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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Court Understands the Importance of Appraisal
Post 5188
See the full video at and at and at https://zalma.com/blog plus more than 5150 posts.
Appraisal Clauses Provide A Less Expensive, More Efficient Alternative To Litigation For Resolving Insurance-Claim Disputes
In Rockbrook Place Townhomes Association, Inc. v. Lio Insurance Company, CIVIL No. 4:24-CV-1021-SDJ, United States District Court, E.D. Texas, Sherman Division (September 3, 2025) the USDC compels appraisal and stops litigation.
Summary:
This insurance-coverage dispute between Rockbrook Place Townhomes Association, Inc. (“Rockbrook”) and LIO Insurance Company (“LIO”). The dispute arises from alleged hail damage to Rockbrook’s property, the key points are as follows:
Background:
Rockbrook owns property in Lewisville, Texas, insured by LIO. Rockbrook requested a reinspection and demanded over $4.5 million for roof replacements, which ...
Life Insurer Took Advantage of Plaintiff But Damages not Proved
Post 5187
Read the full article at https://www.linkedin.com/pulse/insurer-liable-only-1-damages-barry-zalma-esq-cfe-chbnc, see the full video at https://rumble.com/v6yoz9y-insurer-liable-but-only-for-1-damages.html and at https://youtu.be/OaX51GsfLcg, and at https://zalma.com/blog plus more than 5150 posts.
In Malcolm Wiener v. AXA Equitable Life Insurance Company, No. 24-1316, United States Court of Appeals, Fourth Circuit (September 3, 2025) the Fourth Circuit’s opinion addressed the sufficiency of evidence for a jury’s damages award in a negligence case involving AXA Equitable Life Insurance and Malcolm Wiener. AXA was found liable for negligence yet the court affirmed the trial court’s conclusion that the jury lacked sufficient evidence to reasonably calculate Wiener’s damages beyond minimal damages.
AXA liable for negligence but damages unsupported:
The court affirmed AXA’s negligence liability but ruled the jury’s $16 million damages award was ...
In Georgia Stormwater is a Pollutant
Stormwater Alone—Even Uncontaminated—Constitutes a Pollutant
Post 5186
Read the full article at https://lnkd.in/gtM4Gii7, see the full video at https://lnkd.in/g6YyqeFN and at https://lnkd.in/gksd5iTd and at https://zalma.com/blog plus more than 5150 posts.
In Auto-Owners Insurance Company v. Tabby Place Homeowners Association, Inc., et al., Civil Action No. 4:21-cv-346, United States District Court, S.D. Georgia (September 3, 2025) found no coverage.
The decision of the USDC presents a detailed judicial opinion on a declaratory judgment action involving Auto-Owners Insurance Company, Tabby Place Homeowners Association (HOA), and various property owners. The central issue concerned whether Auto-Owners had a duty to defend or indemnify the HOA in an underlying lawsuit brought by property owners alleging property damage from stormwater flooding linked to the HOA’s stormwater retention ponds.
BACKGROUND AND PARTIES INVOLVED
The underlying litigation involved property ...
How a Need for Profit Led Health Care Providers to Crime
Post 5185
Posted on September 8, 2025 by Barry Zalma
See the full video at https://lnkd.in/gePN7rjm and at https://lnkd.in/gzPwr-9q
This is a Fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers.
The Dishonest Chiropractor/Physician
How a Need for Profit Led Health Care Providers to Crime
See the full video at and at
This is a Fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is designed to help to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the Perpetrators than any Other Crime.
How Elderly Doctors Fund their ...
How a Need for Profit Led Health Care Providers to Crime
Post 5185
Posted on September 8, 2025 by Barry Zalma
See the full video at https://lnkd.in/gePN7rjm and at https://lnkd.in/gzPwr-9q
This is a Fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers.
The Dishonest Chiropractor/Physician
How a Need for Profit Led Health Care Providers to Crime
See the full video at and at
This is a Fictionalized True Crime Story of Insurance Fraud from an Expert who explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is designed to help to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the Perpetrators than any Other Crime.
How Elderly Doctors Fund their ...
Barry Zalma: Insurance Claims Expert Witness
Posted on September 3, 2025 by Barry Zalma
The Need for a Claims Handling Expert to Defend or Prove a Tort of Bad Faith Suit
© 2025 Barry Zalma, Esq., CFE
When I finished my three year enlistment in the US Army as a Special Agent of US Army Intelligence in 1967, I sought employment where I could use the investigative skills I learned in the Army. After some searching I was hired as a claims trainee by the Fireman’s Fund American Insurance Company. For five years, while attending law school at night while working full time as an insurance adjuster I became familiar with every aspect of the commercial insurance industry.
On January 2, 1972 I was admitted to the California Bar. I practiced law, specializing in insurance claims, insurance coverage and defense of claims against people insured and defense of insurance companies sued for breach of contract and breach of the implied covenant of good faith and fair dealing. After 45 years as an active lawyer, I asked that my license to practice law be declared inactive ...
