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Lawrence W. Larson v. Auto Owners Insurance Company A Subsidiary of Parent Company Auto Owners Insurance Group

September 12, 2012

LAWRENCE W. LARSON,
PLAINTIFF,
v.
AUTO OWNERS INSURANCE COMPANY A SUBSIDIARY OF PARENT COMPANY AUTO OWNERS INSURANCE GROUP, DEFENDANT.



The opinion of the court was delivered by: Karen E. Schreier Chief Judge

ORDER GRANTING MOTION TO DISMISS AND GRANTING MOTION TO STAY

Defendant, Auto Owners Insurance Company, moves the court to dismiss or, in the alternative, to stay the proceedings involving defendant, Lawrence W. Larson. Auto Owners argues that Minnesota law applies, and therefore, Larson's causes of action for bad faith and punitive damages fail to state a claim. Auto Owners further argues that Larson's additional breach of contract claim should be dismissed or, alternatively, stayed pursuant to the Colorado River abstention doctrine. Larson opposes the motions. For the following reasons, Larson's bad faith and punitive damages claims are dismissed, and Larson's breach of contract claim will be stayed pending resolution of the Minnesota state court proceeding.

FACTUAL BACKGROUND

Auto Owners is an insurance company that conducts business in twenty-six states, including Minnesota and South Dakota. Docket 11-9 at 1.

Larson is a well drilling contractor and has maintained a residence in South Dakota since 1995. Docket 10 at 2.

In 2008, Larson obtained auto insurance from Auto Owners for himself and his business, Minne-Bleha Drilling Company, because he was working and temporarily living in Minnesota at that time. Docket 10 at 2, 14; Docket 7-3 at 2. Larson purchased the insurance from Auto Owners through an agent located in St. Paul, Minnesota. Docket 1 at 1.

On May 15, 2008, while covered under the above-mentioned insurance policy, Larson was involved in an automobile accident in Hugo, Minnesota. The driver of the other automobile, Pamela Grace Bridger, was determined to be 100 percent at fault and was cited for driver inattentiveness. Docket 1 at 3. Larson suffered both temporary and permanent injuries as a result of the accident. Larson alleges that the injuries require medical services that will cost more than $120,000. Additionally, Larson alleges that he "has suffered in the past and will continue to suffer in the future, physical pain and mental suffering, loss of enjoyment of life, inconvenience, scarring, loss of income, impairment of future earning capacity, loss of home services, and partial permanent impairment[.]" Id.

Bridger was insured through State Farm Mutual Automobile Insurance Company. Docket 1 at 4. Pursuant to Bridger's policy and with the consent of Auto Owners, Larson accepted State Farm's tender of $100,000, which constituted Bridger's full auto-policy liability limit. Id. Following acceptance of the $100,000 from State Farm, Larson filed an underinsured motorist claim on July 27, 2011, with Auto Owners pursuant to his contract of insurance, "which provides coverage for injuries, damages and entitlements to first party benefits, caused by uninsured and underinsured motorists." Id.; Docket 10 at 4.

Auto Owners contacted Larson on September 15, 2011, indicating that the claim was forwarded to attorney Timothy Tobin. Docket 10 at 4. Larson then filed a complaint with the Minnesota Department of Revenue (MDR) on October 19, 2011, asking the MDR to impose a penalty on Auto Owners for their delayed response to Larson's claim. The MDR imposed a penalty of $2,500 on Auto Owners. Docket 10 at 4.

Because the parties do not agree on the value of Larson's underinsured motorist claim, Larson and Auto Owners have not reached a settlement on such claim. Auto Owners filed an action seeking a declaratory judgment on the value of the claim in the Fourth Judicial District Court, Hennepin County, Minnesota.*fn1 On February 7, 2012, one day after being served with Auto Owners' complaint, Larson filed an action in this court. Docket 1. Larson alleges that the actions of Auto Owners regarding settlement of his claim are cause for a breach of contract claim, a bad faith claim, and a punitive damages claim.

STANDARD OF REVIEW

A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) requires the court to review the complaint as a whole to determine whether the plaintiff has stated a claim upon which relief can be granted. Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 595 (8th Cir. 2009). The facts alleged in the complaint must be considered true, and all inferences must be viewed in favor of the nonmoving party. Strand v. Diversified Collection Serv., Inc., 380 F.3d 316, 317 (8th Cir. 2004). The Supreme Court has recently held that "to survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.' " Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation omitted). "A complaint states a plausible claim for relief if its 'factual content . . . allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.' " Braden, 588 F.3d at 594 (quoting Iqbal, 556 U.S. at 678)).

DISCUSSION

Auto Owners argues that Larson's causes of action should be dismissed because Minnesota law applies in this diversity action, and under Minnesota law, Larson's causes of action for bad faith and punitive damages fail to state a claim. Auto Owners further argues that Larson's breach of contract claim should be dismissed or, alternatively, stayed pursuant to the Colorado River ...


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