UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF TEXAS 

ABILENE DIVISION 

RICHARD COOLEY, et al., 

Plaintiffs,

v. No. 1:22-CV-046-H

STATE AUTOMOBILE MUTUAL 

INSURANCE COMPANY, et al.,

Defendants.

ORDER

Before the Court is the plaintiffs’ Motion for Leave to File Second Amended 

Complaint. Dkt. No. 26. Defendant State Automobile Mutual Insurance Company

removed this case on the basis of improper joinder, pointing out that the plaintiffs’ only 

claim against the in-state defendants—negligent claims handling—is not recognized under 

Texas law. The plaintiffs now seek leave to add new claims against these defendants. But 

under Fifth Circuit precedent, the Court cannot consider new claims added post-removal 

when assessing its jurisdiction. Because the plaintiffs’ state-court petition did not state a 

valid claim against them, the in-state defendants were improperly joined. Because the Court 

lacks jurisdiction over nondiverse parties, the motion is denied and plaintiffs’ claims against 

Aneesa Bacon and Insurance Solutions of Abilene are dismissed without prejudice.

1. Procedural Background

The plaintiffs filed suit in state court against Aneesa Bacon and Insurance Solutions 

of Abilene (the agent defendants) and State Auto. Dkt. No. 1-1. State Auto removed,

claiming the agent defendants were improperly joined because Texas law does not recognize 

the only cause of action asserted against them. Dkt. No. 1 at 5–6. The plaintiffs agree that 

Texas does not recognize negligent claims handling as a cause of action. Dkt. No. 13 at 3. 

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After some time, and without filing a motion to remand, the plaintiffs sought leave to 

amend their complaint to allege new claims of misrepresentation against the agent 

defendants. Dkt. No. 12.

The Court denied the motion because the new complaint still did not state a valid 

claim against the agent defendants. Dkt. No. 23. Specifically, the DTPA and Insurance 

Code misrepresentation claims did not satisfy the pleading requirements of the Federal 

Rules of Civil Procedure. Id. at 5–8. The Court gave the plaintiffs another chance to 

attempt to state a claim against the agent defendants (Id. at 8), and the plaintiffs 

subsequently filed a Motion for Leave to File Second Amended Complaint (Dkt. No. 26).1 

State Auto responded (Dkt. No. 28), and the agent defendants joined in the response. Thus, 

with the time to file a reply passed (see Loc. Civ. R. 7(f)), the motion is ripe for review.

2. Legal Standards

Generally, a case may not be removed if one of the defendants is a citizen of the 

forum state. 28 U.S.C. § 1441(b). But Section 1441(b) limits the rule to those who are 

“properly joined and served as defendants.” Id. The “properly joined” language recognizes 

that a defendant may remove a case when the forum defendant is improperly joined.

The in-state defendant is improperly joined if the movant can show the “inability of 

the plaintiff to establish a cause of action against the non-diverse party in state court.” 

Smallwood v. Ill. Cent. R.R. Co., 385 F.3d 568, 573 (5th Cir. 2004) (en banc). In Smallwood,

the en banc court explained that the relevant question in determining the plaintiff’s ability to 

state a claim is whether “there is no possibility of recovery” or “no reasonable basis for the 

1 For purposes of clarity, the Court notes that the motion seeks leave to file a first amended

complaint, as no valid amendment to the state-court petition has been approved.

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district court to predict that the plaintiff might be able to recover.” Id. Additionally, “[a] 

mere theoretical possibility of recovery under local law will not preclude a finding of 

improper joinder.” Id. at 573 n.9 (internal citation omitted). Typically, the district court 

conducts “a Rule 12(b)(6)-type analysis” but can permit discovery, consider evidence, and 

conduct summary proceedings if necessary. Id. at 573.

However, as addressed in State Auto’s Response, the Court is barred from 

considering post-removal amendments when assessing jurisdiction. See, e.g., Cavallini v. 

State Farm Mut. Auto. Ins. Co., 44 F.3d 256, 259–60 n.8 (5th Cir. 1999). It is an uncontested 

principle of law that diversity jurisdiction is assessed “against the state of facts that existed at 

the time of filing.” Grupo Dataflux v. Atlas Grp., L.P., 541 U.S. 567, 571 (2004). As a result,

“[j]urisdictional facts are determined at the time of removal, and consequently post-removal 

events do not affect that properly established jurisdiction.” Spear Mktg., Inc. v. BancorpSouth 

Bank, 791 F.3d 586, 592 (5th Cir. 2015). This time-of-filing rule has been applied to the 

amount-in-controversy requirement,2the citizenship of parties,3and the presence of federal 

claims.4It also applies to the post-removal amendment and factual supplementation of 

claims brought against in-state defendants. See, e.g., Cavallini, 44 F.3d at 259. 

2 Gebbia v. Wal-Mart Stores, Inc., 233 F.3d 880, 883 (5th Cir. 2000) (“[S]ubsequent events that reduce 

the amount in controversy to less than $75,000 generally do not divest the court of diversity 

jurisdiction.”).

3 Grupo Dataflux, 541 U.S. at 582 (holding that a limited partnership’s change of citizenship postremoval has no effect on jurisdiction).

4 Spear Mktg., Inc., 791 F.3d at 592 (“It is this court’s established precedent that once a case is 

properly removed, the district court retains jurisdiction even if the federal claims are later 

dropped.”).

