Insurance Claim Denial And Suing The Adjuster

Insurance attorneys get another favorable ruling in a case.  The case is from the Western District of Texas, Austin Division.  It is styled, River of Life Assembly of God v. Church Mutual Insurance Company and Jim Turner Harris.

River of Life suffered storm related damage and made a claim against Church.  Church assigned adjuster Harris to the claim.  When the claim was denied, River of Life sued Church and Harris.

Church elected to take responsibility for Harris arguing that Harris was improperly joined and removed the case to Federal Court citing Texas Insurance Code, Section 542A.006(c) which allowed them to do so since having only Church as a defendant, diversity jurisdiction would not be defeated.

River of Life argues that the voluntary-involuntary rule applies to this case, which provides that a case non-removable on the initial pleadings could become removable only pursuant to a voluntary act of the plaintiff.   While it is true that Church’s election was not a voluntary act by River of Life, improper joinder is an exception to the voluntary-involuntary rule.

Church’s argument that Harris is improperly joined based solely on its Section 542A.006 election misconstrues the doctrine of improper joinder.  The possibility of recovery inquiry is a means to discerning whether the joinder of a non-diverse defendant was improper, not an end in itself.  The focus must remain on whether the non-diverse party was properly joined when joined.

The focus on whether a party would recover against a non-diverse defendant at the time of joinder is consistent with the 5th Circuit’s improper joinder doctrine.

The Court cannot deny remand based on Church’s election to invoke Section 542A.006 solely.  River of Life joined Harris as a defendant when it named him in its original petition in October 2018.  Church did not elect responsibility for Harris for more than another two months.  Church’s election or responsibility therefore did not preclude recovery against Harris until months after his joinder.  If Harris is improperly joined, it must be for a reason that predated his joinder.

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