North Star Mut. Ins. Co. v. Zurich Ins. Co., CIV.01-837 RLE.

• Decision Date: 22 April 2003
• Docket Number: No. CIV.01-837 RLE.,CIV.01-837 RLE.
• Citation: 269 F.Supp.2d 1140
• Parties: NORTH STAR MUTUAL INSURANCE COMPANY, Plaintiff, v. ZURICH INSURANCE COMPANY, Westrope & Associates, and Legend Insurance Services, Defendants.
• Court: U.S. District Court — District of Minnesota

269 F.Supp.2d 1140

NORTH STAR MUTUAL INSURANCE COMPANY, Plaintiff, v. ZURICH INSURANCE COMPANY, Westrope & Associates, and Legend Insurance Services, Defendants.

No. CIV.01-837 RLE.

United States District Court, D. Minnesota.

April 22, 2003.

COPYRIGHT MATERIAL OMITTED

Daniel L Giles, Stoneberg Giles & Stroup, Marshall, MN, Marcus Jon Christianson, Maschka Riedy & Ries, Mankato, MN, for Plaintiff.

Peter G Van Bergen, Andrea E Reisbord, Michelle D Mitchell, Cousineau McGuire & Anderson, Mpls, MN, James Owen Redman, Redman Law Office, Red Wing, MN, David C McLaughlin, Fluegel Helseth McLaughlin Anderson & Brutlag, Ortonville, MN, Mark Reedstrom, Ash Reedstrom & Larson, Milbank, SD, Paul D Reuvers, Kafi C Linville, Iverson Reuvers, Bloomington, MN, Marcus Jon Christianson, Maschka Riedy & Ries, Mankato, MN for Defendants.

ORDER

ERICKSON, United States Magistrate Judge.

At Duluth, in the District of Minnesota, this 22nd day of April, 2003.

I. Introduction

This matter came before the undersigned United States Magistrate Judge pursuant to the consent of the parties, as authorized by Title 28 U.S.C. § 636(c), upon the Motion of the Plaintiff North Star Mutual Insurance Company ("North Star") for an Extension of Time to Disclose Expert Opinions, and upon the Motions of the Defendants Zurich Insurance Company ("Zurich"), and Westrope & Associates ("Westrope"), for Summary Judgment.

A Hearing on the Motions was conducted on December 12, 2002, at which time, North Star appeared by Daniel L. Giles, Esq., Zurich appeared by Peter G. Van Bergen, Esq., and Westrope appeared by Paul D. Reuvers, Esq.¹

For the reasons which follow, we grant both of the Defendants' Motions for Summary Judgment, and we deny North Star's Motion for an Extension of Time for Disclosure of Experts' Opinions.

II. Foxtual and Procedural History

This case arises out of a fire damage loss, which occurred on September 18, 2002, at Schneck Dairies, Inc. ("Schneck"). At the time of the loss, Schneck maintained insurance coverage with North Star, which paid the entirety of the fire loss claim. Thereafter, North Star commenced this action, which seeks a declaration that Schneck was insured by Zurich for the loss, that North Star was not bound to pay for that loss, such that North Star is entitled to reimbursement, from Zurich, for the amount it paid on the loss. Zurich moves for Summary Judgment on the grounds that it was never bound to the Schneck risk. In the alternative, North Star alleges that Westrope negligently failed to properly place replacement coverage, with Zurich, for the Schneck loss, and therefore, that Westrope must reimburse North Star. Westrope moves for Summary Judgment on the ground that the Plaintiff cannot, as a matter of law, state a claim of negligence against it.

Schneck's insurance agent was William Werlinger ("Werlinger"), who was employed by the Defendant Legend Insurance Services ("Legend"). Werlinger had worked for Legend since 1998, and before that time, he had owned his own insurance agency for twenty years. When Schenck came to Werlinger, he placed insurance coverage for it with the Auto Owners Insurance Company ("AOIC"). However, at some point in 2000, AOIC contacted Werlinger and asked that it be removed from the Schneck risk. As a result, in late July, or early August of 2000, Werlinger began seeking quotations from other insurers. He filled out applications for quotations with both North Star, and with Westrope. Westrope is an independent, wholesale insurance broker, which submits insurance applications to several companies, including Zurich, and then serves policies that are sold as a result of those submissions. On August 15, 2000, Werlinger received pricing information from North Star. He also received pricing information from Zurich, via Tamara Owen ("Owen"), who was his contact at Westrope. Since North Star's quote was lower, Werlinger bound coverage for Schneck's loss with North Star, on September 1, 2000.

However, on September 7,' 2000, after further reviewing the application, North Star asked Werlinger to find a different insurer for the Schneck risk, having determined that it did not wish to accept that exposure. North Star agreed, however, to continue its coverage through September 27, 2000. Upon receiving that notice, Werlinger contacted Owen and inquired about coverage by Zurich, which he hoped to bind as soon as possible. On September 8, 2000, Owen sent Werlinger a price quotation from Zurich. Werlinger contacted Owen on September 14, 2002, and claims that, during that conversation, he told Owen that he needed immediate coverage, and asked her to bind coverage to Zurich on either September 1, 2000, or September 14, 2000, and that Owen stated that she would "take care of it." Werlinger claims that he understood Owen to mean that coverage by Zurich would be bound on one of these two dates, although he admits that Owen never expressly stated that she would bind coverage, that she had bound coverage, or that she had the authority to bind coverage for Zurich.

