Suing The Adjuster Has To Be Done Correctly

The Western District, San Antonio Division issued an opinion in the case styled, McClelland v. Chubb Lloyd’s Insurance Company of Texas and Robert Pritchard.

The McClellands suffered a loss to their home and Chubb sent adjuster Pritchard to evaluate and adjust the loss.  The McClellands did not like the result and sued Chubb and Pritchard in State Court.  Chubb and Pritchard had the case removed to Federal Court.

Pursuant to 28 U.S.C., Section 1441, defendants may remove to the appropriate district court any action in which the district courts have original jurisdiction.  Under Section 1332, district courts have original jurisdiction in diversity actions between citizens of different states that involve an amount in controversy exceeding $75,000.  District courts are prohibited from exercising jurisdiction when a party has been improperly or collusively joined to manufacture federal diversity jurisdiction.  Improper joinder may be established by (1) actual fraud in the pleading of jurisdictional facts, or (2) inability of the plaintiff to establish a cause of action against the non-diverse party in state court.

Under the second prong, which is at issue in this case, the test is whether the defendant has demonstrated that there is no possibility of recovery by the plaintiff against an in-state defendant, which stated differently means 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.  To make this determination, the court may conduct a Rule 12(b)(6) type analysis, looking initially at the allegations of the compliant to determine whether the complaint states a claim under state law against the in-state defendant.  The federal standard, not the applicable state pleading standard, applies when conducting this analysis.  The federal pleading standard dictates to pass muster under Rule 12(b)(6), a complaint must have contained enough facts to state a claim to relief that is plausible on its face.  Adjusters may be held individually liable for violations of the Texas Insurance Code but they have to have committed some act that is prohibited by the section, not just be connected to an insurance company’s denial of coverage.  When a court determines that a non-diverse party has been improperly joined to defeat diversity, that party must be dismissed without prejudice.

This court then applied the pleadings in this case to the law stated above and made it’s ruling.  The case does a good job of out-lining the requirements of a pleading that wants to maintain a cause of action against an adjuster.