Alleging Facts Sufficiently Against An Adjuster

As has been discussed before, insurance companies would rather litigate cases in Federal Court instead of State Court.  The reasons are numerous.

One way to stay out of Federal Court is to defeat diversity jurisdiction under 28 U.S.C. Section 1332(a).  This is most commonly done by suing a local adjuster for the wrongs the adjuster has committed when the insurance company is an insurance company that maintains its main head-quarters out of state.

The Southern District of Texas, Houston Division, issued an opinion on October 30, 2018, wherein the Court sue sponte remanded a case back to the State Court after the insurer had removed it to Federal Court.  The case is styled, Joan Elaine Murray v. Allstate Vehicle and Property Insurance Company and Brandon Joseph Chisolm.

Murray had sued Allstate and Chisolm in State Court, alleging violations of the Texas Insurance Code and DTPA violations.  Allstate removed the case to Federal Court alleging that Chisolm, the adjuster had been fraudulently joined in an effort to defeat diversity jurisdiction.

Allstate moved for partial dismissal of the claims against Chisolm, alleging Murray had failed to properly state a claim against Chisolm under Rules 12(b)(6) and 9(b) of the Federal Rules of Civil Procedure.

Murray alleged in her State Court petition that Chisolm inspected the property and estimated the damages at $4,467.71, below the deductible.  Chisolm found only 47 damaged items, while the third-party adjuster’s evaluation was $36,645.98.  Murray alleged that Chisolm had an incentive to undervalue damages to maintain employment, and that he did so.  Murray alleged that Chisolm knew of the deductible and misrepresented the property damage, stating that it was from wear and tear or a previous claim, in order to avoid Allstate having to pay.

Murry did not move for remand, but a Federal Court must ensure it subject matter jurisdiction.

Murray’s complaint closely tracks the language of the Texas Insurance Code and the DTPA.  But it also alleges specific facts that are similar to those courts have found sufficient to state a plausible claim against the adjuster.   In these cases, as here, the allegations that the adjuster estimated damages in an amount substantially lower than the third-party adjuster; conducted an inadequate inspection; and knowingly or recklessly underestimated the losses in order to reach a result below the deductible, were sufficient.

This Court denied Allstate’s motion to dismiss and sue sponte remanded the case back to the State Court.