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Dusseldorp v. Continental Casualty Co.

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

September 19, 2018





         This is a diversity action before the court on Plaintiff Leona Van Dusseldorp's complaint alleging breach of contract, bad faith, and misrepresentation regarding a long term care policy issued by Defendant Continental Casualty Co. (hereinafter “Continental”) and serviced by Defendant Long Term Care Group, Inc. (hereinafter “LTCG”). Plaintiff also seeks a declaratory judgment regarding the rights and obligations of the parties under the terms of the contract.

         Pending before the court is plaintiff Leona Van Dusseldorp's motion for partial summary judgment. (Docket 45). Defendant Continental cross-moved for summary judgment. (Docket 50). Defendant LTCG moved to join Continental's cross-motion for summary judgment. (Docket 53). Plaintiff contests defendants' motion for summary judgment. (Docket 60). The court referred the motions to United States Magistrate Judge Daneta Wollmann pursuant to 28 U.S.C. § 636(b)(1)(B) and the standing order of March 9, 2015. (Docket 68). The magistrate judge issued a report and recommendation (“R&R”) concluding the court should deny plaintiff's motion for partial summary judgment and grant defendants' motion for summary judgment. (Docket 98 at p. 12). Plaintiff filed timely objections to the R&R and defendants responded to plaintiff's objections. (Dockets 102 & 105).

         The court reviews de novo those portions of the R&R 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). The court completed a de novo review of those portions of the R&R to which objections were filed. The court finds the R&R is an appropriate application of the law to the issues presented by the parties. For the reasons stated below, the plaintiff's objections are overruled and the R&R is adopted as supplemented and modified by this order.


         At the outset, the court will address defendants' contention that the plaintiff's objections to the R&R do not merit de novo review. (Docket 105 at pp. 2-3). Defendants argue plaintiff's objections are not sufficiently specific under Fed.R.Civ.P. 72(b)(2) and the objections merely restate arguments made to the magistrate judge. Id. The court finds plaintiff's objections are reviewable.

         Plaintiff does restate arguments in her objections to the R&R in support of her motion for partial summary judgment. Compare Docket 45 at pp. 13-16, with Docket 102 at pp. 13-25. The R&R did not fully examine the arguments which plaintiff raised in the first instance and now repeats in her objections. For the sake of completeness, the court will review, de novo, all of plaintiff's objections to the R&R. Those objections are summarized as follows:

1. TLC Independent Living (“TLC”) and its provided services fall within the definition of an Assisted Living Center as stated in the long-term care policy. (Docket 102 at pp. 13-25).
2. The terms of the policy control and the magistrate judge erred in considering external statutory and regulatory authority in interpreting the policy. Id. at pp. 30-31.
3. The magistrate judge erred in finding TLC could not qualify as an Assisted Living Center because a separate benefit provided under the policy, the home and community-based care benefit, also encompasses residential care facilities. Id. at pp. 25-30.
4. The magistrate judge erred in finding plaintiff's argument that TLC provides services which may be impermissible under South Dakota law amounts to an absurdity. Id. at pp. 38-39.
5. The magistrate judge erred because plaintiff would be entitled to payment under the policy's home and community-based care benefit for TLC's residential care services. Id. at pp. 39-41.

         Plaintiff also raises several policy arguments against what she sees as defendants' concerted scheme to incorporate state statutory and regulatory definitions into insurance policies as a method of increasing claim denials. Id. at pp. 1 and 8. The court finds these arguments are not relevant to the legal question of contract interpretation at issue here and will not address them.

         Plaintiff did not object to the magistrate judge's findings of fact. See Docket 102. The court adopts the material facts set forth in the R&R. (Docket 98 at pp. 2-4).


         The court's jurisdiction is based on diversity of citizenship pursuant to 28 U.S.C. § 1332(a). (Docket 1 ¶¶ 1, 3, 13, 18-19). “It is a long-recognized principle that federal courts sitting in diversity apply state substantive law and federal procedural law.” Shady Grove Orthopedic Associates, P.A. v. Allstate Ins. Co., 559 U.S. 393, 417 (2010) (internal citation and quotation marks omitted). The parties acknowledge the interpretation of the long-term care policy at issue here is governed by the substantive laws of the state of South Dakota. (Dockets 45 at p. 16 & 54-1 at pp. 11-16).


         Under Fed.R.Civ.P. 56(a), a movant is entitled to summary judgment if the movant can “show that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). Once the moving party meets its burden, the nonmoving party may not rest on the allegations or denials in the pleadings, but rather must produce affirmative evidence setting forth specific facts showing that a genuine issue of material fact exists. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986). Only disputes over facts that might affect the outcome of the case under the governing substantive law will properly preclude summary judgment. Id. at p. 248. “[T]he mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact.” Id. at 247-48 (emphasis in original).

         If a dispute about a material fact is genuine, that is, if the evidence is such that a reasonable jury could return a verdict for the nonmoving party, then summary judgment is not appropriate. Id. However, the moving party is entitled to judgment as a matter of law if the nonmoving party failed to “make a sufficient showing on an essential element of her case with respect to which she has the burden of proof.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). In such a case, “there can be ‘no genuine issue as to any material fact,' since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial.” Id. at p. 323.

         In determining whether summary judgment should issue, the facts and inferences from those facts must be viewed in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587-88 (1986). The key inquiry is “whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.” Anderson, 477 U.S. at pp. 251-52.

         B. ...

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