Zapp v. State Farm Fire and Casualty Company et al

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF OKLAHOMA
ROBERT JEFFREY ZAPP, )
)
Plaintiff, )
)
v. ) Case No. CIV-25-738-SLP
)
STATE FARM FIRE AND ) District Court of Oklahoma County
CASUALTY COMPANY and ) Case No. CJ-2025-3609
ANDY SWANN, )
)
Defendants. )
O R D E R
Before the Court is Plaintiff’s Motion to Remand [Doc. No. 11]. Defendant State
Farm Fire and Casualty Company (State Farm) has filed a Response [Doc. No. 12] and
Plaintiff has filed a Reply [Doc. No. 13]. State Farm has also filed a Notice of
Supplemental Authority [Doc. No. 14].1 The matter is fully briefed and ready for decision.
For the reasons set forth below, the Court GRANTS Plaintiff’s Motion and REMANDS
this matter to state court.
I. Introduction
This case arises from State Farm’s denial of Plaintiff’s homeowner’s insurance
claim for alleged roof damage resulting from a hail and/or wind storm. Plaintiff filed suit
in the District Court of Oklahoma County, State of Oklahoma against State Farm and its
agent, Andy Swann (Swann). The state-court Petition alleges claims in Count One and
1 Citations to the parties’ briefing submissions reference the Court’s ECF pagination.
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Two against State Farm for breach of contract and breach of the duty of good faith and fair
dealing. The Petition alleges in Count Three a claim against Swann for negligent
procurement of insurance. Finally, Count Four of the Petition alleges a claim against all
Defendants for constructive fraud and negligent misrepresentation. See Doc. No. 1-3.
Plaintiff’s claims are based on what he alleges to be a “systematic and pervasive Scheme”
by State Farm and Swann to deny claims like those submitted by Plaintiff and to cause
substantial harm to Plaintiff. Id., ¶ 1, 3, 4.
State Farm removed this case to federal court alleging that Swann, who is non-
diverse, has been fraudulently joined. Plaintiff now moves to remand this action to state
court for lack of diversity jurisdiction, contesting State Farm’s assertion of fraudulent
joinder.
II. Governing Standards
Federal courts are courts of limited jurisdiction, and the party seeking to invoke
federal jurisdiction bears the burden of proving the exercise of such jurisdiction is proper.
Becker v. Ute Indian Tribe of the Uintah and Ouray Reservation, 770 F.3d 944, 946-47
(10th Cir. 2014). A defendant may remove a civil action from state court to federal court
when the federal court has original jurisdiction over the action. 28 U.S.C. § 1441(a).
Original jurisdiction based on diversity exists where no plaintiff and no defendant are
citizens of the same state and the amount in controversy exceeds $75,000 (exclusive of
interest and costs). See 28 U.S.C. §§ 1332(a), 1441(b)(1); Middleton v. Stephenson, 749
F.3d 1197, 1200 (10th Cir. 2014).
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If a plaintiff joins a nondiverse party fraudulently to defeat federal jurisdiction under
§ 1332, such fraudulent joinder does not prevent removal. In such cases, the fraudulently
joined defendant is ignored for the purpose of assessing complete diversity. Dutcher v.
Matheson, 733 F.3d 980, 988 (10th Cir. 2013) (citing Smoot v. Chicago, Rock Island &
Pac. R.R. Co., 378 F.2d 879, 881-82 (10th Cir. 1967)); see also Brazell v. Waite, 525 F.
App’x 878, 881 (10th Cir. 2013) (“When [fraudulent joinder] occurs, the district court
disregards the fraudulently joined non-diverse party for removal purposes.”).
The removing defendant faces a heavy burden of proving fraudulent joinder and all
factual and legal issues are resolved in the plaintiff’s favor. Dutcher, 733 F.3d at 988; see
also Montano v. Allstate Indem., No. 99-2225, 2000 WL 525592 at *2 (10th Cir. Apr. 14,
2000) (The Court must “resolve all disputed questions of fact and all ambiguities in the
controlling law in favor of the non-removing party.” (citation omitted)). To establish
fraudulent joinder, the removing party must demonstrate either: (1) actual fraud in the
pleading of jurisdictional facts; or (2) the plaintiff’s inability to establish a cause of action
against the non-diverse defendant in state court. Id.
