Case: 21-20092 Document: 00516494085 Page: 1 Date Filed: 10/03/2022
United States Court of Appeals
for the Fifth Circuit
United States Court of Appeals
Fifth Circuit
FILED
October 3, 2022
No. 21-20092 Lyle W. Cayce
Clerk
Advanced Indicator and Manufacturing, Incorporated,
Plaintiff—Appellant,
versus
Acadia Insurance Company; Nicholas Warren,
Defendants—Appellees.
Appeal from the United States District Court
for the Southern District of Texas
USDC No. 4:18-CV-3059
Before Jolly, Higginson, and Engelhardt, Circuit Judges.
Per Curiam:
Appellant Advanced Indicator and Manufacturing, Inc. claims its
building was damaged by Hurricane Harvey’s winds. Advanced’s insurer,
Acadia Insurance Company, determined that the damage to the building was
caused by poor maintenance and routine wear and tear. When Acadia denied
Advanced’s claim, Advanced sued. From this seemingly commonplace
insurance dispute, we are faced with jurisdictional questions that have deeply
divided district courts and a question of whether summary judgment was
properly granted.
Case: 21-20092 Document: 00516494085 Page: 2 Date Filed: 10/03/2022
No. 21-20092
I.
Appellant, Advanced Indicator and Manufacturing, Inc., owned
property at 1463 Brittmore Road in Houston. The property was insured by a
policy issued by Appellee Acadia Insurance Company. The policy covered
wind damage but did not cover damage from wear and tear or lack of
maintenance.
Hurricane Harvey struck southern Texas in 2017. After the
hurricane, Advanced submitted a claim to Acadia regarding the damage to
1463 Brittmore Road, which it claimed was caused by the hurricane’s winds.
Acadia acknowledged the claim and sent an adjuster, Nick Warren, as well as
an engineer, Jason Watson, to assess the building. After inspecting the
building, Watson determined that pre-existing conditions—including
ongoing leaks from deterioration and poor workmanship—caused the
damage, rather than winds from Hurricane Harvey. Warren adopted these
conclusions in his recommendations to Acadia. Acadia then denied
Advanced’s claim based on Watson’s conclusions and Warren’s
recommendation.
On August 7, 2018, Advanced sued Acadia and Warren in state court,
alleging various claims, including breach of contract, common law bad faith,
and violations of the Texas Prompt Payment of Claims Act. On August 30,
2018, Acadia elected to accept responsibility for Warren under § 542A.006
of the Texas Insurance Code, which provides that an insurer may accept
liability for its agents. The next day, Acadia removed the case to federal
court. One week later, Warren filed a motion to dismiss, arguing in part that
Advanced could no longer state a claim against him. Advanced filed a motion
to remand the case to state court, arguing that Warren was not improperly
joined notwithstanding Acadia’s § 542A.006 election. In a management
2
Case: 21-20092 Document: 00516494085 Page: 3 Date Filed: 10/03/2022
No. 21-20092
order, the district court denied the motion to remand and ruled without
analysis that “Nicholas Warren is struck as improvidently joined.”
Acadia later moved for summary judgment, arguing that it did not
breach the policy and that Advanced could not segregate any damages caused
by the hurricane from pre-existing damage, as required by Texas law. The
district court granted Acadia’s motion, finding that Acadia’s denial of
Advanced’s claim was based on “extensive consideration of the evidence”
and that Advanced failed to carry its burden of showing that covered and non-
covered damages could be segregated as required by Texas’s concurrent
causation doctrine. In doing so, the district court struck the declaration of
Peter de la Mora and Art Boudin, two of Advanced’s experts. The district
court further granted summary judgment on Advanced’s extra-contractual
claims. Advanced promptly appealed.
II.
We begin by considering whether the district court erred in denying
Advanced’s motion to remand. The parties agree that when Advanced filed
suit against Acadia (an out-of-state resident) and Warren (an in-state
resident), Advanced had valid claims against both defendants. Because
Advanced and Warren are both Texas residents, there was not complete
diversity at the outset of the suit, and the matter could not be removed.
