Bruso et al v. State Farm Fire and Casualty Company et al

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IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF OKLAHOMA
MARCUS BRUSO and RUTH BRUSO, 	)
)
Plaintiffs, 	)
)
v. 	) 	Case No. CIV-25-964-D
)
STATE FARM FIRE AND CASUALTY 	) 	(Remanded to Cleveland County
COMPANY; and BRONSON SCHUBERT 	) 	District Court, Case No.
AGENCY INC., 	) 	CJ-2024-1157)
)
Defendants. 	)
ORDER
Before the Court is Plaintiffs’ Motion to Remand [Doc. No. 5]. Defendant State
Farm Fire and Casualty Company filed a response [Doc. No. 6], to which Plaintiffs replied
[Doc. No. 7]. The matter is fully briefed and at issue.
BACKGROUND
Plaintiffs’ property was damaged in a storm on April 19, 2023. Plaintiffs filed a
claim with their homeowner’s policy, issued by State Farm, and an inspection was
performed by SeekNow, on behalf of State Farm. Plaintiffs allege that SeekNow “reported
to State Farm that Plaintiffs’ roof was damaged on ‘all slopes’ by hail and necessitated
replacement.” [Doc. No. 5, at 8]. Plaintiffs further allege that State Farm adjuster Bridgett
Morton agreed and recommended a total roof replacement. Id. However, State Farm then
sent a different adjuster to inspect the property, finding “no hail hits to three of the four
slopes” and some wear and tear damage. Id. at 9. For some covered damage to the dwelling
and shed, State Farm prepared a damage estimate showing a total replacement cost value
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of $7,855.85, of which Plaintiffs would be paid $5,595.85 after applying Plaintiffs’
deductible. [Doc. No. 1-1, at 2].
Plaintiffs’ contractor inspected Plaintiffs’ home and “found approximately $50,000
more damage than State Farm.” Id. at 3. For Plaintiffs’ claims against State Farm, they
allege that State Farm “simply manufactured a reason to deny portions of Plaintiffs’ claim
in order to save money,” breaching the policy and acting in bad faith. Id. at 3-5.
For Plaintiffs’ claims against Bronson Schubert Agency Inc., they allege:
Bronson [Schubert] acted as State Farm’s agent for many years
to renew and maintain Plaintiffs’ policy. Bronson [Schubert]
represented to Plaintiffs the policy would pay to fully replace
all 	damages 	that 	ever 	occurred 	to 	their 	home. 	Bronson
[Schubert] represented this specific policy would pay all costs
to replace or repair damages up front without any deductions
other than the deductible. Bronson [Schubert] represented to
Plaintiffs the policy would pay in full, up front, for all damages
that occurred to their home so Plaintiffs would avoid financial
hardship in the event of a claim. Bronson [Schubert] further
represented 	the 	home 	was 	in 	excellent 	condition, 	which
included the roof. Indeed, State Farm would not have issued
the subject policy if Plaintiffs’ home was in poor condition or
had signs of wear and tear, defects, etc. Bronson [Schubert]
confirmed to Plaintiffs their home met all of State Farm’s
underwriting requirements.
Id. at 2. According to Plaintiffs, these “representations made by Bronson [Schubert] to
Plaintiffs with respect to the Policy, which Plaintiffs relied upon to their detriment, were
not true.” Id. at 3.
State Farm removed this action within 30 days of Plaintiffs’ depositions, and
Plaintiffs do not dispute the timeliness of removal. In its Notice of Removal [Doc. No. 1],
State Farm contends that complete diversity exists under 28 U.S.C. § 1332, and the amount
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in controversy exceeds the threshold for diversity jurisdiction. The parties appear to dispute
whether Plaintiffs are citizens of Oklahoma or Michigan for purposes of diversity
jurisdiction. However, as long as Schubert was not fraudulently joined, the Court need not
determine Plaintiffs’ citizenship. In other words, if Plaintiffs are Oklahoma citizens, then
Schubert (OK) is a non-diverse party, and complete diversity does not exist. If Plaintiffs
are Michigan citizens, then there is diversity between Plaintiffs (MI) and State Farm (IL),
but State Farm’s removal violates the forum-defendant rule as to Schubert (OK). That rule
provides that “[a] civil action otherwise removable solely on the basis of [diversity
jurisdiction] may not be removed if any of the parties in interest properly joined and served
as defendants is a citizen of the State in which such action is brought.” 28 U.S.C.
