Zimmerman v. Travelers Lloyds of Tex. Ins. Co.

RONALD ZIMMERMAN, Plaintiff, v. TRAVELERS LLOYDS OF TEXAS INSURANCE COMPANY AND COREY KRONK, Defendants.

Civil Action No. 5:15-CV-325

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TEXAS SAN ANTONIO DIVISION

June 30, 2015

ORDER

On this date the Court considered Plaintiff's motion to remand and for leave to amend the complaint (docket no. 2). For the following reasons, the Court DENIES the motion to remand and the motion to amend.

I. Background

Plaintiff Ronald Zimmerman owns a residence located at 111 Routt Street, San Antonio, Bexar County, Texas. (Docket no. 1-4 at 3). Defendant Travelers Lloyds of Texas Insurance Company ("Travelers") is an insurance company that employs Defendant Corey Kronk as a claims adjuster. (Docket no. 2 at 1). Zimmerman maintains insurance on his residence with Travelers. (Docket no. 1-4 at 4). Zimmerman alleges the roofs of his house and separate cabana were damaged by hail. (Id. at 3). Zimmerman made a claim with Travelers Insurance for the loss on or about March 31, 2013. (Id.) Kronk was the claims adjuster assigned to handle Plaintiff's claim. "EFI Global (a forensic engineering firm) was hired by [Travelers] to investigate the roof damage, ultimately stating that they did not observe hail damage to the cabana roof." (Id.) Kronk adjusted the loss, and Travelers paid for the damage to the roof of the main home, but denied the cabana portion of the claim. (Id.)

Zimmerman alleges that a tree branch fell on a vent on the roof of the cabana, allowing water to enter and cause more damage to the cabana after Kronk and Travelers denied his initial claim on the cabana. (Id. at 3-4). Kronk re-inspected the cabana. (Id. at 4). Zimmerman alleges Kronk initially acknowledged the damage and agreed to cover the repair. (Id.) Zimmerman alleges Kronk told him that Kronk's supervisor instructed him to do so. (Id.)

Zimmerman filed a state court petition in the 407th Judicial District Court in Bexar County, Texas, on March 19, 2015. (Docket no. 1 at 1). Defendants removed to federal court on April 23, 2015, based on diversity jurisdiction. (Id. at 2). Zimmerman filed this opposed motion to remand to state court and an incomplete motion for leave to amend his complaint on May 22, 2015.¹ (Docket no. 2 at 1). Defendants responded on June 4, 2015. (Docket no. 3 at 14). Zimmerman filed again for leave to amend, this time attaching the proposed amended complaint, on June 9, 2015. (Docket no. 4).

II. Legal Standard

A party may remove an action from state court to federal court if the action is one over which the federal court possesses subject matter jurisdiction. See 28 U.S.C. § 1441(a). On a motion to remand, the court must consider whether removal was proper. Removal is proper in any case in which the federal court would have had original jurisdiction. Id. A federal court originally has subject matter jurisdiction over controversies involving disputes between citizens of different states where the amount in controversy exceeds $75,000. 28 U.S.C. § 1332. Citizenship of the parties and amount in controversy are based on the facts as they existed at thetime of removal. Louisiana v. Am. Nat. Prop. Cas. Co., 746 F.3d 633, 636 (5th Cir. 2014). The court considers only the allegations in the state court petition; any amended complaints filed after removal are not considered. Cavallini, 44 F.3d at 264 (citing Pullman Co. v. Jenkins, 305 U.S. 534, 537 (1939) ("The second amended complaint should not have been considered in determining the right to remove . . . [removal] was to be determined according to the plaintiffs' pleading at the time of the petition for removal.")).

The removing party bears the burden of showing that federal jurisdiction exists and that removal was proper. De Aguilar v. Boeing Co., 47 F.3d 1404, 1408 (5th Cir. 1995). The removal statute is strictly construed in favor of remand. Vantage Drilling Co. v. Hsin-Chi Su, 741 F.3d 535, 537 (5th Cir. 2014) (citing Acuna v. Brown & Root, Inc., 200 F.3d 335, 339 (5th Cir. 2000)).

III. Analysis - Motion to Remand

A court only has diversity jurisdiction when the parties are completely diverse, i.e. when no plaintiff is a citizen of the same state as any defendant. Wisconsin Dep't of Corr. v. Schacht, 524 U.S. 381, 388 (1998). Here, Zimmerman and Defendant Kronk are both citizens of Texas. Travelers, being a citizen of Connecticut for diversity purposes, is diverse from Plaintiff. The amount in controversy exceeds $75,000. (Docket no. 3 at 5). Defendants argue that Kronk is improperly joined. If Kronk is stricken from the suit, complete diversity exists and removal was proper. Therefore, the Court must determine if Kronk was improperly joined.