Acadia then elected to accept liability for Warren pursuant to Texas
Insurance Code § 542A.006, which provides that should an insurer accept
responsibility for its agent after suit is filed, “the court shall dismiss the
action against the agent with prejudice.” TEX. INS. CODE § 542A.006(c).
Acadia filed a notice of removal the next day on the grounds that Advanced
could no longer state a claim against Warren. We must determine whether
Acadia’s § 542A.006 election made this matter removable.
3
Case: 21-20092 Document: 00516494085 Page: 4 Date Filed: 10/03/2022
No. 21-20092
Advanced offers two arguments for why remand was proper. First, it
contends Acadia’s removal in this case violates the involuntary-voluntary
rule, which states that a case may only be made removable by a voluntary act
of a plaintiff. Second, it argues that Warren was properly joined under the
specific language of § 542A.006 because Acadia only elected to accept
liability for him after suit was filed. We address each argument in turn.
“The federal courts may exercise diversity jurisdiction over a civil
action between citizens of different States if the amount in controversy
exceeds $75,000.” Flagg v. Stryker Corp., 819 F.3d 132, 135 (5th Cir. 2016)
(en banc) (citing 28 U.S.C. § 1332(a)(1)). Federal law provides that federal
courts have removal jurisdiction over suits that could have originally been
filed in federal court. See 28 U.S.C. § 1441(a). Further, if it later becomes
clear that diversity jurisdiction exists even when it was not clear from the face
of the initial pleading, the case can often be removed to federal court. See 28
U.S.C. § 1446(b)(3).
“Ordinarily, 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, 819 F.3d at 136. “However, if the plaintiff
improperly joins a non-diverse defendant, then the court may disregard the
citizenship of that defendant, dismiss the non-diverse defendant from the
case, and exercise subject matter jurisdiction over the remaining diverse
defendant.” Id.
We set forth the standard for improper joinder in Smallwood v. Illinois
Central Railroad Co., 385 F.3d 568 (5th Cir. 2004) (en banc).1 A defendant
1
We have at times used the term “fraudulent joinder” interchangeably with
“improper joinder,” regardless of how such improper/fraudulent joinder was established.
See Smallwood, 385 F.3d at 571 n.1. We use the term “improper joinder” here, as it is
“preferred.” Id.
4
Case: 21-20092 Document: 00516494085 Page: 5 Date Filed: 10/03/2022
No. 21-20092
may establish improper joinder in two ways: “(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.” Id. at 573 (quoting Travis
v. Irby, 326 F.3d 644, 646–47 (5th Cir. 2003)) (internal quotation marks
omitted). Only the second method of proving improper joinder is at issue
here. To show that a plaintiff cannot establish a cause of action against the
non-diverse party in state court, a defendant must show “that there is no
possibility of recovery by the plaintiff against an in-state defendant, which
stated differently means 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.” Id. “The court may conduct a Rule 12(b)(6)-type analysis,
looking initially at the allegations of the complaint to determine whether the
complaint states a claim under state law against the in-state defendant.” Id.
But when a plaintiff “has misstated or omitted discrete facts that would
determine the propriety of joinder” then “the district court may, in its
discretion, pierce the pleadings and conduct a summary inquiry.” Id.
Importantly, “to determine whether a plaintiff has improperly joined a non-
diverse defendant, the district court must examine the plaintiff’s possibility
of recovery against that defendant at the time of removal.” Flagg, 819 F.3d at
137 (emphasis in original).
Advanced argues that removal of this case based on Acadia’s post-
suit, pre-removal § 542A.006 election violates the voluntary-involuntary
rule. This judicially created rule dictates that “an action nonremovable when
commenced may become removable thereafter only by the voluntary act of
the plaintiff.” Weems v. Louis Dreyfus Corp., 380 F.2d 545, 547 (5th Cir.
