Suing The Adjusting Company

Here is another of the cases where the insured is suing the insurance adjuster and the insurance company is arguing the new law found in the Texas Insurance Code, Chapter 542A governs the case.  The case is from the Southern District of Texas, Houston Division.  It is styled, D.U.R. Properties LLC v. Amrisc LLC et al.

This case arises out of a storm damage claim.  DUR had insurance coverage with Certain Underwrites at Lloyd’s London (Lloyd’s).  DUR made a claim with Lloyd’s.  Amrisc adjusted the claim for Lloyd’s and DUR alleges that Amrisc did a poor job adjusting the claim.  DUR sued Lloyd’s and Amrisc in State Court and Lloyd’s had the case removed to Federeal Court based on the assertion that Amrisc, a Texas resident, was improperly joined and thus, diversity jurisdiction exists between Lloyd’s and DUR.

Fraudulent joinder – a heavy burden – requires the moving party to show either: (1) actual fraud in the jurisdictional pleadings of the facts; or (2) the plaintiff is unable to establish a claim against the non-diverse party in state court.  Lloyd’s does not assert actual fraud and instead agrees that DUR and Amrisc are Texas citizens.  Thus, the Court turns to whether Lloyd’s can show DUR is unable to establish a claim against Amrisc in State Court.

Lloyd’s contends DUR cannot establish a claim against Amrisc because Lloyd’s elected to accept liability for Amrisc’s conduct under Texas Insurance Code, Section 542A.006(a).  This election must occur before the lawsuit is filed in State Court to allow removal to Federal Court.

Before this lawsuit was filed, Lloyd’s communicated to DUR the “Notice of Election” which reads:

Underwriters have elected to accept whatever liability Arnold Nerio of VeriClaim, Inc. (now Sedgewick) may have with respect to any acts or omissions related to his adjustment of the Claim, as well as other adjusters or third-party administrators involved in the adjustment of the Claim.

The parties dispute whether Amrisc is one of the named “other adjusters or third-party-administrators” under the Notice of Election.  DUR states it never alleged Amrisc was an adjuster or third-party administrator in the petition filed in State Court.  DUR further states Lloyd’s, despite specifically identifying Amrisc by name in the same document containing the Notice of Election – failed to identify Amrisc by name in the Notice of Election itself.  Lloyd’s does not dispute the Notice of Election fails to identify Amrisc by name.

Construing all allegations in favor of DUR while resolving doubts against removal, the Court finds that Lloyd’s fails to demonstrate DUR is unable to establish a claim against Amrisc in State Court.  Thus, Lloyd’s fails to demonstrate Amrisc was fraudulently joined.  The case is remanded.

A small victory for the insured.

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