Opinion
1:22-CV-890-JRN
07-27-2023
CLIFTON JONES, Plaintiff, v. HIGGINBOTHAM INSURANCE AGENCY, INC., ALLIED INSURANCE COMPANY OF AMERICA, NATIONWIDE MUTUAL INSURANCE COMPANY, and ALLIANCE INSURANCE SERVICES, LLC, Defendants.
THE HONORABLE JAMES NOWLIN, UNITED STATES DISTRICT JUDGE:
REPORT AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE
MARK LANE, UNITED STATES MAGISTRATE JUDGE
Before the court is Plaintiff's Opposed Motion to Remand Based Upon a Lack of Subject Matter Jurisdiction (Dkt. #11). Having considered the motion, responsive briefing, and the applicable law, the undersigned submits the following Report and Recommendation to the District Court.
The Motion was referred to the undersigned by then-presiding United States District Judge Lee Yeakel for a Report and Recommendation as to the merits pursuant to 28 U.S.C. § 636(b)(1)(B), Rule 72 of the Federal Rules of Civil Procedure, and Rule 1(d) of Appendix C of the Local Rules of the United States District Court for the Western District of Texas. Dkt. #15.
I. Background
Plaintiff Clifton Jones moves to remand this case back to the Texas state court from which Defendant Allied Insurance Company of America (“Allied”) removed it. Jones brought this action in state court against Defendants Higginbotham Insurance Agency (“Higginbotham”), Allied, Nationwide Mutual Insurance Company (“Nationwide”), and Alliance Insurance Services (“Alliance”) concerning an insurance claim for damages to Jones's property. Dkt. #1-1 (Plaintiff's Original Petition) at 3-4. Jones owns a property in Burkburnett, Texas (the “Property”). Dkt. #11-1 at ¶17. Jones purchased a “Premier Businessowners Policy” (“the Policy”) in 2020 to insure the Property. Id. at ¶14. Higginbotham sold Jones the Policy, which was issued by Allied and Nationwide. Id. at ¶¶15-16. Jones alleges that a winter storm damaged the Property and that he submitted a claim for the damage. Id. at ¶¶21-24. Specifically, Jones contends that the Policy covered freeze-related damage, that various Defendants represented that the Policy covered freeze-related damage, and that Allied and Nationwide have not honored Jones's claim for freeze-related damage. See id. at ¶¶14-16, 21-24. Allied and Nationwide have not paid Jones's insurance claim. Id. at ¶24; Dkt. #12 at ¶1. Allied asserts that Jones's claim was denied based on the Policy's vacancy provision. Dkt. #12 at ¶27. Jones states that the Property was never vacant for sixty consecutive days. Dkt. #11-1 at ¶20. Jones filed suit to recover for his loss and damages. Id. at 11.
Jones originally filed suit in the 421st Judicial District Court, Caldwell County, Texas against all Defendants for bad faith, violations of the Texas Insurance Code, violations of the Texas Deceptive Trade Practices Act, breach of contract, (in the alternative) negligent misrepresentation, as well as negligence and gross negligence. Dkt. #1-1 at 6-9.
On September 2, 2022, Allied, alleging improper joinder, removed the action based on diversity jurisdiction. Dkt. #1 (Notice of Removal) at ¶ 1. Jones moved to remand on October 28, 2022. Dkt. #11. Allied is opposed. Dkt. #12.
“[A] removing party need not obtain the consent of a co-defendant that the removing party contends is improperly joined. Rico v. Flores, 481 F.3d 234, 239 (5th Cir. 2007).
II. Applicable Law
A case may be removed to federal court if the action is one over which the federal court possesses subject matter jurisdiction. 28 U.S.C. § 1441(a). Federal courts are courts of limited jurisdiction and only possess power that is authorized by the Constitution and statute. Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377 (1994). A federal court “must presume that a suit lies outside its limited jurisdiction, and the burden of establishing federal jurisdiction rests on the party seeking federal forum.” Howery v. Allstate Ins. Co., 276 F.3d 912, 916 (5th Cir. 2001). In an action that has been removed to federal court, a district court is required to remand the case to state court if, at any time before final judgment, it determines that it lacks subject matter jurisdiction. 28 U.S.C. § 1447(c); see also Grupo Dataflux v. Atlas Global Grp., L.P., 541 U.S. 567, 571 (2004); In re 1994 Exxon Chem. Fire, 558 F.3d 378, 392 (5th Cir. 2009).