1967). Advanced contends that because the § 542A.006 election was an
action of a defendant, rather than the plaintiff, it cannot make the case
removable. This question has deeply divided district courts. Some courts
have held that the voluntary-involuntary rule bars removal when an insurer
5
Case: 21-20092 Document: 00516494085 Page: 6 Date Filed: 10/03/2022
No. 21-20092
makes a § 542A.006 election after the filing of suit. See, e.g., Morgan v. Chubb
Lloyds Ins. Co. of Tex., 541 F. Supp. 3d 754 (N.D. Tex. 2021). Others have
held that the voluntary-involuntary rule is inapplicable if the agent is
improperly joined at the time of removal. See, e.g., Ramirez v. Allstate Vehicle
& Prop. Ins. Co., 490 F. Supp. 3d 1092 (S.D. Tex. 2020).
Today we adopt the latter approach, which is a natural extension of
our precedent. Indeed, “courts have long recognized an exception to the
voluntary-involuntary rule where a claim against a nondiverse or in-state
defendant is dismissed on account of fraudulent joinder.” Crockett v. R.J.
Reynolds Tobacco Co., 436 F.3d 529, 532 (5th Cir. 2006). Moreover, our en
banc court stressed that “to determine whether a plaintiff has improperly
joined a non-diverse defendant, the district court must examine the
plaintiff’s possibility of recovery against that defendant at the time of
removal.” Flagg, 819 F.3d at 137 (emphasis in original). In this case, Warren
was improperly joined after Acadia’s election because § 542A.006’s
mandate that an agent be dismissed with prejudice dictates that Advanced
had no possibility of recovery against him. Taking our holdings in Crockett
and Flagg together, the answer to this case becomes clear: because Warren
was improperly joined at the time of removal, Acadia’s removal was proper.
Our recent decision in Hoyt v. Lane Construction Corp. confirms this
analysis. 927 F.3d 287 (5th Cir. 2019). In that case, the Texas plaintiffs sued
three defendants, two of whom were Texas residents and one of whom was
not, in state court. Id. at 291. The plaintiffs voluntarily dismissed one in-
state defendant, and the state court granted another in-state defendant’s
motion for summary judgment. Id. at 292. The out-of-state defendants then
removed to federal court. Id. The plaintiffs moved to remand the case to
state court, arguing (as relevant here) that the state-court’s grant of an in-
state defendant’s motion for summary judgment could not serve as the basis
for removal because it violated the voluntary-involuntary rule. Id. On appeal,
6
Case: 21-20092 Document: 00516494085 Page: 7 Date Filed: 10/03/2022
No. 21-20092
we held that the in-state defendant who was dismissed was improperly
joined, as clearly demonstrated by the state court’s grant of summary
judgment. Id. at 296–97. We further held that because improper joinder is
an exception to the voluntary-involuntary rule, that rule did not bar removal
in this case. Id. If the state court’s post-filing, pre-removal ruling dismissing
an in-state defendant can make a case removable, so too can a § 542A.006
election, which eviscerates any claim against an agent. Advanced attempts
to distinguish Hoyt by arguing that the state court’s ruling only confirmed
that the in-state defendant had been improperly joined at the time suit was
filed. But as we stated in Flagg, “the district court must examine the
plaintiff’s possibility of recovery against that defendant at the time of
removal.” 819 F.3d at 137 (emphasis in original).
Advanced makes a second, and related, argument based on the
language of § 542A.006.2 The statute provides that when an insurer elects
to accept responsibility for an agent before an action is filed, “no cause of
action exists against the agent related to the claimant’s claim, and, if the
claimant files an action against the agent, the court shall dismiss that action
with prejudice.” TEX. INS. CODE § 542A.006(b). But when an insurer elects
to accept responsibility for an agent after an action is filed, the statute
provides that “the court shall dismiss the action against the agent with
prejudice.” Id. § 542A.006(c). Advanced argues that because Acadia
elected to accept responsibility for Warren after suit was filed, Warren was
properly joined as § 542A.006(c), rather than § 542A.006(b), applies, and
2
Advanced arguably raised this argument for the first time at oral argument. This
argument is not clearly framed, and is in tension with, Advanced’s opening brief.
