Michael Davison v. State Farm Fire and Casualty Company

IN THE DISTRICT COURT IN AND FOR MURRAY COUNTY STATE OF OKLAHOMA MICHAEL DAVISON; STEVE DAVISON; and DAVISON PROPERTIES, LLC, Plaintiffs, v. STATE FARM FIRE AND CASUALTY COMPANY; and NICKY LEE; Defendants. FILED DISTRICT COURT TULSA COUNTY, OKLAHOMA Case No.: January 1, 2026 9:35 AM DON NEWBERRY, COURT CLERK Case Number CJ-2026-13 Attorney Lien Claimed PETITION COME NOW the Plaintiffs, Michael Davison, Steve Davison, and Davison Properties, LLC, by and through their undersigned counsel, and for their causes of action against the Defendants, set forth and state as follows: PARTIES, JURISDICTION, AND VENUE 1. Plaintiffs Michael and Steve Davison are residents of Tulsa County, Oklahoma. Plaintiffs Michael and Steve Davison are the sole owners and managers of Davison Properties, LLC, an Oklahoma Limited Liability Company. 2. Defendant State Farm Fire and Casualty Company ("State Farm") is an insurance company within the State Farm Group of companies. It is incorporated in the State of Illinois and has its principal place of business in Illinois. 3. Defendant State Farm is the largest property and casualty insurance provider in the United States, licensed and engaged in the business of insurance in all fifty (50) states, including Oklahoma, and operates in Tulsa County. 4. Defendant Nicky Lee is, upon information and belief, a resident of Tulsa County conducting business at 1660 E. 71st Street, Suite 2H in Tulsa, Oklahoma. Plaintiffs purchased insurance from Mr. Lee. At all times relevant hereto, Mr. Lee was an agent and/or ostensible agent of Defendant State Farm. 5. The acts, occurrences, and omissions complained of herein occurred in Tulsa County, State of Oklahoma, and the property damage underlying the claims at issue in this case occurred in Tulsa County. 6. This Court has jurisdiction and venue is proper in Tulsa County, State of Oklahoma. FACTS COMMON TO ALL CLAIMS 7. Paragraphs 1-6 are incorporated herein by reference. 8. Plaintiffs own certain real estate located at 210 S. Phoenix Avenue in Tulsa, Oklahoma ("the Property"). 9. Defendant State Farm issued an insurance policy, by and through Defendant Lee, to Plaintiffs, designated Policy Number 96CQH7294, whereby Defendant State Farm agreed to provide insurance for the Property ("the Policy"). 10. Prior to issuing the policy, Defendants Lee and State Farm represented that the Policy would provide certain coverages, including replacement cost coverage and coverage for the Property’s roof. 11. The Policy was in full force and effect on and around June 17, 2023. 12. On or about June 17, 2023, the Property was damaged as a result of an extreme hail and wind event ("the Storm Loss"). 13. Plaintiffs timely made a claim to Defendants for their Storm Loss. 14. State Farm assigned the Storm Loss a unique claim number of 36M4076J7 ("the Claim"). 15. Defendant State Farm did not inspect the Storm Loss until July 11, 2023, even though Plaintiffs notified State Farm that the damage was such that water was intruding into the interior of the Property through the roof. 16. Eventually, on July 23, 2023 State Farm made a payment of $6,152.89 to Plaintiffs. 17. This amount was not sufficient to repair the damage. 18. State Farm refused to consider estimates or explanations provided by Plaintiffs from their roofing and construction contractor. 19. In order to mitigate damage to the Property, Plaintiffs paid out of pocket to have the damage repaired, which included replacing the roof and performing significant interior repairs to fix the damage caused by water intrusion. 20. Plaintiffs were not able to rent the Property from the time of the Storm Loss until December 23, 2023, i.e., approximately six (6) months. 21. On January 8, 2024, after significant effort and challenges by Plaintiffs, State Farm increased its estimate and made an additional payment of $14,382.80. 22. This amount was still not sufficient to compensate Plaintiffs for the cost to repair the damage. The actual cost to Plaintiffs to repair the Property to its pre-loss condition was approximately $40,000.00. 23. In late January 2024, State Farm advised that before it would consider any benefits for lost rents, Plaintiffs would need to provide proof that they had been actively trying to rent out the Property from the date of the Storm until the repairs should have been completed in October of 2023, and Plaintiffs would further need to provide a "Schedule E" for rents received in 2022. 