FEDERAL DISTRICT COURT IN MCALLEN REMANDS CASE TO STATE COURT BECAUSE INSURER FAILED TO ESTABLISH IMPROPER JOINDER

January 28, 2013

Last week, Judge Micaela Alvarez of the District Court for the Southern District of Texas,  McAllen Division, remanded a case to State court on the basis that the insurer failed to meet its burden to show that the independent adjusting company and adjuster were improperly joined by Plaintiff in an attempt to defeat federal diversity jurisdiction.  Espinoza v. Companion Commercial Ins. Co., et al, 2013 WL 245032, Civil Action No. 7:12–CV–494 (S.D.  Tex. – McAllen, Jan. 22, 2013).

 Plaintiff, Dario Espinoza, sued Companion Commercial Insurance Company, Wellington Claim Service, and William Barker alleging delay and underpayment of insurance benefits related to a severe hailstorm on March 29, 2012.  In November 2012, Companion removed the case to federal court on the basis of diversity of citizenship asserting that both conditions of 28 U.S.C. § 1332(a)(1) were satisfied because the non- diverse defendants (Wellington and Barker) were improperly joined.

 Plaintiff subsequently filed a motion to remand arguing Defendants failed to show that the non-diverse defendants were improperly joined.  After reviewing Plaintiff’s original state court petitions, the Court determined that Plaintiff sufficiently alleged that Wellington and Barker violated provisions of Section 541 of the Texas Insurance Code and therefore were not improperly joined to the action.  The Court found that Companion had not met its burden of demonstrating that all non-diverse defendants were improperly joined in the case.  Thus, the Court held that it lacked jurisdiction over the matter because the parties were not completely diverse and remanded the cases to the State court for further proceedings.