Generally, we do not consider arguments raised for the first time at oral argument. See
Martinez v. Mukasey, 519 F.3d 532, 545–46 (5th Cir. 2008). But because some of the cases
Advanced cited to clearly rely on this argument, and because district courts are split on this
issue, we find it appropriate to reach the argument here.
7
Case: 21-20092 Document: 00516494085 Page: 8 Date Filed: 10/03/2022
No. 21-20092
§ 542A.006(c) excludes the language “no cause of action exists against the
agent related to the claimant’s claim.” This dispute has likewise divided
district courts. Some courts have agreed with Advanced that difference
between the language of the subsections is significant. See, e.g., Stephens v.
Safeco Ins. Co. of Ind., No. 4:18-00595, 2019 WL 109395, at *6–7 (E.D. Tex.
Jan. 4, 2019). Others have found the difference insignificant as
§ 542A.006(c) still requires a court to dismiss the claim against the insurer
with prejudice. See, e.g., Electro Grafix, Corp. v. Acadia Ins. Co., No. SA-18-
CA-589-XR, 2018 WL 3865416, at *3-4 (W.D. Tex. Aug. 14, 2018).
We hold that Advanced’s argument is unavailing because it fails to
consider Flagg’s command that “the district court must examine the
plaintiff’s possibility of recovery against that defendant at the time of
removal.” 819 F.3d at 137 (emphasis in original). Because Acadia elected to
accept liability for Warren before removal, even though suit had already been
filed, the statute required that “the court shall dismiss the action against the
agent with prejudice.” TEX. INS. CODE § 542A.006(c). At the time of
removal, then, it would have been proper for the district court to find that
“there is no possibility of recovery by [Advanced] against an in-state
defendant”—here, Warren. Smallwood, 385 F.3d at 573. Accordingly, the
differences between §§ 542A.006(b) and 542.006(c) are not material as long
as the insurer elects to accept liability for the agent before removal.
III.
We now consider whether the district court erred in granting
summary judgment.3 We review a grant of a motion for summary judgment
3
Appellant argues that the district court improperly struck the declarations of
Peter de la Mora and Art Boudin. Because we find the district court erred in granting
summary judgment based on other record evidence, we need not reach this question.
8
Case: 21-20092 Document: 00516494085 Page: 9 Date Filed: 10/03/2022
No. 21-20092
de novo and apply the same standard as the district court, viewing the
evidence in the light most favorable to the nonmovant. First Am. Title Ins.
Co. v. Cont’l Cas. Co., 709 F.3d 1170, 1173 (5th Cir. 2013). Summary
judgment is appropriate where “there is no genuine dispute as to any material
fact and the movant is entitled to judgment as a matter of law.” FED. R. CIV.
P. 56(a). “A dispute about a material fact is genuine if the evidence is such
that a reasonable jury could return a verdict for the nonmoving party.” Stults
v. Conoco Inc., 76 F.3d 651, 654 (5th Cir. 1996) (quoting Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 248 (1986)) (cleaned up). “Courts do not disfavor
summary judgment, but, rather, look upon it as an important process through
which parties can obtain a ‘just, speedy and inexpensive determination of
every action.’” Goldring v. United States, 15 F.4th 639, 644 (5th Cir. 2021)
(quoting Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986)).
The district court essentially granted summary judgment on
Advanced’s policy breach claim for two reasons. First, the district court
credited Acadia’s investigation over Advanced’s investigation, essentially
finding that Hurricane Harvey did not cause Advanced’s damages. Second,
the district court found that because Advanced could not differentiate its pre-
existing losses from its Hurricane Harvey losses, its claim fails under Texas’s
concurrent causation doctrine. We address each argument in turn.
Because we have diversity jurisdiction over this suit, we apply Texas
law. Greenwich Ins. Co. v. Capsco Indus., Inc., 934 F.3d 419, 422 (5th Cir.
