from engaging in deceptive practices in the business of insurance, such as misrepresenting the terms of a policy or the benefits or advantages promised by the Agents are policy. Tex. Code §§ "persons" engaged in the business purposes of the Insurance Code. 16 Ins. Id. § 541.003, of insurance 541.002(2). Motion to Remand, Docket Entry No. 4, pp. 5-11. -10- 541.051. for Mary'z' Original Petition alleges that Texas General and Khan were agents of Blackboard, knew how the Property would be used when they marketed the Policy to Mary'z, knew that the Property lacked an internal fire alarm system, misrepresented that the Policy would cover damages caused by fire when it did not, failed to disclose that the Policy did not cover fire damage, and that Mary'z relied on Texas General and Khan to procure the appropriate coverage and Mary'z has been damaged by delays in payment under the Policy. also alleges that Texas General and Khan knowingly misrepresented the Policy by making untrue statements of material fact 17 and that Mr. Khan and Texas General owed a duty to Mary' z to obtain appropriate insurance coverage for Plaintiff's property, or if they could not obtain the requested coverage, to notify Mary'z of same. Mr. Khan and Texas General failed to properly obtain appropriate insurance coverage for Mary'z and failed to notify Mary'z of their misrepresentations and other failures. 18 Mary'z allegations, if proven true, would create a reasonable possibility that Mary'z could prevail on its negligence Insurance Code claims against Texas General and Khan. thus concludes that there is a "factual fit" and The court between the allegations and the causes of action for negligence and violation of the Texas Insurance Code. Petition contains more than In other words, mere Mary'z' formulaic negligence and violations of the Insurance Code. 17 Original recitations This case is 0riginal Petition, Exhibit 1 to Notice of Removal, Entry No. 1-1, pp. 6-7 ~~ 5.7, 5.8, 5.9, 5.10. 18 Id. at 10 ~ 13.2. -11- of Docket therefore distinguishable from those in which remand was denied because the only allegations concerning the non-diverse defendant recited essentially verbatim statutory violations. WL 3929930, at *4 See Moore, 2012 (denying remand where petition did not include factual allegations against adjuster defendant other than those reciting violations of the statute); Weldon Contractors, Ltd. v. Fireman's Fund May 22, 2009) provisions Ins. Co., 2009 WL 1437837, at *3-4 (N.D. Tex. (finding that allegations that listed Insurance Code and asserted that "Both Defendants" violated such provisions were "legal conclusions couched as factual allegations," and stating that the plaintiff "alleged no facts to show that [the adjuster] performed any act that could be construed as a violation of any of the aforementioned section [of the Insurance Code]"). IV. Conclusion and Order of Remand Blackboard has not met its heavy burden to show that there is no reasonable basis to predict that Mary'z might be able to recover against Texas General and Khan in state court. The court therefore concludes that Texas General and Khan are properly joined as a defendants in this action. 19 Because complete diversity is lacking, this case will be remanded for lack of subject matter jurisdiction. Accordingly, Plaintiff's Motion to Remand (Docket Entry No.4) is GRANTED. The action is REMANDED to the 80th Judicial District 19 Because the court concludes that there is a reasonable possibility of recovery on the negligence and Insurance Code claims, the court does not address whether such a possibility exists to recover against Texas General and Khan violations of the DTPA, negligent misrepresentation, and common law fraud. -12- Court of Harris County, Texas. The Clerk of Court is directed to promptly send a copy of this Memorandum Opinion and Order of remand to the District Clerk of Harris County, Texas. SIGNED at Houston, Texas, on this 27th day ugust, 2018. SIM LAKE UNITED STATES DISTRICT JUDGE -13-

Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.