February 23, 2015

What started as a standard remand proceeding ended this month with a ruling that provides a glimmer of hope for insurers who have struggled to exercise their right to have bad faith cases against them heard in federal court.  Davis v. Metropolitan Lloyds Ins. Co. of Texas, No. 4:14-CV-957-A, 2015 WL 456726 (N.D. Tex. Feb. 3, 2015) is an unpublished order from Federal District Court Judge John McBryde from the Ft. Worth Division of the Northern District of Texas arising out of a bad faith case involving a hail claim.  The case involved a homeowners’ lawsuit filed in Tarrant County state court against Metropolitan Lloyds Insurance Company (MetLife) for hail damage.  Plaintiff’s counsel also added as a defendant MetLife’s adjuster assigned to investigate the claim. MetLife removed the lawsuit to federal court based on diversity jurisdiction, arguing that the homeowner improperly joined the adjuster as a defendant to defeat federal jurisdiction.  The homeowner, represented by Plaintiffs’ attorney Richard Daly from Houston, then moved to remand the case to state court.

Without explicitly naming the attorneys involved in his order, Judge McBryde began his analysis with an apt introduction:

Certain attorneys representing insureds/claimants who are citizens of Texas and who are dissatisfied with the non-citizen insurer’s response to the insured’s/claimant’s policy demand have developed a practice of filing suit in state court against the non-citizen insurer and an insurance adjuster or agent who is a citizen of Texas with the goal of preventing the insurance company from exercising its right to have the case removed to and heard by a federal court. The instant action is one of those suits.

The Court then looked to what it termed “boilerplate” allegations against the adjuster and found the allegations to be legally insufficient and also noted that these same allegations “repeatedly have been used by counsel for plaintiff in the bringing of state court actions of this kind.”

The Court also rejected plaintiff’s “summary-judgment-type evidence,” which included a letter by MetLife to the plaintiff that simply enclosed the adjuster’s estimate and requested any estimates from the plaintiff’s contractor.  The Court first noted this evidence was inadmissible, but added that even if the evidence was admissible, it would show a lack of liability on the part of the adjuster.  The Court explained that if the letter proved anything, it proved that MetLife “did not consider whatever estimate [the adjuster] might have prepared to be determinative of its payment obligation and that it was open to discussion, and payment, based on an estimate by a contractor hired by plaintiff.”  In addition to finding the adjuster improperly joined and denying remand, the Court dismissed sua sponte the claim against the adjuster because of the same deficient allegations.

Judge McBryde’s commentary in Davis serves as a good indicator that at least some federal courts are becoming frustrated with these well-known tactics by plaintiffs’ attorneys to sue adjusters in every Texas bad faith case in an effort to improperly keep the cases in state court.