4:25-cv-04208•Le et al v. State Farm Lloyds
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UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION TRANG LE, ET AL., Plaintiffs, § § § § § § § § § v. CIVIL ACTION NO. 4:25-cv-4208 STATE FARM LLOYDS, Defendant. MEMORANDUM, RECOMMENDATION, AND ORDER Pending before the Court is Defendant State Farm Lloyds’ (“State Farm”) Motion to Limit Plaintiffs’ Claim for Attorneys’ Fees (ECF No. 2), Motion to Abate (ECF No. 6), and Plaintiffs Trang and Khanh Le’s (“Plaintiffs”) Motion to Remand (ECF No. 7).1 Based on a review of the motions and applicable law, the Court RECOMMENDS Plaintiffs’ Motion to Remand (ECF No. 7) be DENIED and State Farm’s Motion to Limit Plaintiffs’ Claim for Attorneys’ Fees (ECF No. 2) be GRANTED. The Court FURTHER GRANTS State Farm’s Motion to Abate (ECF No. 6). 1 On September 18, 2025, this case was referred to the Undersigned for all purposes pursuant to 28 U.S.C. § 636(b)(1)(A) and (B) and Federal Rule of Civil Procedure 72. (ECF No. 8). United States District Court Southern District of Texas ENTERED November 19, 2025 Nathan Ochsner, Clerk Case 4:25-cv-04208 Document 14 Filed 11/19/25 in TXSD Page 1 of 24
2 I. Background Plaintiffs allege they are named insureds under a homeowners insurance policy (“the Policy”) issued by State Farm, which insures, among other things, against losses from storm damage. (Plaintiffs’ Original Petition (ECF No. 1-3 at 8)).2 Around February 18, 2021, a winter storm with freezing temperatures caused water pipes to burst at Plaintiffs’ property (“the Property”), resulting in flooding and water damage. (Id.). Plaintiffs submitted a policy claim to State Farm for the damage their property sustained due to the storm. (Id. at 8–9). Plaintiffs hired a contractor to repair the Property and asked State Farm to cover the cost of repairs. (Id. at 9). Plaintiffs allege State Farm failed to settle Plaintiffs’ claim, refused to compensate Plaintiffs according to the terms of the Policy, and did not conduct a reasonable investigation of the claim. (Id.). To date, Plaintiffs have not received full payment for their claim. (Id.). On July 3, 2025, Plaintiffs filed an Original Petition against State Farm and State Farm Lloyds Incorporated in the Harris County Civil Court at Law No. 4 of Harris County, Texas. (Id. at 20, 22). Plaintiffs assert claims for (1) violations of the Texas Insurance Code, (2) Prompt Payment of Claim under the Texas Insurance Code, (3) breach of contract, (4) breach of duty of good 2 Plaintiffs’ Original Petition is attached to State Farm’s Notice of Removal (ECF No. 1-3), State Farm’s Amended Notice of Removal (ECF No. 11-2), and Plaintiffs’ Motion to Remand (ECF No. 7-4). For ease of reference, the Court cites to ECF No. 1-3. Case 4:25-cv-04208 Document 14 Filed 11/19/25 in TXSD Page 2 of 24
3 faith and fair dealing, and (5) violations of the Texas Deceptive Trade Practices-Consumer Protection Act (“DTPA”). (Id. at 10–12). As to damages, Plaintiffs seek “only monetary relief of $250,000 or less, excluding interest, statutory or punitive damages and penalties, and attorney’s fees” pursuant to TEX. R. C IV. P. 47(c)(1); “statutory interest at the rate of 18% per annum and reasonable attorneys’ fees” pursuant to T EX. INS. C ODE § 542.060; exemplary damages; punitive damages under Chapter 41 of the TEX. C IV. P RAC. & R EM. C ODE; treble damages under § 17.50(b)(1) of the DTPA; and attorneys’ fees pursuant to various Texas statutes. (Id. at 12–13). State Farm and State Farm Lloyds Inc. were served with a copy of the citation and Plaintiffs’ Original Petition on July 18, 2025. (ECF No. 1 at 1; see also ECF No. 1-3 at 24, 26). On August 8, in state court, State Farm filed its “Original Answer, Special Exceptions and Jury Demand, Subject to its Plea in Abatement,” and State Farm Lloyds Inc. filed its “Original Answer and Verified Denial.”3 (ECF No. 1 at 1–2; see also ECF No. 1-3 at 28–29, 34–42). About two weeks later, Plaintiffs filed a Non-Suit as to the non-diverse defendant, State Farm Lloyds Inc., which was granted on August 28, 2025. (ECF No. 1 at 1). State Farm timely removed the case to federal court on 3 State Farm Lloyds Inc.’s “Original Answer and Verified Denial” is attached at ECF No. 1-3 at 28–29. State Farm’s “Original Answer, Special Exceptions and Jury Demand to Plaintiffs’ Original Petition Subject to its Plea in Abatement” is attached at ECF No. 1-3 at 34–42. Case 4:25-cv-04208 Document 14 Filed 11/19/25 in TXSD Page 3 of 24
