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Nationwide Mutual Insurance Co. v. Korzan

United States District Court, D. South Dakota, Southern Division

August 4, 2016

NATIONWIDE MUTUAL INSURANCE COMPANY, Plaintiff,
v.
CURTIS KORZAN and LORIE KORZAN, Defendants.

          Nationwide Mutual Insurance Company, Plaintiff, represented by Cheri S. Raymond, Lynn, Jackson, Shultz & Lebrun, P.C. & Michael L. Luce, Lynn, Jackson, Shultz & Lebrun, P.C..

          Curtis Korzan, Defendant, represented by Daniel R. Fritz, II, Lindquist & Vennum LLP & Nicole O. Tupman, Lindquist & Vennum LLP.

          Lorie Korzan, Defendant, represented by Daniel R. Fritz, II, Lindquist & Vennum LLP & Nicole O. Tupman, Lindquist & Vennum LLP.

          Curtis Korzan, Counter Claimant, represented by Daniel R. Fritz, II, Lindquist & Vennum LLP & Nicole O. Tupman, Lindquist & Vennum LLP.

          Lorie Korzan, Counter Claimant, represented by Daniel R. Fritz, II, Lindquist & Vennum LLP & Nicole O. Tupman, Lindquist & Vennum LLP.

          Nationwide Mutual Insurance Company, Counter Defendant, represented by Kent R. Cutler, Cutler Law Firm, LLP.

          ORDER GRANTING MOTION TO AMEND DEFENDANTS' ANSWER AND COUNTERCLAIMS AND DENYING DEFENDANTS' PARTIAL JUDGMENT ON THE PLEADINGS

          KAREN E. SCHREIER, District Judge.

         Defendants, Curtis Korzan and Lorie Korzan, seek to amend their answer and counterclaims to include affirmative defenses and also move for partial judgment on the pleadings. Plaintiff, Nationwide Mutual Insurance Company, resists the motions. For the following reasons, the court grants defendants' motion to amend their answer and counterclaims and denies defendants' motion for partial judgment on the pleadings.

         FACTS

         The facts as alleged in the pleadings, taken in favor of plaintiff, are as follows:

         Defendants own Grand Slam Hunts, LLC, a hunting lodge, located in rural Kimball, South Dakota. In 2014, defendants purchased additional property near the lodge that included an outbuilding and a dwelling. Defendants obtained a Nationwide farm insurance policy on the new property. On March 24, 2015, a fire destroyed the outbuilding valued at $250, 000. On March 27, 2014, a second fire destroyed the dwelling and its contents. Both the defendants and Nationwide agree that the dwelling was valued at $394, 586, but disagree as to the value of the contents. Nationwide states that the contents were valued at $5, 170 while defendants assert the contents were worth significantly more.

         Nationwide investigated the second fire and found that the dwelling had not been occupied for at least 120 consecutive days before the fire. The policy included an unoccupancy and vacancy provision:

If a dwelling is vacant' or unoccupied' beyond a period of 120 consecutive days, we will reduce the amount we would otherwise pay for damage to the dwelling and its contents by 50%, unless we extend the period of vacancy' or unoccupancy' by endorsement made a part of this Coverage Form.

         Docket 1-1 at 38 (Farm Property Coverage Form). The policy defined "unoccupied" as "a dwelling' (except while being constructed) not being lived in." Id. at 41. Per the unoccupancy provision, Nationwide paid a total of $199, 878, which was 50% of the $394, 586 for the dwelling plus 50% of the $5, 170 in contents coverage.

         Defendants subsequently filed a complaint with the South Dakota Department of Labor and Regulation Division of Insurance (DOI). In the DOI complaint, defendants alleged that Nationwide was required to pay the full amount for the dwelling and its contents under SDCL 58-10-10.[1] Defendants claim that the DOI found in their favor. Defendants also assert, however, that the DOI shared its decision solely with Nationwide.

         On July 16, 2015, Nationwide filed a complaint with this court asking for a declaratory judgment on whether the unoccupancy provision is valid under South Dakota law. Docket 1. On September 14, 2015, defendants filed an answer and counterclaims. Docket 7. Defendants did not, however, plead the affirmative defenses of res judicata or failure to exhaust administrative remedies. See Id. On October 28, 2015, the scheduling order set the deadline for prediscovery disclosures as November 17, 2015, the deadline for motions to amend the pleadings as February 2, 2016, and all discovery to be commenced by April 4, 2016. Docket 13.

         On March 4, 2016, defendants moved for partial judgment on the pleadings. Docket 14. On March 30, 2016, defendants moved to amend the answer and counterclaims to include the affirmative defenses of res ...


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