2019). In a claim for breach of an insurance contract, Texas law requires the
insured to prove: “(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.” Certain Underwriters at Lloyd’s of London v. Lowen Valley View,
L.L.C., 892 F.3d 167, 170 (5th Cir. 2018) (quoting Smith Int’l., Inc. v. Egle
Grp., LLC, 490 F.3d 380, 387 (5th Cir. 2007)) (internal quotation marks
9
Case: 21-20092 Document: 00516494085 Page: 10 Date Filed: 10/03/2022
No. 21-20092
omitted). The view taken by the district court seems to have been that Acadia
did not breach the contract because it properly denied Advanced’s claim
based on Watson’s report and Warren’s recommendation.
The question before us is whether Advanced has put forth sufficient
summary judgment evidence to create a disputed issue of material fact
regarding whether the damage to the building came from a covered cause,
here, wind from Hurricane Harvey. We hold that it has. Specifically,
Advanced points to the testimony of Thomas Ross, a public adjuster, who
stated that the roofing system “completely failed,” and that the damage was
“absolutely” caused only by the hurricane. De la Mora, Advanced’s expert,
also testified at his deposition that the damage was caused by Hurricane
Harvey. Finally, the record contains previous reports demonstrating that the
building was in good shape. Viewing this evidence in the light most favorable
to Advanced, a reasonable jury could find that Hurricane Harvey’s winds
were the cause of the damage to the building. To be sure, Acadia offers
evidence to the contrary. But this evidence serves only to create a factual
dispute.
We next turn to the district court’s alternative holding: that the
concurrent causation doctrine bars Advanced’s claim because it cannot
segregate covered losses from non-covered losses.4 Under this doctrine,
4
This Court has recognized the substantial gaps in the concurrent causation
doctrine and, as a result, twice certified questions to the Supreme Court of Texas,
including:
1. Whether the concurrent cause doctrine applies where there is any non-covered
damage, including “wear and tear” to an insured property, but such damage does not
directly cause the particular loss eventually experienced by plaintiffs;
2. If so, whether plaintiffs alleging that their loss was entirely caused by a single,
covered peril bear the burden of attributing losses between that peril and other, non-
covered or excluded perils that plaintiffs contend did not cause the particular loss; and
10
Case: 21-20092 Document: 00516494085 Page: 11 Date Filed: 10/03/2022
No. 21-20092
“when covered and non-covered perils combine to create a loss, the insured
is entitled to recover that portion of the damage caused solely by the covered
peril.” Dallas Nat’l Ins. Co. v. Calitex Corp., 458 S.W.3d 210, 222 (Tex. App.
2015) (collecting cases). “Because an insured can recover only for covered
events, the burden of segregating the damage attributable solely to the
covered event is a coverage issue for which the insured carries the burden of
proof.” Id. (citing Wallis v. United Servs. Auto. Ass’n, 2 S.W.3d 300, 303
(Tex. App. 1999)). “Failure to segregate covered and noncovered perils is
fatal to recovery.” Id. at 223 (quoting Comsys Info. Tech. Servs., Inc. v. Twin
City Fire Ins. Co., 130 S.W.3d 181, 198 (Tex. App. 2003)) (internal quotation
marks and alternation omitted). An insured may carry its burden by putting
forth evidence demonstrating that the loss came solely from a covered cause
or by putting forth evidence by which a jury may reasonably segregate
covered and non-covered losses. See Travelers Indem. Co. v. McKillip, 469
S.W.2d 160, 162 (Tex. 1971).
Here, the same evidence that supports Advanced’s argument that
Hurricane Harvey caused some of its damage supports its argument that
Hurricane Harvey caused all of the damage. Indeed, both Ross and De la
Mora testified that the hurricane was the sole cause of Advanced’s loss.
3. If so, whether plaintiffs can meet that burden with evidence indicating that the
covered peril caused the entirety of the loss (that is, by implicitly attributing one hundred
percent of the loss to that peril).
Overstreet v. Allstate Vehicle & Prop. Ins. Co., 34 F.4th 496, 497, 499 (5th Cir.
