Rodenburg LLP v. Certain Underwriters at Lloyd's, Case No. 3:19-cv-00027

• Citation: 468 F.Supp.3d 1125
• Decision Date: 24 June 2020
• Docket Number: Case No. 3:19-cv-00027
• Parties: RODENBURG LLP, doing business as Rodenburg Law Firm, Plaintiff, v. CERTAIN UNDERWRITERS AT LLOYD'S, LONDON, Syndicate No. 4020, subscribing to Policy Number DCLPLA 00574-00; and The Cincinnati Insurance Company, Defendants.
• Court: U.S. District Court — District of North Dakota

468 F.Supp.3d 1125

RODENBURG LLP, doing business as Rodenburg Law Firm, Plaintiff,

v.CERTAIN UNDERWRITERS AT LLOYD'S, LONDON, Syndicate No. 4020, subscribing to Policy Number DCLPLA 00574-00; and The Cincinnati Insurance Company, Defendants.

Case No. 3:19-cv-00027

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

Signed June 24, 2020

Clifton G. Rodenburg, Eeva Wendorf, Rodenburg Law Firm, Fargo, ND, for Plaintiff.

Ian Ronald McLean, Ronald H. McLean, Serkland Law Firm, Fargo, ND, for Defendant Certain Underwriters at Lloyd's London.

Clifton G. Rodenburg, Eeva Wendorf, Rodenburg Law Firm, Fargo, ND, for Defendant Rodenburg LLP.

ORDER GRANTING MOTION FOR SUMMARY JUDGMENT

Peter D. Welte, Chief Judge

Before the Court is Defendant Certain Underwriters at Lloyd's, London's ("Lloyd's") motion for summary judgment filed on January 8, 2020. Doc. No. 61. The motion seeks dismissal of Plaintiff Rodenburg LLP's ("Rodenburg" or the "law firm") complaint, which asserts that Lloyd's wrongfully denied coverage under an insurance policy. On January 30, 2020, Rodenburg responded in opposition to the motion. Doc. No. 71. Lloyd's filed a reply on February 14, 2020. Doc. No. 83. For the reasons below, the motion is granted.

I. BACKGROUND

Rodenburg is a North Dakota law firm that primarily engages in consumer debt collection. Doc. No. 1-4, ¶ 4. Lloyd's is a New York insurance carrier. Id. ¶ 2. A summary of the Policy is followed by the factual background and procedural history.

A. The Policy

Lloyd's issued a Lawyers Professional Liability Insurance Policy ("Policy") to Rodenburg effective from May 10, 2017 through May 10, 2018. Doc. No. 63-6, p. 5. The Policy's retroactive date is May 10, 2009. Id. In relevant part, the Policy provides:

THIS IS A CLAIMS MADE AND REPORTED INSURANCE POLICY. COVERAGE IS LIMITED TO LIABILITY FOR ONLY THOSE CLAIMS THAT ARE FIRST MADE AGAINST [RODENBURG] AND REPORTED TO [LLOYD'S] DURING THE POLICY PERIOD.

* * *

[Lloyd's] agree[s] to pay on behalf of [Rodenburg], all sums which [Rodenburg] may be legally obligated to pay as Damages to others, up to the Limit of Liability, resulting from:

1. A Claim seeking Damages caused by a negligent act, error or omission in Professional Services provided by, or that should have been provided by [Rodenburg] or any person for whose acts [Rodenburg], as a lawyer or notary public, is legally responsible;

2. A Claim seeking Damages for Personal Injury arising from the Professional Services of [Rodenburg].

The Claim must be made against [Rodenburg] during the Policy Period. The Claim must be based on an Incident that wholly occurs on or after the Retroactive Date. [Rodenburg] must provide written notification to [Lloyd's] of the Claim while this Insurance Policy is in effect.

In addition, [Lloyd's] will cover Claims arising from Incidents as follows:

1. Prior Incidents: [Lloyd's] will cover Claims arising from an Incident that occurred before the Effective Date of this Insurance Policy if the following conditions are met:

a. [Rodenburg] did not have knowledge of the Incident prior to the Effective Date of this Insurance Policy;

b [Rodenburg] was not aware of any Incident which could reasonably be expected to the basis for a Claim; and

c. The Claim results from an Incident which occurred on or after the Retroactive Date and is reported to [Lloyd's] while this agreement is in effect.

Id. at 9. The Policy defines a "Claim" as "a demand received by [Rodenburg] for money or services including the service of Suit." Id. at 13. An "Incident" is defined as "any circumstance, act, error or omission which [Rodenburg] could reasonably expect to be the basis of a Claim or Suit covered by this Insurance Policy." Id. at 14.

B. Factual Background

The current lawsuit traces back to June 2010, when Portfolio Recovery Associates, LLC ("PRA") purchased the rights to a defaulted consumer credit card account from HSBC Bank Nevada, N.A. Doc. No. 82-6, p. 41. The account linked to a Best Buy consumer credit card with a $1,481.10 unpaid balance. Id. at 36. As alleged, an individual named Charlene Williams ("Williams") owed the debt. Doc. No. 1-4, ¶ 10. Williams admitted to filling out the application for the Best Buy card on May 9, 2005 and acknowledged that the address, social security number, driver's license number, date of birth, and phone number on the application matched her information.¹ Doc. No. 78 at 67:23-69:14. The application listed an address on Pillsbury Street in Minneapolis, Minnesota, that Williams resided at in 2005. Doc. No. 82-1.

