                                                    United States Court of Appeals
                                                             Fifth Circuit
                                                           F I L E D
                 UNITED STATES COURT OF APPEALS
                      For the Fifth Circuit               December 14, 2006

                                                      Charles R. Fulbruge III
                                                              Clerk
                          No. 06-40675
                        Summary Calendar




  JORGE CASTILLO, as the representative of the Estate of Jorge
  Castillo

                 Plaintiff - Appellant


     v.

  STATE FARM LLOYDS; STATE FARM LLOYDS INC

                 Defendants - Appellees
  ------------------------------------------------------------
  JORGE CASTILLO

                 Plaintiff - Appellant


     v.

  STATE FARM LLOYDS; STATE FARM LLOYDS INC

                 Defendants - Appellees




  Appeal from the United States District Court For the Southern
               District of Texas, McAllen Division
                           7:05-CV-198



Before DAVIS, BARKSDALE, and BENAVIDES, Circuit Judges.
PER CURIAM*

     Plaintiff-Appellant Jorge Castillo, Jr., as representative of

the estate of his father Jorge Castillo, appeals the district

court’s denial of his motion to remand this case to state court and

its subsequent dismissal of the non-diverse defendant State Farm

Lloyds, Inc., as well as the district court’s grant of summary

judgment in favor of Defendant-Appellee State Farm Lloyd’s.    For

the following reasons, we AFFIRM the judgment of the district

court.

              I.   FACTUAL AND PROCEDURAL BACKGROUND

     In May 2005, Jorge Castillo (“Castillo”) filed suit in state

court against his homeowners’ insurer, State Farm Lloyd’s (“State

Farm”), and its attorney in fact, State Farm Lloyds, Inc. (“Lloyds,

Inc.”), alleging   breach of contract, breach of the duty of good

faith and fair dealing, and violations of the Texas Insurance Code

and the Deceptive Trade Practices-Consumer Protection Act (“DTPA”),

arising from insurance claims submitted by his attorney in 2002.1

State Farm removed the case to federal court, arguing that Lloyds,

Inc., a Texas corporation, was improperly joined, and the amount in




     *
      Pursuant to 5TH CIR. R. 47.5, the Court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
     1
      Castillo initially filed three separate suits against State
Farm and Lloyds, Inc. based on three separate insurance claims.
The district court granted State Farm’s unopposed motion to
consolidate the three removed cases.

                                 2
controversy exceeded $75,000 exclusive of interests and costs.2

Lloyds, Inc. consented to the removal.                Castillo then filed a

motion to remand, which the district court denied.

     Lloyds, Inc. filed its motion to dismiss arguing that it was

not a proper party to the suit.             While this motion was pending,

State    Farm   and   Lloyds,    Inc.   filed   their    motion   for    summary

judgment, arguing that Castillo failed to file suit within the

applicable      statute   of    limitations     and     that   certain    policy

provisions precluded coverage for the insurance claims.                      The

district court concluded that Lloyds, Inc. was not a proper party

to the suit and granted Lloyds, Inc.’s motion to dismiss.                    The

district court then granted summary judgment in favor of State Farm

on statute of limitations grounds.           Castillo now appeals.

                                II.   DISCUSSION

                           A.    Motion to Remand

     Castillo first argues that the district court erred by (1)

concluding that Lloyds, Inc. was improperly joined; (2) denying his

motion to remand; and (3) dismissing Lloyds, Inc. from the lawsuit.

We review a denial of remand to state court de novo.              Great Plains

Trust Co. v. Morgan Stanley Dean Witter & Co., 313 F.3d 305, 311

(5th Cir. 2002).       The party invoking the removal jurisdiction on

the grounds of improper joinder bears a heavy burden.                    See Sid

     2
      Although addressed by State Farm in its notice of removal,
no issue has been presented to this court regarding whether the
amount in controversy exceeds 75,000 exclusive of interest and
costs.

                                        3
Richardson Carbon & Gasoline Co. v. Interenergy Res., Ltd., 99 F.3d

746, 751 (5th Cir. 1996).       The removing party may satisfy its

burden by showing either:(1) actual fraud in the pleading of

jurisdictional facts; or (2) the plaintiff’s inability to establish

a cause of action against the non-diverse party in state court.

Travis v. Irby, 326 F.3d 644, 647 (5th Cir. 2005).   Only the latter

method is relevant here because State Farm did not allege actual

fraud. Thus, the relevant question is whether State Farm has shown

that there is no reasonable possibility of recovery against the

non-diverse defendant, Lloyds, Inc., in state court.    Smallwood v.

