Last week, Judge Barbara Lynn of the Dallas Division of the Northern District of Texas denied a motion to remand a case to State court on the basis that non-diverse defendants were improperly joined by Plaintiff in an attempt to defeat federal diversity jurisdiction.  Waldrop v. Guarantee Trust Life Ins. Co., 2013 WL664705, Civil Action No. 3:12–cv–02579–M.  (N.D.  Tex. – Dallas, Feb. 25, 2013).

 The  suit  arose  from  a  life  insurance  contract  between  the  decedent,  Chad  Ryan  and  Guarantee  Life Insurance Company (“GTL”). Ryan purchased a renewable term life insurance policy from GTL in August 2008, naming his mother, Laverne Waldrop, as the beneficiary. Ryan’s coverage was cancelled in February 2010 due to an “interruption” in payment.  The interruption resulted when the bank account associated with the policy no longer contained sufficient funds to pay premiums due.  Ryan applied to reinstate the policy in March of 2010.  In so doing, GTL required Ryan to make certain representations about his medical history. GTL accepted Ryan’s application and reinstated his policy on April 6, 2010.  Ryan was murdered on February 16, 2011. After his death, Waldrop submitted a claim for the policy proceeds. GTL denied the claim due to alleged misrepresentations that Ryan made on the reinstatement application.

 Waldrop filed suit in state court against Defendants GTL, Adrienne Buckingham, Drew Richards, and Trinity Health and Life for claims of breach of contract, bad faith, violations of the Texas Deceptive Trade Practices Act, common law fraud, and negligent misrepresentations.  Buckingham and GTL were citizens of Illinois, while Richards, Trinity, and the Plaintiff were citizens of Texas.

 Defendants  Buckingham  and  GTL  removed  the  case  to  federal  court  based  on  diversity  jurisdiction, claiming the non-diverse Defendants, Richards and Trinity, were improperly joined and should be disregarded when considering diversity of citizenship.  Plaintiff then moved to remand arguing Defendants failed to show that the non-diverse defendants were improperly joined.   Plaintiff also sought leave to file an amended complaint, subject to the motion to remand.  The Court noted the post-removal filings are relevant to the court’s analysis only to the extent they contain factual allegations that “clarify or amplify the claims actually alleged” in the petition that controlled at the time of removal and that the court must not consider new causes of action or theories not raised in the state court petition.

 After reviewing Plaintiff’s petition on file at the time of removal, the Court determined the petition did not establish a cause of action against the non-diverse Defendants Trinity and Richards under any of the theories alleged.  Thus, the Court held the citizenship of Defendants Trinity and Richards should be disregarded for the  purposes  of  determining  jurisdiction.  Because  the  only  legitimate  Defendants  were  diverse  from Plaintiff, and because the amount in controversy exceeded the jurisdictional threshold, the Court denied Waldrop’s Motion to Remand.

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