Cavallini v. State Farm Mut. Auto Ins. Co.

Decision Date26 January 1995
Docket NumberNo. 94-50112,94-50112
Citation44 F.3d 256
PartiesAdrian CAVALLINI, et al., Plaintiffs-Appellants, v. STATE FARM MUTUAL AUTO INSURANCE CO., et al., Defendants-Appellees.
CourtU.S. Court of Appeals — Fifth Circuit

Dennis P. Bujnoch, San Antonio, TX, for appellants.

Cathy J. Sheehan, Jerry A. Gibson, Plunkett, Gibson & Allen, San Antonio, TX, for State Farm.

Appeal from the United States District Court for the Western District of Texas.

Before WHITE, Associate Justice (Ret.); 1 BARKSDALE and PARKER, Circuit Judges.

RHESA HAWKINS BARKSDALE, Circuit Judge:

The appeal in this removed diversity action concerns fraudulent joinder and enforcement of a settlement agreement, with the critical issue being whether, in order to defeat removal based on fraudulent joinder, the state court complaint in issue here can be expanded by post-removal affidavits or amendment to state a cause of action against the nondiverse defendant. If removal stands, we must determine whether correspondence between the parties constitutes an enforceable settlement under Texas Rule of Civil Procedure 11 (settlement of action not enforceable unless "in writing, signed and filed ... [in] the record, or ... made in open court and entered of record").

The Cavallinis challenge the dismissal with prejudice of Larry Cunningham (the nondiverse defendant), an agent for State Farm Mutual Automobile Insurance Company, contending that he was not fraudulently joined; and the summary judgment for State Farm, contending that the action had not been settled. We AFFIRM.

I.

Adrian Cavallini purchased a hospitalization insurance policy from State Farm, through Cunningham, in July 1990; his wife, Debra Cavallini, was insured through her employer, The Olsten Corporation. On August 21, 1991, their son was born with serious birth defects. 2 He was added as an insured under the State Farm policy, but State Farm took the position that the Olsten policy provided primary coverage for the son's medical expenses. In November 1991, State Farm gave notice that its policy would be cancelled effective January 1992.

On January 29, 1992, the Cavallinis (Texas citizens) filed suit in Texas state court against State Farm (an Illinois corporation) and Cunningham (a Texas citizen), asserting claims for breaches of contract and of the duty of good faith and fair dealing. State Farm and Cunningham removed the action to federal court on March 2, claiming that Cunningham's joinder was fraudulent. That same day, they filed a third-party complaint against Olsten's health benefit plan, seeking contribution and/or indemnity. 3

On March 30, the Cavallinis moved to remand. 4 And, five and one-half months later, in mid-September 1992, they moved for leave to amend their complaint, "to clarify those facts which support a cause of action against" Cunningham, but did not attach the proposed amendment. 5 On October 1, noting that the parties had announced that they were in the process of finalizing settlement, the district court denied all pending motions, to include that for remand, subject to renewal absent settlement.

The Cavallinis re-urged their motion to remand on October 26, stating that the parties had been unable to settle. 6 A month later, they did the same for leave to amend, but again failed to attach the proposed amendment. In late July 1993, the district court denied the motion to remand, stating only that it "lack[ed] merit".

A month later, State Farm and Cunningham moved for summary judgment, asserting, inter alia, that the case had been settled. The Cavallinis responded that there were material fact issues concerning both the settlement, and whether State Farm breached the contract (policy) and acted in bad faith in denying benefits; in addition, they submitted affidavits regarding Cunningham. One week after State Farm and Cunningham moved for summary judgment (and a month after denial of their re-urged remand motion), the Cavallinis filed a third motion for leave to amend, attaching the proposed amendment for the first time. 7

The court conducted, on December 21, an evidentiary hearing on settlement. In mid-January 1994, after the court granted summary judgment for Olsten, see note 3, supra, the Cavallinis re-urged their motion to remand. Shortly thereafter, the court dismissed the claims against Cunningham with prejudice, holding that he had been fraudulently joined, and granted summary judgment for State Farm, holding that the parties had made an enforceable settlement agreement.

The district court denied the Cavallinis' motion for reconsideration. Among other things, they asserted that the court, in ruling on remand, should have considered their affidavits filed in opposition to summary judgment.

II.

Needless to say, the Cavallinis challenge the remand and settlement rulings.

A.