Generally, a federal court has jurisdiction over a case in two circumstances. The first, known as federal question jurisdiction, exists if a case “arises under the Constitution, treaties or laws of the United States.” 28 U.S.C. § 1331; see Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 808-09 (1988). The second circumstance in which a federal court has jurisdiction is frequently termed diversity jurisdiction. See generally 28 U.S.C. § 1332.
District courts have diversity jurisdiction over civil actions that are between citizens of different states and involve an amount in controversy of more than $75,000, exclusive of interest and costs. 28 U.S.C. § 1332(a). Diversity jurisdiction “requires complete diversity-if any plaintiff is a citizen of the same State as any defendant, then diversity jurisdiction does not exist.” Flagg v. Stryker Corp., 819 F.3d 132, 136 (5th Cir. 2016).
To remove a case based on diversity, the defendant must demonstrate that all the prerequisites of diversity jurisdiction contained in § 1332 are satisfied, including the requirement of “complete” diversity of citizenship. Smallwood v. Ill. Cent. R.R. Co., 385 F.3d 568, 572 (5th Cir. 2004), cert. denied, 544 U.S. 992 (2005). The parties' citizenship is based on the facts at the time of removal. Louisiana v. Am. Nat. Prop. Cas. Co., 746 F.3d 633, 636 (5th Cir. 2014).
As to Allied an Nationwide, the requirements of 28 U.S.C. § 1332 are met. The Original Petition demanded “monetary relief over $1,000,000.” Dkt. #11-1 at ¶10. And it is undisputed that the citizenship of Texas-based Plaintiff Jones is diverse from that of Ohio-based Defendants Allied and Nationwide. See Dkt. #11-2 at ¶¶11-12.
However, “the improper joinder doctrine constitutes a narrow exception to the rule of complete diversity.” Cuevas v. BAC Home Loans Servicing, LP, 648 F.3d 242, 249 (5th Cir. 2011). A removing party may establish federal jurisdiction based on 28 U.S.C. § 1332 by demonstrating that an in-state defendant has been “improperly joined.” Smallwood, 385 F.3d at 573. The Fifth Circuit recognizes two avenues to establish improper joinder: “(1) actual fraud in the pleading of jurisdictional facts, or (2) inability of the plaintiff to establish a cause of action against the non-diverse party in state court.” Travis v. Irby, 326 F.3d 644, 646-47 (5th Cir. 2003). There is no allegation of fraud in the pleadings alleged in this case. Thus, the undersigned must assess whether Jones has a basis of recovery against the non-diverse Defendants. Smallwood, 385 F.3d at 573.
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 against an in-state defendant.” Smallwood, 385 F.3d at 573. “The Fifth Circuit requires that ‘decisions about removal . . . be made on the basis of federal law, not state law;' therefore, courts use a Rule 12(b)(6)-type analysis when determining whether a plaintiff may reasonably recover.” Lakeside FBCC, LP v. Everest Indem. Ins. Co., Civil Action No. SA-17-CV-00491-XR, 2017 U.S. Dist. LEXIS 127507, at *5-6 (W.D. Tex. Aug. 10 2017) (quoting Int'l Energy Ventures Mgmt., L.L.C. v. United Energy Grp., Ltd., 818 F.3d 193, 202 (5th Cir. 2016); and citing Smallwood, 385 F.3d at 573).
Courts look to state law when assessing the reasonable basis of recovery by “conduct[ing] a Rule 12(b)(6)-type analysis.” Smallwood, 385 F.3d at 573. Or a court may in its discretion pierce the pleadings and conduct a summary inquiry where “a plaintiff has stated a claim[] but has misstated or omitted discrete facts that would determine the propriety of joinder.” Id. A court may use either analysis, but it must use one and only one. Int'l Energy Ventures, 818 F.3d at 207. But “[i]t is rarely appropriate, however, to ‘pierce the pleadings,' and then [it is appropriate] only when a defendant can point to undisputed facts that would preclude a plaintiff's recovery against it in state court.” Akerblom v. Ezra Holdings Ltd., 509 Fed.Appx. 340, 347 (5th Cir. 2013).
