Insurance lawyers got good news about a month earlier, on April 8, 2019. The case they got good news out of was from the Western District of Texas, Austin Division. The style of the opinion was River Of Life Assembly Of God v. Church Mutual Insurance Company and Jim Turner Harris.
The style of this case is still the same but the Court amended its order and the language added to the opinion does a good job of articulating the reasoning in the opinion. This new language and amended order is helpful for insurance lawyers helping insureds in similar situations.
This was a lawsuit about insurance coverage for storm damage. River of Life had sued Church and the adjuster, Harris, for the way the claim was handled. The suit was filed in State Court because Church is diverse and Harris is not. Pursuant to Texas Insurance Code, Section 542A.006(c), Church elected to accept responsibility for Harris and removed the case to Federal Court. The statute requires River of Life to dismiss its claims against Harris after this election to accept responsibility for Harris. So the issue here was whether it was proper to remand the case back to the State Court or to keep it in this Federal Court.
A case may be removed where the Federal Court has original jurisdiction pursuant to 28 U.S.C. Section 1441(a). Part of this is that the amount in controversy exceed $75,000 and that the parties be diverse pursuant to 28 U.S.C. Section 1332(a).
To establish improper joinder of a non-diverse defendant the defendant must establish there is no possibility of establishing a cause of action against the non-diverse defendant. River of Life had argued that the voluntary-involuntary rule applied in this case. This Court said that “it may.” That rule provides that a case non-removable on the initial pleadings could become removable only pursuant to a voluntary act of the plaintiff and that Church’s election to accept responsibility for Harris was undoubtedly not a voluntary act by River of Life. But, because improper joinder is an exception to the voluntary-involuntary rule, the Court must first consider whether Harris was improperly joined.
After discussing whether Harris was improperly joined, the Court ruled that there was at least a reasonable basis to predict that River of Life might recover against Harris at the time of his joinder. Thus, Harris was properly joined even though Church later elected responsibility for him. Since Harris was not improperly joined, the voluntary-involuntary rule applies to Church’s removal. Church’s election of responsibility thus cannot render this case removable because it is not a voluntary act of River of Life. The result of which is that Church failed to meet its burden to establish federal jurisdiction exists and removal was proper.