Nat'l Farmers Union Prop. & Cas. Co. v. Prochnow

• Decision Date: 30 March 2022
• Docket Number: Case No. 3:20-cv-143
• Parties: NATIONAL FARMERS UNION PROPERTY & CASUALTY COMPANY, Plaintiff, v. Michael PROCHNOW, Prochnow Farms, and Torrey Kath, Defendants, Michael Prochnow, and Prochnow Farms, Defendants and Third-Party Plaintiffs, v. Farmers Union Mutual Insurance Company, and Kyle DeVries, Third-Party Defendants.
• Court: U.S. District Court — District of North Dakota

595 F.Supp.3d 828

NATIONAL FARMERS UNION PROPERTY & CASUALTY COMPANY, Plaintiff,

v.Michael PROCHNOW, Prochnow Farms, and Torrey Kath, Defendants,Michael Prochnow, and Prochnow Farms, Defendants and Third-Party Plaintiffs,

v.Farmers Union Mutual Insurance Company, and Kyle DeVries, Third-Party Defendants.

Case No. 3:20-cv-143

United States District Court, D. North Dakota, Eastern Division.

Signed March 30, 2022

William John McNulty, Arthur Chapman Kettering Smetak & Pikala, PA, Minneapolis, MN, for Plaintiff.

John D. Bullis, Lies, Bullis, Grosz & Lindberg, Wahpeton, ND, Will Budke, Lies, Bullis, and Hatting, PLLP, Wahpeton, ND, for Defendants and Third-Party Plaintiffs Michael Prochnow, Prochnow Farms.

Eric Hinckley, Lowe Law Group, Williston, ND, for Defendant Torrey Kath.

Tyler Johnson Siewert, David D. Schweigert, Schweigert, Klemin & McBride, P.C., Bismarck, ND, for Third-Party Defendant Farmers Union Mutual Insurance Company.

Louise A. Behrendt, Nicholas J. O'Connell, Meagher & Geer, P.L.L.P., Minneapolis, MN, for Third-Party Defendant Kyle DeVries.

ORDER

Peter D. Welte, Chief Judge

Pending before the Court are two motions for summary judgment – one filed by Plaintiff National Farmers Union Property & Casualty Company ("National Farmers") on August 19, 2021 (Doc. No. 44), and the other filed by Third-Party Defendant Farmers Union Mutual Insurance Company ("Farmers Union") on August 11, 2021 (Doc. No. 40). Defendants Michael Prochnow ("Prochnow") and Prochnow Farms ("Prochnow Farms") (together, "Prochnow") and Third-Party Defendant Kyle DeVries ("DeVries") filed responses to each motion. See Doc. Nos. 56, 58, 51, 54. Defendant Torrey Kath ("Kath") joined Prochnow and DeVries in opposition to both summary judgment motions. See Doc. Nos. 59, 64.

For the reasons below, National Farmers’ motion is granted. As a result, Farmers Union's motion is denied as moot, as the Court declines to continue exercising supplemental jurisdiction over Prochnow's third-party complaint and Farmers Union's counterclaim and dismisses the third-party complaint and counterclaim without prejudice.

I. FACTUAL BACKGROUND

This case involves an insurance coverage dispute that originates from a May 2, 2018, incident where Kath sustained personal injuries. An introduction of the parties is necessary from the outset. National Farmers is a Colorado insurance company that is authorized to issue insurance policies in the State of North Dakota. Doc. No. 7, ¶ 3. Prochnow is a North Dakota resident, and Prochnow Farms is a North Dakota business entity and farming operation. Id. ¶¶ 4, 5. Prochnow is the owner of Prochnow Farms. Id. ¶ 5. Kath is a North Dakota resident, who worked for Prochnow and his farm operation. Id. ¶¶ 8, 12.

As it relates to the Farmers Union motion, Farmers Union is a North Dakota insurance company that is authorized to issue insurance policies in the State of North Dakota. Doc. No. 26, ¶ 3. DeVries is an insurance agent who conducts business in North Dakota and is an insurance agent for National Farmers and Farmers Union. Id. ¶¶ 4, 9.

A. The Policies.

As a part of Prochnow's farming operation, he purchased certain insurance policies, including one policy with National Farmers and one policy with Farmers Union. National Farmers insured Prochnow under a commercial automobile policy, policy number 1PA3321041 (the "National Farmers Policy"), with a policy period providing coverage from April 27, 2018, through April 27, 2019. Doc. No. 1-4, p. 1. The National Farmers Policy states:

PART I – LIABILITY

COVERAGE A – LIABILITY COVERAGE

We will pay damages for which any insured person is legally liable because of bodily injury and property damage arising out of the ownership, maintenance or use of a car or utility trailer.

Damages include prejudgment interest awarded against an insured person.

We will defend any suit or settle any claim for these damages, as we think appropriate. We will not defend or settle, however, after our limit of liability for this coverage has been reached. We have no duty to defend any suit or settle any claim for bodily injury or property damage not covered under this policy.

