Summary
aggregating claims sounding in tort and claims sounding in contract
Summary of this case from Agre v. Rain & Hail LLCOpinion
3:01-CV-1151-M.
November 6, 2001
MEMORANDUM OPINION AND ORDER
On June 15, 2001, UNUM Life Insurance Co. of America ("UNUM"), removed this case, for the second time, to federal court based on diversity jurisdiction. On its first attempt, this Court granted Plaintiff's Motion to Remand, finding UNUM had not met its burden as to the amount in controversy requirement. UNUM's second removal seeks to cure this deficiency.
On July 10, 2001, Plaintiff Richard O. McCall ("McCall") again moved to remand, claiming complete diversity did not exist and the amount in controversy did not exceed $75,000, as required by 28 U.S.C. § 1332. This memorandum opinion addresses whether UNUM can demonstrate that more than $75,000 is in controversy, and if so, whether the doctrine of fraudulent joinder applies to this case so as to permit removal despite the absence of diversity between the Plaintiff and all the Defendants.
FACTUAL BACKGROUND
UNUM issued two disability policies to McCall, Policy No. LAD 195109, effective August 3, 1992, and Policy No. LAD270709, effective March 23, 1994. The disability policies were sold to McCall through UNUM's brokers, Insurance Partners Southwest Corp., and IPS Insurance Services, Inc.
McCall allegedly became totally disabled on or about December 31, 1999. He made an application for disability benefits on April 12, 2000. On August 11, 2000, UNUM paid him disability benefits of $10,950.00, for the period between June 29, 2000, and July 29, 2000. On August 31, 2000, UNUM again paid him disability benefits of $10,950.00, this time for the period between July 29, 2000, and August 29, 2000. On September 26, 2000, UNUM notified McCall that it would not pay to him any further disability benefits.
On December 20, 2000, McCall filed his Original Petition, seeking damages allegedly due under the two UNUM disability income policies. He alleged the insertion of "total disability" in UNUM's new insurance policy marketed to professionals was intended to, and did, misrepresent to him a material fact or policy provision, in violation of the Texas Deceptive Trade Practices Act ("DTPA") and Texas Insurance Code, Article 21.21, Section 4. McCall also asserted claims against Insurance Partners Southwest Corp. and IPS Insurance Services, Inc. (together "IP Defendants") for "represent[ing] that the disability policies conferred or involved rights, remedies or obligations which they did not have or involve, in violation of Article 21[.]21, Section 16." Pl's Pet. at 5.
On February 7, 2001, UNUM first removed this case. By Order dated April 10, 2001, this Court remanded the action to the state court, finding UNUM did not meet its burden of proof on the amount in controversy requirement. On May 16,2001, McCall served his Response to Disclosure Request, in which he demonstrated the amount and method of his calculation of economic damages. Based on this Response, on June 15, 2001, UNUM again removed, claiming the amount in controversy exceeded $75,000.
ANALYSIS
The Fifth Circuit recognizes a defendant's right to seek subsequent removals after remand as long as the second removal does not rest on the same grounds as the first removal. See Browning v. Navarro, 743 F.2d 1069, 1079-80 n. 29 (5th Cir. 1984); St. Paul C. Ry. Co. v. McLean, 108 U.S. 212, 216-17 (1883); S.W.S. Erectors, Inc. v. Infax, Inc., 72 F.3d 489, 492 (5th Cir. 1996). Under 28 U.S.C. § 1446(b), a second removal is thus proper "when subsequent pleadings or events reveal a new and different ground for removal." 28 U.S.C. § 1446(b) (2000).
In his Response to Disclosure Request asking "the amount and any method of calculating economic damages," McCall stated:
The contract damages are calculated by aggregating the monthly disability benefits to which Plaintiff is entitled under the policies up to date of judgment, plus 18% of those benefits, plus attorneys' fees and court costs incurred in the prosecution of this claim. The tort damages equal the total amount Plaintiff has paid in premiums for the life of the two disability policies, plus treble damages.