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3. Analysis

A. The agent defendants were improperly joined.

Given Fifth Circuit precedent and the live pleading at the time of removal, it is clear 

that the plaintiffs improperly joined the agent defendants. The Fifth Circuit requires district 

courts to look only to the claims presented in the live pleading at the time of removal. See, 

e.g., id. at 263; Akerblom v. Ezra Holdings Ltd., 509 Fed. App’x 340, 344 (5th Cir. 2013)

(“[P]ost-removal filings may be considered only to the extent they amplify or clarify facts 

alleged in the state-court complaint, with new claims or theories of recovery disregarded.”)

(collecting cases), abrogated on other grounds by Int’l Energy Ventures Mgmt., L.L.C. v. United 

Energy Grp., Ltd., 818 F.3d 193, 201 (5th Cir. 2016).

And district courts follow this instruction rigidly. For example, this court faced a 

similar request by a plaintiff whose case had been removed on the basis of improper joinder. 

Excel Mktg. Sols., Inc. v. Direct Fin. Sols., LLC, No. 3:11-CV-109-D, 2011 WL 1833022, at *4 

(N.D. Tex. May 13, 2011) (Fitzwater, J.). Judge Fitzwater rejected the plaintiff’s attempt to 

amend itself out of the court’s jurisdiction: “Excel asks that, in the event that the court 

denies its motion to remand, the court permit Excel to amend its petition to assert a claim 

on which relief can be granted against OIX and thus defeat removal. But the court should 

not evaluate the propriety of removal based on an amended complaint.” Id.; see also Cook v. 

Wells Fargo Bank, N.A., No. 3:10-CV-592-D, 2010 WL 2772445, at *3 (N.D. Tex. July 12, 

2010) (Fitzwater, J.) (“[T]he court must look to the live pleadings at the time of removal.”) 

(citing Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002)).

Here, looking only to the live pleading at the time of removal, the plaintiffs have 

failed to state a claim against the agent defendants. The Court previously acknowledged 

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this reality (Dkt. No. 23 at 7), and the plaintiffs agree (Dkt. No. 13 at 3) (“As Defendant 

State Auto points out[,] Texas law does not recognize a cause of action for negligent claims 

handling.”). Thus, as a simple application of the Cavallini principle, the Court may not 

consider any claims added by amendment, and therefore amendment is futile. The agent 

defendants were improperly joined, and the Court may not assert jurisdiction over the 

claims against them other than to dismiss the claims without prejudice.

B. The amount-in-controversy requirement is satisfied by the plaintiffs’ live 

pleading at the time of removal.

The plaintiffs also argue that the Court lacks jurisdiction because their state-court 

complaint asks for only $74,532.48. Dkt. No. 22 at 2–3. But “[i]f a state statute provides for 

attorney’s fees, such fees are included as part of the amount in controversy.” Manguno, 276 

F.3d at 723. Breach of contract, the first claim brought in the plaintiff’s state-court petition, 

is a claim for which attorneys’ fees are provided by state law. Tex. Civ. Rem. & Prac. Code 

§ 38.001; see also Grapevine Excavation, Inc. v. Md. Lloyds, 35 S.W.3d 1, 5 (Tex. 2000) (holding 

that insurers are liable for breach-of-contract attorney’s fees “unless the insurer is liable for 

attorney’s fees under another statutory scheme” in spite of Section 38.006’s text). Thus, the 

amount-in-controversy requirement is met.

C. Dismissal without prejudice is the proper remedy.

While the question of whether a district court may consider new claims added postremoval in assessing its jurisdiction is clear in the Fifth Circuit, courts are somewhat divided 

in how they dispose of improperly joined defendants. Compare MIL (Invs.) SARL v. Inco Ltd., 

No. 3-02-CV-1879-G, 2002 WL 32319011, at *2 (N.D. Tex. Oct. 29, 2002) (Fish, C.J.) 

(“Rule 21 on its face vests district courts with the authority to dismiss improperly joined 

parties . . . .”), with Excel Mktg. Sols., 2011 WL 1833022, at *1 (“[T]he court holds that the 

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Texas citizen defendant has been improperly joined . . . and that plaintiff’s action against 

that defendant must be dismissed with prejudice.”), and with Marsh v. U.S. Bank, N.A., No. 

SA-21-CV-321-XR, 2021 WL 2227391, at *4 (W.D. Tex. June 1, 2021) (“[T]he only ground 

for dismissing any improperly joined, nondiverse party is lack of subject matter 

jurisdiction.”) (quoting Int’l Energy Ventures Mgmt., L.L.C., 818 F.3d at 210).

The Court agrees with those decisions that dismiss claims against nondiverse 

defendants for lack of subject matter jurisdiction. “When, as here, a court determines that a 

nondiverse party has been improperly joined to defeat diversity, that party must be dismissed 

without prejudice. If subject matter jurisdiction is based on diversity, a court never has 

jurisdiction over a nondiverse party.” Int’l Energy Ventures, 818 F.3d at 209. Here, the Court 

lacks jurisdiction, and the proper remedy is dismissal for lack of jurisdiction.

4. Conclusion

Thus, any amendment to the claims against the agent defendants is futile, and the 

agent defendants are improperly joined. The Court denies the motion for leave to file an 

amended complaint (Dkt. No. 26) and dismisses without prejudice all claims against Aneesa 

Bacon and Insurance Solutions of Abilene.

So ordered on November 16, 2022.

JAMES WESLEY HENDRIX

UNITED STATES DISTRICT JUDGE

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