24. Plaintiffs reminded State Farm that the Property had not had a roof, that the ceilings had collapsed, and that the Property was not inhabitable for months after the Storm, and that State Farm had not paid benefits on the Claim until January of 2024. 25. Plaintiffs further advised State Farm that they did not prepare Schedule Es and did not have one for the time period at issue. 26. State Farm nonetheless insisted it could not consider Plaintiffs’ claim without the identified information. State Farm further demanded Plaintiffs provide utility bills and other information from the City of Tulsa. Plaintiffs dispute that such information was relevant or material to their claim for lost rents but provided the information nonetheless. 27. Plaintiffs further provided a statement from their real estate agent advising that the Property had been actively listed for rent prior to the Storm, but that the listing was pulled and showings cancelled after the Storm because the damage made the property uninhabitable. Plaintiffs also provided advertisements for the Property showing the efforts to rent it after repairs had been done. 28. In July of 2024, State Farm advised that it needed a Schedule E to show expenses State Farm could deduct from the lost rent amount in order to determine the benefit amount. 29. State Farm did not pay any benefits for lost rents until October 2024, more than a year after the Storm Loss and nearly a year after the Property had been repaired and rented out. 30. State Farm failed to fairly and reasonably determine the scope of the damages caused to Plaintiffs by the Storm Loss. Further, State Farm failed to timely and reasonably pay Plaintiffs either the (1) fair and reasonable benefits owed under the Policy, or (2) the benefits State Farm determined were owed. CAUSES OF ACTION BREACH OF CONTRACT/BAD FAITH As to Defendant State Farm 31. Paragraphs 1-30 are incorporated herein by reference. 32. Plaintiffs completed all conditions precedent to coverage and fully cooperated with all material aspects of State Farm’s investigations. 33. In its handling of Plaintiffs’ claims for coverage under the Policy, and as a matter of routine practice in handling similar claims, Defendant State Farm breached the Policy and its duty to deal fairly and in good faith towards Plaintiffs in the following respects: a. Failing to fully pay Plaintiffs the insurance benefits that they were entitled under the Policy at the time when Defendant State Farm knew or reasonably should have known the Plaintiffs were entitled to those benefits; b. Withholding full payment of benefits to the Plaintiffs knowing that their claim for those benefits was valid; c. Refusing to fully honor Plaintiffs' claim without legitimate, arguable reason; d. Unreasonably delaying payment of benefits without reasonable basis; e. Refusing to fully pay Plaintiffs' claim for reasons contrary to the express provisions of the law; f. Intentionally and recklessly misapplying the provisions of the insurance policy; g. Using its unequal wealth and bargaining position to overwhelm and take advantage of the Plaintiffs and to affect an economic gain for Defendant State Farm by not paying an amount that it owed by virtue of the Policy; h. Failing to properly investigate the Plaintiffs' claims for benefits; 1. Failing to adopt and implement reasonable standards for the prompt investigation and handling of claims arising under the policies including the claims of the Plaintiffs; j. Failing to attempt to act in good faith to effectuate a prompt, fair settlement for the Plaintiffs' claims; and k. Engaging in a pattern and practice of treating intended beneficiaries/insureds as non-parties to the Policy. 34. As a direct result of Defendant State Farm's malicious and reckless breach of contract and breach of the implied covenant of good faith and fair dealing, Plaintiffs have suffered actual damages in excess of seventy-five thousand dollars ($75,000.00), including emotional distress, property damage and the loss of insurance benefits, and mental pain and suffering. 35. Defendant State Farm acted intentionally, maliciously and in reckless disregard for the rights of the Plaintiffs. As a result, Plaintiffs are entitled to recover punitive damages against Defendant State Farm. NEGLIGENT PROCUREMENT OF INSURANCE Against Agent Nicky Lee 36. Paragraphs 1-35 are incorporated herein by reference. 