United States District Court, D. Minnesota
H. Bren and Olivia A. Moe, Fisher Bren & Sheridan, LLP,
Minneapolis, MN, for plaintiff Auto-Owners Insurance Company.
Matthew J. Barber, Alicia N. Sieben, James S. Ballentine,
Schwebel Goetz & Sieben, P.A., Minneapolis, MN, for
intervenor defendant J.M.
OPINION AND ORDER
C. Tostrud United States District Court
case is about insurance coverage for injuries from a dog
bite. The answer to the coverage question depends on whether
a term appearing in the relevant policy in bold
text-“insured”-means the same thing or something
different when it appears in the policy in plain
text-“insured.” Plaintiff Auto-Owners Insurance
Company says the word unambiguously has the same meaning
regardless of whether it appears in bold or plain text and
that, as a result, there is no coverage for dog-bite injuries
sustained by intervenor defendant J.M. J.M. says the
opposite, and she has intervened and moved to dismiss
Auto-Owners' complaint under Federal Rule of Civil
Procedure 12(b)(6). J.M.'s motion will be granted because
the Auto-Owners policy is at least ambiguous about whether it
uses the word “insured” to mean different things
depending on whether it appears in bold or regular text, and
Minnesota law requires that ambiguity to be construed against
Auto-Owners. Auto-Owners' complaint for declaratory
relief based on its interpretation of the policy is therefore
facts of this case are few and straightforward. Defendants
Laura and Frank Kammerer asked J.M. to care for their two
dogs while the Kammerers were away. Compl. ¶¶ 8-11
[ECF No. 1]. J.M. was caring for the dogs in the
Kammerers' home on December 31, 2016, when one of them
bit her multiple times, causing injuries. Id.
¶¶ 12-13. At that time, the Kammerers were covered
under the Auto-Owners homeowners policy, and the policy
provided personal-liability protection. Id. Ex. B
(“Policy”) at 9, 25-30 [ECF No. 1-2].
Kammerers notified Auto-Owners of the incident on January 3,
2017. Compl. ¶ 13; Id. Ex. A [ECF No. 1-1]. On
April 26, 2018, J.M.'s attorney sent a demand letter to
Auto-Owners. Id. ¶ 14. Auto-Owners sent the
Kammerers a “reservation-of-rights” letter on
June 28, 2018. Id. Ex. C [ECF No. 1-3]. In the
letter, Auto-Owners wrote that it would defend the Kammerers
against J.M.'s claims subject to a reservation of rights
but added: “Please be advised that the Auto-Owners
Policy does not apply to ‘bodily injury or personal
injury to any insured.' If Claimant is an insured under
the Policy, then no coverage exists under the Policy.”
Id. at 1, 6 (bold text in original). (The
letter's reference to “insured” in plain text
in the first quoted sentence followed by its reference to
“insured” in bold text in the second presaged the
central issue in this case.) Auto-Owners filed this case in
July 2018 against the Kammerers seeking a declaration under
the federal Declaratory Judgments Act, 28 U.S.C. § 2201,
that the policy does not cover J.M.'s
claim.See Compl. ¶¶ 18-22; Id.
at 6. J.M. intervened by stipulation and then moved to
dismiss for failure to state a claim.
settled legal rules govern consideration of J.M.'s Rule
12(b)(6) motion and interpretation of the policy. The
complaint's factual allegations and reasonable inferences
from those allegations must be accepted as true. Gorog v.
Best Buy Co., 760 F.3d 787, 792 (8th Cir. 2014)
(citation omitted). The complaint must “state a claim
to relief that is plausible on its face.” Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007). The Parties
agree that Minnesota law controls interpretation of the
policy, and this makes sense. The case is in federal court on
the basis of diversity. Erie R.R. Co. v. Tompkins,
304 U.S. 64, 78 (1938). The policy was issued in Minnesota,
and no relevant fact is alleged to have occurred outside
Minnesota. Under Minnesota law, “[g]eneral principles
of contract interpretation apply to insurance
policies.” Carlson v. Allstate Ins. Co., 749
N.W.2d 41, 45 (Minn. 2008) (citation omitted).
“Interpretation of an insurance policy is a question of
law. Unambiguous language is given its plain and ordinary
meaning. Ambiguous language is construed against the insurer.
While the insured bears the initial burden of demonstrating
coverage, the insurer carries the burden of establishing the
applicability of exclusions.” C.S. McCrossan Inc.
v. Fed. Ins. Co., No. 16-cv-3379, 2018 WL 2180256, at *7
(D. Minn. Mar. 29, 2018) (cleaned up) (quoting and citing
Travelers Indem. Co. v. Bloomington Steel & Supply
Co., 718 N.W.2d 888, 894 (Minn. 2006)); see also 3M
Co. v. Nat'l Union Fire Ins. Co. of Pittsburgh, 858
F.3d 561, 566 (8th Cir. 2017).
is no dispute about which parts of the policy matter. The
Parties identify the same four provisions in their briefs:
• First, the policy has a “DEFINITIONS”
section that begins with this two-sentence explanation:
“To understand this policy, you must understand the
meaning of the following words. These words appear in bold
face type whenever used in this policy and endorsements
attached to this policy.” Policy at 14.
• Second, relative to “Coverage E - Personal
Liability, ” the policy says: “We will pay all
sums any insured becomes legally obligated to pay as damages
because of or arising out of bodily injury . . . caused by an