4 September 5, 2025, pursuant to 28 U.S.C. § 1441(b), alleging federal diversity jurisdiction under 28 U.S.C. § 1332(a). (Id. at 2–3). State Farm contemporaneously filed a Motion to Limit Plaintiffs’ Claim for Attorneys’ Fees, requesting that Plaintiffs be precluded from recovering attorneys’ fees because Plaintiffs allegedly failed to provide State Farm with pre-suit notice as required by the Texas Insurance Code.4 (ECF No. 2). Plaintiffs did not file a response. Shortly thereafter, State Farm filed their Motion to Abate, requesting abatement of the action until Plaintiffs complied with the statutory notice requirements, or in the alternative, dismissal of Plaintiffs’ statutory claims for failure to comply with the pre-suit notice requirements. (ECF No. 6). Again, Plaintiffs did not respond. On September 10, Plaintiffs filed their Motion to Remand the case to state court, asserting State Farm has not met its burden to establish the amount in controversy exceeds $75,000. (ECF No. 7). State Farm filed a response in opposition with a brief in support. (ECF Nos. 12–13).5 4 See TEX . I NS . CODE § 542A.003 (listing notice requirements); TEX . I NS . CODE § 542A.007 (prescribing award of attorney’s fees and limitations). 5 On September 24, 2025, in response to this Court’s Order for Conference and Disclosure of Interested Parties (ECF No. 4), State Farm filed an Amended Notice of Removal to clarify the citizenship of the parties. (ECF No. 11). State Farm filed an Affidavit of Brant Kaufmann, an officer of State Farm, who attested to the citizenship of each of State Farm’s underwriters. (ECF No. 11-3). The parties do not dispute they are completely diverse. Case 4:25-cv-04208 Document 14 Filed 11/19/25 in TXSD Page 4 of 24
5 II. Legal Standard “‘Federal courts are courts of limited jurisdiction,’ possessing ‘only the power authorized by Constitution and statute.’” Gunn v. Minton, 568 U.S. 251, 256 (2013) (quoting Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S. 375, 377 (1994)). Any civil action brought in a state court of which the district courts have original jurisdiction (e.g., federal question or diversity jurisdiction), may be removed by the defendant to the district court for the district and division embracing the place where such action is pending. 28 U.S.C. § 1441(a); Halmekangas v. State Farm Fire & Cas. Co., 603 F.3d 290, 294 (5th Cir. 2010) (“Where . . . the plaintiff files an action in state court with no federal question or complete diversity, the original jurisdiction necessary for removal under § 1441 does not exist.”). Diversity jurisdiction exists where the amount in controversy exceeds $75,000, exclusive of interest and costs, and there is complete diversity of citizenship between the parties. 28 U.S.C. § 1332(a). The party removing the case bears the burden of establishing jurisdiction. Shearer v. Sw. Serv. Life Ins. Co., 516 F.3d 276, 278 (5th Cir. 2008). Defendant “bear[s] the burden of establishing the basis for removal, and operative facts and pleadings are evaluated at the time of removal.” In re Deepwater Horizon, 745 F.3d 157, 162–63 (5th Cir. 2014); Louisiana v. Am. Nat. Prop. Cas. Co., 746 F.3d 633, 635 (5th Cir. 2014) (“Jurisdictional facts are Case 4:25-cv-04208 Document 14 Filed 11/19/25 in TXSD Page 5 of 24
6 determined at the time of removal, not by subsequent events.”). “Any ambiguities are construed against removal because the removal statute should be strictly construed in favor of remand.” Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002); Acuna v. Brown & Root Inc., 200 F.3d 335, 339 (5th Cir. 2000) (“[D]oubts regarding whether removal jurisdiction is proper should be resolved against federal jurisdiction.” (citing Willy v. Coastal Corp., 855 F.2d 1160, 1164 (5th Cir. 1988))). III. Discussion The Court will first address Plaintiffs’ Motion to Remand (ECF No. 7) before turning to State Farm’s pending motions. See Good River Farms, LP v. TXI Operations, LP, No. 1:17-cv-1117, 2018 WL 1770494, at *1 (W.D. Tex. Apr. 12, 2018) (“Because [Plaintiff’s] motion to remand concerns the Court’s subject matter jurisdiction over this action, the Court will address the motion to remand before turning to the motions to dismiss.”) A. Motion to Remand based on Amount in Controversy In its Notice of Removal, State Farm alleges removal is proper on diversity jurisdiction grounds under 28 U.S.C. § 1332(a). (ECF Nos. 1, 11). Because the parties do not dispute diversity of citizenship, see supra Part I note 4, and the Court is satisfied that complete diversity exists, the only issue is whether the amount in controversy is satisfied. Case 4:25-cv-04208 Document 14 Filed 11/19/25 in TXSD Page 6 of 24
