Gordon v. State Farm Fire & Cas. Co.

WAYNE GORDON & TONI ROMIG, Plaintiffs,

v.STATE FARM FIRE & CASUALTY CO., Defendants.

Civ. No. 11-3176 (JRT/LIB)

UNITED STATES DISTRICT COURT DISTRICT OF MINNESOTA

Dated: August 17, 2012

REPORT AND RECOMMENDATION

This matter came before the undersigned United States Magistrate Judge upon the Defendant's Motion to Strike. The case has been referred to the undersigned Magistrate Judge for report and recommendation under 28 U.S.C. § 636(b)(1). A hearing on the motion was conducted on August 2, 2012. For reasons outlined below, the Court recommends that Plaintiffs' Motion be GRANTED.

I. BACKGROUND

On April 27, 2011, a fire damaged Wayne Gordon and Toni Romig's property in Aitkin, MN. (Compl. ¶¶ 5, 13). The Complaint alleges that Plaintiffs suffered real property and personal property damage as a result of the fire. (Compl. ¶ 25). After the fire, Plaintiffs submitted a Fire Damage Claim to the Defendant. (Compl. ¶ 17). Both parties agree that Plaintiffs' home was considered a "total loss" under the policy and Minn. Stat. § 65A.01, subd. 5. However, Defendant capped reimbursable living expenses under the policy at four months. (Compl. ¶ 19). Plaintiffs contend that the Defendant limited living expenses to four months in violation of their policy. In addition, Plaintiffs also contend that the Defendant withheld other benefits owed to them under the policy.

On the basis of these facts, Plaintiffs bring a number of claims including breach of contract, unjust enrichment, and a claim under Minn. Stat. § 604.18 for the taxation of costs and attorneys fees.

Presently before the Court is Defendant's motion pursuant to Fed. R. Civ. P. 12(f) to strike Plaintiffs' claim under Minn. Stat. § 604.18 from the Complaint.¹

II. STANDARD OF REVIEW

Federal Rule of Civil Procedure 12(f) permits the Court to "strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." Because such relief is an "extreme measure," however, motions under Rule 12(f) are viewed with disfavor in the Eighth Circuit and are infrequently granted. Stanbury Law Firm, P.A. v. Internal Revenue Serv., 221 F.3d 1059, 1063 (8th Cir. 2000); Daigle v. Ford Motor Co., 713 F.Supp.2d 822, 830 (D. Minn. 2010). Nevertheless, the Court has "liberal discretion" under the rule, Stanbury, 221 F.3d at 1063, and a motion to strike should be granted "if the result is to make a trial less complicated or otherwise streamline the ultimate resolution of the action." Daigle, 713 F.Supp.2d at 830.

III. DISCUSSION

A. Whether Defendant's Motion is Untimely

Plaintiff contends that the Defendant's Motion to Strike is untimely because the motion was not filed before the Defendant filed its answer on November 22, 2011, or within 21 days of being served with the pleading.

The Court notes that Defendant's motion is technically late because Federal Rule of Civil Procedure 12(f) requires that any motion to strike be filed either before responding to a pleading or, if a response is not required, within 20 days after being served with the pleading. Fed. R. Civ. P. 12(f)(2). Nevertheless, a court may consider an untimely motion to strike because it also has the authority to strike material from the pleadings on its own initiative. Fed. R. Civ. P. 12(f)(1). Lunsford v. United States, 570 F.2d 221, 227 n. 11 (8th Cir. 1977); United States v. Lot 65 Pine Meadows, 976 F.2d 1155, 1157 (8th Cir. 1992) (Rule 12(f) "has been interpreted to allow the [district] court to consider untimely motions to strike and to grant them if doing so seems proper.... In light of this, the time limitations in Rule 12(f) should not be applied strictly when the motion seems to have merit.").

In this case, because the Defendant's motion appears to have some merit, the Court exercises its discretion and considers the motion to strike even though it was untimely.

B. Merits

Defendant seeks to strike Plaintiff's "Insurance Standard of Conduct Act" claim under Minn. Stat. § 604.18. The relevant provisions of Minn. Stat. § 604.18 read:

Subd. 2. Liability. (a) The court may award as taxable costs to an insured against an insurer amounts as provided in subdivision 3 if the insured can show:

(1) the absence of a reasonable basis for denying the benefits of the insurance policy; and

(2) that the insurer knew of the lack of a reasonable basis for denying the benefits of the insurance policy or acted in reckless disregard of the lack of a reasonable basis for denying the benefits of the insurance policy.

