Speiser et al v. AmGuard Insurance Company et al *** DO NOT DOCKET. CASE REMANDED to the 125th Judicial District Court of Harris County, Texas)., No. 4:2022cv01595 - Document 12 (S.D. Tex. 2022)
Court Description: MEMORANDUM OPINION AND ORDER - Plaintiff's 7 MOTION to Remand is GRANTED, and this action is REMANDED to the 125th Judicial District Court of Harris County, Texas. The clerk will promptly provide a copy of this Memorandum Opinion and Order to the District Clerk of Harris County, Texas...*** Case terminated on 8/12/22. (Signed by Judge Sim Lake) Parties notified.(sanderson, 4)
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Speiser et al v. AmGuard Insurance Company et al *** DO NOT DOCK...t Court of Harris County, Texas). Doc. 12 United States District Court Southern District of Texas ENTERED August 12, 2022 IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION ROBERT SPEISER and DONNA SPEISER, Nathan Ochsner, Clerk § § § Plaintiffs, § § CIVIL ACTION NO. H-22-1595 § V. § AMGUARD INSURANCE COMPANY, LAURA MORGAN, and LEE JASON HUME, § § § § Defendants. § MEMORANDUM OPINION AND ORDER Plaintiffs, Robert Speiser and Donna Speiser ("Plaintiffs") brought this action against defendants, AmGUARD Insurance Company ( "AmGUARD"), Laura Morgan, and Lee "Defendants"), on March 14, 2022 . 1 Jason Hume AmGUARD removed the action from the 125th Judicial District Court of Harris May 19, 2022. 2 County, 7) . Texas, on Pending before the court is Plaintiffs' Motion to Remand and Memorandum in Support ( "Motion to Remand") No. (collectively, For reasons stated below, (Docket Entry the Motion to Remand will be granted. 1 Plaintiffs' Original Petition ("Original Petition"), Exhibit 4 to Notice of Removal, Docket Entry No. 1-4, p. 3. For identification purposes, all page numbers refer to the pagination imprinted at the top of the page by the court's Electronic Case Filing ("ECF") system. 2 Notice of Removal, Docket Entry No. 1. Dockets.Justia.com I. Factual Allegations and Procedural Background Plaintiffs' damaged by a unreasonably Original Petition alleged that power delayed surge 3 and payment of that their home was AmGUARD Plaintiffs' "knowingly insurance and claims, refused to consider or provide damage estimates, and utilized only incomplete or incorrect information." 4 The Original Petition also alleged that two AmGUARD adjusters, Laura Morgan and Lee Jason Hume, failed to inspect and promptly pay the claim and made fraudulent misrepresentations. 5 The Original Petition asserted causes of action against all Defendants for unfair settlement practices, including (1) failure to effectuate a prompt, fair and equitable settlement of Plaintiffs' claim after liability had § become reasonably 541. 060 (a) (2) (A); clear, in violation of Tex. Ins. Code (2) failure to provide a reasonable explanation of the basis in the policy, in relation to the facts or applicable law, § for their partial 541. 060 (a) (3); (3) denial of the claim, in violation failure to affirm or deny coverage within a reasonable time, in violation of 541. 060 (a) ( 4) (A) ; § ( 4) refusal to pay the claim without conducting a reasonable investigation, violation and of § misrepresentations 541. 060 (a) (7); about 3 Plaintiffs' Original Petition, Exhibit Entry No . 1- 4 , p . 6 11 2 0 - 21 . 4 Id. at 3 1 2. 5 Id. at 7-9 11 of 4 25-28. -2- ( 5) policy, making in in material violation to Notice of Removal, of Docket § 541. 061. 6 against all including The Original Petition also brought causes of action Defendants ( 1) for failing to prompt payments, failure to timely request all the i terns that they needed from Plaintiffs, in violation of to make timely notify Plaintiffs of § 542. 055 (a); the purported reasons (2) failure that they needed additional time to investigate their claim, in violation of § 542.056(d); and (3) delaying payment of the claim for more than 60 days after receiving all items it could reasonably request and require § to investigate 542. 055 (a). 7 for Plaintiffs' claim, in violation of The Original Petition also asserted causes of action negligent misrepresentation, common-law fraud, and civil conspiracy against all Defendants. 