7 1. Applicable Law “There is a framework for resolving disputes over the amount in controversy. If the plaintiff’s state court petition specifies a dollar amount of damages, that amount controls if made in good faith.” Guijarro v. Enter. Holdings, Inc., 39 F.4th 309, 314 (5th Cir. 2022). Under the removal statute, subsection 1446(c) “sets a general rule that ‘the sum demanded in good faith in the initial pleading’ is ‘the amount in controversy.’” Durbois v. Deutsche Bank Nat’l Tr. Co., 37 F.4th 1053, 1056 (5th Cir. 2022). It then provides two exceptions to that general rule: “(i) the plaintiff’s operative state-court pleading at the time of removal seeks nonmonetary relief; or (ii) that pleading seeks a money judgment, and the State ‘does not permit demand for a specific sum or permits recovery of damages in excess of the amount demanded.’” Id. (quoting § 1446(c)(2)(A)). In Texas, a state court Petition must contain a statement the party seeks damages within predefined ranges. Kaiser v. State Farm Mut. Auto. Ins. Co., No. 21-cv-1099, 2022 WL 2719631, at *2 (W.D. Tex. Jan. 21, 2022), report and recommendation adopted, No. 1:21-cv-1099, 2022 WL 2761369 (W.D. Tex. Feb. 17, 2022) (citing TEX. R. C IV. P. 47(c)). “When seeking non-monetary and monetary relief, the lowest damages pleading amount under the Texas Rule 47 is $250,000.00.” Id. Therefore, “[i]f the petition is silent (as is often the case in [Texas] state courts in our jurisdiction), the defendant must prove by a preponderance of the Case 4:25-cv-04208 Document 14 Filed 11/19/25 in TXSD Page 7 of 24
8 evidence that the amount in controversy exceeds $75,000.” Guijarro, 39 F.4th at 314) (citation omitted); see also Theriot v. Transamerica Life Ins. Co., 354 F. Supp. 3d 713, 718 (E.D. Tex. 2017) (“In situations such as this one, where the petition alleges only a range of damages and not a specific amount in controversy, removal is proper if the removing party establishes by a preponderance of the evidence that the amount in controversy exceeds $75,000.00.”) The defendant may satisfy this burden by: “(1) showing it is facially apparent from the petition that the damages for the causes of action asserted are more likely than not to exceed $75,000; or (2) setting forth summary judgment-type evidence showing that the facts in controversy support a finding of damages in excess of $75,000.” Kaiser, 2022 WL 2719631, at *3. If the defendant can “show by a preponderance of the evidence that the amount in controversy exceeds the jurisdictional threshold, the plaintiff can defeat diversity jurisdiction only by showing to a legal certainty that the amount in controversy does not exceed the sum or value of $75,000, exclusive of interest and costs.” McCauley v. Kroger Co., No. 3:19-cv-2673, 2020 WL 208816, at *2 (N.D. Tex. Jan. 14, 2020). Case 4:25-cv-04208 Document 14 Filed 11/19/25 in TXSD Page 8 of 24
9 2. Analysis a. Whether it is “facially” apparent that the claims are likely to exceed $75,000 Plaintiffs do not state a specific amount of damages in their Original Petition. Instead, they seek relief of “$250,000 or less, excluding interest, statutory or punitive damages and penalties, and attorney’s fees” per Texas Rule of Civil Procedure (“Rule”) 47(c)(1). (ECF No. 1-3 at 12; ECF No. 11-2 at 12). They also plead that they are entitled to statutory interest under the Texas Insurance Code, exemplary damages under Texas law, treble damages under the DTPA, and attorneys’ fees under the Texas Civil Practices and Remedies Code.6 (ECF No. 1-3 at 12–13; ECF No. 11-2 at 12–13). But because these amounts are unspecified in Plaintiffs’ Petition, it is not “facially apparent” that the claims exceed the jurisdictional amount. See Alcala v. Allstate Vehicle & Prop. Ins. Co., No. 1:22-cv-95, 2022 WL 4239223, at *3 (S.D. Tex. Aug. 30, 2022), report and recommendation adopted, No. 1:22-cv-095, 2022 WL 4239353 (S.D. Tex. Sept. 14, 2022) (finding that it was not facially apparent the amount in controversy was met where complaint stated that it sought “only 6 Although attorneys’ fees are included in the amount in controversy when assessing the jurisdictional amount if they are provided for by contract or state statute, see Theriot, 354 F. Supp. 3d at 719 (noting an award of reasonable attorneys’ fees is authorized under Texas Civil Practice & Remedies Code § 38.001 and under § 541 of the Texas Insurance Code and the DTPA), State Farm moved to limit Plaintiffs’ claim for attorneys’ fees because Plaintiffs failed to provide pre-suit notice (ECF No. 2), and Plaintiffs do not dispute this in their Motion to Remand (ECF No. 7 at 4). But at any rate, as explained below, the calculation of attorneys’ fees is not determinative as to whether the action meets the jurisdictional amount. Case 4:25-cv-04208 Document 14 Filed 11/19/25 in TXSD Page 9 of 24