Pl's Resp. at 2. UNUM claims this disclosure constitutes newly pled facts. In particular, it argues this Response, for the first time, demonstrates that tort damages are equal to the premiums paid by McCall to UNUM over the life of the policy. UNUM's first removal used the amount of unpaid benefits in its calculation of the amount in controversy. In fact, the only actual damages alleged by McCall in his Petition are his unpaid and future benefits. Until UNUM received the disclosure, it could not know that McCall was asserting a claim for premiums paid to UNUM by McCall over the life of the policies. "Different grounds," mean "a different set of facts that state a new ground for removal." S.W.S. Erectors, 72 F.3d at 493. The disclosure statement presented here qualifies as a new ground for removal because it first advised UNUM of a different number to treble. Id. Given that UNUM has asserted a "new ground for removal," the Court will proceed to the analysis of jurisdiction.
The timing of removal is governed by 28 U.S.C. § 1446(b), which gives a party thirty days after receipt of a copy of a pleading, motion, order, or "other paper" from which it may be ascertained that the case is removable. McCall's disclosures qualify as "other paper." See Johnson v. Dillard Dept. Stores, Inc., 836 F. Supp. 390, 391 (N.D. Tex. 1993).
UNUM also contends the "up to the date of judgment" portion of McCall's disclosure gave it new authority to argue for the inclusion of disability benefits beyond the date of filing. Because of the balance of its analysis, the Court does not reach the question of whether the difference between the date of filing and the date of judgment would constitute a new ground of removal.
A. Amount in Controversy
The basic numbers includible in any actual damage calculation consist of either: (1) McCall's requested unpaid disability benefits as of the time of filing, totaling $32,850 ($10,950 per month for three months) or (2) the total amount of premiums paid to UNUM by McCall during the life of the policy, totaling $30,506.91 ($15,010.16 for policy no. LAD195109 and $15,469.75 for policy no. LAD27079). McCall's Petition alleges UNUM knowingly violated the DTPA, which authorizes treble damages. Deferring to McCall's own contentions, $75,000 is claimed. St. Paul Reinsurance Co., Ltd. v. Greenberg, 134 F.3d 1250, 1253 (5th Cir. 1998) ("the sum claimed by the plaintiff controls if the claim is apparently made in good faith"). McCall is plainly requesting some number to be trebled. In its first removal, UNUM trebled the $32,850 figure, the past disability benefits due, to obtain an amount in controversy in excess of $75,000. McCall opposed this calculation:
Though much discussion accompanies the parties' analysis of whether the date of removal, as opposed to the date of filing, should be used to calculate unpaid disability benefits, even under the date of filing calculation, $75,000 is exceeded.
UNUM notes that McCall seeks $32,850 in disability benefits and also seeks treble damages as allowed by the DTPA. UNUM then trebles the contract damages to reach an amount in controversy of $98,550. The fallacy in UNUM's reasoning is that McCall cannot treble contract damages; he can only treble damages caused by violation of the DTPA. For breach of contract, McCall can recover actual damages of $32,850.00 and penalty damages of $5,913.00 totaling $38,763, plus reasonable attorneys' fees.
Pl's 4/3/01 Reply at 1. McCall's recent disclosure provided a different answer, detailing the manner of calculating tort damages. Based on this disclosure, UNUM, in good faith, now alleges claims in excess of $75,000. St. Paul Reinsurance Co., Ltd., 134 F.3d at 1253.
McCall asserts in his discovery response that his contract damages are measured by aggregating the monthly disability benefits to which he is allegedly entitled under the two policies. When McCall filed suit on December 20, 2000, his claim for unpaid benefits under the two policies spanned three months (August 29, 2000 to November 29, 2000). The combined monthly benefit under these policies is $10,950, for a three month total of $32,850. The 18% statutory penalty recoverable on that sum under Texas Insurance Code, Article 21.55, is $5,913, for total contract damages of $38,763.
UNUM argues that damages should be aggregated as of the time of removal rather than the time of filing given that McCall's contract damages are requested "up to the date of judgment." This would bring McCall's claim for unpaid benefits at the time of removal to $98,550.00. However, this approach would allow parties to avoid removing until the amount in controversy exceeded the necessary jurisdictional limit and was rejected by this Court in UNUM's first removal.