In a lawsuit such as this, to determine whether a party has a “reasonable basis of recovery under state law,” the Fifth Circuit counsels a 12(b)(6)-type analysis. Id. To prevail on an improper joinder claim, a “defendant must put forward evidence that would negate a possibility of liability on the part of the nondiverse defendant.” Travis, 326 F.3d at 650. “[T]he evidence that is dispositive on the Smallwood inquiry are the facts that could be easily disproved if not true.” Cumpian v. Alcoa World Alumina, L.L.C., 910 F.3d 216, 220-21 (5th Cir. 2018) (citing Davidson v. Ga.-Pacific, L.L.C., 819 F.3d 758, 766 (5th Cir. 2016)). “A conclusory statement that a claim is false, though, is not a ‘discrete and undisputed fact.'” Cumpian, 910 F.3d at 221 (quoting Smallwood, 385 F.3d at 573). “When analyzing whether a discrete and undisputed fact precludes the possibility of recovery, we are mindful of what Smallwood identified as the prototypical cases: ‘the in-state doctor defendant did not treat the plaintiff patient, the in-state pharmacist defendant did not fill a prescription for the plaintiff patient, or a party's residence was not as alleged.'” Id. (quoting Smallwood, 385 F.3d at 574 n.12).
Federal courts apply the federal pleading standard articulated in Bell Atlantic Corp. v. Twombly in conducting the 12(b)(6)-type analysis. Id. at 208. Thus, a plaintiff must plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “The plausibility standard is not akin to a ‘probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662, 6782009).
The burden of demonstrating improper joinder is a heavy one and is on the party seeking removal. Cuevas, 648 F.3d at 249 (citing Griggs v. State Farm Lloyds, 181 F.3d 694, 699 (5th Cir. 1999)). “Any doubt about the propriety of removal must be resolved in favor of remand.” Gasch v. Hartford Accident & Indem. Co., 491 F.3d 278, 281-82 (5th Cir. 2007).
Where a party is improperly joined, the court may on its own motion dismiss the party. FED. R. CIV. P. 21.
III. Analysis
Jones argues this court lacks subject matter jurisdiction over this action and requests that it be remanded to Texas state court. Dkt. #11 at ¶1. Allied counters that Jones's Original Petition fails to meet federal pleading standards with respect to non-diverse Defendants Alliance and Higginbotham, rendering them improperly joined, and that their citizenship must be disregarded. Dkt. #12 at ¶2. Allied goes on to argue that without either Higginbotham or Alliance, there is complete diversity, making removal proper and enabling this court to exercise jurisdiction. Id.
Jones argues that the claims against Higginbotham and Alliance survive a 12(b)(6)-type analysis, Dkt. #11 at ¶¶ 13-16. In his Reply, Jones requests that if the court determines that the Original Petition cannot survive a 12(b)(6)-type analysis, it decline to employ a summary inquiryand instead grant his Motion for Leave to File an Amended Petition in State Court, which he improperly included within his Reply. Dkt. #13 at 3.
To determine the propriety of joinder, a court may in its discretion forego the 12(b)(6)-type analysis and conduct a summary inquiry to determine whether discrete and undisputed facts will prevent the plaintiff from recovering. Int'l Energy Ventures Mgmt., L.L.C. v. United Energy Grp., Ltd., 818 F.3d 193, 207 (5th Cir. 2016); see discussion of improper joinder inquiry, infra at 5.
W.D. Tex. Civ. R. CV-5(a) (requiring compliance with the Local Administrative Rules); Local Admin. Rule 3(g) (“With the exception of motions for leave to file detailed under section 4(c), each filing must consist of only one pleading. Multiple pleadings (e.g., an answer and a motion to dismiss, or a notice of appeal and a motion for certificate of appealability) must be filed as separate documents.”).
If either Alliance or Higginbotham is properly joined, diversity jurisdiction does not exist, and this court lacks subject matter jurisdiction. The court will address Jones's claims against Alliance and Higginbotham in turn.
