The Referral Center for Alcohol and Drug Services of Central Oklahoma Inc v. Philadelphia Indemnity Insurance Company et al

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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF OKLAHOMA
THE REFERRAL CENTER FOR 	)
ALCOHOL AND DRUG SERVICES 	)
OF CENTRAL OKLAHOMA, INC., 	)
)
Plaintiff, 	)
)
vs. 	) 	Case No. CIV-25-717-R
)
PHILADELPHIA INDEMNITY 	)
INSURANCE COMPANY, and 	)
FINANCIAL RISK SOLUTIONS, 	)
LLC., 	)
)
Defendants. 	)
ORDER
Before the Court is Plaintiff’s Motion to Remand [Doc. No. 10] contending that
Defendant Philadelphia Indemnity Insurance Company’s removal was improper. The
motion is fully briefed and at issue [Doc. Nos. 11, 12].
BACKGROUND
This action arises out of Philadelphia Indemnity’s adjustment of an insurance claim
for hail damage to Plaintiff’s roof. Plaintiff initiated this action in state court asserting
claims against Philadelphia Indemnity for breach of contract, breach of the duty of good
faith and fair dealing, and constructive fraud/negligent misrepresentation. Plaintiff also
asserts claims for negligent procurement of insurance and constructive fraud/negligent
misrepresentation against Financial Risk Solutions, LLC, an independent insurance agency
that sold Plaintiff the policy. Pet. [Doc. No. 1-1] ¶¶ 4, 10, 11.
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Philadelphia Indemnity removed the action on the basis of diversity jurisdiction
contending that FRS, an admittedly non-diverse defendant, was fraudulently joined in the
action. In its Motion to Remand, Plaintiff argues that Philadelphia Indemnity has failed to
meet its heavy burden of establishing fraudulent joinder.
STANDARD OF DECISION
“The defendant seeking removal bears a heavy burden of proving fraudulent joinder,
and all factual and legal issues must be resolved in favor of the plaintiff.” Dutcher v.
Matheson, 733 F.3d 980, 988 (10th Cir. 2013) (quotation omitted). “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.” Id. (brackets and quotation omitted). Here, Philadelphia
Indemnity relies on on the second prong, which requires showing “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 (10 th Cir. 2000) (unpublished).
Although removability is typically determined on the face of 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 (10 th 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.
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DISCUSSION
Based on Plaintiff’s allegations, and the other material in the record, the Court
concludes that Philadelphia Indemnity has met its burden of establishing that Plaintiff does
not have a viable claim against FRS.
First, Plaintiff asserts that FRS was negligent in the procurement of 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.” 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, 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
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are disclosed by the insureds, and this duty is not expanded by general requests for ‘full
coverage’ or ‘adequate protection.’” Id.
Here, Plaintiff alleges that it contacted FRS “to procure full replacement cost
commercial insurance coverage from Philadelphia Indemnity” and FRS stated that “it had
obtained a replacement cost policy that would provide full replacement cost coverage for
the Insured Property in the event of a loss.” Pet. ¶ 53. Plaintiff then alleges that it
“specifically requested and secured a 100% RCV policy based on the representations to
[FRS].” Id. Plaintiff also “expressly and/or inherently disclosed concerns and insurance
needs” to FRS and, “given Oklahoma’s extreme weather,” FRS “was aware that the
Plaintiff needed and requested replacement cost coverage under a policy that would fully
replace the Insured Property’s roof in the event of a loss, without exclusion of any weather-
related damage.” Id. at ¶ 54. Plaintiff then claims that FRS negligently procured a policy
that provides illusory coverage, deviates substantially from what Plaintiff requested, did
not accurately reflect the replacement cost value, and did not provide full replacement cost
coverage to fully the restore the property.
The primary problem with this claim is that Plaintiff’s own allegations establish that
it received the policy it requested. The policy provides replacement cost value coverage,
including for wind and hail damage to the roof, and provides a sufficient amount of
coverage. Pet. ¶¶ 11, 18, 53. Because Plaintiff received the replacement cost value policy
as requested, it cannot possibly show that, “by the agent’s fault, insurance [was] not
procured as promised.” Swickey, 979 P.2d at 269.
