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Hartford Fire Insurance Co. v. Retail Management Solutions, LLC

United States District Court, D. Minnesota

September 22, 2014

Hartford Fire Insurance Co., Plaintiff,
v.
Retail Management Solutions, LLC, Defendant.

Charles Spevacek, Esq., Meagher & Geer, PLLP, Minneapolis, MN, on behalf of Plaintiff.

Jason Lien, Esq., Maslon Edelman Borman & Brand, LLP, Minneapolis, MN, on behalf of Defendant.

MEMORANDUM OPINION AND ORDER

ANN D. MONTGOMERY, District Judge.

I. INTRODUCTION

On August 22, 2014, this matter came before the undersigned United States District Judge for oral argument on Defendant Retail Management Solutions' ("RMS") Motion to Dismiss or Transfer [Docket No. 18] and Plaintiff Hartford Fire Insurance Co.'s ("Hartford") Motion for a Permanent Injunction [Docket No. 24]. For the reasons discussed below, RMS's Motion to Dismiss or Transfer is granted in part and denied in part and Hartford's Motion for a Permanent Injunction is denied.

II. BACKGROUND

This insurance coverage dispute arises from Hartford's denial of coverage to RMS under a Technology Errors and Omissions Liability Insurance policy ("Policy"). In 2011, RMS sold a license to Park Nicollet Health Services in Minnesota for use of a computer software system in Park Nicollet pharmacies. An apparent glitch in the system allowed credit card expiration dates to appear on receipts when customers used their credit cards at Park Nicollet pharmacies. In September 2012, a putative class action was filed in the District of Minnesota alleging this glitch was a violation of the Fair and Accurate Credit Transactions Act. The class action settled in September 2013. Prior to settlement, Park Nicollet tendered its defense to RMS and, in turn, RMS sought indemnification from Hartford under the Policy.

A. The Parties and Policy

Hartford is a Connecticut corporation with more than 100 offices throughout the United States, including one in Washington State. RMS, a 26-employee company based in Washington, provides services throughout the country. Neither party claims a connection to Minnesota beyond the Park Nicollet lawsuit.

Hartford issued the Policy to RMS effective January 1, 2012 to January 1, 2013. Hayes Decl. [Docket No. 23] ΒΆ 3. The Policy was negotiated in Washington through a Washington insurance agent and delivered to RMS in Washington.

B. Procedural History

In January 2013, Hartford sent RMS a letter denying coverage on the basis that the alleged glitch occurred prior to the January 2012 policy period start date. In early February 2013, RMS sent Hartford a letter requesting reconsideration of their coverage position. If Hartford refused to further discuss the matter, RMS indicated it "intend[ed] to sue Hartford in the United States District Court for the Western District of Washington, for among other things, breach of contract and violation of RCW 48.30.015."[1] Hayes Decl., Ex. B at 37. Hartford declined to participate in global settlement talks and filed this lawsuit seeking declaratory relief on March 29, 2013. Three days later, RMS sued Hartford in the Western District of Washington for declaratory relief, breach of contract, bad faith and violation of Washington's Insurance Fair Conduct Act ("IFCA"). See Retail Mgmt. Solutions, L.L.C. v. Hartford Fire Ins. Co., Civil No. 13-5246, Docket No. 1, (W.D. Wash.). Both lawsuits were stayed during the pendency of settlement negotiations in the Park Nicollet action. The stays were lifted at the end of May 2014, upon entry of judgment based on a settlement agreement in the Park Nicollet case. RMS filed its Motion to Dismiss or Transfer on June 23, 2014, and Hartford filed its Motion for a Permanent Injunction on July 11, 2014.

Meanwhile, on March 30, 2014, Hartford filed a Motion to Dismiss, or in the alterative, to Stay the action filed by RMS in Washington. Id., Docket No. 26. On September 10, 2014, the Honorable Ronald B. Leighton, United States District Court Judge in the Western District of Washington, issued an Order denying Hartford's Motion to Dismiss and granting Hartford's motion to stay ...


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