"The burden of proving a fraudulent joinder is a heavy one. The removing party must prove that there is absolutely no possibility that the plaintiff will be able to establish a cause of action against the in-state defendant in state court, or that there has been outright fraud in the plaintiff's pleading of jurisdictional facts." Green v. Amerada Hess Corp., 707 F.2d 201, 205 (5th Cir.1983), cert. denied, 464 U.S. 1039, 104 S.Ct. 701, 79 L.Ed.2d 166 (1984). Because no one disputes that the Cavallinis and Cunningham are Texas residents, "[o]ur sole concern is whether there is a possibility that [the Cavallinis] ha[ve] set forth a valid cause of action" against Cunningham. Id. We "evaluate all of the factual allegations in the plaintiff's state court pleadings in the light most favorable to the plaintiff, resolving all contested issues of substantive fact in favor of the plaintiff", id., and "then examine relevant state law and resolve all uncertainties in favor of the nonremoving party." Id. at 206.

The district court held that, as of removal, the Cavallinis' state court petition (complaint) "did not allege a cause of action against ... Cunningham". 8 The Cavallinis counter that the complaint states a claim against Cunningham for breach of the duty of good faith and fair dealing; that, together with their affidavits, it states a claim against Cunningham for misrepresentation under the DTPA; and, that their motion to amend should have been granted, and the amended complaint considered in ruling on the fraudulent joinder/remand issue. 9

1.

We agree with the district court that the complaint does not contain allegations which could support a claim under Texas law against Cunningham. He is named as a defendant in the caption and introductory paragraph, and listed as such in paragraph I, which provides addresses for service of process. Paragraph II claims, without supporting allegations, a "failure of the Defendants" to exercise a duty of good faith.

Paragraph III states claims for breaches of contract and of the duty of good faith and fair dealing, but makes no mention of Cunningham. As to the breach of contract claim, it alleges only that "Defendant State Farm ... has failed to perform a proper investigation and has attempted to mislead Plaintiffs into rescinding their claim or in the alternative to accept an inadequate amount for the claims submitted and by failing to renew the policy". And, in claiming a "breach of the duty of good faith and fair dealing owed by an insurer to its insured", it alleges only that "Defendant State Farm ... breached this duty for the reason there was and is no reasonable basis for denying Plaintiffs' claims and by failing to renew the policy". (Emphasis added.)

Paragraph V seeks damages, again without mentioning Cunningham, for physical pain, mental anguish, loss of income, and attorney's fees, but only "as a result of the failure of the Defendants State Farm Insurance Companies and State Farm Mutual Automobile Insurance Company" to pay policy benefits; VI seeks exemplary damages "[b]ecause of the gross misrepresentations made by the Defendants, and their respective failure to deal in good faith"; and the concluding paragraph prays for judgment against the "Defendants, jointly and severally". 10

No more need be said. As reflected above, the complaint fails to state a claim against Cunningham.

2.

Alternatively, even if the complaint could be construed as stating a claim against Cunningham for breach of the duty of good faith and fair dealing, there is no possibility that the Cavallinis could recover against him on that basis. 11 The Cavallinis rely on Taylor v. Bonilla, 801 S.W.2d 553 (Tex.App.--Austin 1990, writ denied ), and GAB Business Services, Inc. v. Moore, 829 S.W.2d 345 (Tex.App.--Texarkana 1992, no writ). 12 In Taylor, damages were sought from New York Life Insurance Company and its agent, Bonilla, for, inter alia, breaches of contract, fiduciary duty, and the duty of good faith and fair dealing. 801 S.W.2d at 555. Partial summary judgment and a directed verdict were granted on the two contract claims, and the jury returned a verdict for the defendants on the remaining claims. Id. Primarily at issue on appeal were the contract claims. Id. at 556-60. The court briefly addressed the contention that the jury verdict was against the great weight of the evidence, and affirmed because there was conflicting evidence "as to whether Bonilla acted in a manner consistent with the degree of care required of a fiduciary, [or] whether he ... breached the duty of good faith and fair dealing." Id. at 561.

Although the court seems to have assumed, implicitly, that Bonilla owed the insured a duty of good faith and fair dealing, it does not so hold, because the issue was not presented. Moreover, it apparently was established, or undisputed, that Bonilla was a fiduciary, and thus had a special relationship with the insured that would give rise to a duty of good faith and fair dealing. Id. Here, there are no allegations that Cunningham was a fiduciary, nor do the Cavallinis allege any facts (only their conclusory...

