Geico Gen. Ins. Co. v. M.O.
| Decision Date | 30 September 2021 |
| Docket Number | 21-2164-DDC-ADM |
| Parties | GEICO GENERAL INSURANCE COMPANY and GOVERNMENT EMPLOYEES INSURANCE COMPANY, Plaintiffs and Counterdefendants, v. M.O. and M.B., Defendants and Counterclaimant. |
| Court | U.S. District Court — District of Kansas |
Plaintiffs GEICO General Insurance Company and Government Employees Insurance Company (collectively “GEICO”) seek a declaratory judgment to determine GEICO's rights and obligations for its insured allegedly spreading a sexually transmitted disease (“STD”) while voluntarily having unprotected sex in the insured's automobile. GEICO's insured is defendant M.B., and he allegedly gave the STD to defendant M.O. M.O. demanded that GEICO pay her $1 million to resolve her claim against M.B., triggering GEICO to file this lawsuit. When GEICO filed the lawsuit, it named defendants M.O. and M.B. by their initials. The court subsequently ordered the parties to show cause why GEICO should not be required to file an amended complaint that names defendants by their full names and to state what corrective action is necessary to correct any defects in subject-matter jurisdiction. This matter is now before the court on the parties' responses and defendants' motion for leave to proceed anonymously or using their initials. (ECF 40-43.) For the reasons explained below, the court will allow the parties to proceed using defendants' initials pending the court's ruling on M.O.'s motion to dismiss for lack of personal jurisdiction. But, within seven days of that ruling, GEICO must file an amended complaint naming the remaining defendant(s) by their real names or the court will recommend that the district judge dismiss this action for lack of subject matter jurisdiction.
According to the filings in this case, M.O. and M.B. began having a sexual relationship in November and early December of 2017 including having unprotected sex in M.B.'s 2014 Hyundai Genesis. (ECF 20-1 ¶ 8.) M.O. alleges that M.B. had been previously diagnosed with anogenital human papillomavirus (“HPV”), which is highly contagious through sexual contact, but he did not tell M.O. about it or take measures to prevent transmitting the virus to M.O (Id. ¶¶ 6, 9.) At M.O.'s regularly scheduled gynecology exam in November 2018, she was diagnosed with anogenital HPV. (Id. ¶ 11.) She later learned that she contracted the virus from M.B. (Id. ¶ 13.)
M.B. had two GEICO insurance policies: a Kansas Family Automobile Insurance Policy that listed M.B.'s Hyundai Genesis and an umbrella policy. (ECF 4 ¶ 20.) On February 25, 2021, M.O. sent GEICO a demand letter that stated as follows:
Here's the Petition that will be filed against your insured, [M.B.]. Before doing so, we have been authorized to make one final attempt to resolve [M.O.'s] claims against your insured for the applicable limits of $1m. Let me know.
(ECF 27.) M.O.'s draft state-court Petition for Damages asserted claims against M.B. for negligence and negligent infliction of emotional distress. (Id. at 5-7.) It referred to both M.O. and M.B. by their initials and stated that “[p]laintiff is referred to in this public filing by pseudonym name to maintain confidentiality of her identity.” (Id. at 3.)
According to GEICO, it investigated the claim and learned information that supported certain defenses. For example, M.B. said that he told M.O. on three different occasions that he had been diagnosed with HPV-positive throat cancer; that M.O. had sexual partners other than M.B. during the relevant time period; that the two had sex in locations other than the insured vehicle; that M.B. had never been diagnosed with HPV before 2017; and that another physician later told him that he did not in fact have HPV. (ECF 43-4, at 3.)
On or about March 11, M.O. and M.B. entered into an agreement to settle M.O.'s claim against M.B. pursuant to Mo. Ann. Stat. § 537.065. (ECF 43-4, at 1.) “An agreement under this provision expressly authorizes an insured to settle a personal injury or wrongful death action by agreeing that the plaintiff may collect the settlement only against the insurer.” Allstate Ins. Co. v. Blount, 491 F.3d 903, 907 (8th Cir. 2007) (citation omitted). “It does not determine the insured's liability but merely limits enforceability of a judgment.” Id. As a result, the agreement limited M.B.'s liability to M.O., but left M.B. free to pursue recovery from GEICO. (ECF 43-6, at 2.) GEICO says that it did not know, at the time, that M.O. and M.B. had entered into the § 537.065 agreement.
GEICO filed this declaratory judgment action on April 7, using M.O. and M.B.'s initials. (ECF 1.) The next day, GEICO filed an amended complaint (ECF 4), and days later filed a motion for leave to file under seal a reference list identifying defendants by their full names, unredacted versions of the insurance policies at issue that contain M.B.'s name, and the returned executed summonses. (ECF 5 & 6.) The court granted the motion, finding that GEICO had made a sufficient showing to justify the legal standard for sealing those documents, but the court stated that it would revisit the matter after defendants appeared and had an opportunity to be heard on the issue of proceeding anonymously. (ECF 7.)