10 monetary relief of $250,000 or less, excluding interest, statutory or punitive damages and penalties, and attorney’s fees and costs.”). Since the Petition does not specify the amount of damages or fees at issue, it follows State Farm may meet its burden by submitting “summary judgment-type” evidence to ascertain the amount in controversy. Manguno, 276 F.3d at 723. b. Whether summary judgment-type evidence sets forth the facts in controversy that support a finding of the requisite amount Both the parties have set forth facts that are informative of whether the requisite amount is met. In the Motion to Remand, Plaintiffs explain that they hired the contractor for remedial services in March 2021, and the contractor charged $46,296.22 for its services. (ECF No. 7 at 2). State Farm paid $22,798.43 towards the bill, leaving a balance of $23,497.79 unpaid. (Id.). On April 21, 2025, the contractor obtained a summary judgment in state court against Plaintiffs for $23,497.79, “plus interest at the rate of (18%) per annum beginning and including may [sic] 24, 2021.”7 (Id.; see also ECF No. 7-3 at 2). State Farm admits this amount ($23,497.79) forms the basis for Plaintiffs’ lawsuit. (ECF No. 1 at 3 n.9 (Notice of Removal); ECF No. 13 at 4–5 (Brief in Support of State Farm’s Response in Opposition to Plaintiffs’ Motion to 7 Plaintiffs were unrepresented and they did not appear at the state court hearing on the contractor’s motion for summary judgment. (ECF No. 7 at 2 n.1). A copy of the judgment is attached to Plaintiffs’ Motion to Remand. (ECF No. 7-3). Case 4:25-cv-04208 Document 14 Filed 11/19/25 in TXSD Page 10 of 24
11 Remand)). Plaintiffs argue that in their Original Petition they invoked the lowest damages tier under Rule 47(c), “$250,000 or less,” but in clarifying this “ambiguous” amount, “[t]he actual damages sought are $23,497.79, which is the amount awarded in the Judgment in favor of [the contractor].” (ECF No. 7 at 4). They further argue that “[e]ven if treble damages were awarded, the total amount would be $70,493.37.” (Id.). Additionally, Plaintiffs argue the 18% interest pursuant to their Prompt Payment Claim is excluded from being calculated towards the amount in controversy under section 1332(a), and they have attached a stipulation to their Motion to Remand, stating that they will not accept more than $70,493.37 at the conclusion of the suit. (Id.). Plaintiffs also do not dispute State Farm’s Motion to Limit Plaintiffs’ Claim for Attorneys’ Fees (ECF No. 2), and therefore, “attorneys’ fees cannot be included in the amount in controversy.” (Id.). Based on these calculations, Plaintiffs submit the amount in controversy does not exceed $75,000. (Id. at 5). In opposition to remand, State Farm acknowledges Plaintiffs’ facts in controversy, attaches supporting documentation largely from the state court proceedings, and argues the jurisdictional amount is met because at the time of removal (1) the actual damages amount to $23,497.79,8 (2) treble damages 8 As a slight scrivener’s error, Defendant at times calculates actual damages as $23,479.79 (see, e.g., ECF No. 13 at 5); however, the parties agree that, based on the contractor’s services and subsequent summary judgment, $23,497.79 represents Plaintiffs’ actual damages. Case 4:25-cv-04208 Document 14 Filed 11/19/25 in TXSD Page 11 of 24
12 would increase these damages to $70,493.37, and (3) 18% statutory interest under the Texas Insurance Code is included in this calculation and would amount to $18,134.28 (based on the date of the contractor’s claim to the date of removal). (ECF No. 13 at 4–13). Moreover, Plaintiffs’ post-removal stipulation does not divest the district court of jurisdiction. (Id. at 10–13). State Farm therefore argues that even before considering attorneys’ fees, exemplary damages, and punitive damages, the amount in controversy at the time of removal adds up to approximately $87,000 and exceeds the jurisdictional threshold. (Id. at 13). The Court must consider which calculation is correct. In this case, State Farm has shown by a preponderance of the evidence that the amount in controversy exceeds the jurisdictional threshold for several reasons. “The Court will consider: (1) actual damages; (2) statutory penalties; and (3) attorney’s fees, in analyzing whether the amount in controversy exceeds $75,000.00.” Alcala, 2022 WL 4239223, at *4. The Court notes that the “amount in controversy is not proof of the amount the plaintiff will recover but an estimate of the amount that will be put at issue in the course of the litigation.” Id. (citing Durbois, 37 F.4th at 1057). First, Rule 47(c) provides that a plaintiff’s complaint must include a statement that the party seeks: Case 4:25-cv-04208 Document 14 Filed 11/19/25 in TXSD Page 12 of 24