A removing party can establish federal jurisdiction based on 28 U.S.C. § 1332 by demonstrating that an in-state defendant has been "improperly joined." Smallwood v. Illinois Cent. R. Co., 385 F.3d 568, 573 (5th Cir. 2004). To establish improper joinder, a removing party must show a plaintiff cannot "establish a cause of action against the non-diverse party in statecourt." Id. (quoting Travis v. Irby, 326 F.3d 644, 646-47 (5th Cir. 2003)). A plaintiff cannot establish a cause of action against an in-state defendant if there is "no reasonable basis for the district court to predict that the plaintiff might be able to recover" on the claims asserted against an in-state defendant. Smallwood, 385 F.3d at 573.

The improper joinder analysis closely resembles a Rule 12(b)(6) analysis. Id. However, unlike in a traditional Rule 12(b)(6) analysis, the Court has discretion to review evidence on whether plaintiff has a viable cause of action against the non-diverse defendant under state law. Id. (citing Badon v. RJR Nabisco, Inc., 236 F.3d 282, 389 n. 10. (5th Cir. 2000)). "The burden is on the removing party; and the burden of demonstrating improper joinder is a heavy one." Cuevas v. BAC Home Loans Servicing, LP, 648 F.3d 242, 249 (5th Cir. 2011) (citing Griggs v. State Farm Lloyds, 181 F.3d 694, 699 (5th Cir. 1999)). As a preliminary matter, pursuant to Cavallini and Pullman, the Court only considers Zimmerman's state court petition on this motion for remand because the amended pleading (docket no. 4-1) was not on file before removal.

To prevent remand, Defendants must meet their heavy burden showing Zimmerman has no reasonable basis for any of his claims against Kronk. Zimmerman asserts eight causes of action in his state court petition: (1) breach of contract, (2) violations of section 17.50(a) of the Deceptive Trade Practices - Consumer Protection Act, (3) violations of section 17.46(b) of the DTPA, (4) violations of Chapter 541 of the Texas Insurance Code, (5) violations of Chapter 542 of the TIC, (6) breach of duty of good faith and fair dealing, (7) negligence and gross negligence, and (8) negligent misrepresentation. (Docket no. 1-4 at 4-11). Of these causes of action, Zimmerman only clearly asserts the breach of duty of good faith and fair dealing, and the negligence and gross negligence claims against Kronk.

A. Breach of Duty of Good Faith and Fair Dealing

Zimmerman's claim for breach of duty of good faith and fair dealing states, in relevant part:

. . . Plaintiff would show that a special relationship exists between Defendants and Plaintiff such that Defendant owed its insured a duty to deal fairly and in good faith. Plaintiff would further show that Defendants breached this duty owed to Plaintiff and as such, he is entitled to damages.

(Doc. 1-4, 9). Despite the inconsistent use of plural and singular constructions in the petition, the Court construes this as a claim for breach of duty of good faith and fair dealing against both Travelers and Kronk. (See docket no. 3 at 7; Docket no. 1-4 at 9-10) (both Zimmerman and Travelers agree that this cause of action has been stated against Kronk).

In Texas, a duty of good faith and fair dealing does not exist in the insurance context without a contract creating a special relationship between the parties. Natividad v. Alexsis, Inc., 875 S.W.2d 675, 678 (Tex. 1994) ("[I]n an insurance context, the duty of good faith and fair dealing arises only when there is a contract giving rise to a 'special relationship.'" And "without such a contract there would be no special relationship and hence, no duty of good faith and fair dealing." (emphasis original)); Cavallini v. State Farm Mut. Auto Ins. Co., 44 F.3d 256, 262 (5th Cir. 1995) (under Texas Law, "the existence of a contract, giving rise to a special relationship, is a necessary element of the duty of good faith and fair dealing." (internal quotations omitted)). Insurance adjusters typically do not sign any contract with the insured; therefore, adjusters do not typically owe a duty of good faith and fair dealing to the insured. Great W. Inn v. Certain Underwriters at Lloyds of London, No. CIV.A. H-11-320, 2011 WL 1157620, at *5 (S.D. Tex. Mar. 24, 2011) ("Under Texas law, an independent insurance adjuster owes no duty of good faith and fair dealing to the insured."). Thus, Texas generally does not recognize a cause of action for breach of good faith and fair dealing against insurance adjusters. Crocker v. Am. Nat'l Gen. Ins.Co., 211 S.W.3d 928, 937 (Tex.App.—Dallas 2007, no pet.); see also Natividad, 875 S.W.2d at 678.

Here, there are neither allegations nor indications in the record that Kronk signed the insurance contract between Zimmerman and Travelers. (See docket no. 2-2 at 2-3, 8-9). Zimmerman does not allege he and Kronk are both signatories to any contract. No privity of contract exists between Zimmerman and Kronk, so there is no special relationship between them and no duty owed by Kronk. See Natividad, 875 S.W.2d at 678. Therefore, Zimmerman has no reasonable basis for a claim for breach of duty of good faith and fair dealing against Kronk. Id.; see also Great W. Inn, 2011 WL 1157620 at *5.

B. Negligence and Gross Negligence

Zimmerman's claim for negligence and gross negligence states, in relevant part:

. . . D

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