Contracting with Commercial Property Loss Adjusters from Other States Can Defeat Federal Diversity Jurisdiction
The insured Grecian Delight Foods had an explosion at its factory which caused it to submit a claim. When Grecian Delight and its insurer could not agree how to resolve the $26.76M claim, Grecian Delight filed suit against its insurer in state court for breach of contract, declaratory judgment, tortious interference, and bad faith. Grecian Delight additionally brought claims against the company hired to adjust the claim and its CEO for tortious interference with the insurance policy and the insured’s contract with a third-party. The insurer removed the case arguing that the adjusting company and its CEO were fraudulently joined, but the court disagreed and held that the insurer had not met its burden of establishing that the claims against the adjuster and its CEO “[had] no chance of success.” For that reason, the case was remanded back to state court.