Opinion

IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF ALABAMA

SOUTHERN DIVISION

WADE WILLIAMS, et al., )

)

Plaintiffs, )

)

v. ) CASE NO. 1:25-cv-00704-RAH

)

STATE FARM FIRE & )

CASUALTY COMPANY, et al., )

)

Defendants. )

MEMORANDUM OPINION AND ORDER

Pending before the Court is Plaintiffs’ Motion to Remand (doc. 33) filed on

September 23, 2025. The motion has been fully briefed, orally argued, and is ripe

for review. After careful consideration, the motion is due to be GRANTED.

BACKGROUND

This case was originally filed in the Circuit Court of Houston County,

Alabama. Plaintiffs are 101 individuals and businesses who have collectively filed

suit against State Farm Fire & Casualty Company (“State Farm”) and twelve

insurance agents over 87 distinctive insurance claim denials. In their Complaint,

Plaintiffs bring claims for breach of contract and bad faith against State Farm, and

misrepresentation claims against the insurance agents (“the Insurance Agent

Defendants”).

State Farm timely removed the case to this Court pursuant to 28 U.S.C. §§

1332 and 1441, which spurred Plaintiffs’ Motion to Remand. According to

Plaintiffs, this Court lacks subject matter jurisdiction because complete diversity

between the parties is lacking. State Farm argues there has been fraudulent joinder

of the Insurance Agent Defendants, all of whom are Alabama citizens.

LEGAL STANDARD

Federal district courts have original jurisdiction “over two general types of

cases: cases that arise under federal law . . . and cases in which the amount in

controversy exceeds $75,000 and there is diversity of citizenship among the parties.”

Home Depot U.S.A., Inc. v. Jackson, 587 U.S. 435, 437 (2019) (cleaned up) (citing

28 U.S.C. §§ 1331, 1332(a)). Relevant here is the latter, which is known as

“diversity jurisdiction.” Civil actions that meet diversity jurisdiction criteria and are

brought in state court “may be removed by the defendant or the defendants, to the

district court of the United States for the district and division embracing the place

where such action is pending.” 28 U.S.C. § 1441(a). Assuming the district court

has subject matter jurisdiction, the case may proceed in federal court.

“[R]emand is the necessary corollary of a federal district court’s diversity

jurisdiction, which requires complete diversity of citizenship.” Florence v. Crescent

Res., LLC, 484 F.3d 1293, 1297 (11th Cir. 2007) (citation omitted).

“Fraudulent joinder is a judicially created doctrine that provides an exception

to the requirement of complete diversity.” Triggs v. John Crump Toyota, Inc., 154

F.3d 1284, 1287 (11th Cir. 1998). “In that situation, the federal court must dismiss

the non-diverse defendant and deny any motion to remand the matter back to state

court,” Florence, 484 F.3d at 1297, because the plaintiff is said to have effectuated

a fraudulent joinder and a federal court may appropriately assert its removal diversity

jurisdiction over the case, Crowe v. Coleman, 113 F.3d 1536, 1538 (11th Cir. 1997).

“The burden of establishing fraudulent joinder is a heavy one.” Pacheco de

Perez v. AT&T Co., 139 F.3d 1368, 1380 (11th Cir. 1998). And it is one that rests

with the removing defendant. Id. A defendant seeking to prove that a co-defendant

was fraudulently joined must demonstrate either that: “(1) there is no possibility the

plaintiff can establish a cause of action against the resident defendant; or (2) the

plaintiff has fraudulently pled jurisdictional facts to bring the resident defendant into

state court.” Id. (citation omitted). “The defendant must make such a showing by

clear and convincing evidence.” Henderson v. Wash. Nat. Ins. Co., 454 F.3d 1278,

1281 (11th Cir. 2006).

The court, however, must evaluate the parties’ factual allegations and

submissions in the light most favorable to the plaintiff and “resolve any uncertainties

about state substantive law in favor of the plaintiff.” Crowe, 113 F.3d at 1538

(citation omitted). And the court must make “these determinations based on the

plaintiff’s pleadings at the time of removal” but “may consider affidavits and

deposition transcripts submitted by the parties.” Id. “If there is even a possibility

that a state court would find that the complaint states a cause of action against . . .

the resident defendant[], the federal court must find that the joinder was proper and

remand the case to the state court.” Stillwell v. Allstate Ins. Co., 663 F.3d 1329, 1333

(11th Cir. 2011) (emphasis added) (internal quotations and citation omitted); see

Pacheco de Perez, 139 F.3d at 1380 (“Where a plaintiff states even a colorable claim

against the resident defendant, joinder is proper and the case should be remanded to

state court.”). In other words, “the plaintiff need not have a winning case against the

allegedly fraudulent defendant; he need only have a possibility of stating a valid

cause of action in order for the joinder to be legitimate.” Stillwell, 663 F.3d at 1333

(brackets omitted) (quoting Triggs, 154 F.3d at 1287).

