Federal Jurisdiction

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On December 10, 2019, the Northern District of Texas issued a Memorandum Opinion and Order in, Barnes Burk Storage, LLC v. United Fire & Casualty Company,1 which denied a motion to remand. This opinion applied the recent Hoyt Exception to keep the case in federal court. The Hoyt Exception sprang from the Fifth Circuit’s opinion in Hoyt v. Lane Construction Corp.,2 this year and is a narrow exception to the voluntary-involuntary rule. The Hoyt Exception operates when state court orders create diversity jurisdiction—a ticket to federal court—and when such orders cannot be reversed on appeal.
Continue Reading The Hoyt Exception: An Exception to the Voluntary-Involuntary Rule

The infamous “Hail Bill” will be celebrating its second birthday this September 1, 2019. Whether there will be any celebrations is another question. The “Hail Bill” – the Chapter 542A amendment to the Texas Insurance Code—covers first-party claims arising from “forces of nature.”1 Within that chapter, one notably section is 542A.006, which allows an insurer to elect to assume its agent’s civil liability for the agent’s conduct related to the handling of a claim. This section has been seeing a lot of litigation of late.
Continue Reading Remand From Federal Court After Passage of the “Hail Bill:” Section 542A.006 and the Election of Legal Responsibility

Texas Insurance Code Section 542A.006, effective December 1, 2017, allows insurers to accept liability for the acts of their adjusters either before suit is filed or after suit is filed. If the election of liability is made before suit is filed, the in-state defendant adjuster never becomes a party if suit is filed eventually. If the election is made after suit is filed, the court must dismiss the adjusters from the suit.
Continue Reading It’s a Brand-New Ballgame. . .In Texas When it Comes to Filing Suit Against Your Property Adjuster

Our Constitution vests federal district courts with limited subject matter jurisdiction to adjudicate cases and controversies.1 Unless the Constitution or federal statute authorizes the district court to proceed, the district court must dismiss the action or—in the case of removal— remand the matter to state court.2 In addition to other grants, federal statute provides district courts original jurisdiction over civil actions between citizens of different states where the amount in controversy exceeds $75,000, exclusive of interest and costs.3 Eleventh Circuit precedent holds that a limited liability company is a citizen of any state in which a member of the company is a citizen.4…
Continue Reading Beware a Jurisdictional Pitfall: Federal Diversity Jurisdiction and Limited Liability Companies

Federal courts are courts of limited jurisdiction, possessing only that power authorized by Article III of the United States Constitution and statutes enacted by Congress. Under 28 U.S.C. § 1332, federal district courts “have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000 … and is between … citizens of different States.” Whereas the Constitution contemplates minimal diversity, § 1332 requires complete diversity—no plaintiff may be a citizen of the same state as any defendant.1 For purposes of diversity jurisdiction, a corporation is a citizen of both the state where it is incorporated and the state where its “nerve center” (typically its headquarters) is located.2…
Continue Reading Reciprocal Insurance Companies

Recently, a federal district court in Oregon clarified where one may sue an insurance reciprocal exchange. In the case of Staggs v. Farmers Insurance Exchange,1 the homeowners were Oregon citizens who brought suit under a homeowners’ policy issued by Farmers Insurance Exchange in a federal district court in Oregon. Farmers moves to dismiss, arguing that the court lacked subject matter jurisdiction because there was no diversity; that although its primary place of business was California, the Staggs were Oregon citizens.
Continue Reading Insurance Reciprocal Exchanges and Federal Diversity Jurisdiction

Many insurance cases are filed in state court against out-of-state insurance companies. These insurance companies like to remove the case to federal court because federal courts are seen as a friendly forum for insurance companies. In order to remove a case to federal court there must be complete diversity of citizenship between the plaintiff and the defendant, and the amount in controversy must exceed $75,000. How do you determine “amount in controversy?” In a May 7, 2016 blog I discussed the Cantu1 case where Cantu argued that the amount in controversy was $23,945.43 because that was the amount of actual damages. However, the court found the amount in controversy to exceed $75,000 because Cantu had alleged statutory and common law bad faith damages, which the court found would push the amount in controversy past $75,000. The recent Puente v. State Farm Lloyds2 case from the Brownsville Division of the Southern District shows exactly how the amount in controversy should be determined. Just because the Plaintiff alleges exemplary damages does not mean that the amount in controversy is automatically in excess of $75,000.…

Continue Reading Primer on Amount in Controversy – How Do Court’s Determine It?