Adjuster Actions That Make Them Liable

Insurance attorneys in Grand Prairie know that making the adjuster part of a lawsuit increase the chances that the case will not removed to Federal Court. The United States District Court, McAllen Division issued and opinion in January 2014, wherein the Court remanded a case the insurance company had removed to Federal Court. The style of the case is Rocha v. Geovera Specialty Insurance Company, et al.
Rochas had filed in State Court making specific allegations against the adjuster, Alex Sanchez. Rochas file a motion to remand the case to State Court.
Federal Courts do not have subject matter jurisdiction under 28 U.S.C. ยง 1332 unless the parties are completely diverse and the amount in controversy exceeds $75,000. In light of the conjunctive requirements of the statute, failure to satisfy the diversity requirement is fatal to subject matter jurisdiction and, therefore, to a successful removal.
When the Court is considering whether a party was improperly joined, the court may conduct a Rule 12(b) (6)-type analysis, looking initially at the allegations of the complaint to determine whether the complaint states a claim under state law against the in-state defendant. The Court determines removal jurisdiction on the basis of claims in the state court complaint as it exists at the time of removal.
In the petition filed in the State Court, Rocha alleged the adjusters assigned to Rocha’s claim were improperly trained and failed to perform a thorough investigation of Rocha’s claim. Sanchez conducted a substandard inspection of Rocha’s property. For example, Sanchez spent a mere forty minutes inspecting Rocha’s entire property for hail storm and/or windstorm damages, including the time it took to get on the roof to scope damages. Furthermore, Sanchez was uncooperative and was quick to discount any damages Rocha pointed out to him. Specifically, upon noting that the home’s ceilings had sustained water damage, Sanchez stated that the damage was caused by Rocha taking hot showers. The inadequacy of Sanchez’ inspection is further evidenced by his report dated May 6, 2013, which failed to include all of Rocha’s hail storm and/or windstorm damages noted upon inspection. Moreover, Sanchez both underestimated and undervalued the cost of materials required for necessary repairs, incorrectly applied material sales tax, and failed to include contractor’s overhead and profit. Ultimately, Sanchez’ estimate did not allow adequate funds to cover the cost of repairs to all the damages sustained. Sanchez’ inadequate investigation was relied upon by GeoVera in this action and resulted in Rocha’s claim being undervalued and underpaid.
As a result of Sanchezs’ unreasonable investigation of the claim, including not providing full coverage for the damages sustained by Rocha, as well as under-scoping the damages during their investigation and thus denying adequate and sufficient payment to Rocha to repair her home, Rocha’s claim was improperly adjusted. The mishandling of Rocha’s claim has also caused a delay in her ability to fully repair her home, which was resulted in additional damages.
In light of the above allegations, the petition appears to sufficiently allege that Sanchez violated Section 541.060 of the Texas Insurance Code, which states in relevant part:
(a) It is an unfair method of competition or an unfair or deceptive act or practice in the business of insurance to engage in the following unfair settlement practices with respect to a claim by an insured or beneficiary: … (1) misrepresenting to a claimant a material fact or policy provision relating to coverage at issue; … (7) refusing to pay a claim without conducting a reasonable investigation with respect to the claim; ….
In light of the above, the Court found that Sanchez was properly joined. Since this finding vitiates the jurisdictionally-requisite diversity, the Court did not consider further arguments and the case was successfully remanded.