37. At all material times hereto, Agent acted as State Farm’s agent and/or employee. State Farm is thereby vicariously liable for the Agent’s conduct. 38. In procuring the Policy, Agent had a duty to: a. use reasonable care, skill, and diligence to procure coverage as the insureds requested that meets the insureds’ stated needs; b. use reasonable care, skill, and diligence in undertaking the calculation of replacement cost for the insureds; and c. speak accurately and truthfully by informing Plaintiffs of all coverages, advising Plaintiffs of the benefits, risks, limitations and exclusions thereof, and perform a reasonable inspection of the Insured Property prior to procuring the replacement cost coverage and thereafter upon renewal to ensure no changes to the Policy were necessary or required. 39. Agent breached Agent’s duty owed to Plaintiffs by: a. Knowingly and purposefully procuring and renewing i. illusory coverage (in that all fortuitous losses are not covered under the Policy); ii. coverage deviating substantially and materially from that which Plaintiffs requested; iii. a Policy that did not accurately reflect the replacement cost of the Insured Property (i.e., an amount that was 100% insurance to value as represented); iv. a Policy that, as written, did not provide coverage to fully restore the Insured Property back to its pre-loss condition; b. Failing to i. follow and abide by State Farm’s underwriting policies/guidelines; ii. perform all necessary inspections of the Insured Property; iii. confirm the accuracy of the pre-filled information provided by State Farm’s replacement cost estimating tool; iv. disclose pre-existing damage to the Insured Property; v. verify whether its inherent representation to State Farm and Plaintiffs that the Insured Property (including the roof) was in good, insurable condition was accurate; and vi. procure and renew a policy that provided the requested coverage for all fortuitous losses. 40. Plaintiffs relied on Agent’s representations and omissions to their substantial detriment. 41. As a result of Defendant’s conduct, Plaintiffs sustained damages, including deprivation of monies rightfully belonging to Plaintiffs, and ordinary or garden variety harm of anger, stress, worry, physical and emotional suffering. 42. Defendant’s conduct was intentional, willful, malicious and in reckless disregard of the rights of others and is sufficiently egregious in nature so as to warrant the imposition of punitive damages. Defendant acted intentionally, and with malice and, breached duties owed to Plaintiffs. Defendant’s actions were consistent with the overall collective corporate goal of increasing profits through the systematic underpayment and denial of claims. CONSTRUCTIVE FRAUD AND NEGLIGENT MISREPRESENTATION Against All Defendants 43. Paragraphs 1-42 are incorporated herein by reference. 44. Defendants owed Plaintiffs a legal and/or equitable duty to disclose all material facts that may arise out of their relationship as insurer and insured. Croslin v. Enerlex, Inc., 2013 OK 34, ¶17, 308 P.3d 1041. 45. The concealment of a material fact which substantially affects another person constitutes fraud. Patel v. OMH Medical Center, Inc., 1999 OK 33, ¶ 34; Sutton v. David Stanley Chevrolet, 2020 OK 87, 475 P.3d 847. Fraudulent representations may consist of half-truths calculated to deceive, and a representation literally true is actionable if used to create an impression substantially false. Sutton, 475 P.3d at 15. Where the peculiar circumstances give rise to a duty on the part of one of the parties to a contract **to disclose material facts and the party remains silent to his or her benefit and to the other party's detriment**, the failure to speak constitutes fraud. *Id.* (citing *Croslin*, ¶17) (emphasis added). 46. "[A] variety of facts and circumstances [] will give rise to a duty to disclose material facts." The Sutton Court reiterated that it has "consistently found the existence of the requisite circumstances, *i.e.*, that which is necessary to create a duty to disclose, when the offending party created a false impression concerning material facts that was relied upon by the other party to his detriment and to the benefit of the offending party." *Id.* at 15. 47. A negligent or innocent misrepresentation or concealment for constructive fraud occurs when one who, in the course of his business, profession or employment, or in any other transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information. Negligent misrepresentation can also be based on a material omission. *See Lopez v. Rollins*, 2013 OK CIV APP 43, 303 P.3d 911; *Sutton v. David Stanley Chevrolet*, 2020 OK 87; *Stroud v. Arthur Andersen & Co.