13 (1) only monetary relief of $250,000 or less, excluding interest, statutory or punitive damages and penalties, and attorney fees and costs; (2) monetary relief of $250,000 or less and non-monetary relief; (3) monetary relief over $250,000 but not more than $1,000,000; (4) monetary relief over $1,000,000; or (5) only non-monetary relief . . . . Here, Plaintiffs merely complied with the state court pleading requirements, as Texas law does not permit Plaintiffs to request an amount of damages other than one of the categories set forth in Rule 47(c). Guzman v. Allstate Vehicle & Prop. Ins. Co., 19-cv-334, 2002 WL 1321821, at *1 (S.D. Tex. Feb. 26, 2020, report and recommendation adopted, 2020 WL 1321818 (S.D. Tex. Mar. 19, 2020) (“The Texas Rules of Civil Procedure do not allow plaintiffs to request a specific amount of damages beyond one of the ranges set forth in Rule 47.”). As pleaded, Plaintiffs’ demand for damages in their Petition, therefore, does not control the amount in controversy determination. Second, both parties have submitted evidence that Plaintiffs allege actual damages in the amount of $23,497.79. (ECF No. 7-3; ECF No. 13-2). In addition to actual damages, Plaintiffs seek exemplary damages, punitive damages, and treble damages. (ECF No. 1-3 at 12–13). “[W]hen ascertaining the amount in controversy under an insurance policy, the amount may include the policy limits, potential attorneys’ fees, penalties, statutory damages, and punitive damages, but not interest or costs.” Cantu v. Allstate Vehicle & Prop. Ins. Co., No. 7:21-cv-202, 2021 WL 2778027, at *3 (S.D. Tex. July 2, 2021) Case 4:25-cv-04208 Document 14 Filed 11/19/25 in TXSD Page 13 of 24
14 (citing St. Paul Reinsurance Co. v. Greenberg, 134 F.3d 1250, 1253 & nn.6–7 (5th Cir. 1998)); 2400 Thomas Ass’n, Inc. v. Fireman’s Fund Ins. Co., No. 3:11- cv-3527, 2012 WL 13024100, at *3 (N.D. Tex. Sept. 10, 2012) (explaining items to be considered in ascertaining the amount in controversy when the insurer could be liable for those sums under state law are inter alia penalties, statutory damages, and punitive damages—just not interests or costs). Thus, applying treble damages under the DTPA to the actual damages brings the total to 70,493.37.9 (ECF No. 7 at 4); see also Middlebrook v. SLM Fin. Corp., No. 5:15- cv-237, 2015 WL 2401435, at *4 (W.D. Tex. May 20, 2015) (“Because Plaintiff has alleged that Defendant violated the DTPA knowingly and intentionally, she is entitled to up to three times the economic and mental anguish damages.” (citing TEX. B US. & C OM. C ODE § 17.50(b)(1) (permitting up to three times the economic damages and mental anguish when the conduct was committed knowingly and intentionally))); 2400 Thomas Ass’n, 2012 WL 13024100, at *3 (explaining that the Texas Insurance Code permits a plaintiff to recover statutory damages of three times the amount of actual damages, not three 9 $23,497.79 x 3 = $70,493.37; see also 2400 Thomas Ass’n, 2012 WL 13024100, at *3 (applying treble damages pursuant to the Texas Insurance Code to actual damages stemming from amount plaintiff paid to repair a broiler and that insurer did not pay). Case 4:25-cv-04208 Document 14 Filed 11/19/25 in TXSD Page 14 of 24
15 times the amount of actual damages “plus” the actual damages) (citation omitted).10 Third, Plaintiffs also seek statutory interest under section 542.060 of the Texas Insurance Code at a rate of 18% per annum, which “will be the amount of the claim at 18 percent interest calculated from the due date of [the] payment until the date of judgment.” 2400 Thomas Ass’n, 2012 WL 13024100, at *3 (citing Watson v. Provident Life & Acc. Ins. Co., No. 3:08-cv-2065, 2009 WL 1437823, at *5 (N.D. Tex. May 22, 2009)). The Court must include this statutory interest in the amount in controversy calculation, as it is a penalty rather than prohibited interest under 28 U.S.C. § 1332. 2400 Thomas Ass’n, 2012 WL 13024100, at *3 (citing St. Paul Reinsurance Co., 134 F.3d at 1255); see also, e.g., Watson, 2009 WL 1437823, at *5. Plaintiffs allege they hired the contractor in March 2021, and the adverse summary judgment record indicates the principal amount owed began accruing interest in May 2021. (ECF No. 7 at 2; ECF No. 7-3 at 2). Plaintiffs also allege they sued State Farm in state court in July 2025 “stemming from Defendant’s failure to fully pay for [the 10 Although Plaintiffs also seek exemplary damages, “a plaintiff may not recover both exemplary damages and statutory treble damages on the finding of actual damages resulting from the same acts or course of conduct, because that would amount to a double recovery of punitive damages.” 2400 Thomas Assn, 2012 WL 13024100, at *3 (N.D. Tex. Sept. 10, 2012) (citing St. Paul Surplus Lines Ins. Co. v. Dal–Worth Tank Co., 917 S.W.2d 29, 55 (Tex. App.— Amarillo 1995, rev’d in part on other grounds, 974 S.W.2d 51 (Tex. 1998)) (citing Birchfield v. Texarkana Mem’l Hosp., 747 S.W.2d 361, 367 (Tex. 1987))). Plaintiffs’ request for exemplary damages thus does not increase the amount in controversy in this case, as that amount already includes treble damages under state law. Case 4:25-cv-04208 Document 14 Filed 11/19/25 in TXSD Page 15 of 24