2022), certified question accepted (May 27, 2022), certified question dismissed (Sept. 16,
2022); Frymire Home Servs., Inc. v. Ohio Sec. Ins. Co., 12 F.4th 467, 472 (5th Cir. 2021),
certified question accepted (Sept. 10, 2021), certified question dismissed (Dec. 3, 2021).
Because both Overstreet and Frymire settled after certification, this Court’s questions
regarding when the doctrine applies and a plaintiff’s burden of proof remain unanswered.
This is of no import, however, because our conclusion today does not exclusively rest on
the application of the concurrent causation doctrine.
11
Case: 21-20092 Document: 00516494085 Page: 12 Date Filed: 10/03/2022
No. 21-20092
Accordingly, because a jury could reasonably find that all of Advanced’s loss
comes from a covered cause, the concurrent causation doctrine does not bar
recovery. See id.
Finally, we turn to Advanced’s bad faith and TPPCA claims. The
district court dismissed Advanced’s bad faith claims because it dismissed
Advanced’s breach of contract claim. The Texas Supreme Court has
described breach of contract and bad faith claims as “largely interwoven.”
USAA Tex. Lloyds Co. v. Menchaca, 545 S.W.3d 479, 489 (Tex. 2018).
Accordingly, because we reverse the district court’s dismissal of Advanced’s
breach of contract claim, we find it appropriate to reverse the dismissal of
Advanced’s bad faith claims as well.
For similar reasons, we reverse the district court’s dismissal of
Advanced’s TPPCA claim. To prevail on a TPPCA claim for damages and
interest, an insured must demonstrate the insurer’s (1) liability under the
policy, and (2) failure to comply with the TPPCA. Barbara Techs. Corp. v.
State Farm Lloyds, 589 S.W.3d 806, 812–13 (Tex. 2019). A wrongful rejection
of a claim, if reduced to judgment, can be considered a delay in payment
under the TPPCA. See Higginbotham v. State Farm Mut. Auto. Ins. Co., 103
F.3d 456, 461 (5th Cir. 1997); see also Barbara Techs., 589 S.W.3d at 819–20
(explaining that the TPPCA can apply in cases where “there is a judgment
that the insurer wrongfully rejected the claim”). Accordingly, should
Advanced succeed on its breach claim, it may succeed on its TPPCA claim
as well. We therefore reverse the dismissal of this claim.
In sum, we find that summary judgment was not warranted on
Advanced’s breach of contract claim given the evidence Advanced has put
forth. This conclusion requires reversal of the district court’s dismissal of
Advanced’s other claims.
12
Case: 21-20092 Document: 00516494085 Page: 13 Date Filed: 10/03/2022
No. 21-20092
IV.
For the foregoing reasons, we AFFIRM the district court’s denial of
the motion to remand, REVERSE the grant of summary judgment on
Advanced’s claims, and REMAND the matter to the district court for
proceedings consistent with this opinion.
13
Case: 21-20092 Document: 00516494085 Page: 14 Date Filed: 10/03/2022
No. 21-20092
Kurt D. Engelhardt, Circuit Judge, concurring:
I join the panel’s opinion in full because it properly applies this court’s
binding precedents. I write separately to highlight an important implication
of this decision. Specifically, our holding all but eviscerates the voluntary-
involuntary rule. As our opinion explains, that rule holds that “‘an action
nonremovable when commenced may become removable thereafter only by the
voluntary act of the plaintiff.’” Crockett v. R.J. Reynolds Tobacco Co., 436 F.3d
529, 532 (5th Cir. 2006) (quoting Weems v. Louis Dreyfus Corp., 380 F.2d 545,
547 (5th Cir. 1967)) (emphasis added). The voluntary-involuntary rule is
derived from century-old Supreme Court caselaw. See Powers v. Chesapeake
& Ohio Ry. Co., 169 U.S. 92 (1898); Am. Car & Foundry Co. v. Kettelhake, 236
U.S. 311 (1915). And it has been firmly established in the Fifth Circuit at least
since Weems, 380 F.2d at 547, where we held that the voluntary-involuntary
rule survived the enactment of 28 U.S.C. § 1446(b).