DISCUSSION

In its removal notice, State Farm states that the Insurance Agent Defendants,

all of whom are citizens of Alabama and have been sued under nearly identical

claims for fraudulent misrepresentation, are fraudulently joined, and therefore their

citizenship should be ignored. Plaintiffs dispute State Farm’s fraudulent joinder

assertion, claiming that State Farm has not shown that complete diversity exists or

that the amount in controversy is less than the Court’s jurisdictional threshold. In

particular, Plaintiffs claim that they have stated plausible claims of

misrepresentation against the Insurance Agent Defendants under Alabama law and

that the amount in controversy is in excess of $75,000.

Under Alabama law, “[t]he elements of a fraudulent-misrepresentation claim

are: ‘(1) a false representation (2) of a material existing fact (3) reasonably relied

upon by the plaintiff (4) who suffered damage as a proximate cause of the

misrepresentation.’” Sexton v. Bass Comfort Control, Inc., 63 So. 3d 656, 662 (Ala.

Civ. App. 2010) (quoting Padgett v. Hughes, 535 So. 2d 140, 142 (Ala. 1988)). “The

[plaintiff] must state the time, the place, the contents or substance of the false

representations, the fact misrepresented, and an identification of what has been

obtained” from the complainant as a result of the fraud. Robinson v. Allstate Ins. Co.,

399 So. 2d 288, 290 (Ala. 1981). For misrepresentation claims, a plaintiff’s reliance

on the misrepresentation must be reasonable considering the facts surrounding the

transaction. See AmerUs Life Ins. Co. v. Smith, 5 So. 3d 1200, 1207–08 (Ala. 2008).

In their remand motion, Plaintiffs argue that removal was improper because

they have made specific allegations of misrepresentations by the Insurance Agent

Defendants in their Complaint. Specifically, they allege that each of the Insurance

Agent Defendants represented that a State Farm insurance policy “would cover

[their] roof to include damage from wind and hail” and that “in reliance thereon

[they] purchased a State Farm [] policy.” (See, e.g., Doc. 1-2 at 531.)1 They further

allege that the representations were false because the roofs to their homes and

commercial structures later suffered wind and hail damage that State Farm has

refused to pay. (See, e.g., id. at 532.) In briefing on the remand motion, Plaintiffs

have submitted sworn declarations stating under oath that “the agent represented and

assured me that the State Farm [] policy I was purchasing would cover wind and hail

damage and that State Farm would pay for such losses if they occurred.” (Docs. 33-

1 The referenced citation is an example citation. Virtually identical representations are alleged to

have been made to each of the Plaintiffs.

1, 33-2, 33-3, 33-4, 33-5, 33-6, 33-7, 33-8, 33-9, 33-10, 33-11, 33-12, 33-13, 33-14,

33-15, 33-16, 33-17, 33-18, 33-19, and 33-20.)

State Farm argues in opposition to Plaintiffs’ remand motion that Plaintiffs

cannot maintain fraudulent misrepresentation claims against the Insurance Agent

Defendants because the State Farm insurance policies do in fact provide coverage

for “wind and hail damage.” Thus, according to State Farm, there can be no

actionable misrepresentation by the Insurance Agent Defendants at the point of sale

of the policies. In other words, according to State Farm, Plaintiffs’ contention that

the Insurance Agency Defendants made misrepresentations is the product of

conflating “coverage” and “covered loss,” as those terms are understood in the

insurance context. State Farm also argues that, even assuming the Insurance Agent

Defendants had represented something contrary to the terms of the later-issued State

Farm insurance policies, such statements could not have been reasonably relied upon

given an applicant’s responsibility for reading his or her own written policy. State

Farm then goes on to argue that Plaintiffs’ misrepresentation claims are

insufficiently specific to satisfy Rule 9(b)’s heightened pleading requirements.

Important here is that at issue is not whether the Complaint is well-drafted for

state or federal pleading purposes. Rather, the issue is whether there is “no

possibility” that Plaintiffs can establish a cause of action against one or more of the

Insurance Agent Defendants for misrepresentation. Plaintiffs need not have a

winning case against the Insurance Agent Defendants. They “need only have a

possibility of stating a valid cause of action in order for the joinder to be legitimate.”

