Thomas v. Federated Mutual

Background

Kelly Thomas sued Federated Mutual and Standard Casualty Co. over denied insurance claims involving damage to her Texas home from unsatisfactory plumbing work and a storm. Her amended complaint alleged that the defendants failed to inspect, or improperly inspected, her home; engaged in unfair insurance practices; breached the duty of good faith and fair dealing; breached a contract; and committed fraud.

Both defendants moved to dismiss under Federal Rule of Civil Procedure 12(b), arguing, among other things, that the court lacked subject-matter jurisdiction, lacked personal jurisdiction over Standard, had improper venue, and that Thomas failed to state a claim. Magistrate Judge Becky R. Thorson recommended granting both motions and dismissing the amended complaint without prejudice. Thomas objected and also filed motions seeking removal of the magistrate judge, relief under Rule 60, and other relief.

Jurisdiction

The court rejected Thomas’s argument that her claims presented a federal question. Although her amended complaint cited several federal statutes, the court held that it did not explain how those statutes related to her claims. The court further held that the statutes she cited—15 U.S.C. § 41, 12 U.S.C. § 5481, and 42 U.S.C. § 1983—either did not provide a private right to sue or did not apply to the facts alleged.

The court also held that diversity jurisdiction was absent. It explained that citizenship for diversity purposes is determined when the suit is filed and that, for an individual, citizenship depends on domicile rather than ownership of a residence. The court found that Thomas was a Texas citizen because she lived in Texas and identified it as her primary residence. It also found that Standard was a Texas citizen because the record showed that Texas was both its state of incorporation and principal place of business. Because Thomas and Standard shared Texas citizenship, complete diversity was lacking, making Federated’s citizenship irrelevant.

The court corrected the magistrate judge’s use of December 28, 2018, as the date for assessing diversity. It held that January 2, 2019—the date of the amended complaint—was the proper date, but concluded that the correction did not change the jurisdictional result.

Other Motions and Rulings

The court considered Thomas’s objections despite their untimeliness. It held that Standard’s response to those objections was timely. The court found no basis to remove or recuse the magistrate judge because Thomas’s disagreements with the report and recommendation did not show personal bias or prejudice.

The court also denied relief under Federal Rule of Civil Procedure 60 because that rule applies to final judgments or orders, while the magistrate judge’s report and recommendation was not itself a final judgment or order. The court concluded that the alleged errors were either disagreements with the report, misunderstandings of the electronic filing system, or harmless typographical errors.

Disposition

The order overruled Thomas’s objections; denied her motion to reconsider the objections, motion to remove or recuse, motion for a hearing on that motion, and Rule 60 motion; and adopted the report and recommendation in part, correcting the erroneous date. It granted Standard Casualty Co.’s motion to dismiss and denied Federated Mutual’s motion to dismiss as moot. Thomas’s amended complaint was dismissed without prejudice. The court denied as moot her motions to transfer, for a supplemental response, for appointment of counsel, to extend the time to object, for leave to file, to combine matters, for discovery, and for default judgment. The court did not reach the merits of Thomas’s insurance-related claims.