GEICO's amended complaint alleges that, for the two policies GEICO issued to M.B., liability coverage is identical for all relevant intents and purposes. (ECF 4 ¶¶ 14-20.) GEICO seeks a declaratory judgment that these policies do not provide coverage for M.O.'s alleged injuries, and therefore GIECO has no duty to defend or indemnify M.B. against M.O.'s claim. Among other things, GEICO alleges that the auto policy only applies to bodily injuries arising “out of the ownership, maintenance or use of the . . . auto, ” and that M.O.'s alleged damages have no nexus to the ownership, maintenance, or covered use of the 2014 Hyundai Genesis. In other words, the vehicle's covered use did not cause M.O.'s alleged injuries; instead, her injuries arose from an intervening cause-namely, her failure to prevent transmission of STDs by having unprotected sex. (ECF 4 ¶¶ 29-32.) Likewise, the umbrella policy does not provide coverage because it only applies if the auto policy provides coverage. (Id. ¶¶ 36-37.) GEICO also asserts that various policy exclusions preclude coverage under the umbrella policy. (Id. ¶¶ 38-42.)
Again, GEICO says that it did not know at the time that M.O. and M.B. submitted M.O.'s claim against M.B. to arbitration on May 17. (ECF 43-5, at 4.) And, the next day, the arbitrator awarded M.O. a $5.2 million arbitration award against M.B. On May 24, M.O. filed suit in Jackson County Circuit Court, asserting claims against M.B. for negligence and negligent inflection of emotional distress. (ECF 43-4, at 4.) It was at that time that GEICO says it first learned about M.O. and M.B.'s § 537.065 agreement and the $5.2 million arbitration award that M.O. can collect, if at all, only from GEICO. So GEICO moved to intervene in the Jackson County case and to vacate the arbitration award. GEICO contends that M.O. and M.B.'s “secret” arbitration was collusive and a sham. According to GEICO, M.O. and M.B. kept the arbitration a secret “to avoid GEICO's right to intervene and be heard, to fix liability where it otherwise would not attach, and to obtain an artificially inflated award-all in an attempt to pursue insurance proceeds and extra-contractual monies from GEICO.” (Id.) GEICO contends that M.B. must not have presented any substantive defense to M.O.'s claims during the arbitration. (ECF 43-4, at 4; 43-6, at 2.)
On June 2, M.B. filed an answer to GEICO's complaint in this case. (ECF 15.) M.B.'s answer asserts counterclaims seeking a declaratory judgment that GEICO has an obligation to defend and indemnify M.B. for M.O.'s claims against him (Counts I and II) and asserts claims for breach of contract in failing to defend and indemnify M.B. (Count III), for damages resulting from GEICO's alleged bad faith refusal to pay (Count VI), for breach of the duty of good faith and fair dealing (Count V), and for attorneys' fees (Count VI). (ECF 15 ¶¶ 15-52.)
M.O. has not yet answered. Instead, she moved to dismiss GEICO's claims against her for lack of personal jurisdiction on the grounds that she lacks sufficient minimum contacts with the state of Kansas. In support, M.O. contends that she engaged in unprotected sex with M.B. while his 2014 Hyundai Genesis was in Missouri and that she filed her state court lawsuit against him in Missouri. (ECF 20.) In response, GEICO says that M.O. has sufficient minimum contacts with Kansas because she demanded that GEICO pay $1 million on behalf of a Kansas resident (M.B.) under a Kansas auto insurance policy. (ECF 26, at 2.) Furthermore, under the § 537.065 agreement, M.O. seeks to enforce coverage and garnish on a Kansas auto insurance policy issued to a Kansas resident (M.B.) by purporting to stand in his shoes with respect to coverage, and GEICO contends that a Kansas court “plainly would have jurisdiction over any claim M.B. (a Kansas resident) could make under the Kansas Auto Policy insuring his Kansas automobile.” (Id. at 3-6.) And, M.O. claims to have contracted HPV from having sexual intercourse with M.B., at least some of which took place in M.B.'s house in Kansas and in his automobile, which is licensed, titled, and garaged in Kansas. (Id. at 6-7.)
On July 2, the Jackson County Circuit Court granted GEICO's motion to intervene, confirmed the arbitration award, and entered a $5.2 million judgment. Since then, GEICO has filed motions to amend and vacate the judgment, which it contends was the result of a collusive and non-adversarial arbitration proceeding. (ECF 43-3; 43-4.) GEICO has also moved for a new trial...
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