A. Alliance
Jones only mentions Alliance once in his Original Petition-in the “Parties” section. Dkt. #1-1 at 3. The court “conduct[ed] a Rule 12(b)(6)-type analysis, [and] look[ed] at the allegations of the complaint to determine whether the complaint states a claim under state law against the in-state defendant.” Smallwood, 385 F.3d at 573. Because Jones does not allege any wrongdoing-indeed, he does not allege any conduct-by Alliance, he has not pled “enough facts to state a claim to relief that is plausible on its face.” See Twombly, 550 U.S. at 570. Accordingly, Alliance is improperly joined, and its Texan citizenship cannot be used to defeat diversity jurisdiction.
Because the Original Petition does not state a claim against Alliance, the undersigned will recommend that Alliance be dismissed from this action.
B. Higginbotham
Jones's Original Petition asserts several claims against Higginbotham. Dkt. #11-1 at 7-9. Jones alleges that Higginbotham “sold the Policy and [] represented at the time [] that it would provide coverage for the very type of loss suffered by [Jones] ....” Dkt. #1-1 at ¶ 15.
The Original Complaint alleges all causes of action against all Defendants. Dkt. #11-1 at 7-9.
To determine “whether the defendant has demonstrated 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,” the court will assess each claim. See Smallwood, 385 F.3d at 573. However, the court “will not strain to find inferences favorable to the plaintiffs” and “will not accept ‘conclusory allegations, unwarranted deductions, or legal conclusions.'” R2 Invs. LDC v. Phillips, 401 F.3d 638, 642 (5th Cir. 2005) (quoting Southland Sec. Corp. v. INSpire Ins. Sols. Inc., 365 F.3d 353, 361 (5th Cir. 2004)).
1. Bad Faith
Jones asserts a bad faith claim, apparently against all Defendants. Dkt. #11-1 at 7. However, “[a] claim for breach of the implied covenant of good faith and fair dealing cannot exist absent a breach of contract.” Martin Res. Mgmt. Corp. v. Fed. Ins. Co., No. 20-40571, 2021 U.S. App. LEXIS 28469, at *14 (5th Cir. 2021) (citing Republic Ins. Co. v. Stoker, 903 S.W.2d 338, 341 (Tex. 1995)). “[T]he common-law duty of good faith and fair dealing in the insurance context emanates from the special relationship between insurer and insured created by contract.” Sanchez v. Allied Prop. & Cas. Ins. Co., No. 1:16-CV-176-LY, 2016 U.S. Dist. LEXIS 59402, at *3-4 (W.D. Tex. 2016) (citing Natividad v. Alexsis, Inc., 875 S.W.2d 695, 697 (Tex. 1994)). The duty “does not extend to bind entities and individuals in the insurance industry that are not in contractual privity with the claimant.” Id. (internal quotations appended).
Because Jones does not allege a contractual relationship between himself and Higginbotham, and because an insurer's duty is non-delegable, Higginbotham owed no duty to Jones. Accordingly, the Original Complaint does not state a claim for bad faith against Higginbotham.
Natividad, 875 S.W.2d at 698.
2. Violations of the Texas Insurance Code
i. Violations of Chapter 541
Jones alleges, apparently against all Defendants, claims under Chapter 541 of the Texas Insurance Code. Dkt. #11-1 at 8.
“[A] plaintiff seeking to assert a complaint in federal court against an individual insurance agent or adjuster must ‘satisfy Rules 8, 9, and 12(b)(6) and Twombly, to allege specific actionable conduct by the adjuster and to distinguish claims against the adjuster from generic, conclusory, statute-tracking claims against the insurer.'” S. Austin Pharmacy, LLC v. Pharmacists Mut. Ins. Co., No. A-15-CV-0271-LY-ML, 2015 U.S. Dist. LEXIS 65582, at *7 (W.D. Tex. July 7, 2015) (quoting Okenkpu v. Allstate Tex. Lloyd's, No. H-11-2376, 2012 U.S. Dist. LEXIS 41705, *22 (S.D. Tex. Mar. 27, 2012) (collecting cases).