As for the tort damages which McCall asserts are equal to the amount of premiums paid over the life of the two policies, UNUM's records state the total amount of premiums paid on both policies was $30,506.91, representing $15,010.16 for policy no. LAD195109 and $15,469.75 for policy no. LAD27079, all of which McCall seeks to treble. That approach leads to tort claims of $91,520.73. Attorneys' fees under the Texas Insurance Code are also sought. Plainly, aggregating the tort and contract damages exceeds the jurisdictional requirement.
McCall still argues the amount in controversy is not reached because UNUM cannot aggregate "claims against UNUM (sounding in contract) and against [the IP Defendants] (sounding in tort)." Pl's Brief at 6. The contract-tort distinction makes no difference. Though McCall has sued the IP Defendants in tort under the Texas Insurance Code, Article 21.21, Section 16, authorizing the trebling of actual damages for alleged misrepresentations, McCall, as stated above, has sued UNUM in tort under Article 21.21, Section 4, and the DTPA, which also authorizes treble damages, and in contract. UNUM is not aggregating relief sought from the IP Defendants, which it claims should not be in this case at all, and relief sought against UNUM. It is aggregating relief, which it is authorized to do, against UNUM sounding in contract and relief sounding in tort. See Snyder v. Harris, 394 U.S. 332, 335 (1969); Wolde-Meskel v. Vocational Instruction Project Community Serv., Inc., 166 F.3d 59, 61 (1st Cir. 1999) ("[s]ince the diversity statute confers jurisdiction over `civil actions' rather than specific claims alleged in a complaint, a plaintiff is permitted to aggregate claims in order to satisfy the amount in controversy requirement"). Further, as evidenced by the above calculation, the amount in controversy threshold is exceeded even without the contract-tort aggregation.
The section of the Petition alleging claims against the IP Defendants reads:
In selling the disability policies to Plaintiff, Defendants IPS, Inc. and IPS Corp. represented that the disability policies conferred or involved rights, remedies or obligations which they did not have or involve, in violation of Article 21[.]21, Section 16, producing Plaintiff's damages and entitling Plaintiff to his actual damages, court costs and reasonable and necessary attorney's fees.
Pl's Pet. at 5-6.
The portion of McCall's Petition alleging tort claims against UNUM reads:
In the course of implementing its pre-meditated and devious course of conduct, UNUM misrepresented to Plaintiff a material fact or policy provision relating to coverage under the disability policies and failed to attempt in good faith to effectuate a prompt, fair, and equitable settlement of Plaintiff's claim when UNUM's liability had become reasonably clear, in violation of Article 21[.]21, Section 4, Texas Insurance Code. UNUM's actions and conduct was done and committed knowingly, producing Plaintiff's damages and entitling Plaintiff to three times his actual damages, court costs, and reasonable and necessary attorney's fees.
. . . .
By engaging in this reprehensible behavior and course of conduct, UNUM is taking gross advantage of Plaintiff, who is a consumer under the "DTPA". Plaintiff is also adversely affected by UNUM's unlawful actions and course of conduct because it creates a gross disparity between the consideration Plaintiff paid for the disability policies and their values.
Pl's Pet. at 5. The portion of McCall's Petition alleging claims against UNUM arising from the insurance contract reads:
Plaintiff timely paid all premiums due under the policies, until premium payments were waived by UNUM, and complied with all other conditions precedent to his right to receive disability benefits under the terms of the policies. Notwithstanding Plaintiff's demand that UNUM honor its contractual obligations, UNUM has failed and refused, and still fails and refuses to pay Plaintiff disability benefits due under the disability policies, to Plaintiff's damage in the amount of $10,950 per month for each month that Plaintiff's disability continues up to the date of judgment.
. . . .
Pursuant to Art. 21.55, Plaintiff is entitled to recover of and from UNUM, in addition to the amounts owed under the disability policies, penalty damages of 18% of the amounts due per annum, for which plaintiff now sues.
Pl's Pet. at 3.
