Claims Denial – Suing Adjuster

Here is another case illustrating that when suing an insurance company adjuster that it is vital to properly plead the case against the adjuster.  This 2021, opinion is styled, Detavia Wilson v. State Farm Mutual Automobile Insurance Company, Robert Nash, and Yulonda Jones.  The opinion is from the Northern District of Texas, Dallas Division.

Wilson was injured in a hit-and-run vehicle collision.  Wilson recovered from the third-party tortfeasor and sought under-insured motorist coverage from State Farm.

Wilson sent documents to State Farm to evaluate the claim.  The adjusters, Nash and Jones, sent requests for more records to Wilson.  After this request, Wilson sued State Farm, Jones, and Nash for violations of the Texas Insurance Code in State Court.

State Farm removed the case to Federal Court, claiming Jones and Nash were improperly joined and this motion to remand was filed by Wilson.

The Courts cited the law saying, claims against improperly joined defendants must be dismissed, as a federal court cannot have jurisdiction over claims against nondiverse defendants who are improperly joined. Improper joinder occurs when there is either (1) actual fraud in the pleading of jurisdictional facts, or (2) the plaintiff cannot establish a cause of action against the non-diverse party in state court.  The test for improper joinder 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.  This “no reasonable basis” standard is the federal pleading standard. Accordingly, the district court strips out all conclusory statements and looks to the remaining statements to determine if a claim has been adequately pled such that the claim is plausible on its face.  Threadbare recitals of
the elements of a cause of action, supported by mere conclusory statements do not

To resolve the question of improper joinder, the Court should either: (1) engage
in a Rule 12(b)(6)-type analysis or (2) pierce the pleadings and conduct a summary inquiry to determine if there is a possibility of recovery.

At this point Wilson only pleads conclusory allegations against Jones and Nash. And if all allegations are conclusory, then Jones and Nash are improperly
joined and the claims against State Farm may be dismissed.

The Court finds that there is no viable claim against Jones or Nash because Wilson does not satisfy federal pleading standards.  There must be adequate facts pled to make the claims alleged plausible on their face—conclusory statements or recitations of the elements of the cause of action are insufficient.  Wilson’s complaint contains hardly any non-conclusory statements—she frequently
quotes only the Code and elaborates no further. 
For example, consider Wilson’s section 541.060(a)(3) claim.  Wilson alleges that the “Defendants violated section 541.060(a)(3) because Defendants did not provide ‘a reasonable explanation of the basis in the policy, in relation to the facts or applicable law’ for the decision Defendant Nash made.  In fact, Defendants have provided nothing to Plaintiff at this time.” Perhaps this appears to sufficiently plead that the defendants needed to provide something and the defendants provided nothing.  However, the statute, when read in full, requires more:

It is an unfair method of competition or an unfair or deceptive act or
practice in the business of insurance to engage in the following unfair
settlement practices with respect to a claim by an insured or beneficiary
. . . failing to promptly provide to a policyholder a reasonable explanation
of the basis in the policy, in relation to the facts or applicable law, for
the insurer’s denial of a claim or offer of a compromise settlement of a
claim . . . .

The statute requires either a (1) denial of a claim or (2) offer of a compromise
settlement.  Wilson never pleads that the defendants denied her claim and did not
plead any facts indicating an offer of compromise settlement.
In fact, Wilson pleads that the defendants never communicated or committed to a final decision, so Wilson does not state a claim under 542.060(a)(3).

As another example of the inadequacy of Wilson’s pleadings, consider the
alleged violation of section 541.060(a)(7): “Defendants violated § 541.060(a)(7)
because Defendants are ‘refusing to pay a claim without conducting a reasonable
investigation with respect to the claim.’”
This is the extent of relevant facts pled
under this claim.  Wilson pled a paradigmatic threadbare conclusory statement that is facially insufficient under federal pleading standards.
So, Wilson fails to show a possibility of recovery against Jones and Nash for the violation listed under section 541 of the Code.  And any claims arising under section 542 of the Code apply only to insurers, not individual adjusters or employees.

Wilson states no viable claim against Jones or Nash.  The Court finds Jones
and Nash were improperly joined to the case as there is no possibility of recovery
against them as pled in the complaint.The motion to remand was denied and Jones and Nash dismissed from the lawsuit.

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