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Standby Technical Services, Inc. v. F & M Agency, Inc.

United States District Court, D. Minnesota

June 1, 2015

Standby Technical Services, Inc., and AmFed National Insurance Company, Inc., Plaintiffs,
v.
F & M Agency, Inc., and John Does 1 through 10, Defendants.

Benjamin A. Johnson, Esq., Michael C. Lindberg, Esq., and Mark J. Peschel, Esq., Johnson & Lindberg, PA; and Timothy D. Crawley, Esq., Anderson Crawley & Burke PLLC, counsel for Plaintiffs.

Aaron M. Simon, Esq., and Rolf E. Sonnesyn, Esq., Tomsche Sonnesyn & Tomsche, PA, counsel for Defendant F & M Agency, Inc.

MEMORANDUM OPINION AND ORDER

DONOVAN W. FRANK, District Judge.

INTRODUCTION

This matter is before the Court on Plaintiffs Standby Technical Services, Inc. ("Standby") and AmFed National Insurance Company, Inc.'s ("AmFed") (collectively, "Plaintiffs") Motion for Partial Summary Judgment. (Doc. No. 20.) For the reasons set forth below, the Court denies Plaintiffs' motion.

BACKGROUND

Plaintiff Standby is an Alabama business that worked on projects to clean up and rehabilitate lands in the Mississippi and Louisiana Gulf Coast after they were devastated by Hurricane Katrina in August 2005 ("Katrina Recovery"). (Doc. No. 1, Compl. ¶¶ 1, 8.) Plaintiff AmFed is an insurance company based in Mississippi ( id. ¶ 2), which provided an insurance policy to Standby. ( See generally id. )

On December 11, 2005, AshBritt, Inc. contracted with Standby to provide certain services for Katrina Recovery. (Doc. No. 23 ("Peschel Aff.") ¶ 2, Ex. A.) On January 6, 2006, Standby subcontracted with another company, Streblow Brothers Repair and Fabrication ("Streblow"), a Minnesota company, for the same work. (Peschel Aff. ¶ 5, Ex. D.) Streblow further subcontracted with Poo-Monkey for this work. ( See Peschel Aff. ¶ 6, Ex. E.) Streblow was to provide labor and material for assisting in the removal of trees and associated debris ("Standby-Streblow Subcontract"). ( See Peschel Aff. ¶ 5, Ex. D.) Streblow was also to provide insurance for its laborers. ( See id. )

Streblow obtained a workers' compensation and employer's liability policy from Defendant F & M Agency, Inc. ("F&M"), an insurance agency based in Minnesota. ( See Peschel Aff. ¶ 3, Ex. B ("J. Streblow Dep.") at 35-39; see also Peschel Aff. ¶ 4, Ex. C; Compl. ¶ 3.) Specifically, in late August or early September 2005, Streblow contacted Pat Nikolaisen ("Nikolaisen"), an agent with F&M, to obtain workers' compensation insurance for its Katrina Recovery-related work. ( See J. Streblow Dep. at 35-39.) Streblow communicated to Nikolaisen that it would be doing Katrina Recovery-related work. ( See id. ) F&M obtained workers' compensation coverage through Berkley Risk Administrators Company, LLC ("Berkley Risk"), which issued a policy to cover the period of September 17, 2005 through September 17, 2006 (the "Policy"). (Peschel Aff. ¶ 4, Ex. C.) The Policy was numbered WC-22-04-165956-00. ( Id. ) Streblow provided a certificate of the Policy to Standby as proof of workers' compensation insurance. ( Id. )

On January 16, 2006, Ron Rosa ("Rosa"), an employee of Poo-Monkey, fell out of a boom basket truck while cutting down a tree. ( See Peschel Aff. ¶ 6, Ex. E.) At the time he fell, Rosa was working under the Standby-Streblow Subcontract.

In January, just after the incident, Rosa filed a workers' compensation claim with Streblow. ( See id. ) Rosa's claim was denied on September 11, 2006. ( Id; see also Doc. No. 29 ("Sonnesyn Aff.") ¶ 4, Ex. C.) Berkley Risk denied coverage on the grounds that Streblow was not covered for claims by workers outside the state of Minnesota. (Peschel Aff. ¶ 6, Ex. E.)

On August 15, 2006, Rosa sued Streblow for negligence in Mississippi Federal District Court ( Rosa v. Streblow Bros., Civ. No. 06-195 (S.D.Miss.) ("Mississippi Suit")). (Peschel Aff. ¶ 7, Ex. F; Sonnesyn Aff. ¶¶ 2, 3, Exs. A, B.) F&M was informed about the lawsuit on August 24, 2006. (Doc. No. 41 ("Johnson Aff.") ¶ 3, Ex. N.) On September 6, 2006, Streblow was informed that its commercial general liability policy would not cover Rosa's claims in the Mississippi Suit. (Johnson Aff. ¶ 5, Ex. P; see also Johnson Aff. ¶ 6, Ex. Q.) On September 13, 2006, Streblow moved to extend time to respond in the Mississippi Suit. (Sonnesyn Aff. ¶ 5, Ex. D.) Streblow filed an answer on October 20, 2006 (Sonnesyn Aff. ¶ 6, Ex. E) and an amended answer on December 12, 2006. (Sonnesyn Aff. ¶ 7, Ex. F). On March 30, 2007, Streblow sought defense and indemnity from Berkley on Rosa's Mississippi lawsuit. (Sonnesyn Aff. ¶ 8, Ex. G.) On June 1, 2007, Berkley was served with a summons in the Mississippi Suit, and it was subsequently dismissed on December 6, 2007. (Johnson Aff. ¶¶ 10, 12, Exs. V, X.) On February 11, 2008, Streblow was dismissed from the lawsuit by an Agreed Order of Dismissal Without Prejudice. (Doc. No. 40 ("J. Streblow Aff.") ¶ 5, Ex. Y.)

On September 12, 2007, Rosa filed a workers' compensation claim against Standby and its insurer AmFed. (Peschel Aff. ¶ 8, Ex. G; see also Peschel Aff. ¶ 7, Ex. F (letter stating that if Rosa was unable to successfully recover through Streblow's general liability policy, Standby was next in line to cover Rosa).) Standby and AmFed objected to the workers' compensation claim, but paid over $586, 000 to or on behalf of Rosa for indemnity and medical benefits. (Peschel Aff. ¶ 9, Ex. H.) The First benefit payment issued in connection with Rosa's workers' compensation claim was dated February 25, 2009. (Doc. No. 24 ("Swanner Aff.") ¶¶ 1-3; Peschel Aff. ¶¶ 12-14, Exs. K-1, K-2, L.)

On January 16, 2009, Standby and AmFed brought an action against Streblow in federal court in Mississippi, where they received a judgment of $604, 592.03 against Streblow. ( See Peschel Aff. ¶¶ 9, 10, Exs. H, I.) Judgment was entered ...


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