§ 1441(b)(2). Accordingly, this case turns on the issue of fraudulent joinder regardless of
Plaintiffs’ citizenship because Schubert is either a non-diverse party or a forum defendant.
Although Schubert is either non-diverse or a forum defendant, State Farm asserts
that Schubert was fraudulently joined by Plaintiffs and can be disregarded for purposes of
analyzing diversity jurisdiction and the forum-defendant rule. Before the Court is
Plaintiffs’ motion to remand, arguing that State Farm cannot meet its “heavy burden” to
show fraudulent joinder.
STANDARD OF DECISION
Subject-matter jurisdiction over this case turns on the issue of fraudulent joinder.
“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
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980, 988 (10th Cir. 2013) (internal quotation omitted); see also Osburn v. Ardmore Suzuki,
Inc., No. 21-CV-234-JWB, 2023 WL 1927991, at *5 (E.D. Okla. Feb. 10, 2023) (“The
fraudulent joinder doctrine creates an exception to the forum-defendant rule.”). State Farm
relies solely on Plaintiffs’ inability to establish a cause of action against Schubert.1 As the
removing party, State Farm must establish federal jurisdiction exists. See McPhail v. Deere
& Co., 529 F.3d 947, 955 (10th Cir. 2008).
“Removal statutes are to be strictly construed, and all doubts are to be resolved
against removal.” Fajen v. Found. Rsrv. Ins. Co., 683 F.2d 331, 333 (10th Cir. 1982)
(internal citation omitted). To satisfy the “heavy burden on the party asserting fraudulent
joinder,” State Farm must show that there is no possibility that Plaintiffs would be able to
establish a cause of action against Schubert in state court. See Montano v. Allstate Indem.,
No. 99-2225, 2000 WL 525592, at *1 (10th Cir. Apr. 14, 2000) (unpublished)2 (quotations
and citation omitted); Brazell v. Waite, 525 F. App’x 878, 881 (10th Cir. 2013) (citation
omitted) (“[T]he removing party must show that the plaintiff has ‘no cause of action’
against the fraudulently joined defendant.”).
“[U]pon 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.” Dodd v. Fawcett Publications, Inc., 329 F.2d 82, 85 (10th Cir. 1964) (citations
1 Although State Farm does reference actual fraud in the pleadings in response to Plaintiffs’ motion
to remand, the Court does not consider this argument as it was not included as a basis for removal
in State Farm’s Notice of Removal. [Doc. No. 1, at 6 n.3].
2 Unpublished opinions are cited pursuant to FED. R. APP . P. 32.1(a) and 10th Cir. R. 32.1(A).
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omitted); see also Smoot v. Chicago, Rock Island & Pac. R.R. Co., 378 F.2d 879, 881-82
(10th Cir. 1967). The nonliability of a defendant alleged to have been fraudulently joined
must be “established with complete certainty.” Smoot, 378 F.2d at 882; Dodd, 329 F.2d at
85. “This standard is more exacting than that for dismissing a claim under FED. R. C IV. P.
12(b)(6).” Montano, 2000 WL 525592, at *2. “[A]ll factual and legal issues must be
resolved in favor of the plaintiff.” Dutcher, 733 F.3d at 988.
DISCUSSION
I. 	Inability to State Cause of Action
Under Oklahoma law, “[a]n agent has the 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.” Kutz v. State Farm Fire & Cas. Co., 189 P.3d 740, 744-45 (Okla. 2008)
(citation omitted). To that end, agents must “offer coverage mandated by law and coverage
for needs that are disclosed by the insureds….” Rotan v. Farmers Ins. Grp. of Companies,
Inc., 83 P.3d 894, 895 (Okla. 2003). “[C]onstructive fraud [or negligent misrepresentation]
consists of ‘any breach of duty which, without an actually fraudulent intent, gains an
advantage to the person in fault, or any one claiming under him, by misleading another to
[his] prejudice, or to the prejudice of any one claiming under him[.]” McDow v. State Farm
Fire & Cas. Co., No. CIV-22-927-F, 2022 WL 17960457, at *2 (W.D. Okla. Dec. 27, 2022)
(quoting Okla. Stat. tit. 15, § 59). “This duty could arise, even though it might not exist in
the first instance, once a defendant voluntarily chooses to speak to plaintiff about a
particular subject matter.” Foster v. State Farm Fire & Cas. Co., No. CIV-24-222-PRW,
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2025 WL 392728, at *3 (W.D. Okla. Feb. 4, 2025) (citing Specialty Beverages, L.L.C. v.