Under the “actual fraud” prong, a defendant must basically show that plaintiff “lied
in the pleadings.” Sanelli v. Farmers Ins. Co., No. CIV-23-263-SLP, 2023 WL 3775177
at *2 (W.D. Okla. June 2, 2023) (quotation omitted). Under the “inability to establish a
cause of action” prong, the defendant 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, 2000 WL 525592 at *1 (cleaned up). “This standard is more exacting than that
for dismissing a claim under Fed. R. Civ. P. 12(b)(6); indeed, the latter entails the kind of
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merits determination that, absent fraudulent joinder, should be left to the state court where
the action was commenced.” Id. at * 2; see also Dutcher, 733 F.3d at 988 (the question of
fraudulent joinder is not to be confused with whether “plaintiffs have stated a valid claim”
against the allegedly fraudulently joined defendants); Nerad v. AstraZeneca Pharms., Inc.,
203 F. App’x 911, 913 (10th Cir. 2006) (If there is “a reasonable basis to believe the
plaintiff might succeed in at least one claim against the non-diverse defendant” then the
case must be remanded.).
III. Factual Allegations
State Farm issued an insurance policy to Plaintiff. Swann procured the policy as a
“captive agent” for State Farm.2 Plaintiff requested full replacement cost coverage from
Swann in the event of a loss, without exclusion of a weather-related loss. Swann did not
inspect Plaintiff’s property, disclose any reasons why the property would be ineligible for
the requested replacement cost coverage, or advise Plaintiff that if the property had any
defect or pre-existing damage, it would be excluded from replacement cost coverage.
Swann was aware that State Farm has a widespread and pervasive scheme whereby
it denies or underpays claims, even when wind and/or hail damage is clearly shown, by
using a narrow and limited definition of what constitutes “hail damage” that is absent from
the face of the policy.
Plaintiff’s roof was damaged by a specific weather event – a wind and/or hail storm.
In addition to the roof damage, subsequent to the storm, Plaintiff’s girlfriend slipped and
2 “A ‘captive agent’ is an agent who generally sells only one company’s policies to insureds.” See,
e.g., Miller v. Mill Creek Homes, Inc., 97 P.3d 687, 689 n. 1 (Or. App. 2004).
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fell at the home due to water alleged to have come from a leak in the roof and consequently,
the ceiling of the bathroom. Plaintiff submitted a timely claim and, consistent with the
alleged scheme, State Farm denied the claim, finding that the damage was not attributed to
the storm but to a “preexisting condition.” Notably, a contractor, who was referred to
Plaintiff by State Farm, inspected Plaintiff’s roof and found “terrible hail damage” that
necessitated that the roof be replaced. Pet., ¶ 40. But State Farm dispatched a different
contractor and then denied Plaintiff’s claim “because the amount of damage, as determined
by State Farm, was below his deductible.” Id.
Plaintiff alleges that, in light of the pervasive scheme about which Swann was fully
aware, any coverage provided by the policy is illusory. Plaintiff alleges that Swann’s
negligent conduct included procuring a policy that did not provide the scope of coverage
as requested to fully restore his property back to its pre-loss condition. Plaintiff alleges a
host of other conduct by Swann to include failing to disclose that his home had some defect
or pre-existing damage that would negate the full replacement cost coverage and would not
meet all underwriting guidelines. Plaintiff sustained damages as a result of Swann’s
conduct.
IV. Discussion
This case is among multiple state-court cases removed to this judicial district under
the Court’s diversity-of-citizenship jurisdiction in which one or more Oklahoma citizens
have sued State Farm. This Court has previously found that State Farm failed to meet its
burden to establish fraudulent joinder on substantially similar allegations as those at issue
here. See Willard v. State Farm Fire & Cas. Co., No. CIV-25-337-SLP, 2025 WL 2419274
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(W.D. Okla. Aug. 21, 2025).3 State Farm has addressed the Court’s Willard decision in its
briefing. The Court finds State Farm has failed to persuasively establish that the Willard
decision is incorrect or otherwise that the facts alleged in this action require a different
result. The Court, therefore, adopts the rationale set forth in Willard.
A. State Farm Has Not Met its Burden To Demonstrate Plaintiff’s Inability
to Establish a Cause of Action for Negligent Procurement
Plaintiff’s allegations could state a viable claim under Oklahoma law. See Swickey
v. Silvey Cos., 979 P.2d 266, 269 (Okla. Civ. App. 1999) (an insurance agent has a duty
“to act in good faith and use reasonable care, skill and diligence in the procurement of
insurance and an agent is liable to the insured if, by the agent’s fault, insurance is not
procured as promised and the insured suffers a loss.”); Rotan v. Farmers Ins. Group of
Cos., 83 P.3d 894, 895 (Okla. Civ. App. 2003) (An agent’s duty “rests, in part, on
‘specialized knowledge [about] the terms and conditions of insurance policies generally.’”
(quoting Swickey, 979 P.2d at 269)).
