Joseph v. Unitrin, Inc., 2008 WL 3822938 (E.D. Tex. 2008)

Dear Ann Landers – I am an overworked, underpaid insurance lawyer practicing in the Great State of Texas. My wife has recently started spending an exorbitant amount of money on socks, I am afraid my 12 year old son is going to develop arthritis and/or carpal tunnel in his thumbs from excessive texting and Twittering, and I am pretty sure my dog has anxiety. But my biggest concern is this here perplexing legal issue that is consuming me – PLEASE HELP

One of my clients, Capital County, a Texas insurance company that issues homeowner’s insurance policies only in Texas, was recently named in a proposed class action lawsuit in a Texas state court filed by a lady on behalf of herself and other Texas residents asserting state law claims against Capitol County. The complaint states that she is serving as class representative for all policyholders who paid premiums to Capitol County for residential insurance coverage in Texas from November 2006 to June 2007 and whose policies were cancelled. 

I timely removed the case to federal court under CAFA, a federal statute that I learned about on that website that everyone has been talking about (and my 12 year old son told me just the other night that the CAFA Law Blog is on that Twitter thing now, too).

The plaintiff’s lawyer is now trying to get the case sent back to the state court based on some “Local Controversy Exception” found in CAFA. I read up on this “Local Controversy Exception” on, and I just don’t think the plaintiff has met the requirements.  

According to my research, in order to take advantage of this “Local Controversy Exception,” the plaintiff must first prove that 2/3’s of the proposed class are citizens of the great state of Texas. Back when I was in law school, we were taught that in order to prove that one is a citizen of the great state of Texas, one must show that he or she has a residence here and that he or she intends to stay here. The plaintiff’s lawyer has not come forward with any proof of that. 

Second, the plaintiff must prove that they are seeking significant relief from a Texas defendant and that the conduct of that Texas defendant must form a significant basis for the claims stated in the lawsuit. Now, there are other defendants in this lawsuit. The plaintiff named other defendants that make up the corporate structure of Capitol County, and I figure that has to be significant? In any event, as far as my client, I just don’t think the plaintiff has proved either of these things. Where’s the proof??

Please Anne Landers, I read your column everyday and have seen you help countless others with their problems … WHAT WOULD YOU DO ??

Dear Confused in Texas: I realize that you are a lawyer and this may be a tough concept to grasp, but I think this situation just calls for a little COMMON SENSE!! I read the posts on everyday, so I consider myself to be pretty much an expert on CAFA. 

 Regarding the first requirement, citizenship, for purposes of proving an exception to CAFA, must be analyzed as of the date the complaint or amended complaint was filed. Now, I realize that one must have a residence in Texas and the intention to remain in Texas in order to be considered a Texas citizen; however, evidence of a person’s place of residence is a prima facie proof of his domicile. And, once established, a person’s state of domicile presumptively continues unless rebutted with sufficient evidence of change. 

Now …. You stated in your letter that Capitol County only issued homeowner’s policies in Texas and that the plaintiff only seeks to represent residents of Texas. Capitol County’s policies cover a policyholder’s residence, so it can be assumed that members of the proposed class own real property in Texas.

Now … COMMON SENSE (again, I know this may be a foreign concept to a lawyer and one that is difficult to grasp) tells us that the vast majority, if not all, of the proposed class remain citizens of Texas. We all realize that our country’s economy is in bad shape, but there is no indication that there has been or will be a mass exodus from, as you call it, the Great State of Texas. Like that television commercial says, “It’s like a whole other country.” Why would anyone want to leave? Where would they go? Arkansas?

Regarding the second requirement concerning the significance of the Texas defendant, it is my understanding that all the potential class members have claims against Capitol County. Each member of the putative class purchased a policy from Capitol County, paid monthly premiums to Capitol County, and was later notified that their Capitol County policy was canceled.   Again … COMMON SENSE … THAT IS SIGNIFICANT.

By the way, good luck with your wife’s sock fetish.  This may open up a whole new passionate world for the two of you.


 Apparently, Judge Marcia Crone read the above article before issuing her opinion in Joseph v. Unitrin, Inc. … 

The Court’s opinion stated that common sense suggests that the proposed class meets the local controversy exception’s citizenship requirement. The Court recognized that (1) the proposed class definition inherently characterizes potential plaintiffs as citizens of Texas; (2) Capitol County issued homeowner’s policies in Texas only; and (3) said policies cover both the policyholder’s residence and household effects so it can be assumed that members of the putative class own both real and personal property in Texas. In light of these factors, the Court held that the plaintiff need not provide additional evidence in order to determine that more than two-thirds of the potential plaintiffs were Texas citizens. 

With regard to the second prong of the “Local Controversy Exception” the court held that the plaintiff was seeking significant relief from Capitol County, and although there were other members of the corporate structure named as defendants in an effort to maximize recovery, that does not mean that the class is not seeking the full panoply of damages from Capital County.