see the full video at https://lnkd.in/gsxE-nPK and at https://lnkd.in/gGbQ9taM, and at https://zalma.com/blog plus more than 5100 posts.
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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The Professional Claims Handler
Post 5218
Read the full article at https://www.linkedin.com/pulse/zalma-philosophy-claims-handling-part-8-barry-zalma-esq-cfe-zdwsc, see the full video at https://rumble.com/v70zl4s-the-zalma-philosophy-of-claims-handling-part-8.html and at https://youtu.be/MIYcF71ffRQ, and at https://zalma.com/blog plus more than 5200 posts.
Claims Commandment X – Thou Shall Not Pretend to be a Lawyer
Some experienced and professional claims people know the law in their area of expertise better than most lawyers.
Adjusters should be adjusters and leave lawyering to lawyers. Similarly, lawyers should be lawyers and never try to be adjusters.
Claims Commandment XI – Thou Shall Empathize With the Claimant
Everyone presenting a claim is unhappy, disturbed, shocked, injured and needs help.
Empathy is identification with and understanding of another’s situation, feelings, and motives. It is the ability to understand another person’s circumstances, point of view, thoughts, and feelings....
HOW TO CREATE AN EXCELLENCE IN CLAIMS HANDLING PROGRAM
See the full video at https://rumble.com/v70wb2i-the-zalma-philosophy-of-claims-handling-part-6.html and at https://youtu.be/tL5nDKPEs40 and at https://zalma.com/blog plus more than 5200 posts.
Post 5217
This is a change from my normal blog postings. It is my attempt. in more than one post, to explain the need for professional claims representatives who comply with the basic custom and practice of the insurance industry.
An Excellence in Claims Handling program begins with a statement in the insurer’s claims manual or statement of professionalism that it is dedicated to providing excellence in claims handling to every insured who presents a claim.
The excellence in claims handling program should include, at a minimum:
A series of lectures supported by text materials explaining:
A definition of insurance.
How to read and understand an insurance policy.
How to interview an insured, witness, or claimant.
How to assist an insured in the insured’s obligation to ...
The Professional Claims Handler
Post 5216
Read the full article at https://www.linkedin.com/pulse/zalma-philosophy-claims-handling-part-5-barry-zalma-esq-cfe-jde8c, see the full video at https://rumble.com/v70q4x8-the-zalma-philosophy-of-claims-handling-part-5.html and at https://youtu.be/6b9tZQsEkB4, and at https://zalma.com/blog plus more than 5200 posts.
This is a change from my normal blog postings. It is my attempt. in more than one post, to explain the need for professional claims representatives who comply with the basic custom and practice of the insurance industry.
Standards to be a Professional Claims Adjuster
The Insurance claims professional should be a person who:
1. Can read and understand the insurance policies issued by the insurer.
2. Understands the promises made by the policy.
3. Understand their obligation, as an insurer’s claims staff, to fulfill the promises made.
4. Are competent investigators.
5. Have empathy and recognize the difference between empathy and sympathy.
6. ...
The Professional Claims Handler
Post 5219
Posted on October 31, 2025 by Barry Zalma
An Insurance claims professionals should be a person who:
Can read and understand the insurance policies issued by the insurer.
Understands the promises made by the policy.
Understand their obligation, as an insurer’s claims staff, to fulfill the promises made.
Are competent investigators.
Have empathy and recognize the difference between empathy and sympathy.
Understand medicine relating to traumatic injuries and are sufficiently versed in tort law to deal with lawyers as equals.
Understand how to repair damage to real and personal property and the value of the repairs or the property.
Understand how to negotiate a fair and reasonable settlement with the insured that is fair and reasonable to both the insured and the insurer.
How to Create Claims Professionals
To avoid fraudulent claims, claims of breach of contract, bad faith, punitive damages, unresolved losses, and to make a profit, insurers ...
The History Behind the Creation of a Claims Handling Expert
The Insurance Industry Needs to Implement Excellence in Claims Handling or Fail
Post 5210
This is a change from my normal blog postings. It is my attempt. in more than one post, to explain the need for professional claims representatives who comply with the basic custom and practice of the insurance industry. This statement of my philosophy on claims handling starts with my history as a claims adjuster, insurance defense and coverage lawyer and insurance claims handling expert.
My Training to be an Insurance Claims Adjuster
When I was discharged from the US Army in 1967 I was hired as an insurance adjuster trainee by a professional and well respected insurance company. The insurer took a chance on me because I had been an Army Intelligence Investigator for my three years in the military and could use that training and experience to be a basis to become a professional insurance adjuster.
I was initially sat at a desk reading a text-book on insurance ...
The History Behind the Creation of a Claims Handling Expert
The Insurance Industry Needs to Implement Excellence in Claims Handling or Fail
Post 5210
This is a change from my normal blog postings. It is my attempt. in more than one post, to explain the need for professional claims representatives who comply with the basic custom and practice of the insurance industry. This statement of my philosophy on claims handling starts with my history as a claims adjuster, insurance defense and coverage lawyer and insurance claims handling expert.
My Training to be an Insurance Claims Adjuster
When I was discharged from the US Army in 1967 I was hired as an insurance adjuster trainee by a professional and well respected insurance company. The insurer took a chance on me because I had been an Army Intelligence Investigator for my three years in the military and could use that training and experience to be a basis to become a professional insurance adjuster.
I was initially sat at a desk reading a text-book on insurance ...
