Hail Claims And Federal Court

As has been stated here many times, insurance companies prefer to litigate cases in Federal Court, whereas, attorneys representing claimants prefer to litigate cases in State Court.  The Northern District, Dallas Division, issued an opinion wherein the fight over which court a case would be heard was the subject of a Motion to Remove and Motion to Remand.  The case is styled, Ministerio International Lirios Del Valle v. State Farm Lloyds, et al.

Plaintiff sued State Farm and the adjuster Galvan.  The purpose of suing Galvan was to keep the case out of Federal Court.  State Farm alleges Galvan was improperly joined to defeat diversity jurisdiction.

The 5th Circuit recently held that, when deciding whether a defendant has been improperly joined, a federal court must apply the federal pleadings standard.  This standard requires the plaintiff to plead enough facts to state a claim to relief that is plausible on its face.  A claim has factual plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.  Where the well pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged — but it has not shown — that the pleader is entitled to relief.  Although the pleading standard Rule 8 announces does not require detailed factual allegations, it demands more than labels and conclusions.  And a formulaic recitation of the elements of a cause of action will not do.

Plaintiff asserts Galvan is liable under Texas Insurance Code, Sections 541.060(a)(1), 541.060(a)(2)(A), 541.060(a)(3), 541.060(a)(4), and 541.060(a)(7).

Galvan cannot be held liable under 541.060(a)(1).  This court has previously held that acts or omissions like this are not within the scope of this section because they do not relate to coverage at issue.  The misrepresentations must be about the details of a policy, not the facts giving rise to a claim for coverage.

Plaintiff cannot recover against Galvan under 541.060(a)(2)(A) because this section prohibits failing to attempt to fairly and promptly settle a claim when it becomes “reasonably clear” that the insurer is liable.  Galvan is an adjuster, and an adjuster cannot be held liable under this section because, as an adjuster, he does not have settlement authority on behalf of the insurer.

Plaintiff cannot be recover against Galvan under 541.060(a)(3) and (4) because an adjuster does not have the authority on behalf of the insurer to affirm or deny coverage of a claim to a policyholder.  Similarly, an adjuster cannot be held liable because an adjuster has no obligation to provide a policyholder a reasonable explanation of the basis in the policy for the insurer’s denial of a claim, or offer of a compromise settlement of a claim.

Plaintiff cannot recover against Galvan under 541.060(a)(7).  The bad behavior that the statute targets is an insurer’s refusal to pay under certain circumstances.  Those who can be held liable are the insurance company or the individual at the insurance company who refuses to pay the claim, not the individual responsible for conducting the investigation.

The motion to remand the case was denied.