16 contractor’s] remedial services.” (ECF No. 7 at 2). Therefore, even under conservative estimates, should Plaintiffs prevail, the Court determines that their claim will have accrued at least four years of interest, at $4,230 in interest each year, for a total of $16,918 in interest.11 This brings the amount in controversy to approximately $87,412.12 Thus, the damages Plaintiffs seek exceed the jurisdictional threshold. State Farm has therefore shown by a preponderance of the evidence that the amount in controversy exceeded $75,000 at the time Plaintiffs filed the current action. See also Bustos v. State Farm Lloyds, No. 4:19-cv-4812, 2020 WL 2771997 (S.D. Tex. May 8, 2020), report and recommendation adopted, No. 4:19-cv-4812, 2020 WL 2771190 (S.D. Tex. May 27, 2020) (finding the amount in controversy requirement was met by calculating treble damages where the plaintiff sought $27,89.92 in actual damages, treble damages, attorneys’ fees, and exemplary damages); Abascal v. United Prop. & Cas. Ins. Co., No. 4:18-cv- 3930, 2019 WL 3229174 (S.D. Tex. July 18, 2019) (finding the amount in controversy requirement was met by calculating treble damages where the plaintiff sought $19,303.41 in economic damages, treble damages, attorneys’ fees, and other damages); Horton v. Allstate Vehicle & Prop. Ins. Co., No. 5-19- cv-140, 2019 WL 1552494 (W.D. Tex. Apr. 9, 2019), report and recommendation 11 $23,497.79 x 0.18 = $4,229.60. $4,229.60 x 4 = $16,918.41. 12 $70,493.37 + $16,918.41 = $87,411.78. Case 4:25-cv-04208 Document 14 Filed 11/19/25 in TXSD Page 16 of 24
17 adopted, No. 19-cv-140, 2019 WL 2563837 (W.D. Tex. May 1, 2019) (finding the amount in controversy requirement was met by calculating treble damages where the plaintiff sought $19,764.34 in economic damages, treble damages, attorneys’ fees, and other damages). c. Plaintiffs’ post-removal stipulation does not affect the amount in controversy at the time of removal State Farm has met its burden; thus, to obtain remand, Plaintiffs must prove to a legal certainty that their claims do not exceed $75,000 or that they are legally bound to accept less than $75,000. Metz v. Amguard Ins. Co., No. 1:21-cv-74, 2021 WL 6773101, at *3 (E.D. Tex. Aug. 4, 2021), at *5 (collecting cases). Plaintiffs, however, do not cite a state statute that limits its recovery to an amount below $75,000, and Plaintiffs did not stipulate to the amount in controversy in their Petition. The Court also considers whether Plaintiffs’ post-removal stipulation limiting damages to $70,493.37 requires remand. (ECF Nos. 7-1, 7-2). The Fifth Circuit has recognized that a state court plaintiff’s stipulating to recovery of damages less than $75,000 is binding, thereby defeating diversity removal. See Durbois, 37 F.4th at 1060–61 (determining that a stipulation in the plaintiff’s state-court petition that his damages were “an amount less than $74,500” was “legally binding”). However, the federal court “must assess the jurisdictional facts as of the time that the complaint is filed, bearing in mind Case 4:25-cv-04208 Document 14 Filed 11/19/25 in TXSD Page 17 of 24
18 that subsequent events cannot serve to ‘deprive the Court of jurisdiction once it has attached.’” Davis v. Meta Platforms, Inc., No. 4:22-cv-1001, 2023 WL 4670491, at *6 (E.D. Tex. July 20, 2023) (citing St. Paul Reinsurance Co., 134 F.3d at 1253–54 (5th Cir. 1998)). It follows that a “binding stipulation limiting damages to an amount below $75,000, which is filed with a state-court petition, precludes federal diversity jurisdiction;” a “post-removal stipulation, on the other hand, is deemed ‘suspect and . . . [is] a practice cited with disapproval by the Fifth Circuit.’” Bustos, 2020 WL 2771997, at *3 (emphasis in original) (citing Wilson v. Hibu, Inc., No. 3:13-cv-2012, 2013 WL 5803816, at *6 (N.D. Tex. Oct. 28, 2013)). Plaintiffs filed a post-removal stipulation agreeing to neither seek nor accept damages more than $70,493.37. (ECF Nos. 7-1, 7-2). Plaintiffs’ post-removal stipulation does not preclude federal jurisdiction because the amount in controversy unambiguously met the jurisdictional threshold at time of removal.13 See Lopez v. Allstate Indem. Co., No. 7:22-cv- 23, 2022 WL 1403493, at *3 (S.D. Tex. May 4, 2022) (“Plaintiff argues that he has offered to file a binding stipulation limiting recovery to under $75,000.00. However, it is well-established that ‘[e]vents occurring subsequent to the 13 A post-removal stipulation may be considered in determining the amount in controversy only when it is ambiguous whether the amount in controversy met the jurisdictional threshold at the time of removal. Gebbia v. Wal-Mart Stores, Inc., 233 F.3d 880, 883 (5th Cir. 2000) (citations omitted). Here, there was no such ambiguity because the parties agree that the $23,497.79—stemming from the contractor’s remedial services and summary judgment—forms the basis for Plaintiffs’ lawsuit. As explained above, the amount in controversy exceeded $75,000 at the time of removal. Case 4:25-cv-04208 Document 14 Filed 11/19/25 in TXSD Page 18 of 24
