Fourteen months after Hurricane Ike hit the Gulf coastline of Texas, the initial onslaught of litigation is starting to surface in reported decisions. Our first post of undoubtedly many Hurricane Ike cases to come addresses a motion for remand after a coverage dispute was removed to federal court. See Lakewood Chiropractic Clinic v. Travelers Lloyds Ins. Co., No H-09-1728, 2009 U.S. Dist. LEXIS 99854 (S.D. Tex. Oct. 27, 2009).
The insured filed a claim with Travelers for hurricane damage to its office in Houston and business interruption losses. Travelers assigned an adjuster, Nate Stanton, who denied the claim after finding that the amount of damage was less than the policy's deductible. The insured' s attorney sent a demand letter, disputing the estimation of damage and alleging that Traveler's adjuster appeared to have violated the Texas Insurance Code in the handling of the claim. Thereafter, a second adjuster, Sonja Victor, wrote to ask the insured for permission to have an engineer inspect the claimed exterior damage. The insured refused. Victor then wrote another letter, asserting that the policy required the insured to permit a further inspection.
In April 2009, the insured sued Travelers and Victor in state court. The defendants removed based on diversity, claiming that Victor was improperly joined in order to defeat diversity jurisdiction. Travelers was a citizen of Connecticut, and both the insured and Victor were Texas citizens. The insured moved to remand.
To determine if there was diversity jurisdiction, the district court considered whether the insured had a reasonable possibility of recovering against defendant Victor. The complaint alleged defendants were liable jointly for: (1) breach of the insurance contract; (2) violations of the Texas Insurance Code; (3) violations of the Texas Deceptive Trade Practices Act; and (4) fraud. The first claim failed against Victor because an she was not in a contractual relationship with the insured and could not be liable for breach of contract.
Both the Texas Insurance Code and Deceptive Trade Practices Act, however, recognized claims against adjusters. Nevertheless, the complaint failed to allege facts illustrating what actions were attributable to Victor individually. Instead, the allegations against Victor were merely a verbatim recitation of portions of the Texas Insurance Code. Nate Stanton, not Victor, was the first claims adjuster that performed the original investigation, estimated the amount of loss, and denied the claim. Victor's subsequent letters merely established she had some involvement in a further investigation of the claim after Stanton denied it. There was nothing in the letters, nor anywhere else in the record, from which one could find that the insured had a reasonable possibility of recovering on any claim against Victor. Accordingly, the Motion for Remand was denied.
