Insurance lawyers who have cases that could potentially end up in Federal Court need to know and understand Federal pleading standards. This is illustrated in a 2020, opinion from the Eastern District, Sherman Division. The case is styled, Angelina’s Restaurant v. Allied Insurance Company of America and Mary Keefer.
Angelina’s suffered wind and hail damage and eventually made a claim against their insurance company, Allied. Allied assigned adjuster Keefer to handle the claim. An impasse resulted from the claim and Angelina’s filed suit in State Court against Allied and Keefer for their handling of the claim. Allied and Keefer had the case removed to Federal Court alleging Keefer had been improperly joined to defeat diversity jurisdiction. Angelina’s filed a Motion to Remand.
A party seeking removal based on improper joinder bears a heavy burden of proving that the joinder of the in-state party was improper. The removing party must prove that there is absolutely no possibility that the plaintiff will be able to establish a cause of action against the in-state defendant in state court, or that there has been outright fraud in the plaintiff’s pleading of jurisdictional facts. In deciding whether a party was improperly joined, we resolve all contested factual issues and ambiguities of state law in favor of the plaintiff. Any doubt about the propriety of removal must be resolved in favor of remand.
To show improper joinder, the defendant must show 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. To determine whether there was improper joinder the 5th Circuit has stated:
The [C]ourt may conduct a Rule 12(b)(6)-type analysis, looking initially at the allegations of the complaint to determine whether the complaint states a claim under state law against the in-state defendant. Ordinarily, if a plaintiff can survive a Rule 12(b)(6) challenge, there is no improper joinder. That said, there are cases, hopefully few in number, in which a plaintiff has stated a claim, but has misstated or omitted discrete facts that would determine the propriety of joinder. In such cases, the district court may, in its discretion, pierce the pleadings and conduct a summary inquiry. . . . [W]e caution that a summary inquiry is appropriate only to identify the presence of discrete and undisputed facts that would preclude the plaintiff’s recovery against the in-state defendant.
The question is whether a plaintiff has any possibility of recovery against the party whose joinder is questioned.
The Court conducted a Rule 12(b)(6) analysis of Angelina’s claims against Keefer to determine whether Keefer was improperly joined.
Federal Rule of Civil Procedure 8(a)(2), requires that each claim in a complaint include a “short and plain statement . . . showing that the pleader is entitled to relief.” Each claim must include enough factual allegations to raise a right to relief above the speculative level.
After consideration of Angelina’s claims against Keefer, the Court is unconvinced that they survive scrutiny under Rule 12(b)(6). Angelina’s asserts a number of claims under the Texas Insurance Code. To support those claims, Angelina’s pleads, among other things, that Keefer inspected Angelina’s property; ignored covered damages; performed a cursory inspection; failed to properly adjust and estimate the claim; failed to timely and properly report to Allied to address all the covered damages; made statements misrepresenting the policy terms; misrepresented material facts related to the coverage at issue; and prepared a report that failed to include all of the damages that she noted during the inspection of the property, which resulted in an undervaluation of the damages the property sustained. But these are merely boilerplate legal allegations without factual matter supporting them. Though Angelina’s asserts correctly that an insurance adjuster may be held individually liable under the Texas Insurance Code, it did not plead sufficient factual matter in its Original Petition to support a claim against Keefer that can withstand scrutiny under Rule 12(b)(6).
Thus, the Court finds that Angelina’s has failed to allege sufficient factual matter to state a claim against Keefer that is plausible on its face. Because none of Angelina’s claims against Keefer can survive a Rule 12(b)(6) challenge, Keefer was improperly joined to this action. This means that the only real parties in interest are completely diverse, and the Court therefore has diversity jurisdiction over this civil action.