Newell v. State Farm Fire and Casualty Company et al

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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF OKLAHOMA
JANEVA K. NEWELL, 	)
)
Plaintiff, 	)
)
vs. 	) 	Case No. CIV-25-562-R
)
STATE FARM FIRE AND 	)
CASUALTY COMPANY, et al, 	)
)
Defendants. 	)
ORDER
Plaintiff initiated this action in state court asserting claims for breach of contract,
bad faith and constructive fraud/negligent misrepresentation against State Farm and claims
for negligent procurement of insurance and constructive fraud/negligent misrepresentation
against Bronson Schubert and the Bronson Schubert Agency, Inc. State Farm removed the
case, contending that Mr. Schubert and the Schubert Agency1 are fraudulently joined and
their non-diverse citizenship may therefore be disregarded for purposes of establishing
diversity jurisdiction. Now before the Court is Plaintiff’s Motion to Remand [Doc. No. 13]
arguing that State Farm has not met its burden of showing fraudulent joinder. The motion
is fully briefed [Doc. Nos. 14, 15] and at issue.
This case arises from State Farm’s alleged wrongful denial of Plaintiff’s claim for
storm damage to her property. Plaintiff alleges that the denial was part of a systemic and
1 For ease of reference, and because Plaintiff refers to Mr. Schubert and the Schubert
Agency collectively without distinguishing between their conduct, the Court refers to these
parties simply as the Schubert Agency.
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pervasive scheme by State Farm to deny storm damage claims based on hidden definitions
of hail damage and a variety of bad faith claims handling tactics. State Farm implemented
the scheme, in part, through its “Hail Focus initiative,” which allegedly aims to reduce
indemnity payments and deny full roof replacements to policyholders. Plaintiff claims that
she was subjected to this scheme when State Farm denied her claim for storm damage
based on a sham investigation.
The Schubert Agency sold Plaintiff her homeowner’s insurance policy. Plaintiff
alleges that State Farm’s “captive” insurance agents, like the Schubert Agency, “anchor”
the scheme by negligently failing to procure the comprehensive replacement cost coverage
requested and misrepresenting or omitting material facts from Plaintiff. State Farm
contends that the Schubert Agency is a fraudulently joined defendant because Plaintiff has
no viable claim against the agent for negligent procurement of insurance or constructive
fraud/negligent misrepresentation.
“To establish fraudulent joinder, 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.” Dutcher v. Matheson, 733
F.3d 980, 988 (10th Cir. 2013) (brackets and quotation omitted). Under the second prong,
the removing party must show “that there is no possibility that plaintiff would be able to
establish a cause of action against the joined party in state court.” Montano v. Allstate
Indem., 211 F.3d 1278 (10th Cir. 2000) (unpublished). When making this determination,
“all factual and legal issues must be resolved in favor of the plaintiff.” Dutcher, 733 F.3d
at 988 (quotation omitted). Although removability is typically determined on the face of
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the pleadings, “upon specific allegations of fraudulent joinder the court may pierce the
pleadings, consider the entire record, and determine the basis of joinder by any means
available.” Smoot v. Chicago, R.I. & P. R. Co., 378 F.2d 879, 882 (10th Cir. 1967) (internal
citation omitted). “This does not mean that the federal court will pre-try, as a matter of
course, doubtful issues of fact to determine removability; the issue must be capable of
summary determination and be proven with complete certainty.” Id.
Based on Plaintiff’s allegations, and the other materials in the record, the Court
concludes that State Farm has met its heavy burden of establishing fraudulent joinder. With
respect to the negligent procurement claim, 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.” Swickey v. Silvey Co., 979 P.2d 266, 269 (Okla. Civ. App.
1999). “This duty rests, in part, on specialized knowledge about the terms and conditions
of insurance policies generally.” Rotan v. Farmers Ins. Grp. of Companies, Inc., 83 P.3d
894, 895 (Okla. Civ. App. 2004) (internal quotations marks and brackets omitted). 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.” Swickey, 979 P.2d at
269. 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. Rotan, 83 P.3d
at 895. 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.” Id.
