SPLIT IN AUTHORITY SUPPORTS GRANTING MOTION TO REMAND
In Shade Tree Apartments, LLC v. Great Lakes Reinsurance (UK) PLC, et al., No. A-15-CA-843-SS, 2015 WL 8516595 (WD Tex. December 11, 2015), the court granted the plaintiff’s motion to remand this first party property insurance coverage case which had been removed from state court based on diversity of citizenship. The Court noted the removal by the carrier was based on the two Texas defendant adjusters who were allegedly improperly joined to defeat diversity jurisdiction. The Carrier must show the plaintiff had “no possibility of recovery” against them in order to prevail against the plaintiff’s motion to remand.
When analyzing if the plaintiff has no possibility of recovering against the adjusters, the Court recognized plaintiff must allege actionable conduct against them which must be reviewed under the Texas pleading standard of “fair notice” pleading. The only claims examined were those alleged for deceptive or misleading acts in violation of the Texas Insurance Code. The issue is whether the Plaintiff “has alleged sufficient facts to support a reasonable basis to predict recovery against [the adjusters] under this theory of liability.” The Court held the allegations went beyond “boilerplate pleadings” because they “specifically outlined the way in which [the adjusters] failed to properly adjust its claim.”
The Carrier further argued that a recent line of authorities hold adjusters can only be held liable under the Texas Insurance Code “if they misrepresent the scope of the coverage or have settlement authority on behalf of the insurer.” The Carrier argued against remand because the Plaintiff did not specifically allege the adjusters misrepresented any details of the policy or that they had any settlement authority. The Court recognized “a split in authority regarding the scope of an insurance adjuster’s liability under the Texas Insurance Code” and held that the split “must be resolved in favor of remand.” The motion to remand was therefore granted.