19 institution of suit which reduce the amount recoverable below the statutory limit do not oust jurisdiction.’”). Thus, the Court denies Plaintiffs’ Motion to Remand. (ECF No. 7). B. Motion to Limit Plaintiffs’ Claim for Attorney Fees On the same day State Farm removed the case, it filed its Motion to Limit Plaintiffs’ Claim for Attorneys’ Fees. (ECF No. 2). State Farm argues that, under the Texas Insurance Code, Plaintiffs should be precluded from recovering any attorneys’ fees incurred after August 8, 2025—the date State Farm filed its Original Answer challenging Plaintiffs’ entitlement to attorneys’ fees due to lack of notice. (Id. at 1). Plaintiffs do not dispute that they failed to provide the required notice prior to filing their lawsuit. (ECF No. 7 at 4). 1. Applicable Law Under the Texas Insurance Code, an insured who prevails on a claim is entitled to recover attorney’s fees, provided that certain conditions are met. See T EX. INS. C ODE § 542A.007 (awarding attorney’s fees). According to Section 542A.003, “not later than the 61st day before the date a claimant files an action . . . seek[ing] damages from any person, the claimant must give written notice . . . as a prerequisite to filing the action.” § 542A.003(a). The notice must provide: “(1) a statement of the acts or omissions giving rise to the claim; (2) the specific amount alleged to be owed by the insurer on the claim for damage to or loss of covered property; and (3) the amount of reasonable and necessary Case 4:25-cv-04208 Document 14 Filed 11/19/25 in TXSD Page 19 of 24
20 attorney’s fees incurred by the claimant . . . .” § 542A.003(b). Section 542A.007(d) provides: If a defendant in an action to which this chapter applies pleads and proves that the defendant was entitled to but was not given a presuit notice stating the specific amount alleged to be owed by the insurer under Section 542A.003(b)(2) at least 61 days before the date the action was filed by the claimant, the court may not award to the claimant any attorney’s fees incurred after the date the defendant files the pleading with the court. A pleading under this subsection must be filed not later than the 30th day after the date the defendant files an original answer in the court in which the action is pending. T EX. INS. C ODE § 542A.007(d) (emphasis added). 2. Analysis In this case, on August 8, 2025, State Farm filed its Original Answer in state court challenging Plaintiffs’ entitlement to attorneys’ fees for failure to provide pre-suit notice. (ECF No. 1-3 at 28–42; ECF No. 2 at 1). State Farm then filed the instant motion on September 5, which was within the 30-day deadline provided by subsection 542A.007(d). (ECF No. 2 at 1–2). In Plaintiffs’ Motion to Remand, they do not dispute that they did not provide pre-suit notice to State Farm before filing their lawsuit. (ECF No. 7 at 4). State Farm has therefore “plead” and “proved” that it “was entitled to but was not given a presuit notice . . . under Section 542A.003(b)(2).” § 542A.007(d). As such, the Court “may not award to [Plaintiffs] any attorney’s fees incurred after the date [State Farm] file[d] the pleading with the court”—on August 8, 2025. See Case 4:25-cv-04208 Document 14 Filed 11/19/25 in TXSD Page 20 of 24
21 Ansah v. Nationwide Prop. & Cas. Ins. Co., No. 23-cv-2488, 2023 WL 6049519, at *3 (S.D. Tex. Sept. 15, 2023) (granting defendant’s motion to deny plaintiff’s claim for attorneys’ fees pursuant to § 542A.007(d) because plaintiffs never provided a presuit notice, which applied to attorneys’ fees incurred starting on the date defendant filed its answer in state court). Plaintiffs’ failure to provide pre-suit notice therefore precludes them from recovering attorneys’ fees. Thus, the Court grants State Farm’s Motion to Limit Plaintiffs’ Claim for Attorneys’ Fees. (ECF No. 2). C. Motion to Abate On September 8, 2025, State Farm filed its verified Motion to Abate Plaintiffs’ claims because Plaintiffs failed to provide pre-suit notice. (ECF No. 6). State Farm argues “this case should be abated until the 60th day following Plaintiffs providing proper notice to Defendant.” (Id. at 2). Alternatively, State Farm “moves to dismiss Plaintiffs’ statutory causes of action for failure to comply with the pre-suit notice provisions of Section 542A of the Texas Insurance Code.” (Id. at 4). Plaintiffs have not responded to the motion. 1. Applicable Law The procedures for filing such a plea are set forth in the Texas Insurance Code. Under subsection 542A.005(a), a person against whom an action is pending “may file a plea in abatement not later than the 30th day after the date the person files an original answer in the court in which the action is Case 4:25-cv-04208 Document 14 Filed 11/19/25 in TXSD Page 21 of 24