Despite this storied history, for practical purposes the voluntary-
involuntary rule does not survive our ruling today. If, as here, a defendant
can take a post-filing, pre-removal action which the negates the claim against
the in-state defendant, thereby triggering the improper joinder “exception,”
then the voluntary-involuntary rule does not exist in practice.1
As our opinion explains, this outcome is dictated by our intervening
decisions in Crockett, 436 F.3d at 532, which held that improper joinder is an
1
I note that some district courts have suggested that our intervening caselaw since
Weems has only cabined the voluntary-involuntary rule to cases where there is a reasonable
“possibility of some court restoring an in-state defendant to the case, which would undo
federal diversity jurisdiction.” Valverde v. Maxum Cas. Ins. Co., 558 F. Supp. 3d 385, 398
(S.D. Tex. 2021). But the voluntary-involuntary rule has always been based in part on a
policy of favoring a plaintiff’s right to determine the removability (and jurisdiction) of his
or her case. See Insinga v. LaBella, 845 F.2d 249, 253–54 (11th Cir. 1988) (per curiam)
(explaining how such a policy is rooted in the Supreme Court’s early jurisprudence on the
voluntary-involuntary rule).
14
Case: 21-20092 Document: 00516494085 Page: 15 Date Filed: 10/03/2022
No. 21-20092
exception to voluntary-involuntary rule, and Flagg v. Stryker Corp., 819 F.3d
132, 137 (5th Cir. 2016) (en banc), which emphasized the need to focus our
improper joinder analysis on the facts as they stood at the time of removal.
Neither case explicitly overruled the voluntary-involuntary rule, but reading
those holdings together requires effectively overruling it in this case, even
though the rule existed decades before either decision.
Moreover, both Crockett and Flagg have been the subject of criticism,
particularly for how their broad holdings apply to cases like this one. District
courts have complained that Crockett’s characterization of improper joinder
as an “exception” to the voluntary-involuntary rule is misleading, as they
should be viewed as separate but sometimes competing doctrines. See, e.g.,
Morgan v. Chubb Lloyds Ins. Co. of Tex., 541 F. Supp. 3d 754, 763–64 (N.D.
Tex. 2021). Indeed, the sole authority Crockett cited to hold that the
characterization of improper joinder as an exception to the voluntary-
involuntary rule is “settled law” is the Eleventh Circuit case Insinga. See
Crockett, 436 F.3d at 532 n.2. But that case dealt with a different situation
involving a defendant entitled to sovereign immunity. The Insinga court
therefore emphasized that the case “involve[d] a determination by the [state]
court that the resident defendant was never properly before the court, rather
than a determination that the court had jurisdiction of that defendant but that
the case against him, although not frivolous, was not meritorious.” 845 F.3d
at 254–55 (emphasis added).
District courts have also implicitly criticized Flagg’s requirement that
we focus on jurisdictional facts as they stood at the time of removal in
improper joinder cases. See Stephens v. Safeco Ins. Co. of Ind., No. 4:18-cv-
595, 2019 WL 109395, at *5 (E.D. Tex. Jan. 4, 2019) (“Whether a non-
diverse defendant is improperly joined is a binary question; the defendant is
either a proper party when joined to [the] suit or the defendant is an improper
party when joined to the suit. . . . It does not follow that a non-diverse
15
Case: 21-20092 Document: 00516494085 Page: 16 Date Filed: 10/03/2022
No. 21-20092
defendant that is initially properly joined may become initially improperly
joined.”). And despite the Flagg court’s broad language, that case’s focus
was on whether post-removal events could revive a claim against an in-state
defendant, not whether pre-removal (but post-filing) events could mandate
removal. But whatever the faults of Crockett and Flagg, they bind this court
today.
Our precedents in this field have flummoxed parties and district
courts alike. I hope that our decision today offers some clarity. But I
recognize that, given the wicked web our caselaw weaves, these concerns may
merit further consideration in a future appropriate case.
16