McCall faults UNUM for the confusion over damages, arguing that "[t]his does not excuse UNUM for failing to meet its burden of proof in the first removal proceeding." Pl's Brief at 8. UNUM attempted to meet its burden, but the relief sought by McCall was disguised in his Petition. Now that McCall has disclosed just what number he will seek to treble, UNUM's burden has been satisfied.
B. Complete Diversity
McCall was a citizen of Texas at the time this action was filed, and remained a citizen of Texas as of the date of removal. UNUM is a Maine corporation with its principal place of business in Maine. The IP Defendants are Texas corporations with their principal places of business in Texas. Thus, on the face of the Petition, complete diversity does not exist. UNUM urges the Court to "pierce the pleadings" to uncover the fraudulent joinder asserted by McCall. Carriere v. Sears Roebuck Co., 893 F.2d 98, 100 (5th Cir.), cert denied, 498 U.S. 817 (1990). In support of its contention, UNUM argues McCall actually asserts no cognizable claim against the IP Defendants and that, even if he could assert claims against them, these claims are barred by the statute of limitations. Each contention is taken in turn.
1. The Possibility of a Cognizable Claim against the IP Defendants
Where fraudulent joinder is alleged in removed cases, the burden of proving fraud clearly rests on the moving party — here, UNUM. B, Inc. v. Miller Brewing Co., 663 F.2d 545,549 (5th Cir. 1981). The burden of persuasion placed on those "who cry `fraudulent joinder' is indeed a heavy one." Id. at 549. The standard for judging fraudulent joinder claims of this sort is clearly established in this Circuit. The Court must initially resolve all disputed questions of fact and all ambiguities in Texas state law in favor of the non-removing party. Dodson v. Spiliada Maritime Corp., 951 F.2d 40, 42 (5th Cir. 1992). The Court is not to decide whether McCall will actually or even probably prevail on the merits against the IP Defendants, but only looks for a possibility that he may do so. Cavallini v. State Farm Mutual Auto Ins. Co., 44 F.3d 256, 259 (5th Cir. 1995) ("[t]he removing party must prove that there is absolutely no possibility that the plaintiff will be able to establish a cause of action against the in-state defendant in state court"); Green v. Amerada Hess Corp., 707 F.2d 201, 205 (5th Cir. 1983), cert. denied, 464 U.S. 1039 (1984); B, Inc. v. Miller Brewing Co., 663 F.2d 545, 550 (5th Cir. 1981) ("`a good faith assertion of such an expectancy in a state court is not a sham . . . and is not fraudulent in fact or in law'") (quoting Bobby Jones Garden Apartments v. Suleski, 391 F.2d 172, 177 (5th Cir. 1968))).
To establish that the non-diverse IP Defendants have been fraudulently joined, UNUM must show either: (1) that there is no possibility that McCall would be able to establish a cause of action against the IP Defendants in state court; or (2) that there has been outright fraud in McCall's pleading of jurisdictional facts. B, Inc., 663 F.2d at 549. UNUM attempts to show the first, that no cause of action can be established against the IP Defendants.
The IP Defendants were brokers involved in taking Plaintiff's application for the disability policies at issue. UNUM relies heavily on Waters v. State Farm Mut. Auto Ins. Co., 158 F.R.D. 107, 109 (S.D. Tex. 1994), to argue the existence of fraudulent joinder as to these brokers. There, the court dismissed the plaintiffs' claims against the defendant insurance agent, under Fed.R.Civ.P. 12(b)(6), finding plaintiffs failed to state a cause of action because the petition did not satisfy Fed.R.Civ.P. 9(b). In Waters, the plaintiffs' petition was conclusory, and plaintiffs' counsel admitted not knowing of any evidence linking the insurance agent to a material misrepresentation. He merely "suspect[ed]" discovery might reveal such a misrepresentation. This was not sufficient.
UNUM also relies heavily on Griggs v. State Farm Lloyds, 181 F.3d 694, 699 (5th Cir. 1999). 181 F.3d at 699-700. Griggs is distinguishable on its facts. There, only one general sentence in the plaintiff's petition mentioned the defendant agent: "Defendant [sic], through its local agent, issued an insurance policy." Further, the plaintiff made no attempt to serve the defendant agent. The Fifth Circuit had no problem declining to expand notice pleading to allow this kind of passing reference to constitute the statement of a claim.
