MCALLEN COURT DENIES INSURED’S MOTION TO REMAND ON THE BASIS OF IMPROPER JOINDER OF THE INDEPENDENT ADJUSTING COMPANY

Judge Crane from the McAllen Division of the District Court for the Southern District of Texas denied an insured’s Motion to Remand on the basis of improper joinder. Cortez v. Meritplan Ins. Co., 7:13-CV-140, 2013 WL 6835266 (S.D. Tex. Dec. 20, 2013). Plaintiffs’ Original Petition alleged that they own properties in Hidalgo County and they were damaged by a March 2012 hail storm.  Dissatisfied with the adjustment of the policy claims, Plaintiffs brought causes of action against their insurer, Meritplan for breach of contract and adjusting company Cunningham Lindsey, U.S. Inc. for breach of the duty of good faith and fair dealing and violations of the Texas Insurance Code and Deceptive Trade Practices Act.

Meritplan removed the case from state court on the grounds that the Court had diversity jurisdiction over the action, the amount in controversy exceeded $75,000, and Cunningham Lindsey was improperly joined in an effort to defeat diversity jurisdiction.

In its analysis, the Court noted that improper joinder is a “narrow exception” to the rule of complete diversity, and Meritplan’s burden is a “heavy one”.  The Court noted that its analysis focused solely on whether Plaintiffs pleaded enough facts to establish a reasonable possibility to recover from Cunningham Lindsey, not a mere hypothetical one.  The Court agreed with the insurer and held that Plaintiffs’ Original Petition failed to identify a reasonable basis for recovery against Cunningham Lindsey.  Specifically, the Court noted that the “Facts” section in Plaintiffs’ Original Petition solely alleges that Cunningham Lindsey performed a faulty investigation and used their faulty investigation to make coverage decisions.  The Court further noted that Plaintiffs’ pleading asserted bad faith, DTPA, and Insurance Code causes of action against Defendants collectively and in a conclusory manner, without any indication of the specific, actionable bases for Plaintiffs’ claims against Cunningham Lindsey.  As such, the Court denied Plaintiffs’ Motion to Remand because Plaintiffs only pleaded a theoretical possibility of recovery against Cunningham Lindsey.