MELINDA HARMON, District Judge.
Before the Court are Plaintiff's Motion to Remand (Document No. 6) and Defendant Travelers Personal Security Insurance Company's ("Defendant Travelers") Response thereto (Document No. 7). Having considered these filings and the applicable law, the Court concludes Plaintiff's Motion to Remand (Document No. 6) should be denied.
This case arises from a claim made by Gregory Young ("Plaintiff") on an insurance policy. The Plaintiff originally filed suit in the 268th Judicial District Court of Fort Bend County, Texas. Defendant Travelers removed the case to federal district court on the basis of diversity jurisdiction. (Document No. 7 at 1).
Plaintiff is the owner of a Texas Homeowners' Insurance Policy (the "Policy"), which was issued by Travelers Personal Security Insurance Company. Plaintiff owns the insured property, which is specifically located at 619 Johnson Ln., Sugar Land, Texas 77479. (Document No. 1-3 at 7). On or about May 25, 2015, Plaintiff experienced a storm event, which gave rise to a claim for loss under the Policy issued by Defendant Travelers. (Document No. 1-3 at 8). Plaintiff filed suit in state court against Defendant Travelers and Robert Finley ("Defendant Finley"). Id. at 6. It is undisputed that Defendant Finley is an insurance adjuster, who was assigned to process the claim. (Document No. 7 at 1). It is also undisputed that Defendant Finley resides in Harris County, Texas. (Document No. 1-3 at 7). Plaintiff is a citizen of Texas (Document No. 6 at 1), while Defendant Travelers is a citizen of Connecticut (Document No. 7 at 2).
Unhappy with the dissolution of his claim on the Policy, Plaintiff filed suit against Defendants Travelers and Finley alleging violations of the Texas Insurance Code, common law fraud, breach of contract, and breach of the duty of good faith and fair dealing. The majority of the allegations by the Plaintiff are directed at Defendant Travelers. Plaintiff's allegations relevant to Defendant Finley include:
(Document No. 1-3 at 8-11). Defendant Finley is also mentioned in paragraphs 28-32 and paragraph 34 of Plaintiff's State Court Petition. Id. at 12-13. Factual allegations in those paragraphs refer to previous paragraphs by stating, "as described above." Id.
Plaintiff has moved to remand this case to state court. Plaintiff contends Defendant Finley is a properly joined defendant, who is a citizen of Texas, and thus this Court lacks subject matter jurisdiction. Defendant Travelers contends that Defendant Finley's citizenship is irrelevant because of improper joinder.
Under 28 U.S.C. § 1441(a), any state court action over which federal courts would have original jurisdiction may be removed from state to federal court. Under § 1441(b)(2), where original federal jurisdiction would be based on diversity of citizenship, a defendant may remove such an action only if none "of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought." Thus, a civil action may be removed to a federal court on the basis of diversity. However, "[t]he only caveat is that, when a properly joined defendant is a resident of the same state as the plaintiff, removal is improper." Int'l Energy Ventures Mgmt., L.L.C. v. United Energy Grp., Ltd., No. 14-20552, 2016 WL 1274030, at *3 (5th Cir. Mar. 31, 2016) (citing Smallwood v. Ill. Cent. R.R. Co., 385 F.3d 568, 573 (5th Cir. 2004) (en banc)). If a non-diverse defendant is improperly joined, the citizenship of that party is disregarded in determining the court's subject matter jurisdiction, and therefore cannot destroy complete diversity. Smallwood, 385 F.3d at 572.
"A defendant is improperly joined if the moving party establishes that (1) the plaintiff has stated a claim against a diverse defendant that he fraudulently alleges is nondiverse, or (2) the plaintiff has not stated a claim against a defendant that he properly alleges is nondiverse." Int'l Energy Ventures Mgmt., 2016 WL 1274030, at *3 (citing Smallwood, 385 F.3d at 573).
With regards to the failure to state a claim against a non-diverse defendant, "[t]he test for [improper] joinder is whether the defendant has demonstrated that there is no possibility of recovery by the plaintiff against an in-state 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 defendant." Id. at *7. As the Fifth Circuit recently clarified, the court should conduct a Rule 12(b)(6)-type analysis when determining, in the context of improper joinder, whether a plaintiff has stated a valid claim against a non-diverse defendant. Id. at *6.
When conducting a Rule 12(b)(6)-type analysis, the federal pleading standards must be applied. Id.
Under a Rule 12(b)(6)-type analysis, dismissal is appropriate only if the complaint fails to plead "enough facts to state a claim to relief that is plausible on its face." Leal v. McHugh, 731 F.3d 405, 410 (5th Cir. 2013) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). "A claim has facial plausibility when the pleaded factual content allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Montoya v. FedEx Ground Package System, Inc., 614 F.3d 145, 148 (5th Cir. 2010) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). The plausibility standard is not akin to a "probability requirement," but asks for more than a "possibility that a defendant has acted unlawfully." Twombly, 550 U.S. at 556. "While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, . . . a plaintiff's obligation to provide the `grounds' of his `entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. . . ." Id. at 544.
"[W]hether the plaintiff has stated a valid state law cause of action depends upon and is tied to the factual fit between Plaintiffs' allegations and the pleaded theory of recovery." Griggs v. State Farm Lloyd's, 181 F.3d 644, 647 (5th Cir. 1999). In conducting this analysis, the district court must resolve all contested fact issues and ambiguities of state law in favor of the plaintiff and remand. Gasch v. Hartford Acc. & Indem. Co., 491 F.3d 278 (5th Cir. 2007). The removal statute is to be strictly construed, and any doubt about the propriety of removal must be resolved in favor of remand. Id.
