Insurance Lawyers Have To Sue The Adjuster Correctly

A 2017, opinion styled, Carrillo Funeral Directors, Inc. v. Ohio Security Insurance Company, et al, is another example of incorrect pleadings against an adjuster.  The case is from the Northern District, Dallas Division.

Carrillo suffered hail damage and made a claim against its insurer Ohio.  There was an under payment of the claim and Carrillo sued Ohio and the adjuster John Horvath for violations of the Texas Insurance Code, in State District Court.  Ohio timely removed the case to Federal Court asserting that Horvath was improperly joined in the lawsuit in an effort by Carrillo to defeat diversity jurisdiction.

28 U.S.C. section 1441(a) permits the removal of any civil action brought in a State court of which the district courts of the United States have original jurisdiction.  But only if the action could have been originally filed in federal court.  However, the removal statute must be strictly construed because removal jurisdiction raises significant federalism concerns.  As a result, any doubt as to the propriety of removal should be resolved in favor of remand.

To exercise removal jurisdiction, there must be complete diversity of citizenship among the parties.  Horvath being in the lawsuit defeats diversity.

The reasonable basis test for improper joinder is essentially a Rule 12(b)(6) type analysis, whereby the court looks at the allegations of the complaint to determine whether the complaint states a claim under state law against the in-state defendant.

Plaintiff must state enough facts to state a claim to relief that is plausible on its face.  The factual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true.

In this case, Carrillo alleges that Horvath violated the Texas Insurance Code by “failing to attempt in good faith to effectuate a prompt, fair, and equitable settlement of … a claim with respect to which the insurer’s liability has become reasonably clear.”  And, “failing to reasonably explain the basis … for the insurer’s denial of a claim.”  And, “failing within a reasonable time to affirm or deny coverage or submit a proper reservation of rights.”  And, “refusing to pay a claim without conducting a reasonable investigation.”

Carrillo’s allegations against Horvath are strikingly similar to allegations made in other cases where courts have concluded that the plaintiff failed to state a claim.

Carrillo has made allegations but has not pled sufficient facts to support the allegations.

Carrillo’s motion to remand was denied.