Pabst Brewing Co., 537 F.3d 1165, 1180-81 (10th Cir. 2008) (citation omitted)).
Plaintiffs contend that “Schubert represented their roof had been inspected before
the policy was issued in 2022, and [the roof] was in ‘great’ or ‘excellent’ (or something
synonymous) condition and, as a result, their home qualified for a replacement cost policy.”
[Doc. No. 5-3, at 7, 9] (“I do remember being told that they did the inspection, house was
in great shape and that it would qualify for full coverage.”). Plaintiffs asked Schubert
“specifically whether the policy would pay to replace the roof in the event of hail damage,”
and Schubert allegedly “misled [Plaintiffs] because they believed if the roof was damaged,
the entire roof would be replaced.” [Doc. No. 5, at 7]. Plaintiffs further contend that
“Schubert’s representations proved to be false” in that “State Farm’s claim determination—
that much of the damage was due to pre-existing wear and tear and deterioration—is
fundamentally inconsistent with Schubert’s representations.” Id. at 10. Plaintiffs argue that
“Schubert did not simply sell a policy; it made affirmative representations about the
property’s condition and the type of policy Plaintiffs purchased” and “failed to disclose the
whole truth: that State Farm engages in a systematic practice of using alleged pre-existing
conditions as a pretext to deny the very claims the policy is meant to cover.” Id. For these
reasons, Plaintiffs contend that Schubert’s affirmative representations about the roof’s
condition and eligibility for a full replacement cost policy were “demonstrably untrue and
induced Plaintiffs to their detriment.” Id. at 11.
Based on these allegations, although Plaintiffs’ claims against Schubert are not a
“sure-thing,” the Court finds that State Farm has not met its heavy burden to establish with
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complete certainty that Plaintiffs cannot establish a claim against Schubert in state court.
See Nerad v. AstraZeneca Pharmaceuticals, Inc., 203 F. App’x 911, 913 (10th Cir. 2006);
Montano, 2000 WL 525592, at *2 (“A claim which can be dismissed only after an intricate
analysis of state law is not so wholly insubstantial and frivolous that it may be disregarded
for purposes of diversity jurisdiction.”); see also Coover v. State Farm Fire and Cas. Co.,
et al., No. CIV-25-334-PRW, 2025 WL 3470868 (finding remand appropriate where “open
questions remain regarding the scope of the agents’ roles in procurement of the policies,
whether [the] [p]laintiffs requested or were promised more extensive coverage than they
received, the precise duties that may be imposed on insurance agents under Oklahoma law,
the representations made by the agents, the existence and the agents’ knowledge of a
widespread scheme to shortchange insured parties when making claims for hail and wind
damage, and more.”). Accordingly, the Court finds that State Farm has not met its “heavy
burden” to establish fraudulent joinder, and remand is appropriate.
CONCLUSION
For the reasons stated herein, the Court finds that State Farm has not established
fraudulent joinder, and this Court lacks subject-matter jurisdiction. IT IS THEREFORE
ORDERED that Plaintiffs’ Motion to Remand [Doc. No. 5] is GRANTED, and the case
is REMANDED to the District Court of Cleveland County, Oklahoma. The Clerk of Court
shall mail a certified copy of this Order to the clerk of the District Court of Cleveland
County. Each side shall bear their own attorney’s fees, costs, and expenses incurred as a
result of the removal and remand.
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IT IS SO ORDERED this 27 th day of March, 2026.
TIMOTHY D. DeGIUSTI
Chief United States District Judge
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