Removal Win

As is normal, an insurance company will remove a case to federal court anytime they can.  When an insured sues parties besides the insurer, the insurance company claims the joinder of the other party is fraudulent.  To often the insurer wins this removal battle.  Here is a case where the insured won the removal battle.

The case is a 2018 case styled, Ramona L. Smith v. Government Employees Insurance Company and R&M Towing and Recovery.  The case is from the Eastern District of Texas.

Smith’s husband was killed in an accident.  R&M towed Smith’ vehicle.  Smith contends R&M agreed to maintain possession of the vehicle while she pursued a civil action against the manufacturer.  R&M subsequently released the vehicle to GEICO.  She then contacted GEICO and reached an agreement for GEICO to ensure the continued storage and preservation of the vehicle.  GEICO then sold the vehicle for salvage without Smith’s permission and allowed it to be destroyed.

Smith then sued filed suit in State Court against GEICO for breach of contract and R&M for promissory estoppel.  GEICO removed the case to Federal Court based on improper joinder and Smith filed a motion to remand.

The burden of persuasion on those who claim fraudulent joinder is a heavy one.  R&M is a nondiverse party so GEICO must demonstrate that there is no reasonable basis for the court to predict the plaintiff might be able to recover against the nondiverse defendant.

The courts look at a fraudulent joinder under a Rule 12(b)(6) analysis.  A plaintiff must plead enough facts to state a claim of relief that is plausible on its face.

As for the promissory estoppel allegation, Smith must be able to prove: 1) a promise; 2) foreseeability of reliance thereon by the promisor; and 3) substantial reliance by the promisee to his detriment.

The court then reviewed the facts in the case and ruled that Smith had met her burden and remanded the case back to the State Court.