The Ye Darm Presbyterian Church v. Gulf Coast Adjustment Service of Houston, Inc. et al

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
THE YE DARM PRESBYTERIAN
CHURCH,
Plaintiff,
v.
MOUNT VERNON FIRE INSURANCE
COMPANY, et al.,
Defendants.
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CIVIL ACTION NO. H-25-4091
MEMORANDUM OPINION AND ORDER
This is an insurance dispute arising out of a 2025 deep freeze in South Texas. 	The Ye
Darm Presbyterian Church, a Texas citizen, sued its insurance adjuster, Jack Hignett, and the
adjuster’s employer, Gulf Coast Adjustment Service of Houston, Inc., both Texas citizens, as well
as the insurer, Mount Vernon Fire Insurance Co., a citizen of Pennsylvania. (Docket Entry No. 1-
5 at 1–2; Docket Entry No. 1 at 3). 	Mount Vernon removed, claiming that the adjuster was
improperly joined to destroy diversity jurisdiction. (Docket Entry No. 1). The Church moved to
remand. (Docket Entry No. 3). Mount Vernon argues that the adjuster defendants are improperly
joined (1) because adjusters cannot be liable under § 541.060(a)(2)(A) of the Texas Insurance
Code and (2) because the Church did not state a claim against the adjuster defendants. (Docket
Entry No. 4). The first argument fails, but the second succeeds.
First, federal district courts have reached different results on whether an insurance adjuster
cannot be held liable under § 541.060(a)(2)(A) of the Texas Insurance Code. 	See, e.g., Hazari
LLC v. Everest Indem. Ins. Co., No. CV H-19-4071, 2020 WL 1969530, at *8 (S.D. Tex. Apr. 14,
2020); Holly Villa Condominiums Ass'n v. Westchester Surplus Lines Ins. Co., No. CV H-15-2200,
United States District Court
Southern District of Texas
ENTERED
February 23, 2026
Nathan Ochsner, Clerk
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2016 WL 6603816, at *4 (S.D. Tex. Jan. 18, 2016). “In the context of a motion to remand, this
split in authority regarding the scope of an insurance adjuster’s liability under the Texas Insurance
Code must be resolved in favor of remand because any ambiguities are construed against removal
and in favor of remand to state court.” Hazari LLC, 2020 WL 1969530, at *8 (cleaned up).
Second, the Church has not alleged a plausible claim against the adjuster defendants. The
Church argues that the adjuster manipulated the Church’s pastor’s description of how thermostat
temperatures were changed into a statement that the Church’s heaters were “turned off” before the
freeze; that the adjuster posed compound questions designed to elicit confused answers; that, when
the pastor clarified that he only adjusts the thermostat, the adjuster ignored the clarification; and
that adjuster’s mischaracterization of what the pastor said in the interview became the sole basis
for Mount Vernon’s denial of the claim on February 25, 2025. (Docket Entry No. 1-5 ¶¶ 13–16).
These allegations state a plausible claim against the adjuster under § 541.060(a)(2)(A) for failing
to “effectuate a prompt, fair, and equitable settlement” of the insurance claim. 	See Mehar
Holdings, LLC v. Evanston Ins. Co., No. 5:16-CV-491-DAE, 2016 WL 5957681, at *4 (W.D. Tex.
Oct. 14, 2016) (finding allegations that the defendant failed to: inspect the property; request
information; truly investigate the claim; and timely and properly report to the insurance company
stated a plausible § 541.060(a)(2)(A) claim under federal pleading standards (citing Martinez v.
State Farm Lloyds, No. 3:16-cv-404, 2016 WL 4427489, at *2 (N.D. Tex. Aug. 22, 2016))).
But the adjuster defendants submitted a recording of the adjuster’s call with the Church’s
pastor to show that there was no misrepresentation. (Docket Entry No. 16-1). The court reviewed
the recording. The Church’s pastor and the adjuster hold a steady conversation for fifteen minutes.
Although English is not the pastor’s first language, he is proficient, speaks clearly, and his
responses to the adjuster’s questions show that he clearly understood those questions. The pastor
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did not ask for clarifications or state that he misunderstood the adjuster’s questions, including
during the last four minutes when they discussed whether the Church’s heater was often turned
off. 	The adjuster asked open-ended questions, and the Church’s pastor responded clearly and
concisely that he had turned the heater off. 	The pastor later distinguished between turning the
heater off and lowering the thermostat; the pastor states in the recording that the heater was turned
off in the sanctuary but that the temperature was only lowered in the office area. The adjuster’s
final question is compound and potentially confusing, but it only summarized the pastor’s clear
answers from earlier in the conversation. There is no basis to find that the adjuster misrepresented
to the insurance company that the pastor had said that the heater was turned off before the freeze.
Whether the heater was in fact turned off is a different question. For the purpose of the motion to
remand, there is no “reasonable basis of recovery under state law” on the misrepresentation claim
against the adjuster or his employer. Smallwood v. Illinois Cent. R. Co., 385 F.3d 568, 573 (5th
Cir. 2004) (en banc).
The adjuster defendants—Jack Hignett and Gulf Coast Adjustment Service of Houston,
Inc.—are dismissed as improperly joined. This court has jurisdiction under 28 U.S.C. § 1332. The
motion to remand, (Docket Entry No. 3), is denied.
SIGNED on February 23, 2026, at Houston, Texas.
________________________________
Lee H. Rosenthal
Senior United States District Judge
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