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O'Daniel v. Hartford Life Insurance Co.

United States District Court, D. South Dakota

August 13, 2014

DANIEL O'DANIEL, Plaintiff,
v.
HARTFORD LIFE INSURANCE COMPANY and HARTFORD LIFE AND ACCIDENT INSURANCE COMPANY, Defendants.

ORDER

JEFFREY L. VIKEN, Chief District Judge.

Pending before the court is plaintiff's motion for partial summary judgment and defendants' cross-motion for summary judgment. (Dockets 49, 54). The court referred the motions to Magistrate Judge Veronica L. Duffy for resolution. (Docket 101). On September 20, 2013, Magistrate Judge Duffy filed a report recommending the court grant in part and deny in part plaintiff's motion for partial summary judgment and grant in part and deny in part defendants' motion for summary judgment.[1] (Docket 103). Plaintiff and defendants timely filed objections. (Dockets 109, 110). Both parties filed responses to the objections.[2] (Dockets 113, 114).

The court reviews de novo those portions of the report and recommendation which are the subject of objections. Thompson v. Nix , 897 F.2d 356, 357-58 (8th Cir. 1990); 28 U.S.C. § 636(b)(1). The court may then "accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge." 28 U.S.C. § 636(b)(1).

For the reasons stated below, plaintiff's objections are overruled in part and sustained in part, and defendants' objections are overruled. The court adopts in part and rejects in part the report and recommendation of the magistrate judge.

A. MAGISTRATE JUDGE'S FINDINGS OF FACT

Neither party objected to the magistrate judge's findings of fact. See Dockets 109, 110. The magistrate judge's findings of fact are adopted by the court in accordance with 28 U.S.C. § 636(b)(1)(C).

B. MAGISTRATE JUDGE'S CONCLUSIONS OF LAW

Plaintiff's objections to the magistrate judge's conclusions of law are:

1. The magistrate judge erroneously refused to follow, and misinterpreted, Wolfe v. Order of United Commercial Travelers of America , 18 N.W.2d 755 (S.D. 1945).
2. The magistrate judge's recommendation that Count Four - Bad Faith - should be dismissed is erroneous.
3. The magistrate judge erroneously ruled that Hartford's "loss resulting from medical treatment" exclusion applies here.
4. The magistrate judge erroneously ruled that pre-judgment interest is a jury question.

(Docket 109 at pp. 23-65)

Defendants' objections to the magistrate judge's conclusions of law are:

1. The magistrate judge erred in entering summary judgment in favor of plaintiff on the breach-of-contract claim.
2. The magistrate judge erred in concluding an issue of material fact exists regarding whether it was bad faith for defendants to deny plaintiff's claim under the Hartford policy.
3. The magistrate judge erred in concluding an issue of material fact exists regarding whether defendants engaged in deceit in the handling of plaintiff's claim.

(Docket 110 at pp. 7-33). Each objection will be addressed separately.

C. PLAINTIFF'S OBJECTIONS

1. The magistrate judge erroneously refused to follow, and misinterpreted, Wolfe v. Order of United Commercial Travelers of America , 18 N.W.2d 755 (S.D. 1945).

Plaintiff argues the magistrate judge misinterpreted Wolfe, which resulted in an erroneous finding that Wolfe does not apply in this case. (Docket 109 at pp. 23-38). Judge Duffy found the Wolfe decision not controlling for two reasons. First, Wolfe involved a policy issued to an insured from a fraternal benefit association in Ohio and the court exclusively applied Ohio contract law in interpreting the policy. (Docket 103 at p. 62). Second, Judge Duffy concluded "the Wolfe decision is not controlling precedent... because the insurance provision being interpreted by the Wolfe court was demonstrably different than the two key provisions in The Hartford's policy" at issue in this case.[3] Id. at p. 63.

Plaintiff argues the South Dakota Supreme Court applied both South Dakota and Ohio law in deciding Wolfe. (Docket 109 at p. 26). Although that court acknowledged South Dakota law did not conflict with Ohio law on the subject, the court nevertheless concluded "the laws of Ohio will be observed, to the extent that they are found to be determinative of [the issues in the case]." Wolfe , 18 N.W.2d 755, 758 (S.D. 1945). This statement by the court makes it clear which law was applied. This court will not speculate whether the result would have been the same had the court exclusively applied South Dakota law. The court finds the magistrate judge did not err in concluding Wolfe is not controlling law in South Dakota. The court also finds it significant that no subsequent South Dakota cases cite Wolfe as controlling precedent. The court finds Wolfe does not control the outcome in this case. Plaintiff's objection to the report and recommendation is overruled.

2. The magistrate judge's recommendation that Count Four - Bad Faith - should be dismissed is erroneous.

Count four of plaintiff's complaint alleges Hartford committed bad faith by ignoring Wolfe. Because Wolfe is not controlling law in this case, the plaintiff's objection is overruled. The court finds Judge Duffy's legal analysis on this point is well ...


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