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Fraudulent Joinder of Defendant to Avoid Federal Court Fails
Post 5113
It Never Pays to Sue a Party Who Did Nothing Wrong
The Plaintiffs initiated this action in state court, asserting claims for breach of contract, bad faith, and constructive fraud/negligent misrepresentation against State Farm. They also brought claims for negligent procurement of insurance and constructive fraud/negligent misrepresentation against Tyler McCall and the Tyler McCall Insurance Agency, Inc .
In Justin Gamble and Brittany Gamble v. State Farm Fire And Casualty Company, et al., No. CIV-25-396-R, United States District Court, W.D. Oklahoma (July 2, 2025) State Farm removed the case to Federal Court and alleged that the McCall Agency was fraudulently joined to avoid removal.
KEY ISSUES
Fraudulent Joinder: State Farm removed the case, arguing that Mr. McCall and the McCall Agency were fraudulently joined to defeat diversity jurisdiction. The standard for establishing fraudulent joinder is stringent, requiring either actual fraud in the pleading of jurisdictional facts or the inability of the plaintiff to establish a cause of action against the non-diverse party in state court.
Negligent Procurement of Insurance: Plaintiffs allege that the McCall Agency negligently failed to procure the insurance coverage they requested. However, the court found that the plaintiffs received the policy they requested and had sufficient coverage to replace their roof. Therefore, they cannot show that insurance was not procured as promised.
Constructive Fraud/Negligent Misrepresentation: Plaintiffs also allege that the McCall Agency engaged in constructive fraud and negligent misrepresentation by failing to disclose information about State Farm’s bad faith claims handling tactics and the Hail Focus initiative. However, the court found no viable claim against the McCall Agency for these allegations .
State Farm removed the case, contending that Mr. McCall and the McCall Agency were fraudulently joined and their non-diverse citizenship may therefore be disregarded for purposes of establishing diversity jurisdiction.
DISCUSSION
The standard for establishing that a defendant has been fraudulently joined is a difficult one where the removing party must demonstrate either:
1. actual fraud in the pleading of jurisdictional facts, or
2. inability of the plaintiff to establish a cause of action against the non-diverse party in state court.
The standard to establish fraudulent joinder is more exacting than that for dismissing a claim and requires all factual disputes and all ambiguities in the controlling law to be resolved in the plaintiff’s favor. However, where a defendant’s non-liability is established as both a matter of fact and law, the defendant’s joinder is fraudulent and remand is appropriately refused.
The McCall Agency is the State Farm insurance agency that sold Plaintiffs the insurance policy. Oklahoma law recognizes that an insurance agent has a duty to act in good faith and use reasonable care, skill and diligence in the procurement of insurance.
An insurance agent can therefore be liable to the insured in negligence if, by the agent’s fault, insurance is not procured as promised and the insured suffers a loss. However, the scope of the agent’s duty to use reasonable care, skill, or diligence in the procurement of insurance is limited to needs disclosed by the insured. Agents do not have a duty to advise an insured with respect to his insurance needs and a general request for adequate protection and the like does not change this duty.
It is clear from Plaintiffs’ allegations and the record that Plaintiffs received the policy they requested and had sufficient coverage to replace their roof. No viable claim against McCall is available because Plaintiff’s claim against State Farm depends upon what damage her roof sustained, not the terms of her policy. As a result, Plaintiffs have no possibly viable claim against the McCall Agency for negligent procurement of insurance.
Any implied representations by the agent about the property’s condition or its eligibility for a replacement cost value policy were either true or not the cause of Plaintiffs’ losses.
Mr. McCall and the McCall Agency were fraudulently joined defendants, and their citizenship was therefore disregarded for purposes of determining subject matter jurisdiction.
The claims against Mr. McCall and the McCall Agency were dismissed without prejudice and the case will remain in the USDC.
ZALMA OPINION
Some litigants do not like litigating in federal court, especially when they are suing insurers and will sue the agent to create a failure of jurisdiction in federal court. The Plaintiffs tried and failed because the agent did exactly what he was required to do. The case will be tried against State Farm in federal court.
(c) 2025 Barry Zalma & ClaimSchool, Inc.
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Convicted Criminal Seeks to Compel Receiver to Protect his Assets
Post number 5291
See the video at and at and at https://www.zalma.com/blog plus more than 5250 posts.
The Work of a Court Appointed Receiver is Constitutionally Protected
In Simon Semaan et al. v. Robert P. Mosier et al., G064385, California Court of Appeals, Fourth District, Third Division (February 6, 2026) the Court of Appeals applied the California anti-SLAPP statute which protects defendants from meritless lawsuits arising from constitutionally protected activities, including those performed in official capacities. The court also considered the doctrine of quasi-judicial immunity, which shields court-appointed receivers from liability for discretionary acts performed within their official duties.