Factual questions exist as to Swann’s procurement conduct in relation to the scope
of the insurance requested and promised, as compared to the insurance received, and
3 In Willard, the Court consolidated eleven cases, finding the motions to remand filed in those
cases “arise from a formulaic petition and the bases for requesting remand are premised on
common questions of law and fact involving the issues of fraudulent joinder and diversity
jurisdiction.” Id. at *2. Other decisions have been issued relying on Willard to support finding a
remand proper on substantially similar factual allegations and claims for relief. See, e.g., Varner
v. State Farm Fire & Cas. Co., No. CIV-25-892-J, 2025 WL 3227779 (W.D. Okla. Oct. 29, 2025).
Recently, another district judge consolidated seven cases involving State Farm and claims brought
against it for negligent procurement and remanded those claims, similarly rejecting State Farm’s
assertions that the non-diverse agents had been fraudulently joined. See Coover v. State Farm Fire
& Cas. Co., No. CIV-25-334-PRW, 2025 WL 3470868 (W.D. Okla. Dec. 3, 2025).
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Swann’s knowledge of and complicity in the alleged scheme. As such, the Court cannot
say that Plaintiff has no possibility of succeeding. Cf. Smoot, 378 F.2d at 882 (finding
joinder was fraudulent where the non-liability of the non-diverse defendant had been
“established with complete certainty upon undisputed evidence” (emphasis added)); Dodd
v. Fawcett Publ’ns, Inc., 329 F.2d 82, 85 (10th Cir. 1964) (finding fraudulent joinder where
the same proof alleged against the defendant and which appeared with “complete certainty”
to be the sole basis of the plaintiff’s claim was identical to proof the Oklahoma Supreme
Court had judicially determined in another case was insufficient to impose liability
(emphasis added)).
In so finding, the Court underscores that at this stage, Plaintiff need not establish
entitlement to relief, but only a “reasonable basis” that his claim might succeed. See Nerad,
203 F. App’x at 913 (“A ‘reasonable basis’ means just that: the claim need not be a sure-
thing, but it must have a basis in the alleged facts and the applicable law.”). As the Tenth
Circuit explained in Dutcher, this “does not mean that plaintiffs have stated a valid claim,”
“[b]ut the defendants needed to clear a high hurdle to prove something they have yet to
prove, i.e., fraudulent joinder.” Id., 733 F.3d at 989.
B. There is No Actual Fraud in the Pleading of Jurisdictional Facts
The Court further finds State Farm has failed to establish actual fraud in the pleading
of jurisdictional facts. State Farm primarily bases this argument on its contention that “this
is one of an implausible (and increasing) number of cases against not only State Farm but
other insurers by the same group of attorneys alleging dozens of agents from different
companies made the same misrepresentations and underwriting failures, based on which
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those Oklahoma-based agents are also sued.” Resp. at 30-31. The Court is not convinced.
As the Court has previously found, the fact that the Petition at issue may have been used
as a template in the multiple other cases brought against State Farm is not, in and of itself,
sufficient to establish actual fraud in the pleading of jurisdictional facts. See Willard, 2025
WL 2419274 at *5.
V. Conclusion
In sum, State Farm removed this action and asserted that Plaintiff fraudulently
joined Swann, a non-diverse Defendant. But State Farm has failed to show that Plaintiff
has no possibility of recovering against Swann on his negligent procurement claim.4 State
Farm’s arguments in opposing remand are based on issues that are not capable of summary
determination by the Court. Nor has State Farm shown actual fraud in the pleading of
jurisdictional facts. Because State Farm has failed to meet its burden to show fraudulent
joinder, the Court lacks subject matter jurisdiction.
IT IS THEREFORE ORDERED that Plaintiff’s Motion to Remand [Doc. No. 11]
is GRANTED.
IT IS FURTHER ORDERED that this case is REMANDED to the District Court of
Oklahoma County, State of Oklahoma.5
4 The Court need not further consider whether State Farm has met its burden as to Plaintiff’s
remaining claims. See, e.g., Montano, 2000 WL 525592 at * 2 (“[R]emand is required if any one
of the claims against the non-diverse defendant . . . is possibly viable.”).
5 The record reflects that prior to the removal of this action, Swann filed a motion to dismiss in
state court. See Doc. No. 1-11. But upon removal, Swann did not comply with LCvR 81.2(b) and
the motion, therefore, is considered withdrawn. In any event, this Court lacks jurisdiction to
consider any pending substantive motion. See, e.g., Cunningham v. BHP Petroleum Gr. Brit. PLC,
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IT IS FURTHER ORDERED that the Clerk of Court is directed to take all actions
necessary to effect the remand.
IT IS SO ORDERED this 18th day of March, 2026.
427 F.3d 1238, 1245 (10th Cir. 2005) (vacating district court’s post-removal substantive rulings
where it lacked diversity jurisdiction because “it had no power to rule on any substantive
motions”).
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