Ill. Cent. R.R., 385 F.3d 568, 573 (5th Cir. 2004) (en banc).      A

mere theoretical possibility of recovery is insufficient.    Travis,

326 F.3d at 648.

     We agree with the district court’s conclusion that there was

no reasonable basis to predict that Castillo might prevail against

Lloyds, Inc. in state court.    Castillo argues that Lloyds, Inc. was

properly joined because Lloyds, Inc., in a services agreement with

State Farm Fire & Casualty Co.,3 retained the “ultimate control and

authority” to adjust claims.4    Based on this contractual right of


     3
      Pursuant to the services agreement, State Farm Fire &
Casualty handles, investigates, and pays or denies insurance
claims made on State Farm policies, and provides the details,
means, and methods of the insurance operations and claims
handling for State Farm. R. 328.
     4
      Lloyds, Inc. entered into this services agreement acting on
behalf of State Farm.


                                   4
control, Castillo argues that Lloyds, Inc. can be held liable for

the acts and omissions of the adjusters.

     State Farm sells insurance under a so-called “Lloyd’s plan,”

which consists of a group of underwriters who combine to issue

insurance through an attorney in fact - in this case, Lloyds, Inc.

See Tex. Ins. Code Ann. § 941.001 (Vernon Supp. 2006).       “[T]he

attorney in fact acts as an agent for the Lloyd’s group.”     Royal

Insurance Co. of America v. Quinn-L Capital Corp., 3 F. 3d 877, 882

(5th Cir. 1993) (emphasis provided by court); see also Massey v.

State Farm Lloyds Insurance Co., 993 F. Supp. 568, 570 (S.D. Tex.

1998).   “[T]he attorney in fact has to be authorized by the

underwriters to execute insurance policies and acts for those

underwriters by so doing.”   Quinn-L Capital Corp., 3 F. 3d at 882.

The attorney in fact does not bear risks, and has no contractual

relationship with the insured.       Lloyds, Inc. is not even an

insurance company.5

     Under Texas law, agents are generally not liable for contracts

entered into on behalf of a principal or for any actions that are

within the scope of their authority.   See French v. State Farm Ins.

Co., 156 F.R.D. 159, 162 (S.D. Tex. 1994).     Consequently, unless

Lloyds, Inc. was acting outside of the scope of its authority with

     5
      Lloyds, Inc. does not sell policies of insurance; it does
not earn premium income and it is not required to file an annual
statement with the Texas Department of Insurance in its own name
or for its own account. Lloyds, Inc. has no employees, and it
renders services only as an attorney in fact as authorized by
Texas law.

                                 5
respect to Appellant’s claims, Lloyds, Inc. is not individually

liable.       See Arzehgar v. Dixon, 150 F.R.D. 92, 94-95 (S.D. Tex.

1993).      Appellant has included no claims of specific wrongdoing on

the part of Lloyds, Inc., nor any claims that might suggest it

acted outside the scope of its authority.              Absent allegations that

Lloyds, Inc. was acting in anything other than a representative

capacity or that it actually engaged in any deceptive or unfair

practices in connection with Appellant’s claims, Lloyds, Inc.

cannot be       held   individually   liable.         See    id.   Therefore,   the

district court was correct in denying Castillo’s motion to remand

and subsequently dismissing the claims against Lloyds, Inc.

                       B. Motion for Summary Judgment

       Castillo next argues that the district court erred by granting

summary judgment in favor of State Farm.                    We review a district

court’s grant of summary judgment de novo, applying the same

standard as the district court. Riverwood Int’l Corp. v. Employers

Ins. of Wasau, 420 F.3d 378, 382 (5th Cir. 2005).                  Castillo argues

that       because   State   Farm   made    partial     payments     without    any

indication of finality, the statute of limitations did not begin to

run until, at the earliest, July 28, 2003, when State Farm sent a

letter stating that “the claims remained closed.”6                  However, State

Farm communicated a final determination on all of Castillo’s claims

by March 31, 2003, when State Farm sent the payments on the kitchen

       6
      This letter was sent in response to the settlement offer
from Castillo’s attorney.

                                        6
and bathroom claims, along with decision letters on both claims.

This was the last payment made to Castillo.                      There is no evidence

that State Farm was attempting to string Castillo along ”without

denying or paying a claim . . . .”                   Murray v. San Jacinto Agency,

Inc., 800 S.W.2d 826, 828 n.2 (Tex. 1990).