(internal quotation marks and brackets omitted). Thus, “[t]o discharge their duty to act in
good faith and use reasonable care, skill, and diligence in the procurement of insurance,
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including use of their specialized knowledge about the terms and conditions of insurance
policies, insurance agents need only offer coverage mandated by law and coverage for
needs that are disclosed by the insureds, and this duty is not expanded by general requests
for ‘full coverage’ or ‘adequate protection.’” Id.
Plaintiff alleges that 	she “contacted Agent 	to procure full replacement cost
homeowners insurance coverage” and “requested Agent obtain a replacement cost policy
that would provide coverage for the Insured Property in the event of a loss.” See Pet. [Doc.
No. 1-3] ¶ 25(a). In doing so, “Plaintiff expressly and/or inherently disclosed concerns and
insurance needs to Agent” and Agent was “aware that the Plaintiff needs coverage under a
policy that would fully replace the Insured Property’s roof in the event of a tornado, wind,
and/or hailstorm, loss, without exclusion of any weather-related losses.” Id. ¶ 25(b). She
then claims that Schubert Agency negligently procured a policy that provides illusory
coverage, 	deviates 	from 	what 	she 	requested, 	and 	does 	not 	accurately 	reflect 	the
replacement cost value of the property. Id. ¶ 63.
However, it is clear from Plaintiff’s allegations and the record that Plaintiff received
the policy she requested and had sufficient coverage to replace her roof. The policy is an
all-risk replacement cost policy that provides coverage for any accidental direct physical
loss, including wind and hail damage. Id. ¶¶ 4(c), 30-33. Because Plaintiff received the
replacement cost value policy she requested, she cannot possibly show that, “by the agent’s
fault, insurance [was] not procured as promised.” Swickey, 979 P.2d at 269. And while
Plaintiff asserts that the coverage she received was illusory, “[t]here is nothing in the policy
delivered which implausibly limits its reach.” Marino v. State Farm Fire & Cas. Co., No.
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CIV-22-0885-HE, 2023 WL 11915691, at *3 (W.D. Okla. Aug. 7, 2023). Plaintiff’s
damages flow from State Farm’s allegedly improper interpretation of her policy and
adjustment of her claim, not the agent’s failure to procure the correct type of policy, type
of coverage, or coverage limit. See Stafford v. State Farm Fire & Cas. Co., CIV-25-08-HE
(W.D. Okla. May 25, 2025) (“The fact that a claim under a policy is denied, or paid at a
level less than that sought by the insured, does not, without more, render the policy
illusory.”); Rain Drop Found., Inc. v. State Farm Fire & Cas. Co., No. 24-1101-D, 2025
WL 582562, at *4 (W.D. Okla. Feb. 21, 2025) (no viable claim against agent because
“Plaintiff’s alleged damages arose, not because of the type of insurance procured, but
because State Farm refused to replace Plaintiff’s roof”); Steinkamp v. State Farm Fire &
Cas. Co., No. CIV-22-00047-PRW, 2023 WL 11920886, at *2 (W.D. Okla. Sept. 29, 2023)
(no viable claim against agent because “Plaintiff’s claim against State Farm depends upon
what damage her roof sustained, not the terms of her policy”). The Court therefore
concludes there is no possibility of recovery against the Schubert Agency for negligent
procurement of insurance.
Plaintiff’s remaining cause of action asserts that the Schubert Agency engaged in
constructive fraud and negligent misrepresentation. A constructive fraud claim under
Oklahoma law requires a “breach of duty which, without an actually fraudulent intent,
gains an advantage to the person in fault, … by misleading another to his prejudice, ….”
Okla. Stat. Ann. tit. 15, § 59(1); see also Sullivan v. Wyndham Hotels & Resorts, Inc., No.
21-7003, 2021 WL 5822690, at *3 (10th Cir. Dec. 8, 2021) (explaining that negligent
misrepresentation requires a material misrepresentation, a breach of a duty in making the
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misrepresentation, and reasonable reliance to the plaintiff’s detriment). Such a duty “may
arise if a party selectively discloses facts that create a false impression.” Specialty
Beverages, L.L.C. v. Pabst Brewing Co., 537 F.3d 1165, 1181 (10th Cir. 2008) (applying
Oklahoma law). “In other words, one conveying a false impression by the disclosure of
some facts and the concealment of others is guilty of fraud even though his statement is
true as far as it goes, since concealment is in effect a false representation that what is
disclosed is the whole truth.” Id. (internal quotation marks and brackets omitted).
