Ramirez v. Allstate Vehicle & Prop. Ins. Co.

• Decision Date: 29 September 2020
• Docket Number: CIVIL ACTION NO. 7:20-cv-00211
• Parties: Adan RAMIREZ and Sandra Ramirez, Plaintiffs, v. ALLSTATE VEHICLE AND PROPERTY INSURANCE COMPANY and David Backer, Defendants.
• Court: U.S. District Court — Southern District of Texas

490 F.Supp.3d 1092

Adan RAMIREZ and Sandra Ramirez, Plaintiffs,

v.ALLSTATE VEHICLE AND PROPERTY INSURANCE COMPANY and David Backer, Defendants.

CIVIL ACTION NO. 7:20-cv-00211

United States District Court, S.D. Texas, McAllen Division.

Signed September 29, 2020

Michelle Christine Le, Law Office of Michelle Le, San Antonio, TX, Lucas E. Ahlman, Pro Hac Vice, L.A. Law Firm, McAllen, TX, for Plaintiffs.

Robert Edward Valdez, Amanda Layne Stephens, Valdez Trevino PC, San Antonio, TX, for Defendants.

OPINION AND ORDER

Micaela Alvarez, United States District Judge

The Court now considers "Plaintiffs’ Adan Ramirez and Sandra Ramirez Opposed Motion to Remand,"¹ Defendant's response,² and Plaintiffs’ reply.³ The Court also considers "Defendant Allstate Vehicle and Property Insurance Company's Motion for Partial Dismissal Under Rule 9(b) and 12(b)(6),"⁴ Plaintiffs’ response,⁵ and Defendant's reply.⁶ After considering the motions, record, and relevant authorities, the Court DENIES both motions.

I. BACKGROUND AND PROCEDURAL HISTORY

This is an insurance dispute. Plaintiffs allege they "sustained covered losses in the form of wind and/or hail damage and damages resulting therefrom" to their home.⁷ Plaintiffs allege that Defendants failed to conduct a full investigation and wrongfully denied Plaintiffs’ insurance claim on their property.⁸ Plaintiffs brought claims in state court on June 24, 2020, for breach of contract, noncompliance with the Texas Insurance Code, and breach of the duty of good faith and fair dealing.⁹ Defendants appear to have been served on July 6th,¹⁰ answered in state court,¹¹ then timely¹² removed to this Court on August 5th.¹³ Defendant asserts that diversity jurisdiction is proper in this Court pursuant to 28 U.S.C. § 1332(a).¹⁴ Plaintiffs and Defendant David Backer are citizens of Texas,¹⁵ but Defendant Allstate is a citizen of Illinois.¹⁶ Plaintiffs moved to remand on September 4th,¹⁷ Defendant expediently responded on September 10th,¹⁸ and Plaintiffs replied on September 17th.¹⁹ The motion is ripe for consideration. In addition, promptly after removing to this Court, Defendant filed a motion for partial dismissal²⁰ and that motion is also ripe.

II. MOTION TO REMAND

The Court first considers Plaintiffs’ motion to remand because it attacks the Court's jurisdiction.

a. Legal Standard

It is a "well-settled principle that litigants can never consent to federal subject matter jurisdiction, and the lack of subject matter jurisdiction is a defense that cannot be waived."²¹ District courts have limited jurisdiction and the authority to remove an action from state to federal court is solely conferred by the Constitution or by statute.²² While the Court has jurisdiction to determine its jurisdiction,²³ it cannot exercise any "judicial action" other than dismissal when the Court lacks jurisdiction.²⁴ "Removal [to federal court] is proper only if that court would have had original jurisdiction over the claim."²⁵ The Court determines its jurisdiction by considering the plaintiff's claims as they existed at the time of removal,²⁶ which cannot be defeated by the plaintiff's later amendment.²⁷

If the removing party claims federal diversity jurisdiction under 28 U.S.C. § 1332, the removing party must demonstrate complete diversity: that each defendant is a citizen of a different state from each plaintiff²⁸ and the amount in controversy exceeds $75,000.²⁹ Accordingly, "[w]hen original federal jurisdiction is based on diversity ... a defendant may remove 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.’ "³⁰ Citizenship, domicile, and residency are frequently conflated terms; for diversity jurisdiction purposes, a person is a citizen of the state where that person resides and has an intention to remain or make his or her home, and a business entity is typically a citizen of the state both where it is incorporated and where it has its principal place of business.³¹ "The removing party, the party seeking the federal forum, bears the burden of showing that federal jurisdiction exists and that removal was proper,"³² and must overcome this Court's presumption that cases lie outside its narrow jurisdiction.³³ "Each factual issue necessary to support subject matter jurisdiction ‘must be supported in the same way as any other matter on which the plaintiff bears the burden of proof, i.e., with the manner and degree of evidence required at the successive stages of the litigation.’ "³⁴