8 Plaintiffs are citizens of Texas. 9 corporation. 10 Defendant Morgan is AmGUARD is a Pennsylvania a citizen of Nevada, 11 and defendant Hume is a citizen of Texas. 12 , ,, ,, ,, ,, 6 Id. at 13-15 7 Id. at 15 8 Id. at 17-18 9 Id. at 4 45-55. 57-59. 74-85; p. 19 ,, 95-100. 8-9; Notice of Removal, Docket Entry No. 1, p. 3 12. 10 original Petition, Exhibit 4 to Notice of Removal, Docket Entry No. 1-4, p. 4 1 10; Notice of Removal, Docket Entry No. 1, p. 3 1 13. 11 Original Petition, Exhibit 4 to Notice of Removal, Docket Entry No. 1-4, p. 5 1 12; Notice of Removal, Docket Entry No. 1, p. 4 1 14. 12 Original Petition, Exhibit 4 to Notice of Removal, Docket Entry No. 1-4, pp. 4-5 1 11; Notice of Removal, Docket Entry No. 1, p. 4 1 16. -3- AmGUARD removed on the basis of diversity jurisdiction, arguing that "complete diversity exists because Defendant Hume is improperly joined, state as and Plaintiffs are not citizens of the same the other Defendants." 1 3 On June 7, Defendant Lee Jason Hume's Motion to Dismiss Dismiss") (Docket Entry No. 5) . 2022, Hume filed ("Hume's Motion to Plaintiffs filed an amended complaint on June 17, 2022, 14 and filed their Motion to Remand the same day. 15 July 6, Defendants filed an answer to the Amended Complaint on 2022, 1 6 and filed a response to the Motion to Remand on July 8, 2022 . 17 Plaintiffs replied on July 15, 2022. 18 II. A. Applicable Law Removal Jurisdiction Under 28 U.S.C. § 144l(a) 19 any state court civil action over which a 13 federal court would have original Notice of Removal, Docket Entry No. 1, p. 3 14 Plaintif f s' First Amended Complaint Docket Entry No. 6. 15 jurisdiction may be 1 11. ( "Amended Complaint") , Motion to Remand, Docket Entry No . 7. 16 Defendants' Response to Plaintiffs' First Amended Complaint, Docket Entry No. 9. 17 Defendants' Response to Plaintiffs' Motion ("Defendants' Response"), Docket Entry No. 10. 18 Plaintiffs' Reply in Support of ("Plaintiffs' Reply"), Docket Entry No. 11. 19 Motion to Remand to Remand Title 28 U.S. C. § 1441 (a) provides: "Except as otherwise expressly provided by Act of Congress, any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place were such action is pending." -4- removed from Accident state to federal Indemnity Co., & 491 court. See F.3d 278, Gasch 281 v. Hartford (5th Ci r. 2007). Federal courts have original jurisdiction over civil actions if the parties are diverse and the matter in controversy exceeds the sum or value of $75,000, exclusive of interests and costs. § 1332 (a) . that is, 28 u.s.c. Diversity jurisdiction requires complete diversity, "a district court cannot exe r cise diversity jurisdiction if one of the plaintiffs shares the same state citizenship as one of the defendants." Whalen v. Carter, 954 F.2d 1087, 1094 (5th Cir. 1992). Removal jurisdiction depends on the plaintiff's state court pleadings at the time of removal. Pullman Co. S. v. Ct. 347, 349 (1939); Cavallini Insurance Co., 44 F.3d 256, 264 State v. Jenkins, Farm Mutual (5th Cir. 1995). However, 59 Auto "this does not mean that the plaintiff cannot prov i de additional factual allegations to support those claims. claims in order to secure a viable claim against a defendant, claims Plaintiffs may not change nondiverse but they may provide additional facts to support the asserted Corporat i on, pre - removal." Case No. Bukowski SA-22-CV-0272-JKP, v. Liberty Insurance 2022 WL 1625173, at *5 (W . D. Tex . May 20, 2022). "The removing party bears the burden of showing that federal jurisdiction exists and that remov al was proper." Manguno v. Prudential Property and Casualty Insurance Co., 276 F.3d 720, 723 (5th Cir. 2002). "Any ambiguities are construed against removal - 5- because the removal statute should be strictly construed in favor of remand." B. Id. Improper Joinder The doctrine of improper or "fraudulent" joinder "ensures that the presence of an improperly joined , non-diverse defendant does not defeat federal removal jurisdiction premised on diversity." Borden v. Allstate Insurance Co., 