FEDERAL COURT IN SOUTHERN DISTRICT, MCALLEN DIVISION FINDS IMPROPER JOINDER & DENIES MOTION TO REMAND BAD FAITH CASE

Last Monday, the Federal District Court in the McAllen Division of the Southern District of Texas showed that removal based on improper joinder is alive and well and can still succeed when policyholders sue agents in an attempt to defeat federal diversity jurisdiction.  In Garza v. State Farm Lloyds, 7:13-CV-112, 2013 WL 3439851 (S.D. Tex. July 8, 2013), the policyholder filed a “cut-and-paste” type petition against State Farm and the procuring State Farm agent, which referred to them jointly throughout the petition, even though some of the claims, such as breach of contract, were only asserted against State Farm.  The court pierced the pleadings and examined additional evidence submitted by the parties and concluded there was no reasonable basis to predict the plaintiff could recover against the agent for the various misrepresentation-based claims made against him.

Editor’s Note: This case does not address the likelihood of winning an improper joinder argument when the non-diverse defendant is an adjuster who is accused of improperly handling the claim.  That scenario can be significantly more difficult to beat under existing Texas precedent.