In his Brief in Support of Motion to Remand, McCall argues that:
[i]f Plaintiff, through discovery, establishes that [IP] Defendants knew, at the time the disability policies were sold to Plaintiff, that UNUM did not intend to apply the policy definition of `total disability' in considering claims filed on the policies, but instead intended to deny all claims and force insureds to prove total disability under a definition not contained in the policies, then [the IP] Defendants would be guilty of violating § 17.46(b)(12), DTPA, by misrepresenting that the insurance policies conferred or involved rights, remedies, or obligations which they did not have or involve, which would entitle Plaintiff to recover judgement against [the IP] Defendants for their own violation of the DTPA.
Pl's Brief at 12. While this statement exposes some pleading inadequacies similar to those found in Waters, other allegations in McCall's Petition, combined with the elaboration in his deposition of alleged misrepresentations relating to the "total disability" definition of the policy, puts UNUM and the Co-Defendants on notice of McCall's claims against them and precludes UNUM from meeting its "heavy burden" of establishing that McCall will have absolutely no possibility of success in establishing a cause of action against the IP Defendants:
In selling the disability policies to Plaintiff, Defendants IPS, Inc. and IPS Corp. represented that the disability policies conferred or involved rights, remedies or obligations which they did not have, in violation of Article 21[.]21, Section 16, producing Plaintiff's damages and entitling Plaintiff to his actual damages, court costs, and reasonable and necessary attorney's fees.See Pl's Original Pet. at 5-6. McCall, in contrast to the plaintiff in Waters, narrows his allegations to the IP Defendants' alleged conduct — their failure to disclose UNUM's intentions as to the policy definition of "total disability."
McCall's recent deposition further clarifies the alleged false conduct of the IP Defendants. McCall testified that Rod Sager, the IP Defendants' agent and employee, admitted he knew, at renewal times, that UNUM had changed its practice of liberally paying mental health-related claims, but did not advise McCall and pushed him to renew the policy anyway. This evidence, when joined with Sager's deposition testimony, where he admits being able to sell more UNUM policies, such as that purchased by McCall, especially to professionals, because the older policies had a "less liberal," less "attractive" definition of "total disability." That evidence, although not terribly compelling, allows McCall to escape the grasp of the "fraudulent joinder" doctrine, because the Court cannot conclude that there is absolutely no possibility that McCall can prevail on it.
Applicable portions of McCall's deposition shed light on Sager's claimed failure to disclose UNUM's alleged practice of denying mental health-related claims:
Q: You have no evidence, nor is it your opinion, that Rod Sager ever did anything to intentionally mislead or deceive or misrepresent any terms of the policy to you, is that correct?
A: I think that I've clearly stated that when Rod told me that he knew for some period of time before we had the conversation in December, thereabouts, 1999, that he — that he knew, as a matter of course, that UNUM was no longer managing mental and nervous disorder claims in the same manner that he and I had discussed when he sold it to me back in `92 and `94.
I think, though unintentional it might have been, which was part of your question, he in fact misrepresented to me each time he resold me the policy, or he annually renewed the policy, what the facts were.
. . . .
Q: Do you have any evidence or do you know how long Rod was aware or had known prior to December of `99, that UNUM was no longer managing mental claims?
A: He would specifically say mental and nervous disorder claims, that's right, is the — you know, I think that's accurate.
He told me at that meeting, where I was somewhat amazed, that it had — it had been — it had — you know, it had been a policy for the last few years, because they had started suffering losses from those, and that it — it obviously wasn't anything that he or I or anybody else would have known about when they first started issuing the policies back in the `80's and the early `90s because there hadn't been time for those sort of claims to start coming in.
So I got the distinct impression that it's something that had been known for two or three or four years.
McCall Depo. at 123, 127.
