Federal Court And Suing The Adjuster

Any insurance lawyer who has filed very many lawsuits knows that one key to helping their client have a good result is to be able to keep their case out of Federal Court.  One way of doing this is by properly suing the claim adjuster.  One successful way of doing this is illustrated in a Northern District of Texas, Amarillo Division opinion.  The opinion is styled, Sparky’s Storage Solutions Ltd. v. Lexington Insurance Company, et al.

Sparky’ sued Lexington and their adjuster, Tim Fitzgerald for violations of the Texas Deceptive Trade Practices Act (DTPA) and Insurance Code violations.  The suit was filed in State District Court.  Lexington and Fitzgerald had the case removed to Federal Court due to the amount in controversy and alleging that Fitzgerald was improperly joined in the lawsuit in order to prevent diversity of citizenship which is required pursuant to 28 U.S.C. 1332(a).

Sparky’s filed a motion to remand the case back to the State District Court asserting that the joinder of Fitzgerald was proper.

Here, Sparky’s petition contains specific, factual allegations against Fitzgerald.  Sparky’s alleges that Fitzgerald conducted a substandard inspection of the property, prepared an estimate that failed to include all storm related damages, and grossly undervalued Sparky’s damages.  Further, Sparky’s alleges that Lexington failed to thoroughly review and properly supervise the claims adjustment process, approved an improper adjustment and inadequate settlement, and failed to note clear and obvious damage to Sparky’s property.  This conduct, Sparky’s contends, resulted in a wrongful conclusion that Sparky’s claim should not be timely and adequately paid.

Resolving all factual disputes and ambiguities in Sparky’s favor, the Court concludes that Sparky’s factual allegations in the petition state a plausible claim against the non-diverse Fitzgerald.  The allegations do have a basis in law and fact:  a reasonable person could believe the facts and allegations, if true, would entitle Sparky’s to relief under the Texas Insurance Code.  Accordingly, Sparky’s petition provides the Court a reasonable basis to predict that Sparky’s might be able to recover against Fitzgerald.

While the allegations do not indisputably establish that any Defendant will be liable under Texas law for one or more of the alleged cause so action, this is not the test.  Rather, the removing party carries the heavy burden of showing that Sparky’s has no reasonable possibility of recovery against Fitzgerald.  Lexington failed to meet that heavy burden.  For all of the above stated reasons, the Court concludes that the removing party has not satisfied its heavy burden of establishing improper joinder under the specific facts of this lawsuit.