The entirety of Jones's allegations are:
The foregoing paragraphs are incorporated by reference as if fully set forth herein. As described above, the Defendants' actions and omissions violate Texas Insurance Code §§ 541.051, 542.052 & 541.061(1), (2), (3), (4) and/or (5). Amongst other things, the Defendants misrepresented the terms of the policy, the benefits or advantages promised by any policy, and the nature of a policy through its name or title. This list is not all inclusive, but more [sic] than sufficient to meet the pleading standards under the TRCP.Id.
Jones's Section 541 claim against Higginbotham is insufficient under Rule 8(a) or 9(b) because it does not even go so far as to provide a threadbare recital of elements much less meet the fraud claim requirement to state the “who, what, when, where, and how.” Indeed, it only contains a broad allegation of misrepresentation. Merely referring to § 541 is insufficient to state an actual claim. Martin, 2021 U.S. App. LEXIS 28469, at *13.
“Texas district courts have consistently applied Rule 9(b)'s heightened pleading standard to claims under the Texas Insurance Code and Deceptive Trade Practices Act.” Ears & Hearing, P.A. v. Blue Cross & Blue Shield of Tex., No. 1:18-CV-00726-LY, 2019 U.S. Dist. LEXIS 130593, at *5 (W.D. Tex. 2019) (collecting cases).
“To state claims for misrepresentation or fraud in violation of the Texas Insurance Code, Plaintiffs must meet the ‘who, what, when, where, and how' requirements of Federal Rule of Civil Procedure 9(b).” Martin, 2021 U.S. App. LEXIS 28469, at *13.
Jones also states that “[t]his list is not all inclusive, but [it is] more than sufficient to meet the pleading standards under the TRCP.” Dkt. #11-1 at 8. But collectively referring to “Defendants” without attributing conduct to specific parties does not meet even the liberal requirements of notice pleading. Stephenson v. Standard Ins. Co., No. SA:12-CV-01081-DAE, 2013 U.S. Dist. LEXIS 85156, at *36 (W.D. Tex. 2013) (citing Griggs v. State Farm Lloyds, 181 F.3d 694, 699 (5th Cir. 1999)).
Accordingly, the Original Petition does not state a claim under Chapter 541 against Higginbotham.
ii. Violations of Chapter 542
Jones asserts a claim, apparently against all Defendants, for violation of Texas Insurance Code § 542.052. However, only insurers are liable under this provision. See TEX. INS. CODE ANN. § 542.060(a). Higginbotham is an agent, Dkt. #1-1 at ¶ 15, and the Original Petition does not allege Higginbotham is an insurer. See generally, Id. Accordingly, the Original Petition fails to state a claim against Higginbotham under Chapter 542 of the Texas Insurance Code.
3. Violations of the Texas Deceptive Trade Practices Act
Jones also asserts a claim, again apparently against all Defendants, for violations of the Texas Deceptive Trade Practices Act (“DCTPA”). Dkt. #11-1 at 8.
i. False, Misleading, or Deceptive Acts
“Texas district courts have consistently applied Rule 9(b)'s heightened pleading standard to claims under the . . . Deceptive Trade Practices Act.” Ears & Hearing, 2019 U.S. Dist. LEXIS 130593, at *5 (collecting cases). “Rule 9(b) sets forth the heightened pleading standard imposed for fraud claims: ‘In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake.'” Strickland v. Bank of N.Y. Mellon, 838 Fed.Appx. 815, 819-20 (5th Cir. 2020) (quoting FED. R. CIV. P. 9(b)). The Fifth Circuit “requires a party asserting fraud to specify the statements contended to be fraudulent, identify the speaker, state when and where the statements were made, and explain why the statements were fraudulent.” Herrmann Holdings Ltd. v. Lucent Techs., Inc., 302 F.3d 552, 564-65 (5th Cir. 2002).
Jones's allegations of false, misleading, or deceptive conduct are as follows: “Defendants . . . engaged in false, misleading, or deceptive acts or practices that [Jones] relied on to [Jones's] detriment. Amongst other things, representing that the Policy would provide coverage for the type of loss suffered by [Jones] . . . and that his claim would be covered giving him, amongst other things, a false sense of security and depriving him of any chance to mitigate his damages, if any.” Dkt. #11-1 at 8.