22 pending if the person,” inter alia, “did not receive a pre-suit notice complying with Section 542A.003.”14 The notice requirement is to “discourage litigation and encourage settlements of consumer complaints,” by allowing the defendant-insurer a right and opportunity to make a settlement offer. Perrett v. Allstate Ins. Co., 354 F. Supp. 3d 755, 757 (S.D. Tex. 2018) (citation modified). The court shall abate the action if the court finds that the person filing the plea in abatement “did not, for any reason, receive a presuit notice complying with Section 542A.003.” § 542A.005(b). An action is “automatically abated without a court order beginning on the 11th day after the date a plea in abatement is filed” if the plea is verified and alleges that the person against whom the action is pending did not receive a presuit notice and “is not controverted by an affidavit filed by the claimant before the 11th day after the date the plea in abatement is filed.” § 542A.005(c) (emphasis added). “An abatement under this section continues until . . . the 60th day after the date a 14 Subsection 542A.005(a) requires a party to file a plea in abatement within 30 days of filing an original answer. State Farm filed its Original Answer in state court on August 8, 2025, and then after removal, filed the instant motion to abate on September 8. The 30-day deadline fell on Sunday, September 7. However, under either the Texas or federal rules, the deadline is extended to the next business day, Monday, September 8. T EX . R. CIV. P. 4; FED . R. CIV. P. 6(a)(1)(C) (providing that when a deadline falls on a weekend or holiday, it is extended to the next business day); see McRay v. Peachey, No. 06-cv-2794, 2009 WL 249772, at *5 (E.D. La. Feb. 2, 2009), aff’d sub nom., 367 F. App’x 566 (5th Cir. 2010) (“Although Erie commands application of substantive state law to the merits of the underlying case, Fed. R. Civ. P. 6 is to be applied to determine timeliness of a motion filed in the federal court. ‘Computation of time . . . is a procedural question and thus governed by federal law. Pursuant to federal law, time calculations in civil actions are governed by Rule 6 . . . .’”). Case 4:25-cv-04208 Document 14 Filed 11/19/25 in TXSD Page 22 of 24
23 notice complying with Section 542A.003 is given.” § 542A.005(e). “If a plaintiff does not comply with the notice requirement, ‘abatement of the action for the statutory notice period is more consistent with the purpose of notice than dismissal.’” Perrett, 354 F. Supp. 3d at 757 (quoting Hines v. Hash, 843 S.W.2d 464, 469 (Tex. 1992)). 2. Analysis Because Plaintiffs do not dispute they never sent written notice to State Farm (ECF No. 7 at 4), no such notice is included in the record. State Farm filed a verified motion for abatement on September 8. (ECF No. 6). Plaintiffs did not challenge the verified plea in abatement within the required 11-day period; accordingly, the abatement went into effect without a court order as of September 19, 2025. See § 542A.005(c). As a result, the automatic abatement remains in effect until Plaintiffs provide proper notice in compliance with section 542A.003, at which point the abatement will continue until 60 days thereafter. See Perrett, 354 F. Supp. 3d at 758 (granting motion and abating case until 60 days after defendant received proper written notice). For the reasons set forth above, the Court grants State Farm’s Motion to Abate (ECF No. 6), and orders Plaintiffs’ compliance with the statutory pre- suit notice requirement. Case 4:25-cv-04208 Document 14 Filed 11/19/25 in TXSD Page 23 of 24
24 IV. Conclusion Based on the foregoing, the Court RECOMMENDS Plaintiffs’ Motion to Remand (ECF No. 7) be DENIED and State Farm’s Motion to Limit Plaintiffs’ Claim for Attorneys’ Fees (ECF No. 2) be GRANTED. The Court FURTHER GRANTS State Farm’s and Motion to Abate (ECF No. 6). It is therefore ORDERED that this action is ABATED and will remain in abatement until sixty (60) days after the date Plaintiffs provide State Farm with proper pre-suit notice as required under § 542A.003. The parties are further ORDERED to file a joint status report regarding the status of the completion of this requirement no later than thirty (30) days from the date of this Order. The Clerk shall send copies of this Memorandum and Recommendation to the respective parties who have fourteen days from the receipt thereof to file written objections thereto pursuant to Federal Rule of Civil Procedure 72(b) and General Order 2002-13. Failure to file written objections within the time period mentioned shall bar an aggrieved party from attacking the factual findings and legal conclusions on appeal. SIGNED in Houston, Texas on November 19, 2025. Richard W. Bennett United States Magistrate Judge Case 4:25-cv-04208 Document 14 Filed 11/19/25 in TXSD Page 24 of 24
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