Triggs, 154 F.3d at 1287 (emphasis omitted).

The Eleventh Circuit addressed a similar issue in Stillwell v. Allstate Ins. Co.

See 663 F.3d 1329, 1329 (11th Cir. 2011). There, Allstate Insurance argued the

plaintiff fraudulently joined a non-diverse insurance agent that had sold him his

insurance policy. Id. at 1331–32. The district court denied the plaintiff’s motion to

remand, concluding that the plaintiff fraudulently joined the agent. Id. at 1332. On

appeal, the Eleventh Circuit contrasted the fraudulent joinder standard with the

standard of review for a Rule 12(b)(6) motion, stating “all that is required to defeat

a fraudulent joinder claim is ‘a possibility of stating a valid cause of action.’” Id. at

1333 (quoting Triggs, 154 F.3d at 1287). In concluding that the district court erred

in denying the plaintiff’s motion to remand, the Eleventh Circuit stated “[a]s the

allegations against [the non-diverse insurance agent] state the elements of [the

Georgia state law claims] and give [the defendant] fair notice that it is being sued

for [breach of those state law claims], it is, at the very least, possible that a . . . state

court would conclude that [plaintiff’s] allegations against [the non-diverse

defendant] satisfied this standard.” Id. at 1334–35.

Here, Plaintiffs’ allegations against the Insurance Agent Defendants state the

elements of Alabama state law claims for fraudulent misrepresentation and provide

notice to State Farm and the Insurance Agent Defendants of those claims. And

Alabama law is clear that “an insurance agent may be held liable [in tort] for

wrongful procurement [of insurance] where [the agent] procures a policy” but was

negligent or wanton and, as a result, “that policy did not provide the ‘complete and

adequate’ coverage desired by the insured.” Bartlett v. Allstate Ins. Co., Civ.A. 05-

518-BH-M, 2005 WL 2978323, at *2 (S.D. Ala. Nov. 7, 2005) (quoting Crump v.

Greer Brothers, Inc., 336 So. 2d 1091, 1093 (Ala. 1976)); see also Henson v. Celtic

Life Ins. Co., 621 So. 2d 1268, 1274 (Ala. 1993); Thompson v. United Companies

Lending Corp., 699 So. 2d 169, 175 (Ala. Civ. App. 1997); Parrett v. Allstate Ins.

Co., No. 2:08-CV-983-WKW, 2009 WL 1505510, at *2 (M.D. Ala. May 28, 2009)

(rejecting a claim of fraudulent joinder of an agent alleged to be liable under

Alabama law for negligent procurement of insurance). More importantly, Alabama

law is also clear that an insurance agent may be held liable to the insured for

misrepresenting the coverage of a later-issued insurance policy. See, e.g., Alfa Mut.

Fire Ins. Co. v. Thomas, 738 So. 2d 815, 819 (Ala. 1999); Allstate Ins. Co. v. Hilley,

595 So. 2d 873, 876 (Ala. 1992) (applying justifiable, not reasonable, reliance

standard); see also Carter v. Companion Life Ins. Co., 2019 WL 11637304, at *17

(N.D. Ala. Feb. 22, 2019) (denying motion to dismiss misrepresentation claim

against agent for making misrepresentations about scope of coverage of later-issued

policy); Pensinger v. State Farm Fire & Cas. Co., 347 F. Supp. 2d 1101, 1106-07

(M.D. Ala. 2003) (rejecting insurer’s argument that plaintiff had fraudulently joined

agent, in light of allegations that agent misrepresented and suppressed information

about policy that led them to believe that it would cover damage to and loss of use

of their home); Barkley v. State Farm & Cas. Co., Civ.A. 05-00113-B, 2005 WL

1587796, at *4 (S.D. Ala. June 30, 2005) (rejecting claim of fraudulent joinder as to

insurance agent because “it is unquestioned that under Alabama law an insurance

agent may be found personally liable for misrepresentations, suppression of material

facts[,] and concealment in the sale of an insurance policy.”).