The allegations fall far short of alleging the who, what, when, where, and how required by Rule 9(b). Accordingly, the Original Petition does not state a claim under the DTPA's false, misleading, or deceptive acts prong.
ii. Unconscionable conduct
Jones also alleges that “Defendants' actions, as described above, are also unconscionable.” Id. But the Fifth Circuit has “stated that where ‘allegedly unconscionable statements' are made but where the breach of the contract causes the harm, a plaintiff cannot maintain a claim for unconscionable conduct under the DTPA.” Shakeri v. ADT Sec. Servs., 816 F.3d 283, 295 (5th Cir. 2016) (citing Malsom v. Match.com, L.L.C., 540 Fed.Appx. 412, 415 (5th Cir. 2013) (unpublished)). Where statements do not cause harm but the failure to complete the contract causes loss, “that injury is governed by contract law, not the DTPA.” Crawford v. Ace Sign, 917 S.W.2d 12, 14-15 (Tex. 1996).
Because Original Petition's assertion of a claim under the DTPA's unconscionable prong does not meet the heightened pleading requirements of Rule 9(b) and because Jones alleges that his insurance claim was not paid in violation of the Policy, his claim sounds in contract, see “Breach of Contract” infra, and he has not stated a claim under the DTPA.
4. Breach of Contract
Jones alleges “Defendants breached the Policy by not paying Plaintiff's claim.” Dkt. #11-1 at 9.
“In Texas, the essential elements of a breach of contract claim are (1) the existence of a valid contract; (2) performance or tendered performance by the plaintiff; (3) breach of the contract by the defendant; and (4) damages sustained by the plaintiff as a result of the breach.” Mullins v. TestAmerica Inc., 564 F.3d 386, 418 (5th Cir. 2009). Under Texas law, “a party generally must be a party to a contract before it can be held liable for a breach of the contract.” Ibe v. Jones, 836 F.3d 516, 524 (5th Cir. 2016).
Jones's Original Petition contains no allegation that there was a contract between Jones and Higginbotham. Jones alleges the “Policy was written and/or issued by Allied and Nationwide ....” Dkt. #11-1 at 5.
Because the Original Petition contains no allegation of a contractual relationship between Jones and Higginbotham and because Texas law requires that a “party generally must be a party to a contract before it can be held liable for a breach of the contract,” Ibe, 836 F.3d at 524, Jones has not stated a claim for breach of contract against Higginbotham.
5. Negligent Misrepresentation
Jones “strictly in the alternative to the fraud claim pled [] above” alleges a negligent misrepresentation claim, contending that “if Defendants' representations were not fraudulent, they certainly were negligent.” Dkt. #11-1 at 9.
“Although Rule 9(b) by its terms does not apply to negligent misrepresentation claims, [the Fifth Circuit] has applied the heightened pleading requirements when the parties have not urged a separate focus on the negligent misrepresentation claims.” Benchmark Elecs. v. J.M. Huber Corp., 343 F.3d 719, 723 (5th Cir. 2003) (citing Williams v. WMX Techs., Inc., 112 F.3d 175, 177 (5th Cir. 1997)).
That is the case here, as Jones's fraud and negligent misrepresentation claims are based on the same set of alleged facts. “The foregoing paragraphs are incorporated by reference as if fully set forth herein. . . [and pled] strictly in the alternative to the fraud claim ....” Dkt. #11-1 at 9.
Thus, for the same reasons as the Original Petition fails to state a fraud claim under Rule 9(b), it fails to state a claim for negligent misrepresentation.
Furthermore, under Texas law, an insured has a duty to read the policy and is charged with knowledge of the policy's terms and conditions, and an insurance agent has no duty to explain the policy terms. WMS, LLC v. Allied Prop. & Cas. Ins. Co., 244 F.Supp.3d 567, 573 (W.D. Tex. 2017) (collecting cases). Accordingly, “alleged[ly] fraudulent representations cannot as a matter of law override the written contract terms ....” Luna v. Feliciano, No. 6:18-CV-00340-ADA-JCM, 2019 U.S. Dist. LEXIS 233414, at *10 (W.D. Tex. 2019).
6. Negligence / Gross Negligence
Jones's final claims are for negligence and gross negligence. Dkt. #11-1 at 9-10. The Original Petition reads: “The foregoing paragraphs are incorporated by reference as if fully set forth herein. In addition to the claims pled above, Defendants' actions were negligent and, because they were gross and committed with malice, [they were] grossly negligent.” Id. at ¶¶ 40, 41.