If each defendant is not a citizen of a different state from each plaintiff, a party—usually a removing defendant—may claim that the plaintiff improperly or fraudulently joined parties to defeat federal diversity jurisdiction. The citizenship of an improperly joined party is then disregarded in determining the Court's jurisdiction.³⁵ The doctrines of fraudulent or improper joinder ensure "that the presence of an improperly joined, non-diverse defendant does not defeat federal removal jurisdiction premised on diversity."³⁶ There is a heavy burden upon the party claiming improper or fraudulent joinder.³⁷ The Fifth Circuit has "recognized two ways to establish improper joinder: ‘(1) actual fraud in the pleading of jurisdictional facts, or (2) inability of the plaintiff to establish a cause of action against the non-diverse party in state court.’ "³⁸ The Court determines "whether [the plaintiff] has any possibility of recovery against the party whose joinder is questioned. If there is arguably a reasonable basis for predicting that the state law might impose liability on the facts involved, then there is no fraudulent joinder. This possibility, however, must be reasonable, not merely theoretical."³⁹ To test this reasonable basis for recovery, the Court may resolve the issue with a two-step analysis. First, "[t]he court may conduct a [Federal Rule of Civil Procedure] 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 in-state defendant."⁴⁰ The Court uses federal pleading standards in assessing the state court complaint.⁴¹ A Rule 12(b)(6) analysis "leaves intact the well-pleaded complaint doctrine with all its intended reach,"⁴² so the analysis accepts all well-pled facts in the complaint as true and interprets those facts in the light most favorable to the plaintiff, then asks whether the plaintiff has alleged "enough facts to state a claim to relief that is plausible on its face."⁴³ The Court does not make credibility determinations or discount the complaint's factual allegations.⁴⁴ "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.... Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice."⁴⁵ If a complaint can survive a Rule 12(b)(6) analysis, there is no improper joinder as to that party.⁴⁶ "[T]he existence of even a single valid cause of action against in-state defendants (despite the pleading of several unavailing claims) requires remand of the entire case to state court."⁴⁷ But if "there is no reasonable basis for the district court to predict that the plaintiff might be able to recover against an in-state defendant," the party was improperly joined.⁴⁸

In instances in which the propriety of joinder is still questionable after the Rule 12(b)(6) -like analysis, or if the plaintiff has misstated or omitted facts that would determine the propriety of joinder, the Court may in its discretion pierce the pleadings and conduct a "summary inquiry" to consider "summary judgment-type evidence such as affidavits and deposition testimony" but will not pretry factual issues.⁴⁹

While a District Court has jurisdiction to determine its own jurisdiction in considering a motion to remand, the focus of the inquiry on a motion to remand must "must be on the joinder, not the merits of the plaintiff's case."⁵⁰ Importantly, "removal statutes are to be strictly construed against removal; doubts as to removal are resolved in favor of remanding the case to state court."⁵¹ Specifically, the Court will resolve all legal and factual issues, doubts, and ambiguities in favor of remand,⁵² because the exercise of jurisdiction over a removed case "deprives a state court of a case properly before it and thereby implicates important federalism concerns."⁵³

b. Analysis

1. The Voluntary-Involuntary Rule and Defendant's Election of Liability

In its notice of removal, Defendant insurer Allstate argues that it accepted liability for its agent adjuster Defendant David Backer,⁵⁴ so he is improperly joined and his consent to removal is not required.⁵⁵ Plaintiffs argue that "[t]he dismissal of Backer pursuant to 542A.006 would not be a voluntary act of the Plaintiffs, and, as such, removal in this case violates the voluntary-involuntary rule."⁵⁶

Texas Insurance Code § 542A.006 is entitled "Action Against Agent; Insurer Election of Legal Responsibility," and provides for an insurer to irrevocably elect to accept its agent's⁵⁷ liability as its own by notifying the claimant. Thereafter, the court "shall dismiss the action against the agent with prejudice."⁵⁸ In this case, on August 4, 2020, Defendant Allstate invoked this statute and notified Plaintiffs.⁵⁹ The Court may consider this letter and election.⁶⁰ However, the state court did not act on this election because Defendants removed to this court one day after their election.⁶¹

However, " ‘a case nonremovable on the initial pleadings [can] become removable only pursuant to a voluntary act of the plaintiff’; this is the ‘voluntary-involuntary’ rule."⁶² "The purpose of the [voluntary]-involuntary rule is both to promote judicial efficiency and to protect a plaintiff's right to select his forum."⁶³ The voluntary-involuntary rule is premised on numerous ...