589 F.3d 168, 171 (5th Cir. The court may ignore an improperly joined non-di verse 2009) . defendant in determining subject matter jurisdiction. Smallwood v. Illinois Central Railroad Co., 385 F.3d 568, 572-73 (5th Cir. 2004) (en bane), cert. denied, 125 S. Ct. 1825 (2005). A removing party attempting to prove improper joinder carries a heavy burden. Witter & Great Plains Trust Co. v. Co., 313 F.3d 305, 312 (5th Cir. 2002) Morgan Stanley Dean To establish that a non-diverse defendant has been improperly joined in order to defeat diversity jurisdiction the removing party must prove either (1) actual fraud in the pleading of jurisdictional facts or (2) an inability of the plaintiff to establish a cause of action ~gainst the non-diverse defendant in state court. Gasch, 491 F.3d at 281 (citing Crockett v. R.J. Reynolds Tobacco Co., 436 F.3d 529, 532 (5th Cir. 2006)). Since the parties do not dispute that Hume is a Texas resident, the second method is at issue in this case. Under this second type of improper joinder the court must determine "whether the defendant has demonstrated that there is no -6- possibility of recovery defendant, which stated reasonable basis for by the plaintiff differently the district against an that there means court to predict in-state is that no the plaintiff might be able to recover against an in-state defendant." Smallwood, 385 defendant is F.3d at 573. improperly Under joined this unless test there a is non-diverse "arguably a reasonable basis for predicting that the state law might impose liability on the facts involved[.]" Great Plains Trust, 313 F.3d at 312 (internal quotations and citations omitted). A "reasonable" basis requires more than merely a theoretical basis. Citifinancial, 462 Inc., 344 F.3d 458, (5th Cir. Ross v. 2003) " [T] he existence of even a single valid cause of action against in-state requires defendants court." Gray ex rel. remand of Rudd v. the entire case to state Beverly Enterprises-Mississippi, Inc., 390 F.3d 400, 412 (5th Cir. 2004). The standard for evaluating whether a reasonable basis for a claim exists for purposes of improper joinder is similar to that used in evaluating a motion to dismiss for failure to state a claim under Fed. R. Civ. P. 12(b) (6). 509 F.3d 665, 669 Campbell v. Stone Insurance, Inc., (5th Cir. 2007) "[W]hether the plaintiff has stated a valid state law cause of action depends upon and is tied to the factual fit between the plaintiffs' pleaded theory of recovery." 694, 701 (5th Cir. 1999). allegations and the Griggs v. State Farm Lloyds, 181 F.3d The court must take into account all unchallenged factual allegations, -7- including those alleged in the petition, in the light most favorable to the plaintiff. Irby, 326 F.3d 644, 649 (5th Cir. Travis v. All contested factual 2003). issues and ambiguities of state law are resolved in favor of the plaintiff. Gasch, 491 F.3d at 281. III. Analysis Because the burden is on the removing party to establish that a state court suit is properly removable, see Gasch, 491 F.3d at 281, to avoid remand reasonable basis for recover against Hume, F.3d at 573. Defendants the court must show to predict the instate defendant. that that there is no Plaintiffs may See Smallwood, 385 Defendants' Notice of Removal contended that "Hume had no duty to pay a claim made on a Policy issued by AmGUARD, so there is no re asonable basis to predict that Hume might be liable on the Policy" and that Plaintiffs' Original Petition pleaded legal conclusions instead of specific factual allegations. 20 Notice of Removal further contended that none of Defendants' the alleged fraudulent statements that Plaintiffs' Original Petition attributed to Hume were specific enough to satisfy the pleading standard of Fed. R. Civ. P. 9 (b) . 21 A. The Original Petition Stated a Claim Against Hume. The Texas Insurance Code prohibits persons engaged in the business of insurance from "failing to attempt in good faith to 20 Notice of Removal, Docket Entry No. 1, p. 6 1 22. 