      The   claims    process     in    this     case      was    rather    drawn      out,

beginning on May 1, 2002, when Castillo submitted a claim for water

damage and mold in the hallway and bedroom, and ending on March 31,

2003, when State Farm issued the above-mentioned decision letters.

On May 30, 2002, after an initial inspection of the house, State

Farm sent a letter and payment to Castillo.                      On October 24, 2002,

State Farm spoke with Castillo’s attorney’s office regarding a

request     for   additional      living       expense      (“ALE”)       benefits      for

Castillo.     State Farm stated that ALE benefits were not available

to Castillo because he was not a named insured or spouse of a named

insured.

      On December 7, 2002, after receiving the final copy of the

Naismith Engineering report regarding its water assessment and

fungal investigation at Castillo’s house, State Farm sent a letter

to   Castillo’s    attorney       asking       him    if   he    wanted    to   open     an

additional claim for bathroom #1.                State Farm then inspected the

Castillo house       in   order    to   prepare        estimates     based      upon    the

Naismith report, even though Castillo had not yet requested that

additional claims be opened.            On January 27, 2003, State Farm sent

Castillo a repair estimate and a decision letter on his first

                                           7
claim. The decision letter stated that “this claim is closed as of

today,” but also stated that if Castillo wished to pursue claims

for damage in the kitchen from the dishwasher leak and damage in

the bathroom from the sink leak, Castillo need only submit the two

claims and State Farm would adjust those claims accordingly.

     On   March   26,   2003,   Appellant’s   counsel    submitted   two

additional claims for the kitchen and bathroom.          Each claim was

assigned a separate claim number.      Since State Farm had already

inspected these areas and determined the scope of the repairs,

State Farm allocated the costs between the two new claims and sent

the payments on these two claims, along with decision letters on

both claims, to Appellant on March 31, 2003.            State Farm then

closed its files for these two claims on March 31, 2003.

     In light of the above-mentioned correspondence, we agree with

the district court’s conclusion that Castillo’s cause of action

began to accrue, at the latest, upon the issuance of the March 31,

2003, letters.    See Mangine v. State Farm Lloyds, 73 S. W. 3d 467,

468 (Tex. App. - Dallas 2002, pet. denied) (holding issuance of

“building estimate” constituted a denial of claim and triggered the

running of the limitations period); see also Provident Life and

Accident Ins. Co. v. Knott, 128 S.W. 3d 211, 223 (Tex. 2004)

(holding letter to policyholder was outright denial although the

letter did not use the word “deny,” but conveyed insurer’s position

that insured was not entitled to portion of benefits claimed). We

agree with the district court that letters from Appellant’s counsel

                                   8
requesting, inter alia, that State Farm reopen the claims do not

toll       or   extend   the   limitations   period   following   the   claims

decisions.        See Pace v. Travelers Lloyds of Tex. Ins. Co., 162

S.W.3d 632, 634-35 (Tex. App. - Houston [14th Dist] 2005, no pet.).

Although State Farm was willing to review additional information

submitted by Appellant’s attorney, State Farm never changed its

position on any of the claims after the final decision letters were

issued on March 31, 2003.

       The limitations period for Appellant’s breach of contract

action relating to the insurance policy is two years and one day

pursuant to the express terms of the policy.7                The statute of

limitations for Appellant’s extra contractual causes of action

brought under common law theories,8 under the Texas Insurance Code,

and under the Texas Deceptive Trade Practices Act is two years.

See Tex. Civ. Prac. & Rem. Code § 16.003(a); see Tex. Bus. & Com.

Code § 17.565; see Tex. Ins. Code 21.21 § 16(d);9 see Campbell v.

Texas Employers’ Ins. Ass’n, 920 S.W.2d 323, 329 (Tex. App. -

Houston [1st Dist.] 1995, no pet.).             The statute of limitations

period had run on all of the Appellant’s claims by the time

       7
      The policy provision states in relevant part that “[a]ction
brought against us must be started within two years and one day
after the cause of action accrues.” R. 660.
       8
      Specifically, Appellant alleges breach of the duty of good
faith and fair dealing.
       9
      Appellant’s claims were filed under the old Articles 21.21
and 21.55 that have been replaced with Article 541.151 et seq of
the Texas Insurance Code. See Tex. Ins. Code § 541.162(a).

                                        9
Appellant filed suit on May 6, 2005.   Therefore, the district court

correctly granted summary judgment to State Farm.

                         III. CONCLUSION

     For the reasons above, the judgment of the district court is

AFFIRMED.




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