UNUM objects to the use of evidence related to alleged disclosures Sager failed to make at renewal periods, arguing McCall is now changing his claim from that of alleged pre-sale misrepresentations by the IP Defendants to alleged misrepresentations by the IP Defendants during renewal stages. The Court observes that McCall's Petition is not a model of clarity. Nevertheless, the Court finds it sufficient to put UNUM on notice that he claims misrepresentations by the IP Defendants regarding the "rights, remedies, or obligations" conferred on McCall by the policies. As stated in Griggs v. State Farm Lloyds, 181 F.3d 694, 699 (5th Cir. 1999), post-removal evidence can clarify or amplify claims alleged in McCall's Petition, as McCall has done in his deposition here. See Carriere, 893 F.2d at 100 (unlike a 12(b)(6) motion, courts, in a "fraudulent joinder" situation, should consider summary judgment evidence such as deposition and affidavit testimony). The approach is quite distinct from what occurred in Waters.
Although in federal court, there is a heightened pleading requirement for fraud claims, it does not appear from the record that either UNUM or the IP Defendants specially excepted to the allegations asserted in McCall's Petition under Tex. R. Civ. P. 91. See also Corwin v. Marney, Orton Inv., 788 F.2d 1063, 1068 n. 4 (5th Cir. 1998) ("`although Rule 9(b) calls for fraud to be pleaded with particularity, the allegations must still be as short, plain, simple, direct, and concise as reasonable under the circumstances.' Rule 9(b) should not be read so as to obliterate this basic pleading philosophy.") (quoting 5C CHARLES ALAN WRIGHT ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE § 1291 (1st ed. 1969)).
UNUM argues that "it is clear under Texas law that the IP Defendants owed no duty to investigate or explain the terms of coverage under the policy." Def. Notice of Rem. at 5. While it is true that a policyholder's mistaken belief about the scope or availability of coverage is not generally actionable under the DTPA or Texas Insurance Code, if the IP Defendants failed to state a material fact that was necessary to make other statements not misleading, they can be liable for fraud. Colonial Cty. Mutual Ins. Co. v. Valdez, 30 S.W.3d 514, 521 (Tex.App. — Corpus Christi 2000, no pet). Sager testified that he recognized he would have been obligated, at the time of policy renewal, to advise McCall if UNUM had developed a practice of denying all mental health-related disability claims had he known of such practice. Sager Depo. at 51. While Sager's subjective belief as to his duty is not dispositive, it is significant. Sager began doing business with McCall in 1984, began handling some of McCall's personal life policies in 1985, and began doing business with McCall's clients in 1990. Sager Depo. at 7. McCall relied on Sager, and his approval of the "total disability" definition under UNUM's policy in particular, when selecting a policy. Sager Depo. at 11; McCall Depo. at 250, 255.
Sager, in his deposition, refers to the policy's liberal definition of "total disability" as "attractive." McCall recalls Sager using the same description of the policy and contends that: "Well, he pushed that issue hard, and why that's so important to professionals like doctors, and lawyers, and accountants, because that often times is what happens to them when they're in a high stress job, and basically said, every — everybody that was in that type of profession ought to have this type of policy." McCall Depo. at 255.
Sager's duty of disclosure may also have been enhanced by his longstanding personal and business relationship with McCall. See Adickes v. Andreoli, 600 S.W.2d 939 (Tex.Civ.App.-Houston [1st Dist] 1980, writ dism'd). Both Sager and McCall testified that they were long-time friends and business confidants. Sager Depo. at 7. Clearly, Sager had a duty to correct representations made concerning UNUM's liberal coverage under the "total disability" definition if his failure to make such a disclosure rendered his other statements misleading. See Colonial Cty. Mutual Ins. Co., 30 S.W.3d at 62 (insurer failing to state a material fact was found liable under the Texas Insurance Code). See also Ferguson v. Security Life of Denver Ins. Co., 996 F. Supp. 597, 603 (N.D. Tex. 1998) (statements by insured concerning his conversations with insurance agent were subject to differing interpretations, and thus, insurer failed to prove no possibility of recovery against its agent); Jackson v. Wilson, 4 F. Supp.2d 671, 672 (E.D. Tex. 1998); Tenner v. The Prudential Ins. Co. of Am., 872 F. Supp. 1571, 1574 (E.D. Tex. 1994).