21 Id. at 5-6 11 21, 23. -8- effectuate a prompt, fair, and equitable settlement of a claim with respect to which the clear[.]" § insurer's liability has become reasonably 541.060(a)(2)(A). Federal district courts in Texas have held that adjusters can be held personally liable under § 541. 060 (a) (2) (A) for failing to conduct a proper investigation because, " [a] s the persons primarily responsible for investigating and evaluating insurance claims, insurance adjusters unquestionably have the ability to affect or bring about the 'prompt, fair, and equitable settlement' of claims, because it is upon their investigation that the insurance company's settlement of a claim is generally based." Ltd. No. V. Wausau Underwriters 3:15-CV-00293-B, See Linron Properties, Insurance 2015 WL 3755071, at *5 Co., Civil (N.D. Tex. Action June 16, 2015 ) ; Denley Group, LLC v. Safeco Insurance Company of Indiana, Civil Action No. 3:15-CV-1183-B, 2015 WL 5836226, at *4 (N.D. Tex. Sept. 30, 2015). "Federal district courts are split as to whether the general Rule 8(a) or heightened Rule 9(b) pleading standard applies when anal y zing militates § 541. 060 (a) (2) (A) against finding claims Plaintiffs' But pleadings Yarco Trading Company. Inc. v. United Fire F. Supp. 3d 939, 946 (S.D. Tex. 2019) & that split insufficient." Casualty Company, 397 (citing Gasch, 491 F.3d at 281-82 ("[W]e resolve all contested factual issues and ambiguities of state law in favor of the plaintiff . ")). Fed. R. Civ. P. 8(a) requires that to state a claim for relief a pleading must contain: -9- (1) a short and plain statement of the grounds for the court's jurisdiction, unless the court already has jurisdiction and the claim needs no new jurisdictional support; (2) a short and plain statement of the claim showing that the pleader is entitled to relief; and (3) a demand for the relief sought, which may include relief in the alternati v e or different t y pes of relief. Plaintiffs' Original Petition alleged that Hume "failed to promptly inv estigate and resolve the Speiser's claims" and that he failed to "thoroughly investigate within a reasonable time." 2 2 the claim and pay the claim The Original Petition also alleged that "Hume was the only adjuster sent by AmGuard to inspect the Speiser home[,]" that no other adjuster set foot on the property, and the r efore "[e] v ery thing that AmGuard and Morgan hav e done on the Speisers' claim is deri v ed from the inspection, e x amination, v iewing and presence of Hume at the stricken property." 23 Plaintiffs' Original Petition further alleged that" [t]he insurance claim was delayed for months" because of Hume and Morgan's failure to properly inv estigate and resolve the claim, and that Plaintiffs had been out of their home since October of 2021 - which, as of the time of the filing of the Original Petition, was approx imately f ive months. 24 22 original Petition, Exhibit Entry No. 1-4, p. 8 1 27. 24 Id. at 9 § I V; 10 1 4 31. -10- to Notice of Remov al, Docket The Original Petition also alleged that Hume told Plaintiffs that "[a]lthough they had a good claim, the insurance company may not pay the claim[,)" and that he "wanted to help them, but he real ly worked for the insurance company and so couldn't do anything but deny the claim." 25 If Hume made these statements, they would indicate that (1) AmGUARD's liability was reasonably clear to Hume, and (2) Hume would not attempt to effectuate a prompt, fair, Giv en that equitable settlement. § 541.060(a)(2)(A) "factual fit" theory of forbids, the this court between Plaintiffs' finds that Ins . there Code is a allegations and their pleaded See Griggs, recovery. is what Tex. and 181 F.3d at 701. The court further holds that Plaintiffs' Original Petition made a "short and plain statement" showing Plaintiffs' entitlement to relief , as Fed. R. Civ. P. 8(a) requires. The court concludes that contained allegations that, Plaintiffs' if true, relief under Texas Insurance Code § Original Petition stated a plausible claim to 541. 060 (a) (2) (A). Because the e xi stence of even one valid cause of action against an in-state defendant requires remand of the entire case, Rudd , 390 F.3d at 412, the court concludes jurisdiction over Plaintiffs' state-law claim . 