Suing Insurance Adjusters

October 9, 2011

Adjusters in Grand Prairie, Dallas, Irving, Richardson, Garland, Mesquite, Carrolton, Farmers Branch, Duncanville, or anywhere else in Texas, who make a mistake in their job that costs an insurance customer money, can be sued for what he cost the insurance customer. The tricky thing is doing it in the most advantageous manner.
Usually the individual adjuster does not have to be sued. Suing his employer, the insurance company, is often times just as good. But sometimes there is a legal advantage to suing the adjuster and the company. Often times, if just the company is sued, the case can be removed from the State Court in which it was filed, to a Federal Court. There are advantages to the insurance company for doing a removal. That is why they do it.
One way of defeating the attempt at removal is by suing the insurance adjuster and not just the insurance company. However, doing it this way must be done correctly.
The United States District Court, Southern District, Houston Division, issued an opinion on July 25, 2011, dealing with this issue. The style of the case is Emma Gonzales v. Homeland Insurance Company of New York, et al.
In this case, the lawsuit was filed in State Court and then Homeland had the case removed to Federal Court. Here is some background:
This is an insurance case where Ms. Gonzales alleges her house sustained roof and water damage as a result of Hurricane Ike. Her house was covered by an insurance policy issued by Homeland. She submitted a claim and Homeland assigned its employee adjuster, defendant Ball, to adjust the claim. The adjuster then hired an adjusting firm, defendant Precise, who assigned defendant Murphy, to inspect the damage. Gonzales alleged in the lawsuit that:
Defendant Murphy conducted a substandard inspection of Plaintiff's property. Murphy spent a mere twenty minutes inspecting Plaintiff's entire property for hurricane damages. This is evident in his report, which failed to include all of Plaintiff's Hurricane Ike damages noted upon inspection. Moreover, the damages that defendant Murphy actually included in his report were grossly undervalued. Defendant Ball also actively participated in the investigation of Plaintiff's claim. Specifically, she corresponded with Plaintiff regarding her claim in a letter dated October 24, 2008. Ball's letter shows that she failed to thoroughly review Murphy's assessment of the claim and ultimately approved Murphy's inaccurate report of the damages. As a result of these defendants' unreasonable investigation, Plaintiff was considerably underpaid on her claim and has suffered damages.
In discussing this case, the court stated the law wherein, after removal a plaintiff may move to remand and, if "it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." This is found at 28 U.S.C. Section 1447(c). But removal statutes are construed strictly against removal and for remand. All doubts regarding whether removal jurisdiction is proper should be resolved against federal jurisdiction. This means that once a motion to remand has been filed, the burden is on the removing party to establish that federal jurisdiction exists. This means that, "All factual allegations are evaluated in the light most favorable to the plaintiff."
The United State 5th Circuit Court of Appeals recognizes two ways to establish improper joinder when, as here, the defendant alleges that the adjuster was brought into the case for the sole purpose of defeating removal to federal court. First, that there is actual fraud in the pleading of jurisdictional facts, or second, the inability of the plaintiff to establish a cause of action against the non-diverse party in state court. Under the second test, the defendant prevails only when it establishes "that there is no reasonable basis for the district court to predict that the plaintiff might be able to recover against an in-state defendant." A reasonable basis for state liability requires that there be a reasonable possibility of recovery, not merely a theoretical one.
In ruling against the remand and allowing this case to be removed to Federal Court the court said:
"The question here is whether there is no reasonable basis for the district court to predict that the plaintiff might be able to recover against Precise or Murphy, the instate defendants. Defendants urge that Gonzales cannot recover from Precise or Murphy because she has failed to allege viable claims against the adjuster defendants .... Gonzales argues that defendant Murphy created a wholly deficient report as a result of his substandard inspection of the claim, which was in part, the cause of much of Plaintiff's damages complained about in this suit. Nowhere, however, does Gonzales plead any specific facts, or explain the what, where, when, and how, to support these allegations."
This writer believes the court made an incorrect ruling in this case. Maybe the decision will be reversed if it is appealed. One thing is certain. An experience Insurance Law Attorney should be consulted when contesting a denial of benefits on an insurance claim. There are many strategies to ponder in deciding the best way to proceed.