Nothing in the Texas Insurance Code limits its reach to misrepresentations before the initial sale. Resolving all uncertainties in favor of McCall, there is no reasonable basis for predicting that state law would completely shelter Sager from liability if, to induce purchase or renewal, he knowingly failed to advise McCall that UNUM was treating mental health-related disability claims differently. See Dodson v. Spiliada Maritime Corp., 951 F.2d 40, 42 (5th Cir. 1992) ("[w]e do not decide whether the plaintiff will actually or even probably prevail on the merits, but look only for a possibility that he may do so"). UNUM has not met its heavy burden of proving that McCall could certainly not establish a cause of action against the IP Defendants in state court.
McCall alleges the IP Defendants violated Section 16, Article 21.21, of the Texas Insurance Code, which states in relevant part that:
Any person who has sustained actual damages caused by another's engaging in . . . any practice specifically enumerated in a subdivision of Section 17.46(b), Business Commerce Code, as an unlawful deceptive trade practice may maintain an action against the person or persons engaging in such acts or practices.
Tex. Ins. Code. Ann. art. 21.21, § 16 (Vernon Supp. 2000).
Section 16 expressly incorporates Sections 17.46(b)(12) and (23) which states:
(12) representing that an agreement confers or involves rights, remedies, or obligations which it does not have or involve, or which are prohibited by law;
(23) the failure to disclose information concerning goods or services which was known at the time of the transaction if such failure to disclose such information was intended to induce the consumer into a transaction into which the consumer would not have entered had the information been disclosed.Id. at §§ 17.46(b)(12), (23) (Vernon Supp. 2000).
2. Statute of Limitations Bar
UNUM asserts that McCall's claims against the IP Defendants are barred by the statute of limitations. As the argument goes, any alleged misrepresentation to induce McCall to purchase his policies would have occurred, at the latest, in 1994. He would then have had two years to bring his Insurance Code claims. See Sabine Towing Transportation Co., Inc. v. Holliday Ins. Agency, Inc., 54 S.W.3d 57, 58 (Tex.App. — Texarkana 2001, no pet). However, the discovery rule is applicable to McCall's claims under the DTPA and the Texas Insurance Code, Article 21.21, and UNUM has not met its heavy burden to establish that McCall's claims are certainly barred. See Pecan Valley Nut Co., Inc. v. E.I. du Pont de Nemours Co., 15 S.W.3d 244, 247 (Tex.App. — Eastland 2000, no pet); McLaren v. Imperial Casualty and Indemnity, 767 F. Supp. 1364, 1378 (N.D. Tex. 1991) ("the moving party has the burden to negate the discovery rule by establishing as a matter of law by summary judgment evidence that the plaintiff discovered or should have discovered the facts upon which [the cause of action] is based far enough in advance of the filing of suit for the applicable limitations period to have elapsed between `discovery' and the filing of suit").
McCall brought suit against UNUM and the IP Defendants on December 20, 2000, after he was given notice that UNUM would not pay him any further disability benefits. In his deposition, McCall points to a conversation he had with Sager some time during December 1999, wherein Sager represented knowing, "as a matter of course, that UNUM was no longer managing mental and nervous disorder claims in the same manner that [Sager] and [McCall] had discussed when [Sager] sold it to [McCall] back in `92 and `94." McCall Depo. at 123. Suit was filed less than two years later. It cannot be said, at this stage of the case that, as a matter of law, McCall knew or should have known more than two years before the suit was filed that the IP Defendants knew of UNUM's alleged new practice, but failed to disclose it.
CONCLUSION
Though UNUM has satisfied its burden as to the amount in controversy, it has failed to meet the heavy burden of showing that the IP Defendants were joined fraudulently to evade federal diversity jurisdiction. McCall's Motion to Remand is therefore GRANTED. This case is remanded to the 162nd Judicial District Court of Dallas County, Texas, for further proceedings. The Court is without jurisdiction to consider the IP Defendants' Motion for Leave to File a Cross-Claim for Contribution and Indemnity.