25 Id. at 8-9 ~ 28. - 11- see Gray ex rel. that it never had B. The Live Pleading States a Claim Against Hume. On June 1 7, 2022, Plaintiffs filed an Amended "pursuant to Federal Rule of Civil Procedure lS(a) (1) ." 26 Complaint The rule provides that [a] party may amend its pleading once as a matter of course within: (A) 21 days after serving it, or (B) if the pleading is one to which a responsive pleading is required, 21 days after service of a responsive pleading or 21 days after service of a motion under Rule 12 (b), (e), or (f), whichever is earlier. Fed. R . Civ. P. 15 (a) (1). In all other cases, a party may amend its pleading only with the opposing party's written consent or the court's leave. Fed . R. Civ. P. 15 (a) (2). "If there is more than one defendant, and not all have served responsive pleadings, the plaintiff may amend the complaint as a matter of course with regard to those defendants that have yet to answer." Scott-Blanton v . Universal City Studios Productions, LLP, 244 F.R.D. 67, 69 (D.D.C. 2007). "'An amended complaint supersedes the original complaint and renders it of no legal effect unless the amended complaint specifically refers to and adopts or incorporates by reference the earlier pleading.'" F. App'x 453, 456 (5th Cir. 2014) In re R.E. Loans, L.L.C., 553 (quoting King v. Dogan, 31 F.3d 344,346 (5th Cir. 1994)). 26 Amended Complaint, Docket Entry No. 6, p. 1. -12- Defendants AmGUARD and Morgan filed an answer to Plaintiffs' Original Petition in state court on May 12, filed its Notice of Removal on May 19, 2022. 28 Hume did not join in either of these filings. to the Original Petition until June 7, 2022, 2022, 27 and AmGUARD However, Defendant Hume did not respond when he filed his Motion to Dismiss under Fed. R. Civ. P. 12 (b) (6) . 29 That is when Plaintiffs' 21-day time limit to amend their petition as to Hume began to run. See Scott-Blanton, 244 F.R.D. at 69. Plaintiffs filed their Amended Complaint ten days after Hume filed his Motion to Dismiss. 30 The court is persuaded that at the time Plaintiffs filed their Amended Complaint, they still had the right to amend their complaint as a matter of course as to Hume. See Scott- Blanton, 244 F.R.D. at 69. Defendants do not dispute that Plaintiffs had the right to amend their petition, but instead argue that it would be improper to consider the Amended Complaint because it was filed after the case was removed. 31 27 Def endants Original Answer, No. 1-4, p. 32. Defendants rely on Cavallini, 44 F. 3d at 264, 32 AmGUARD Insurance Company and Laura Morgan' s Exhibit 4 to Notice of Removal, Docket Entry 28 Notice of Removal, Docket Entry No. 1. 29 See Hume's Motion to Dismiss, Docket Entry No. 5. 30 See id.; Amended Complaint, Docket Entry No. 6, p. 1. 31 Defendants' Response, Docket Entry No. 10, p. 2. -13- which held that removal jurisdiction is determined "on the basis of claims in the state court complaint as it exists at the time of removal[,]" and "a complaint amended post-removal cannot divest a federal court of jurisdiction." But Cavallini is inapposite because Plaintiffs' Amended Complaint did not attempt to "divest" the court of jurisdiction. For reasons explained above, the court did not have jurisdiction to begin with. Moreover, rationale the applies court where, is as not here, persuaded the that plaintiffs Cavallini's amend their complaint as a matter of course pursuant to Rule 15(a) (1). The rationale for determining removal jurisdiction on the basis of claims in the state court complaint as it exists at the time of removal is obvious. Without such a rule, disposition of the issue would never be final, but would instead have to be revisited every time the plaintiff sought to amend the complaint to assert a new cause of action against the nondiverse defendant, all at considerable expense and delay to the parties and the state and federal courts involved. Cavallini, 44 F.3d at 264 (emphasis added) Because amendment as a matter of course can happen only once, and only within a specified time period, see