Instead, Werlinger asserts that Owen never told him that she did not have authority to bind coverage. Owen recalls the conversation differently, and claims that she informed Werlinger that she needed a written order, and additional information, in order to request that Zurich bind coverage. Westrope admits that its employees have no authority to bind Zurich in coverage, or to backdate coverage.

On September 18, 2000, Werlinger mailed a letter to Westrope, again asking it to bind coverage with Zurich for the Schneck risk. The letter did not reference any binding dates, and Werlinger claims that this was due to his belief that Owen had already assured him that coverage would be bound on September 1, or 14, 2000. On that same day—September 18, 2000—the fire occurred at the Schneck property. On September 19, 2000, after Werlinger received notice of the fire, he faxed a copy of his correspondence of September 18, 2000, to Owen, after altering it, by adding the wording "Effective date of policy: September 18, 2000." Werlinger claims that he added this notation because he had not heard from Owen, and wanted to insure that the policy did not have an effective date any later than September 18, 2000. Werlinger did not, however, disclose that there had been any damage to the property. On September 19, 2000, after receiving this fax from Werlinger, Owen sent an electronic message to Zurich, requesting that it bind coverage. On September 21, 2000, Owen received notice of the fire damage, and promptly called Zurich to inform it of the loss. Zurich had not, at that time, replied to Owen's e-mail.

III. Discussion

A. The Plaintiff's Motion to Extend Expert Disclosure Deadline.

Under the Pretrial Order, North Star was required to disclose its expert witnesses, and their reports, by no later than August 1, 2002. On May 31, 2002, North Star disclosed Jon Rongstad ("Rongstad") as an expert but, as of the date of the Hearing on this Motion, North Star had not produced his report. As a result, North Star moved for leave to then disclose that opinion, claiming that such a late disclosure would in no way prejudice the Defendants. Both Westrope and Zurich oppose any extension.

1. Standard or Review. The "good cause" standard of Rule 16(b), Federal Rules of Civil Procedure, provides the framework for our consideration of a Motion to amend the Scheduling Order, when the deadline sought to be extended, has already passed. We have frequently stated:

Rule 16(b), Federal Rules of Civil Procedure, provides that a Scheduling Order "shall not be modified except upon a showing of good cause and by leave of the district judge or, when authorized by local rule, by a magistrate judge." The "good cause" standard is an exacting one, for it demands a demonstration that the existing schedule "cannot reasonably be met despite the diligence of the party seeking the extension." Rule 16(b), Federal Rules of Civil Procedure, Advisory Committee Notes—1983 Amendment; see also Julian v. Equifax Check Services, Inc. 178 F.R.D. 10,16 (D.Conn. 1998). It hardly bears mention, therefore, that "carelessness is not compatible with a finding of diligence and offers no reason for a grant of relief." Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 609 (9th Cir.1992). Nor does the question of good cause turn on the existence or absence of prejudice to the nonmoving party. Luigino's Inc. v. Pezrow Cos., 178 F.R.D. 523, 525 (D.Minn.1998).

Scheidecker v. Arvig Enterprises, Inc., 193 F.R.D. 630, 631-32 (D.Minn.2000), quoting Archer Daniels Midland v. Aon Risk Services, Inc., 187 F.R.D. 578, 581 (D.Minn. 1999); see also, Fabio v. Credit Bureau of Hutchinson, Inc., 210 F.R.D. 688, 691 (D.Minn.2002).

Accordingly, "[w]e doubt that it can be seriously questioned that `[a]dherence to reasonable deadlines is * * * critical to maintaining integrity in court proceedings.'" Alholm v. American Steamship Co., 167 F.R.D. 75, 79 (D.Minn.1996), quoting Rouse v. Farmers State Bank of Jewell, 866 F.Supp. 1191, 1199 (N.D.Iowa 1994).

2. Legal Analysis. Although North Star disclosed Rongstad as its expert, it failed to serve his expert report, as it was required to do, by the deadline of August 1, 2002, that was imposed by our Pretrial Order. Rule 16, Federal Rules of Civil Procedure, "permits the district court * * * to impose sanctions on a party for failing to meet a deadline." Firefigter's Institute for Racial Equality v. City of St. Louis, 220 F.3d 898, 902 (8th Cir.2000). In the context of a failure to meet the expert disclosure deadline, "Rule 16 is buttressed by the sanctions imposed by Rule 37(c)(1), Federal Rules of Civil Procedure, which requires exclusion of an expert's opinion if disclosures are not timely made." Engleson v. Little Falls Area Chamber of Commerce, 210 F.R.D. 667, 669 (D.Minn. 2002).² However, as we have previously noted:

"While sanctions under Rule 37(c)(1) are mandatory * * *...