*, 2001 OK 76, 37 P.3d 783; *Ragland v. Shattuck Nat'l Bank*, 36 F.3d 983, 992 (10th Cir. 1994) (applying Oklahoma law). 48. Defendants owed specific duties to Plaintiffs. These duties are encompassed in State Farm’s duty of good faith and fair dealing owed to its insureds, as well as specific duties Agent owed Plaintiff—a duty to exercise reasonable diligence and skill in obtaining and accurately notifying of the nature and character of the insurance procured, the duty in undertaking the calculation of replacement cost for the insured to use reasonable care, skill, and diligence to do so, the duty to speak accurately and truthfully, and the duty to disclose all material facts relating to the Scheme as outlined within this Petition. 49. Defendants breached this duty by misrepresenting, concealing, or omitting pertinent material facts from Plaintiff, including (but not limited to) the following: a. Defendants misrepresented the Insured Property met all underwriting requirements, that all property inspections had occurred, and that the replacement cost values it calculated were accurate and commensurate with reconstruction costs such that the coverage would fully restore, replace and/or repair the Insured Property (including its roof) in the event of a loss by a covered event. b. Defendants misrepresented that the Insured Property (and, specifically, its roof) was eligible for the comprehensive full replacement coverage (rather than ACV); c. Defendants failed to disclose that pre-existing issues with the Insured Property would either prevent issuance of the replacement cost coverage or limit coverage for any damage during the Policy period; d. Agent misrepresented the procurement of the comprehensive coverage Plaintiffs requested; e. Defendants misrepresented that the Policy covered all fortuitous losses and that weather-related damage (even cosmetic)—big or small—was fully covered under the Policy; f. Defendants failed to disclose all material information to an insured about State Farm’s bad faith claims handling tactics, its reliance on undisclosed definitions and standards outside of the Policy, internal and external complaints about State Farm’s handling of wind and hailstorm claims, and other material information any insured would deem reasonable in making a purchasing decision. g. Defendants failed to disclose to Plaintiff any of the above misrepresentations and/or omissions, any facts underlying these misrepresentations, or any material facts regarding the Scheme; 50. Nevertheless, Defendants sold and renewed illusory replacement cost insurance coverage to Plaintiff knowing such statement was untrue. 51. As a result of both State Farm and Agent’s breach of duty, each gained an advantage by misleading Plaintiffs to substantial detriment and prejudice. These breaches of duty induced Plaintiffs to accept, purchase, and renew the State Farm replacement cost policy. 52. State Farm and Agent’s misrepresentations constitute constructive fraud. 53. At all relevant times, Agent was State Farm’s employee and/or agent. 54. As a result of the Defendants’ constructive fraud, Plaintiffs sustained damages, including deprivation of monies rightfully belonging to Plaintiffs, and ordinary or garden variety harm of anger, stress, worry, physical and emotional suffering. 55. Defendants’ conduct was intentional, willful, malicious, and in reckless disregard of the rights of others, and/or was grossly negligent, and is sufficiently egregious in nature so as to warrant the imposition of punitive damages. WHEREFORE, premises considered, Plaintiffs pray the Court enter judgement against Defendants State Farm State Farm Fire and Casualty Company, and Nicky Lee, and grant them the relief sought including, but not limited to, actual damages in excess of Seventy Five Thousand Dollars ($75,000.00), costs, pre-judgment interest, attorney's fees, punitive damages in excess of seventy-five thousand dollars ($75,000.00), post-judgment interest and all other relief deemed appropriate by this Court. Respectfully submitted, Laura L. Hamilton, OBA #22619 Lawrence R. Murphy, Jr., OBA #17681 HAMILTON MURPHY LAW, PLLC 1800 S. Baltimore Ave., Suite 420 Tulsa, OK 74119 P: (918) 973-5373 F: (918) 771-2863 [email protected] [email protected] Attorneys for Plaintiffs