Facts
In September 2021, the State of California filed felony charges against Simon Semaan, alleging violations of Insurance Code section 11760(a) for making...
When There are Two Different Other Insurance Clauses They Eliminate Each Other and Both Insurers Owe Indemnity Equally
Post number 5289
In Great West Casualty Co. v. Nationwide Agribusiness Insurance Co., and Conserv FS, Inc., and Timothy A. Brennan, as Administrator of the Estate of Pat- rick J. Brennan, deceased, Nos. 24-1258, 24-1259, United States Court of Appeals, Seventh Circuit (February 11, 2026) the USCA was required to resolve a dispute that arose when a tractor-trailer operated by Robert D. Fisher (agent of Deerpass Farms Trucking, LLC-II) was involved in a side-impact collision with an SUV driven by Patrick J. Brennan, resulting in Brennan’s death.
Facts
Deerpass Trucking, an interstate motor carrier, leased the tractor from Deerpass Farms Services, LLC, and hauled cargo for Conserv FS, Inc. under a trailer interchange agreement. The tractor was insured by Great West Casualty Company with a $1 million policy limit, while the trailer was insured by Nationwide Agribusiness Insurance Company with a $2 million ...
Opiod Producer Seeks Indemnity from CGL Insurers
Post number 5288
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Insurers Exclude Damages Due to Insured’s Products
In Matthew Dundon, As The Trustee Of The Endo General Unsecured Creditors’ Trust v. ACE Property And Casualty Insurance Company, et al., Civil Action No. 24-4221, United States District Court, E.D. Pennsylvania (February 10, 2026) Matthew Dundon, trustee of the Endo General Unsecured Creditors’ Trust, sued multiple commercial general liability (CGL) insurers for coverage of opioid-related litigation involving Endo International PLC a pharmaceutical manufacturer.
KEY FACTS
Beginning as early as 2014, thousands of opioid suits were filed by governments, third parties, and individuals alleging harms tied to opioid manufacturing and marketing.
Bankruptcy & Settlements
Endo filed Chapter 11 in August 2022; before bankruptcy it ...
Passover for Americans
Posted on February 19, 2026 by Barry Zalma
“The Passover Seder For Americans”
For more than 3,000 years Jewish fathers have told the story of the Exodus of the enslaved Jews from Egypt. Telling the story has been required of all Jewish fathers. Americans, who have lived in North America for more than 300 years have become Americans and many have lost the ability to read, write and understand the Hebrew language in which the story of Passover was first told in the Torah. Passover is one of the many holidays Jewish People celebrate to help them remember the importance of G_d in their lives. We see the animals, the oceans, the rivers, the mountains, the rain, sun, the planets, the stars, and the people and wonder how did all these wonderful things come into being. Jews believe the force we call G_d created the entire universe and everything in it. Jews feel G_d is all seeing and knowing and although we can’t see Him, He is everywhere and in everyone.We understand...
Passover for Americans
Posted on February 19, 2026 by Barry Zalma
Read the full article at https://www.linkedin.com/pulse/passover-americans-barry-zalma-esq-cfe-5vgkc.
“The Passover Seder For Americans”
For more than 3,000 years Jewish fathers have told the story of the Exodus of the enslaved Jews from Egypt. Telling the story has been required of all Jewish fathers. Americans, who have lived in North America for more than 300 years have become Americans and many have lostthe ability to read, write and understand the Hebrew language in which the story of Passover was first told in the Torah.
Passover is one of the many holidays Jewish People celebrate to help them remember the importance of G_d in their lives. We see the animals, the oceans, the rivers, the mountains, the rain, sun, the planets, the stars, and the people and ...
You Get What You Pay For – Less Coverage Means Lower Premium
Post number 5275
Posted on January 30, 2026 by Barry Zalma
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When Experts for Both Sides Agree That Two Causes Concur to Cause a Wall to Collapse Exclusion Applies
In Lido Hospitality, Inc. v. AIX Specialty Insurance Company, No. 1-24-1465, 2026 IL App (1st) 241465-U, Court of Appeals of Illinois (January 27, 2026) resolved the effect of an anti-concurrent cause exclusion to a loss with more than one cause.
Facts and Background
Lido Hospitality, Inc. operates the Lido Motel in Franklin Park, Illinois. In November 2020, a windstorm caused one of the motel’s brick veneer walls to collapse. At the time, Lido was insured under a policy issued by AIX Specialty Insurance Company which provided coverage for windstorm damage. However, the policy contained an exclusion for any loss or damage directly or indirectly resulting from ...
