InsuranceHow Motions to Sever Claims for Misjoinder Impact Texas Insurance Companies Involved in Litigation

01/05/2024by Thomas Fee

State courts in Texas are notorious for making unfavorable rulings against insurance companies. It may be in a Texas insurance company’s best interest to file a motion to sever claims for misjoinder to seek the best venue in which to have a case heard. An insurance coverage lawyer from Fee Smith & Sharp LLP can help you determine whether having your case severed will improve your chances of a favorable outcome.

Understanding Misjoinder and its Ramifications

Pursuant to Rule 41 of the Texas Rules of Civil Procedure, misjoinder occurs when legal claims that should be litigated separately are improperly joined in a single lawsuit. A misjoinder can happen for a variety of reasons, including diverse claims, distinct causes of action, multiple parties with separate interests, or separate incidents giving rise to the claims. In addition to misjoinder complicating legal proceedings, it can also pose a challenge to litigants seeking fair and efficient resolution by increasing costs unnecessarily and prejudicing the insurance company’s interests.

Rule 41 provides a framework for managing misjoinder issues. It governs the severance of claims and allows a party to seek the separation of claims that have been improperly joined. A motion to sever claims for misjoinder is a strategic tool that litigators can use to unravel complex cases and help streamline the adjudication of individual issues and is used by defendants to remove a case from a specific venue.

Texas insurance companies are often involved in cases that include numerous parties and causes of action. Many times, claimants use this mix of diverse and non-diverse defendants to defeat diversity jurisdiction. As such, it may be in an insurance company’s best interest to file a motion to sever claims to assert misjoinder of the parties, with the goal being to sever the claimant’s causes of actions against the insurer.

The Impact of Motions to Sever Claims for Misjoinder on Texas Insurance Companies

There are several ways that motions to sever claims for misjoinder affect Texas insurance companies contending with complex cases involving diverse issues, such as coverage disputes, bad faith claims, and third-party liability. These motions to sever claims affect the legal strategies, resources, and potential liabilities of insurance companies. Following are common ways motions to sever claims for misjoinder impact Texas insurance companies involved in litigation:

Risk Management and Strategy

Effective risk management is key for Texas insurance companies involved in litigation. Misjoinder can complicate risk assessment by linking unrelated claims and obscuring the overall picture of potential liabilities. A motion to sever claims can provide an insurer with a strategic opportunity to isolate and address each claim individually, as well as retain a better suited venue, which can facilitate a more accurate risk assessment and enable it to tailor its legal strategy to the specific characteristics of each severed claim.

Judicial Economy and Fair Adjudication

A motion to sever claims for misjoinder can be beneficial to a Texas insurance company by promoting judicial economy and fair adjudication of claims, which are also the goals of most courts. A motion to sever claims prevents unrelated claims from being grouped together, thereby helping the insurer receive a fairer and more expeditious decision from the court. It can also maintain a venue that will provide a better outcome for your client.

Increasing the Likelihood for the Best Venue

One of an insurance coverage attorney’s underlying duties when accepting a case is determining which venue is the most beneficial for their client. In many instances in Texas, an insurance company may fare better in federal court. A motion to sever can have the causes of action against a Texas insurance company severed from the remaining causes of action against the non-diverse defendants and removed from state court under diversity jurisdiction.

Settlement Opportunities

When a Texas insurance company is faced with a consolidated case, it can encounter challenges with regard to settlement opportunities. By severing claims, an insurer can engage in more targeted settlement discussions and can potentially resolve individual claims without the need for prolonged litigation. Severing claims for misjoinder can be particularly advantageous where certain claims are more open to settlement than others.

There are many advantages to Texas insurance companies filing motions to sever claims for misjoinder. As discussed, filing a motion to sever claims can help insurers manage risks efficiently, have claims heard in the most favorable venue, and help ensure judicial economy and fair adjudication. An experienced insurance coverage lawyer at Fee Smith & Sharp can help you determine whether filing a motion to sever claims for misjoinder can be beneficial in your defense.

When Severance is Appropriate for Texas Insurance Companies

When determining whether a motion to sever claims for misjoinder may be appropriate, several factors should be considered. There are three primary instances in which severance is appropriate for insurance companies in Texas. The Texas Supreme Court has provided the following three-prong test for determining whether severance is appropriate:

  • The controversy involves more than one cause of action: Severance is appropriate when there are multiple causes of action involved in a single lawsuit. Each cause of action usually represents a distinct legal claim, and if these claims can be separated, severance may be justified.
  • The severed claim could be independently asserted in a separate lawsuit: If a claim can stand alone and be asserted in a separate lawsuit without relying on other claims, severance may be appropriate.
  • The severed claim is not so interwoven with the remaining action: If there is a clear distinction between the severed claim and the remaining claims, with the severed claim having different facts and issues, an argument for severance can be supported.

The venue of a lawsuit can be crucial in its outcome. Exploring the possibility of severing claims for misjoinder can be a strong strategy for improving a Texas insurance company’s chance of obtaining a favorable outcome in litigation. At Fee Smith & Sharp, we will determine whether filing a motion to sever claims for misjoinder can be advantageous to you in a legal battle.

Consult with the Legal Representatives of Some of the Nation’s Largest Insurance Carriers

Seeking the best venue for Texas insurance companies involved in litigation is crucial. Our insurance coverage attorneys at Fee Smith & Sharp LLP can discuss how filing a motion to sever claims for misjoinder can potentially be in your best interest and save you money and time in the complex litigation process.

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