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The dispute here concerns Philadelphia Indemnity’s interpretation of the policy and
its claims handling practices, not the agent’s actions during the procurement stage.
Philadelphia Indemnity denied, or partially denied, Plaintiff’s claim for storm damage
because it determined that there was no hail damage to the roof and interior water damage
was due to ponded rainfall and condensate from the rooftop HVAC system. Pet. ¶ 18. But
the insurance company’s determination that some of the claimed damage was not caused
by wind or hail does not mean the coverage is negated. Plaintiff’s damages flow from
Philadelphia Indemnity’s allegedly wrongful adjustment of her claim, not the agent’s
failure to procure the correct type of policy, type of coverage, or coverage limit. See 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”); 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.”). Further, although Plaintiff faults FRS for failing to inspect the property or
confirm its condition prior to binding coverage, “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
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‘inherently’ represents that no exclusions in the policy potentially apply or that a claim will
be paid.” Id. at 7; see also Country Gold, Inc. v. State Auto Prop. & Cas. Ins. Co., No. CIV-
14-1398-D, 2015 WL 431638, at *2-4 (W.D. Okla. Feb. 2, 2015) (finding “no legal basis
for Plaintiff's negligence claim” based on allegations that the agent failed to inform insured
“of the limitations of the insurance policy” and failed to conduct an “underwriting analysis”
or make “annual adjustments to the coverage limits”);
Plaintiff’s second claim asserts that FRS engaged in constructive fraud or made a
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 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” 	misrepresented 	that 	the 	property 	met 	all
underwriting requirements and was eligible for replacement cost coverage, that all property
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inspections had occurred, that the replacement cost value it calculated was accurate, and
that the policy included coverage for all weather-related damage. Pet. ¶ 70. But none of
these alleged misrepresentations by FSV have a causal connection to Plaintiff’s alleged
loss. Plaintiff’s allegations indicates that FSV “secured a 100% RCV policy” from
Philadelphia Indemnity, 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 provided coverage for
storm damage and there are no factual allegations to show the issued policy excluded a
“weather-related loss.” Philadelphia Indemnity found covered hail damage, but determined
it was below the deductible amount. As to the coverage values, they substantially exceed
the amount needed to pay for a roof replacement and there are no factual allegations to
demonstrate the replacement cost value FRS allegedly calculated was inaccurate. Stone v.
State Farm Fire & Cas. Co., CIV-25-7-D (W.D. Okla. Aug. 20, 2025) (concluding that
plaintiff’s 	allegation 	that 	the 	agent 	failed 	to 	undertake 	an 	accurate 	calculation 	of
replacement cost coverage “is either false or irrelevant”).
Plaintiff also contends that FRS failed to disclose Philadelphia’s “internal coverage
definitions and clandestine definitions” and its bad faith claims handling tactics. But
Plaintiff does not allege that FRS had specific knowledge of Philadelphia Indemnity’s
clandestine definitions or bad faith conduct, nor does Plaintiff include allegations showing
that FRS made any affirmative statements regarding Philadelphia Indemnity’s claims
handling or policy interpretation. Although “an agent may by its representations or
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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. There are no factual allegations
that demonstrate the FRS disclosed any information that would have required it to convey
the information Plaintiff asserts was not disclosed. Stafford, CIV-25-08-HE at 7. Plaintiff
has not identified a misstatement of fact or a supplying of false information sufficient to
make out a viable constructive fraud claim.
“Bottom line, there is no basis shown for concluding that [FRS] undertook or
otherwise had a duty beyond securing the issuance of the initial and renewal policies for
full replacement coverage.” Goebel, 2023 WL 11883977, at *4. Plaintiff’s dispute concerns
Philadelphia Indemnity’s coverage determination and claims handling practices, not FRS’s
actions during the procurement and renewal of the policy.
CONCLUSION
Philadelphia Indemnity has met its burden of establishing that FRS is a fraudulently
joined defendant, and its citizenship is therefore disregarded for purposes of determining
subject matter jurisdiction. Plaintiff’s Motion to Remand [Doc. No. 10] is DENIED and
the claims against FRS are dismissed without prejudice.
IT IS SO ORDERED this 16th day of September, 2025.
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