It is not terribly surprising that the Insurance Agent Defendants find

themselves as defendants in this case, although it is largely State Farm’s own

conduct in denying Plaintiffs’ roof claims that is at issue. But Plaintiffs have alleged

that the Insurance Agent Defendants made express representations about the State

Farm insurance policies that were false and induced them to procure the policies in

the first place. These kinds of claims are cognizable in Alabama, although difficult

to win. Nevertheless, viewing these allegations in a light most favorable to Plaintiffs

and given Alabama’s recognition of civil tort liability claims against insurance

agents, it cannot be said that there is no possibility that Plaintiffs could prove a set

of facts that would entitle them to relief under Alabama’s pleading standards and

Alabama law.

While it is true that Plaintiffs’ misrepresentation claims are governed by the

particularly requirements of Alabama’s version of Rule 9(b), which largely mimic

the federal version, and that the pleadings against the Insurance Agent Defendants

arguably are insufficient to satisfy either Alabama or Federal Rule of Civil Procedure

9, that concern does not control the outcome as it concerns the fraudulent joinder

issue. As stated by the Eleventh Circuit in Henderson v. Washington Nat. Ins. Co.,

“[o]ur task is not to gauge the sufficiency of the pleadings in this case.” 454 F.3d

1278, 1284 (11th Cir. 2006); see also Ullah v. BAC Home Loans Servicing LP, 538

F. App’x 844, 846–47 (11th Cir. 2013).

This Court does not speak to this issue for the first time here. As this Court

said it previously, “[c]onsidering the Eleventh Circuit’s guidance in Henderson, this

Court will not decide the issue of fraudulent joinder on [the Defendant’s] assertion

that [the] Plaintiffs’ fraud and conspiracy claims against [the non-diverse Defendant]

are insufficiently pleaded or fail to state a claim under Rule 9(b) or otherwise.”

Watson v. HomeFirst Agency, Inc., No. 2:23-cv-449-RAH-SMD, 2023 WL

6926261, at *4 (M.D. Ala. Oct. 19, 2023). In a similar vein, this Court again will not

decide the fraudulent joinder issue against Rule 9. Whether or not Plaintiffs are able

to ultimately prevail on their misrepresentation claims is not at issue at this stage.

The objective is not to pre-try the merits of Plaintiffs’ claims, as 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.

Although the question is close, State Farm has failed to establish by clear and

convincing evidence that the joinder of the Insurance Agent Defendants is

fraudulent.

On a final note, one can hardly fault State Farm for suggesting that Plaintiffs’

counsel is indiscriminately suing insurance agents for fraud as a means to avoid

federal court. Some of the allegations in this case lend credence to that view. After

all, Plaintiffs are 101 individuals and businesses who have sued twelve different

insurance agents and make virtually identical claims of fraudulent misrepresentation

across the board. Although counsel’s practice here of recycling nearly identical

allegations without regard to their applicability to a particular defendantis troubling,

the Court is not persuaded that the similarity in the allegations or the number of

Plaintiffs or Defendants is enough on its own to establish actual fraudulent pleading

in this action.”

CONCLUSION

On the record presented, the Court is not sufficiently convinced that no

possibility exists where Plaintiffs could establish a misrepresentation claim against

any of the Insurance Agent Defendants. Accordingly, the Court cannot find that

Plaintiffs fraudulently joined the Insurance Agent Defendants to defeat federal

diversity jurisdiction. Plaintiffs Motion to Remand (doc. 33) 1s_ therefore

GRANTED, and this action is REMANDED to the Circuit Court of Houston

County, Alabama.

The Clerk of the Court is DIRECTED to terminate all other pending motions

(docs. 56, 59, 63), take the necessary steps to remand this case back to the Circuit

Court of Houston County, Alabama, and to close the case

DONE and ORDERED this the Ist day of December 2025.

R. □□ JR.

UNITED STATES DISTRICT JUDGE

2 Plaintiffs have submitted sworn declarations that say virtually the same thing as it concerns the

Insurance Agent Defendants. If that testimony later provides false, State Farm certainly has

potential recourse through sanctions for submitting false declarations in an effort to manipulate the

Court or induce court action, perjury proceedings, or re-removal to federal court under 28 U.S.C.

§ 1446(c)(3)(B) for bad faith conduct by Plaintiffs. See Hill v. Allianz Life Ins. Co. of North

America, 51. F. Supp. 3d. 1277, 1281-82 (M.D. Fla. 2014) (clarifying the “bad faith exception to

the one year limitation on diversity removal”); see also Barnett v. Sylacauga Autoplex, 973 F.

Supp. 1358, 1367 (N.D. Ala. 1997) (“[T]he plaintiffs claims are in bad faith if, by her actions, she

attempted to disguise the removability of the case until the one-year limitation had run.”).