Id. at 17. In relevant part, the National Farmers Policy also has several exclusions, including an exclusion for bodily injury to an employee:

EXCLUSIONS

This coverage does not apply to:

* * *

(4) Bodily injury to an employee of an insured person arising in the course of employment. Coverage, however, does apply to a domestic employee unless benefits are payable or are required to be provided for the domestic employee under a workers’ compensation law or similar law.

Id. at 18 (the "Employee Injury Exclusion"). The National Farmers Policy also contains an endorsement for Personal Injury Protection (the "PIP Endorsement"), consistent with North Dakota law. The PIP Endorsement states:

We agree with you, subject to the provisions of this endorsement and to the provisions of the policy, except as changed by this endorsement, as follows:

SECTION I – PERSONAL INJURY PROTECTION COVERAGE

We will pay, in accordance with the North Dakota Auto Accident Reparations Act, personal injury protection benefits for:

(a) medical expenses,

(b) rehabilitation expenses,

(c) work loss,

(d) replacement services loss,

(e) survivors income loss,

(f) survivors replacement services loss, and

(g) funeral expenses

incurred with respect to bodily injury sustained by an eligible injured person and caused by an accident arising out of the operation, maintenance or use of a motor vehicle as a vehicle.

Id. at 10.

Farmers Union, on the other hand, insured Prochnow under a Farm and Ranch Package Policy, policy number 33-136497-07-1001-04 (the "Farmers Union Policy"), with a policy period providing coverage from April 27, 2018, to April 27, 2019. Doc. No. 42-1. The Farmers Union Policy also included a Farm Employers’ Liability and Farm Employees’ Medical Payments Insurance endorsement, effective April 27, 2018 (the "Farm Employee Endorsement"). Id. The Farm Employee Endorsement covers bodily injuries sustained by farm employees arising out of and in the course of the farm employee's employment. Id.

B. The Incident, Kath's Injuries, and the State Court Action.

The parties largely agree on the underlying facts that led to Kath's injuries, but dispute which policy, if any, provides coverage for Kath's injuries. As noted above, Kath was an employee of Prochnow and worked for him and his farm operation as a farmhand. Doc. No. 46-1 at 21:20-22. He performed various tasks around the farm and the maintenance shop and considered himself a "main mechanic." Id. at 23. Kath, among other things, worked on vehicles, machines, and equipment for the farm, including trailers. Id.

On May 2, 2018, while working, Prochnow asked Kath to go under a vehicle to set the brakes on a trailer. Id. at 22-28. As Kath was working under the vehicle, setting the brakes, Prochnow got into the driver's seat and began moving the truck and trailer in reverse. Id. at 30-44. Prochnow then proceeded to drive the truck with the trailer attached some distance, with Kath stuck under the trailer as it moved. Id. As a result, Kath suffered serious injuries. Id.

Following the incident, in August 2019, Kath commenced a personal injury action against Prochnow and Prochnow Farms in North Dakota state court (the "State Court Action"). Doc. No. 1-1. In the State Court Action, Kath alleged Prochnow and Prochnow Farms were liable for his personal injuries resulting from the May 2, 2018, incident. Id. Prochnow tendered the claims to National Farmers and Farmers Union. Both insurance companies, however, denied coverage under the applicable policies. See Doc. No. 1-2 (as to National Farmers).

C. The Federal Action and Procedural Posture.

National Farmers filed its amended complaint for declaratory judgment against Prochnow and Kath on October 29, 2020.¹ Doc. No. 7. In the amended complaint, National Farmers seeks a determination that the National Farmers Policy does not provide coverage to Prochnow with respect to the claims and allegations in the State Court Action. National Farmers asserts that this Court has diversity jurisdiction under 28 U.S.C. § 1332(a)(1), as the amount in controversy exceeds $75,000 and there is complete diversity of citizenship between National Farmers, on the one hand, and Prochnow, Prochnow Farms, and Kath, on the other. Id. ¶ 10.

Prochnow, invoking only supplemental jurisdiction² and asserting the Court has "subject matter jurisdiction over this action pursuant to 28 U.S.C. § 1367," filed a third-party complaint against DeVries and Farmers Union on February 22, 2021. Doc. No. 26. Farmers Union answered and filed a third-party counterclaim³ and a declaratory judgment action against Prochnow, seeking a determination that the Farmers Union Policy provides no coverage to Prochnow with respect to Kath's injuries. Doc. No. 31.

As noted above, National Farmers moves for summary judgment on all counts of its amended complaint, arguing the Employee Injury Exclusion of the National Farmers Policy precludes coverage. Doc. No. 45. Similarly, Farmers Union moves for summary judgment on its Policy, arguing the motor vehicle exclusion in the Farmers Union Policy precludes coverage. Doc. No. 41. The Court addresses National Farmers’ motion first, then Farmers Union's motion.

II. LEGAL STANDARD AND ANALYSIS

Summary judgment is required "if the movant shows 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) ; see also Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). "An issue is ‘genuine’ if the evidence is sufficient to persuade a reasonable jury to return a verdict for the nonmoving party." Schilf v. Eli Lilly & Co., 687 F.3d 947, 948 (8th Cir. 2012) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ). "A fact is material if it ‘might affect the outcome of the suit.’ " Dick v....