To continue reading

Request your trial
868 cases
  • Faulk v. Owens-Corning Fiberglass Corp., 1:99CV180 (TH).
    • United States
    • U.S. District Court — Eastern District of Texas
    • May 26, 1999
    ...is determined "on the basis of claims in the state court complaint as it exists at the time of removal ..." Cavallini v. State Farm Mutual Auto Ins., 44 F.3d 256, 264 (5th Cir.1995); see Nolan v. Boeing, 919 F.2d 1058, 1063 fn. 5 (5th Cir.1990) ("In removed cases, the existence of federal s......
  • Mbia Ins. Corp. v. Royal Bank Of Canada
    • United States
    • U.S. District Court — Southern District of New York
    • December 30, 2009
    ...petition filed in state court.” Griggs v. State Farm Lloyds, 181 F.3d 694, 700 (5th Cir.1999); see also Cavallini v. State Farm Mut. Auto Ins. Co., 44 F.3d 256, 263 (5th Cir.1995) (stating that although the court could consider affidavits or deposition testimony in analyzing fraudulent join......
  • Mims v. Deepwater Corrosion Servs., Inc.
    • United States
    • U.S. District Court — Southern District of Texas
    • March 16, 2015
    ...the petition for removal. Pullman Co. v. Jenkins, 305 U.S. 534, 537–38, 59 S.Ct. 347, 83 L.Ed. 334 (1939) ; Cavallini v. State Farm Mutual Auto Ins., 44 F.3d 256, 264 (5th Cir.1995) ; Ford v. Property & Cas. Ins. Co. of Hartford, No. Civ.A. H–09–1731, 2009 WL 4825222, *2 (S.D.Tex. Dec. 9, 2......
  • Honey Holdings I, Ltd. v. Alfred L. Wolff, Inc.
    • United States
    • U.S. District Court — Southern District of Texas
    • January 23, 2015
    ...the petition for removal. Pullman Co. v. Jenkins, 305 U.S. 534, 537–38, 59 S.Ct. 347, 83 L.Ed. 334 (1939) ; Cavallini v. State Farm Mutual Auto Ins., 44 F.3d 256, 264 (5th Cir.1995) ; Ford v. Property & Cas. Ins. Co. of Hartford, No. Civ. A. H–09–1731, 2009 WL 4825222, *2 (S.D.Tex. Dec. 9, ......
  • Request a trial to view additional results
5 books & journal articles
  • Forum Selection: Venue and Removal
    • United States
    • James Publishing Practical Law Books Archive New York Civil Practice Before Trial. Volume 1 - 2014 Contents
    • August 18, 2014
    ...look beyond the pleadings and may consider affidavits and discovery responses. [ Pampillonia ; Cavallini v. State Farm Mut. Auto. Ins. , 44 F3d 256, 263 (5th Cir 1995)]. Some courts in the Second Circuit have conducted an evidentiary hearing on a remand motion to resolve a factual issue. [ ......
  • Forum Selection: Venue and Removal
    • United States
    • James Publishing Practical Law Books New York Civil Practice Before Trial
    • May 2, 2018
    ...look beyond the pleadings and may consider affidavits and discovery responses. [ Pampillonia ; Cavallini v. State Farm Mut. Auto. Ins. , 44 F3d 256, 263 (5th Cir 1995)]. Some courts in the Second Circuit have conducted an evidentiary hearing on a remand motion to resolve a factual issue. [ ......
  • Forum Selection: Venue and Removal
    • United States
    • James Publishing Practical Law Books Archive New York Civil Practice Before Trial. Volume 1 - 2016 Contents
    • August 18, 2016
    ...VENUE AND REMOVAL §8:475 may consider affidavits and discovery responses. [ Pampillonia ; Cavallini v. State Farm Mut. Auto. Ins. , 44 F3d 256, 263 (5th Cir 1995)]. Some courts in the Second Circuit have conducted an evidentiary hearing on a remand motion to resolve a factual issue. [ Merme......
  • Table of Cases
    • United States
    • James Publishing Practical Law Books Archive New York Civil Practice Before Trial. Volume 2 - 2016 Contents
    • August 18, 2016
    ...Dept 1989), §9:152 Cavages, Inc. v. Ketter , 56 AD2d 730, 392 NYS2d 755 (4th Dept 1977), §42:292 Cavallini v. State Farm Mut. Auto. Ins. , 44 F3d 256 (5th Cir 1995), §8:472 Cavanaugh v. Metropolitan Transportation Authority , NYLJ, December 14, 2001, p. 27, col. 4 (Sup Ct Nassau Co), §14:56......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT