Dallas Fort Worth Insurance Lawyer Blog
Here is a case from the Northern District of Texas, Dallas Division, that discusses the voluntary / involuntary rule related to joining adjuster in a lawsuit. This 2020, opinion is styled, Jason Bowers and Casi Bowers v. Chubb Lloyd’s Insurance Company of Texas.
The Bowers who alleged to have suffered hail and wind damage sued their insurer, Chubb, and Chubb’s adjuster Bernard Dang, for denial of the claim.
On July 28, 2019 the Bowers provided the defendants with the pre-suit notice required under Texas Insurance Code, Section 542A.003. Then on October 22, 2019, filed suit in State Court against Chubb and Dang.
On March 17, 2020, Chubb filed a post-suit election to accept responsibility for whatever liability Dang might have to the Bowers. On April 22, 2020, the defendants filed a motion to dismiss all of the Bowers’ claims against Dang pursuant to Section 542A.006. On May 28, 2020, the State Court dismissed the Bowers’ claim against Dang with prejudice pursuant to Section 542A.006, leaving Chubb as the sole defendant in the case.
Chubb then removed this case to Federal Court on June 24, 2020, followed by the Bowers’ motion to remand being filed on July 24, 2020.
By their motion the Bowers assert that, because Dang is a citizen of Texas and was properly joined as a defendant at the time that this action was filed in State Court, Chubb is precluded from removing this case to Federal Court under 28 U.S.C., Section 1441(b)(2).
Here, it is undisputed that Dang is a citizen of Texas and that the sole basis for removal is diversity of citizenship. Chubb asserts, however, that removal was proper in this case because Dang’s citizenship should be ignored under Fifth Circuit precedent.
Section 1441 allows a defendant to remove a State Court action to Federal Court only if the action could have originally been filed in Federal Court.
The Fifth Circuit has ruled that removability is subject to the voluntary-involuntary rule: ‘[A]n action nonremovable when commenced may become removable thereafter only by the voluntary act of the plaintiff.” Section 1441 allows a defendant to remove a State Court action to Federal Court only if the action could have originally been filed in Federal Court. Generally, if a case becomes removable by any means other than the voluntary act of the plaintiff, the case must be remanded upon removal. The Fifth Circuit, however, has “promulgated a narrow but clear exception to the voluntary-involuntary rule,” “When a state court order creates diversity jurisdiction and that order can not be reversed on appeal, . . . the voluntary-involuntary rule [is] inapplicable.”
The narrow issue before the court is whether the State Court’s order dismissing Dang from this suit with prejudice pursuant to section 542A.006 is reversible on appeal, thus rendering the exception to the voluntary-involuntary rule inapplicable. Because the Bowers’ did “not oppose dismissal of . . .Dang pursuant to the Texas Insurance Code” before the state court, and raise no argument as to the appealability of Dang’s dismissal before this court, the matter is open and shut: the State Court’s order dismissing Dang created complete diversity among the parties and cannot be reversed on appeal, and the Hoyt exception to the voluntary-involuntary rule applies.
This case articulates the reasoning behind the decision and is a good read for insurance attorneys who may find themselves in a similar situation.
The Motion to Remand was denied.