* * *

Subd. 4. Claim for taxable costs. (a) Upon commencement of a civil action by an insured against an insurer, the complaint must not seek a recovery under this section. After filing the suit, a party may make a motion to amend the pleadings to claim recovery of taxable costs under this section. The motion must allege the applicable legal basis under this section for awarding taxable costs under this section, and must be accompanied by one or more affidavits showing the factual basis for the motion. The motion may be opposed by the submission of one or more affidavits showing there is no factual basis for the motion. At the hearing, if the court finds prima facie evidence in support of the motion, the court may grant the moving party permission to amend the pleadings to claim taxable costs under this section.

Defendant argues that the language in Minn. Stat. § 604.18 stating that "the complaint must not seek recovery under this section" renders the Plaintiffs' claim improper and requires striking the claim. (Def's Mem., p. 4). In its analysis, the Defendant analogizes Minn. Stat. § 604.18 subd. 4 to the language of the statute allowing parties to seek punitive damages, Minn. Stat. § 549.191, which requires that claims for punitive damages be brought as a motion to amend rather than as part of the original complaint.² (Def's Mem., p. 4-6). As such, the Defendant contends that a claim under Minn. Stat. § 604.18 can only be brought pursuant to a motion to amend after prima facie evidence of the requirements in Minn. Stat. § 604.18, subd. 2 has been presented.

In response, Plaintiffs contend that requiring a claim under Minn. Stat. § 604.18 to be brought pursuant to a motion to amend conflicts with federal procedure because the federal rules, not a state statute, apply when bringing claims in federal court. (Pls' Mem., p. 4). Moreover,Plaintiffs assert that the punitive damages statute differs from a claim under Minn. Stat. § 604.18 because the former requires a party to meet the clear and convincing evidence standard while the latter employs a preponderance of the evidence standard. (Pls' Mem., p. 5). Thus, a claim under Minn. Stat. § 604.18 is subject to the same standard of proof as ordinary civil state-law claims and is decided by a trier of fact. Id.

Plaintiffs' contention that federal procedural rules prevent the Court from applying Minn. Stat. § 604.18 is unconvincing. Two analyses apply when determining whether to apply a state law in a federal action. First, where the state provision directly collides with the plain meaning of a Federal Rule of Civil Procedure, the court analyzes whether the federal rule is authorized by the Rules Enabling Act and whether it violates any constitutional principles. Walker v. Armco Steel Corp., 446 U.S. 740, 749-50 (1980); Hannah v. Plumer, 380 U.S. 460, 469-71 (1965). However, "when there exists only a potential conflict between a state and a federal law—where the state law and federal law can "peacefully co-exist"—the court must engage in a choice of law analysis that evaluates if the choice of law determination "is substantial enough to raise equal protection problems or influence the choice of forum." In re Levaquin Products Liability Litigation, 2010 WL 4867588, at *1 (D. Minn. Nov. 23, 2010)(emphasis in original). The second analysis is derived from the Court's opinion in Erie R. Co. v. Tompkins, 304 U.S. 64 (1938). Walker, 446 U.S. at 753; Hannah, 380 U.S. at 468.

Thus, the Court must first analyze whether a federal rule conflicts with the state provision.

Here, the Plaintiffs do not point to any federal rule that conflicts with Minn. Stat. § 604.18, nor has the Court been made aware of any federal statute that conflicts with the stateprovision.³ Instead, Plaintiffs appear to rely on the second step of the analysis. As such, because only a potential conflict exists between the Federal Rules of Civil Procedure and Minn. Stat. § 604.18 the Court should apply the analysis of Erie. See Walker, 446 U.S. at 752-53 ("Since there is no direct conflict between the Federal Rule and the state law, ... the policies behind Erie ... control the issue [and the relevant inquiry is] whether ... failure to apply the state ... law might not create any problem of forum shopping, the result would be an 'inequitable administration' of the law.") Such an analysis asks "whether the variation between litigation with [Minn. Stat. § 604.18] enforced and without [Minn. Stat. § 604.18] enforced is substantial enough to raise equal protection problems or influence the choice of forum." Green Tree Acceptance, Inc., 1990 WL 36142, at *2 (citing Walker, 446 U.S. at 752-53; Hannah, 380 U.S. at 470)).

Before applying Erie to the present case, the Court first briefly addresses Plaintiffs' contention that cases analyzing Minnesota's punitive damages statute are not persuasive. Plaintiffs point to differences between the punitive damages statute, Minn. Stat. § 549.191, and Minn. Stat. § 604.18 in support of their argument. However, for the purposes of Erie, the two statutes are similar enough that the reasoning from other cases within this district analyzing Minnesota's punitive damages statutes is persuasive. Plaintiffs primarily rely on the fact that Minn. Stat. § 549. 20 requires that the moving party demonstrate "clear and convincing evidence" in support of a punitive damages claim before it can be asserted while Minn. Stat. § 604.18 has no such requirement. The standard of review...