Under Texas law, the elements of negligence are (1) the existence of a duty, (2) breach of the duty, (3) and damages proximately caused by the breach. Kroger Co. v. Elwood, 197 S.W.3d 793, 794 (Tex. 2006).
The Original Petition does not contain an allegation that Higginbotham owed a duty to Jones or that Higginbotham breached a duty, nor does it contain an allegation that Higginbotham acted with malice. See generally, Dkt. #11-1. Accordingly, the Original Complaint does not state a claim for negligence or gross negligence against Higginbotham.
Under Texas law, “an insurance agent has two common law duties: (1) to use reasonable diligence in attempting to place requested insurance and (2) to inform the client promptly if unable to do so.” Garcia v. Hartwig Moss Ins. Agency, Ltd., No. 01-20-00420-CV, 2022 Tex.App. LEXIS 2786, at *1 (Tex. App.-Houston [1st Dist.] Apr. 28, 2022, pet. denied) (citing May v. United Servs. Ass'n of Am., 844 S.W.2d 666, 669 (Tex. 1992)). Under Texas law, an insured has a duty to read the policy and is charged with knowledge of the policy's terms and conditions, and an insurance agent has no duty to explain the policy terms. WMS, 244 F.Supp.3d at 573 (collecting cases).
IV. Conclusion
The Original Petition, by which this court must assess the propriety of removal, Louisiana, 746 F.3d 633 at 636, does not state a claim against non-diverse Defendants Alliance and Higginbotham. It does not allege any conduct by Alliance. The claims asserted against all Defendants, including Higginbotham (and ostensibly Alliance), do not meet the federal pleading requirements under Twombly, Rule 8(a), or Rule 9(b). Because at the time of removal, Jones's Original Petition did not state a claim against a non-diverse Defendant, removal was proper.
Accordingly, the undersigned will recommend that the District Court deny Jones's Motion to Remand and will further recommend that Defendants Alliance and Higginbotham be dismissed from this action.
V. Request to Amend
In his Reply, Jones included a request and a purported motion to amend his Original Petition in the state court action. Dkt. #13 at 3. Specifically, Jones requests:
Rather than employ a summary inquiry, [Jones] is requesting-should this Court believe that Plaintiff's Original Petition omits discrete facts to determine whether
joinder of [Higginbotham] was proper-that this Court grant this Motion for Leave to file an amended petition in the state court action which contains additional facts to demonstrate [Higginbotham's] involvement and to show the basis for [Higginbotham's] proper joinder in this matter.”Id.
Because this court may not order the amendment of the Original Petition (which is properly in federal court) in a Texas state court and because Jones's Motion to for Leave to File First Amended Petition in State Court Action was filed improperly in the Reply brief, the undersigned will not rule on or expound upon that request.
Filings must consist of only one pleading. W.D. Tex. Civ. R. CV-5(a); Local Admin. Rule 3(g).
VI. Recommendations
Accordingly, the undersigned RECOMMENDS that the District Court DENY Plaintiff's Opposed Motion to Remand Based Upon a Lack of Subject Matter Jurisdiction (Dkt. #11).
The undersigned FURTHER RECOMMENDS that Defendants Alliance and Higginbotham be DISMISSED without prejudice.
VII. Objections
The parties may file objections to this Report and Recommendation. A party filing objections must specifically identify those findings or recommendations to which objections are being made. The District Court need not consider frivolous, conclusive, or general objections. See Battles v. United States Parole Comm'n, 834 F.2d 419, 421 (5th Cir. 1987).
A party's failure to file written objections to the proposed findings and recommendations contained in this Report within fourteen (14) days after the party is served with a copy of the Report shall bar that party from de novo review by the District Court of the proposed findings and recommendations in the Report and, except upon grounds of plain error, shall bar the party from appellate review of unobjected-to proposed factual findings and legal conclusions accepted by the District Court. See 28 U.S.C. § 636(b)(1)(C); Thomas v. Arn, 474 U.S. 140, 150-53 (1985); Douglass v. United Services Automobile Ass'n, 79 F.3d 1415 (5th Cir. 1996) (en banc).