Fed. R. Civ. P. 15 ( a) ( 1) , it does not pose a risk of forcing the court to revisit the issue of removal jurisdiction "every time the plaintiff [seeks] to amend the complaint[.]" Moreover, Complaint is the court seeking to See Cavallini, 44 F.3d at 264. is not "amend jurisdiction" by adding new claims. - 14- persuaded away the that the Amended basis for federal See Cavallini, 44 F.3d at 265. The Cavallini court held that, removal by subsequently while a plaintiff may not defeat changing the jurisdictional facts it alleges, a plaintiff may "'clarify a petition that previously left the jurisdictional question ambiguous.'" Id. at 265 (quoting Asociacion Nacional de Pescadores a Peguena Escala o Artesanales de Colombia (ANPAC) v. Dow Quimica de Colombia S.A., 988 F.2d 559, 565 (5th Cir. 1993)) examining the "'Under those circumstances, the court is still jurisdictional facts as of the time the case is removed, but the court is considering information submitted after removal.'" Id. Allowing a plaintiff to provide clarifying factual allegations does not change the requirement that the Court examine the jurisdictional facts as of the date of removal. It merely permits a state court plaintiff to clarify factual allegations under the federal pleading standards. And allowing clarifying factual allegations is consistent with caselaw requiring leave to amend prior to dismissal of a cause of action that does not satisfy the particularity-pleading requirements of Fed. R. Civ. P. 9(b). See Hart v. Bayer Corp., 199 F.3d 239, 248 n.6 (5th Cir. 2000) (recognizing that an opportunity to amend is appropriate when it appears that more careful or detailed drafting might overcome the deficiencies on which dismissal is based). Bukowski, 2022 WL 1625173, at *6. The court is persuaded that Plaintiffs' Amended Complaint seeks to clarify the basis for claims that were made in Plaintiffs' Original Petition - for instance, specifying how much time passed between Hume's first inspection and Plaintiffs' filing of the Original Petition, which supports the allegation that Hume failed to effectuate a "prompt" settlement of Plaintiffs' claim as Tex. -15- Ins. Code§ requires. 30 541.060(a)(2)(A) None of the clarifying facts that Plaintiffs added in their Amended Complaint change the substance of the§ 541.060(a) (2) (A) claim that they made in their Original Petition. As the court explains above, stated a Plaintiffs' Original Petition claim against Hume under § 541. 060 (a) (2) (A), Amended Complaint did not substantively change and the this claim. Although the Amended Complaint is the live pleading, both stated a claim against Hume under Tex. Ins. Code § 541.060(a)(2)(A). Therefore, AmGUARD has not "met its heavy burden of proving - based on the factual allegations of [Plaintiffs'] . petition - that there to is no reasonable basis for the court predict that [Plaintiffs] might be able to recover against [Hume] on even one of the claims brought against him [.] See 11 Conrad v. Cincinnati Insurance Co., Civil Action No. 3:21-CV-1533-D, 2021 WL 5140826, at *4 (N.D. valid Tex. Nov. claim 3, against 2021) Hume, Because Plaintiffs have alleged a the court concludes properly joined as a party to this lawsuit. citizenship therefore renders required. AmGUARD' s See removal Gray ex Rudd, Hume was Hume's nondi verse improper, rel that and 390 remand F.3d at is 412 ("[Section] 1441's holistic approach to removal mandates that the existence of even a single valid cause of action against in-state defendants court. 30 11 ) requires remand of the entire case • Amended Complaint, Docket Entry No. 6, p. 6 -16- 1 27. to state IV. Order For the reasons stated above, Plaintiffs' Motion to Remand (Docket Entry No. 7) is GRANTED, and this action is REMANDED to the 125th Judicial District Court of Harris County, Texas. The clerk will promptly provide a copy of this Memorandum Opinion and Order to the District Clerk of Harris County, Texas. SIGNED at Houston, Texas, on this 12th day of August, 2022. SIM LAKE SENIOR UNITED STATES DISTRICT JUDGE -17-
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