Neither party disputes that Defendant Finley is a citizen of Texas. (Document No. 1-3 at 7). Therefore the dispositive issue is whether Defendant Finley has been properly joined, i.e. whether the Plaintiff has stated a valid claim against him under state law. See Int'l Energy Ventures Mgmt., 2016 WL 1274030, at *3 (citing Smallwood, 385 F.3d at 573). If Plaintiff has stated a valid claim against Defendant Finley, his citizenship must be taken into account, and this case must be remanded to state court. If not, Defendant Finley was improperly joined and his citizenship can be disregarded for the purposes of determining jurisdiction.
Plaintiff argues (1) there is a valid cause of action against Defendant Finley under state law and (2) the facts alleged in Plaintiff's Original Petition (Document No. 1-3 at 6-19) are sufficient to establish a cause of action against Defendant Finley. Plaintiff went into a lengthy discussion of whether or not an adjuster can be held liable under the Texas Insurance Code, but as this Court has noted before, "[t]here is no dispute . . . that in addition to an insurer, as a matter of law an adjuster may be found liable in his individual capacity for deceptive or misleading acts in violation of the Texas Insurance Code. . . ." Centro Cristiano Cosecha Final, Inc. v. Ohio Cas. Ins. Co., No. H-10-1846, 2011 WL 240335, at *11 (S.D. Tex. Jan. 20, 2011) (citing Liberty Mut. Ins. Co. v. Garrison Contractors, Inc., 966 S.W.2d 482, 546 (Tex. 1998)); Griggs, 181 F.3d at 701. Defendant Travelers does not contend that an adjuster cannot be held liable under the Texas Insurance Code, but instead contends that the Plaintiff failed to make enough factual allegations to satisfy a rule 12(b)(6)-type analysis.
Plaintiff contends multiple allegations in the Plaintiff's Original Complaint (Document No. 1-3) are factually sufficient to support a cause of action against Defendant Finley. The relevant portions of the Plaintiff's Original Complaint state:
(Document No. 1-3 at 8-11). These statements are conclusory and lack the specificity necessary to state a claim. The statements are nothing more than a formulaic recital of the statutory elements.
This case is similar to Dalton v. State Farm Lloyd's, Inc. See No. CIV.A. H-12-3004, 2013 WL 3157532 at *1 (S.D. Tex. June, 19, 2013). In Dalton, the factual allegations made by the plaintiff against an insurance adjuster were of "insufficient investigation and undervaluing the claim." Id. at *6. Additionally, the plaintiff identified no specific misrepresentations by the adjuster. Id. In holding there were not sufficient facts to state a cause of action against the adjuster, the court noted "the claims against the adjuster are identical to those against the insurer. . . and [] are insufficient to support a claim against the adjuster. Id. at *7.
This case is also similar to Gardezi v. Nationwide Property and Casualty Ins. Co. See No. 4:15-CV-01663, at *1 (S.D. Tex. Jan. 7, 2016). In Gardezi, the plaintiffs filed suit against both the insurer and the adjuster after "substantial storm damage occurred." Id. The plaintiffs alleged Nationwide Insurance Company "wrongfully underpaid plaintiff's claim." Id. Specific to the adjuster, the plaintiffs alleged, "[the adjuster] made numerous errors in estimating the value of the Plaintiff's claim, all of which were designed to intentionally minimize and underpay the loss incurred by Plaintiffs . . . As a result of [the adjuster's] conduct, Plaintiff's claim was underpaid." Id. at *2 (emphasis added). The plaintiffs in Gardezi also referred to the factual allegations "as described above" to allege violations of Tex. Ins. Code §§ 541.060(a), 541.060(a)(1), 541.060(a)(2)(A), 541.060(a)(3), 541.060(a)(4), 541.060(a)(7). Id. at *2-3. In concluding the plaintiffs failed to state a cause of action against the adjuster, the court noted the actions of the adjuster were "indistinguishable from the acts of [the insurer] and hence are insufficient to support a claim against the adjuster." Id. at *6 (internal quotations and citations omitted).
Like the plaintiffs in Gardezi, the Plaintiff alleges, "[d]efendant Finley made numerous errors in estimating the value of Plaintiff's claim, all of which were designed to intentionally minimize and underpay the loss incurred by Plaintiff." (Document No. 1-3 at 8) (emphasis added). Similar to Dalton, the Plaintiff alleges no specific misrepresentation by the adjuster, but instead refers to the allegations "as described above." See id. at 8-13. Such general and conclusory allegations are indistinguishable from the acts of the insurer and fail to state a cause of action against Defendant Finley. See Gardezi, No. 4:15-CV-01663, at *1; Dalton, 2013 WL 3157532, at *1.
Without a valid cause of action, there is no reasonable basis for the Court to predict that the Plaintiff might be able to recover against Defendant Finley. Without a reasonable basis, Defendant Finley was improperly joined. See Int'l Energy Ventures Mgmt., 2016 WL 1274030, at *7 (citing Smallwood, 385 F.3d at 573). When a defendant is improperly joined, the party must be dismissed without prejudice. See id. at *9 (When "[a] court determines that a nondiverse party has been improperly joined to defeat diversity, that party must be dismissed without prejudice."). Accordingly, Defendant Finley is dismissed from this action without prejudice.
There is complete diversity between the remaining parties and the amount in controversy exceeds $75,000. (See Document No. 7 at 2). Therefore this Court has diversity jurisdiction.
The Court hereby
ORDERS the Defendant Finley is DISMISSED without prejudice for improper joinder and Plaintiff's Motion to Remand (Document No. 6) is DENIED.
(7) refusing to pay a claim without conducting a reasonable investigation with respect to the claim[.]