PRA assigned the account to Rodenburg in January 2011 for collection. Doc. No. 63-7, ¶ 10. When providing the account information to Rodenburg, PRA listed an address on Crocus Street in Coon Rapids, Minnesota. Doc. No. 82, ¶ 11. Unknown to Rodenburg, the Coon Rapids address belonged to an individual named Charlene Williams-Mumbo ("Williams-Mumbo"). Doc. No. 63-1, p. 2. Based on the information PRA provided, Rodenburg proceeded to commence an action in Minnesota state court, ostensibly against Williams. Doc. No. 82, ¶ 13. Rodenburg served the summons and complaint, however, at the Coon Rapids address. Id. The Minnesota state court entered a default judgment on December 6, 2011. Id. ¶ 14. An attorney, Daniel York, contacted Rodenburg to vacate the default judgment shortly after, but he never responded to the law firm's follow-up inquiries. See Doc. No. 84-1.

Fast forwarding to November 8, 2016, PRA relayed information to Rodenburg that Williams had secured employment with US Foods. Doc. No. 84, ¶ 17. Rodenburg served a notice of intent to garnish wages at the Coon Rapids address two days later. Doc. No. 63-7, ¶ 41. Receiving no response, Rodenburg then served US Foods with garnishment papers on November 22, 2016. Doc. No. 84, ¶ 17. Williams discovered Rodenburg had garnished her wages in December 2016 when reviewing her paycheck. Doc. No. 78 at 85:11-86:14.

By pure coincidence, on December 16, 2016, a representative from a title company called Rodenburg to inquire about the default judgment on Williams-Mumbo's behalf. Doc. No. 63-1, p. 2. A fax from the title company sent to Rodenburg later that day confirmed that Williams-Mumbo resided at the Coon Rapids address. Doc. No. 82-4. Rodenburg informed the title company that Williams-Mumbo's social security number did not match the Best Buy cardholder's social security number. Doc. No. 63-1, p. 2.

After learning Rodenburg had garnished her wages, Williams first contacted the law firm on December 21, 2016. Doc. No. 82, ¶ 20. Initially, Williams denied owing Best Buy the amount claimed but stated it was "fine" that Rodenburg had garnished her wages because the work at US Foods was "too hard" and that she planned to quit anyway. Doc. No. 63-1, p. 3. She subsequently called the law firm several more times that same day, becoming increasingly distraught. Doc. No. 82, ¶ 21. Williams more forcefully denied owing the debt, denied that she had ever lived at the Coon Rapids address, and denied that she had received notice of the lawsuit or the judgment before garnishment commenced. Doc. No. 63-7, ¶ 63. She verbally requested that Rodenburg return her garnished wages during numerous phone calls between December 2016 and February 2017. See Doc. No. 63-1, pp. 3-4.

In at least one phone call, Rodenburg attempted to apprise Williams that York represented her in the matter. Doc. No. 78 at 92:20-93:15. But Williams denied hiring or knowing York. Id. at 93:16-18. On her own initiative, Williams then contacted York in late December 2016. Id. at 93:18-21. York confirmed that he had represented a different person named Charlene Williams in 2011 regarding the default judgment. Doc. No. 63-7, ¶ 69. The person he represented was Caucasian, while Williams is African-American. Doc. No. 78 at 97:25-98:15.

At the beginning of 2017, Williams filed complaints against Rodenburg with the Minnesota Attorney General's Office and the Consumer Financial Protection Bureau ("CFPB"). Doc. No. 82-6, pp. 10, 71. In addition to seeking information about the credit card debt, Williams' complaints stated, "I request that all my wages that [have] been garnished be refunded and the harassment and [defamation] of character be stopped." Id. at 8. Rodenburg responded to the complaints by claiming that the law firm had positively identified Williams as the judgment debtor. Id. at 55-56. Despite Williams' continued protests, Rodenburg garnished a total of $656.93 from four of her paychecks between December 29, 2016 and February 9, 2017. Doc. No. 63-7, ¶ 68.

Upon further investigation, PRA and Rodenburg decided on February 16, 2017 to terminate the wage garnishment, vacate the judgment, and dismiss the underlying lawsuit. Doc. No. 63-1, p. 3. Rodenburg partner Eeva Wendorf conveyed the decision to Williams during a phone call later that day. Id. at 4. At that point, Williams stated that she considered the matter resolved. Id.

Reentering the picture one final time, York sent a letter to Rodenburg after Williams contacted him. Doc. No. 84-3. The law firm received the letter on March 1, 2017.² Id. York wrote, "I think you need to take a serious look at your file because I have referred the Charlene Williams you are now going after to attorney Todd Murray for the horrible way she has been treated and ignored during your collection efforts on the wrong person." Id. In reaction, Wendorf sent an email marked with high importance to Rodenburg's partners the next day with the subject line: "Charlene Williams – 106883 – ltr from york. Possible lawsuit against us. Please review." Doc. No. 63-4. Wendorf stated in the email, "We may have to deal with a threat of suit or suit from attorney Todd Murray." Id. She also wrote, "As soon as I saw this file after [Clifton Rodenburg] sent the second letter from the AG to me, I knew it was going to be [a] bomb." Id.

Also on March 1, 2017, Williams spoke with Rodenburg attorney Anita Sunde. Doc. No. 63-1, p. 4. Williams expressed...