Plaintiff alleges that “Defendants” made a number of misrepresentations, including
that the property met all underwriting requirements, all property inspections occurred, the
replacement cost value calculated by the agent was accurate, the property was eligible for
full replacement cost coverage and the policy covered all weather-related damage. Pet. ¶
73. Defendants also allegedly failed to disclose that pre-existing issues with the property
would prevent issuance of the replacement cost coverage or limit coverage. Id. State Farm
argues that these alleged misrepresentations were not actually spoken by anyone at the
Schubert Agency but were instead implied by the mere act of selling, binding, and then
renewing the insurance policy. In response, Plaintiff contends that she has pleaded both
misrepresentations and omissions, but does not point to any factual allegations describing
express statements by the agent. Rather, her pleading and briefing assert that the
representations were implied by or inherent in the agent’s act of selling, binding, and
renewing the insurance policy. See Pet. ¶¶ 4(a), 4(c), 19, 25(d), 36, 63(b); Mot. at p. 1, 3,
13.
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However, “[c]ontrary to plaintiff’s suggestion, the Oklahoma cases do not support
the idea that an agent is required to personally inspect a premises before binding a policy
or that, merely by binding or delivering a homeowner’s policy, the agent impliedly or
‘inherently’ represents that no exclusions in the policy potentially apply or that a claim will
be paid.” Stafford, CIV-25-08-HE at 7. Moreover, Plaintiff cannot show the allegedly
implied representations about her eligibility for coverage or satisfaction of the underwriting
guidelines were untrue or related to her alleged damages. State Farm issued Plaintiff a
replacement cost policy so the property did meet the underwriting guidelines and was
eligible for replacement cost coverage. See Steinkamp, 2023 WL 11920886, at *4 (“This
cannot be a misrepresentation because there is no indication that Plaintiff’s property did
not meet State Farm’s underwriting requirements.”). The policy provides replacement cost
coverage for wind and hail damage, there is no indication the coverage values are wrong,
and no allegation that the property had a pre-existing defect that negated coverage for storm
damage to the roof. See Stone v. State Farm Fire & Cas. Co., CIV-25-7-D (W.D. Okla.
Aug. 20, 2025) (concluding that plaintiff’s claims against the agent “lack a basis in fact”);
Rain Drop Found., Inc. v. State Farm Fire & Cas. Co., No. 24-1101-D, 2025 WL 582562,
at *5 (W.D. Okla. Feb. 21, 2025) (“[T]he Court is unable to make out a causal nexus
between [the agent’s] actions at the procurement stage and Plaintiff’s alleged prejudice at
the coverage determination stage.”).
Plaintiff also contends that the Schubert Agency failed to disclose State Farm’s bad
faith claims handling tactics, its narrow internal definition of hail damage, or its scheme to
underpay claims. “Although an agent may be held accountable for failing to answer an
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insured’s coverage questions accurately, he or she generally is not obligated to explain the
policy terms to the insured.” Smith, 2014 WL 1382488, at *3. There are no factual
allegations that demonstrate the Schubert Agency disclosed any information that would
have required it to convey the information Plaintiff asserts was not disclosed. Stafford,
CIV-25-08-HE at 7. Although “an agent may by its representations or conduct, assume
duties beyond those inherently tied to its role as agent,” an agent does not have a “duty to
anticipate, and advise the insured as to, anything that might conceivably limit the payment
of a future claim” simply because the agent markets, procures, and renews a policy. Goebel,
No. 2023 WL 11883977, at *4. Plaintiff has not identified a misstatement of fact or a
supplying of false information sufficient to make out a viable constructive fraud claim.
Under the circumstances present here, Plaintiff cannot establish that the Schubert Agency
breached a duty of full disclosure. See id.
Accordingly, the Court concludes that Bronson Schubert and the Bronson Schubert
Agency, Inc. are fraudulently joined and their citizenship must be disregarded for purposes
of determining subject matter jurisdiction. The claims against these defendants are
dismissed without prejudice. Plaintiff’s Motion to Remand [Doc. No. 13] is therefore
DENIED.
IT IS SO ORDERED this 15 th day of September, 2025.
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