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Selective Insurance Co. of America v. Community Living Options Inc.

United States District Court, D. Minnesota

August 26, 2019

Selective Insurance Company of America, Plaintiff,
Community Living Options Inc. et al., Defendants.



         Before the Court are Plaintiff Selective Insurance Company of America's motion for judgment on the pleadings, (Dkt. 13), and Defendant Community Living Options Inc.'s cross-motion for partial judgment on the pleadings, (Dkt. 22). For the reasons addressed below, Plaintiff's motion is granted and Defendant's motion is denied.


         Plaintiff Selective Insurance Company of America (Selective Insurance) provides insurance for Defendant Community Living Options Inc. (CLO), a facility for in-home foster care services for adults with behavioral, cognitive, and medical challenges. Defendants Alexis A. O'Brien and Erin M. Lundblad were employed by CLO as caretakers during the relevant time period. Selective Insurance and CLO dispute whether Selective Insurance is required to defend and indemnify CLO in an underlying Minnesota state court case.[1]

         On or about August 24, 2017, the County of Sherburne and Minnesota Department of Human Services placed Nathaniel Luke Chambers into one of CLO's facilities. During Chambers's introduction into the facility, CLO created a file with Chambers's mental health and medical history. Although CLO omitted information about Chambers's prior violent and sexual behaviors, CLO implemented several policies with respect to Chambers's supervision. These policies included requirements that female employees wear loose-fitting clothing when around Chambers and supervision of Chambers by two employees.

         Chambers engaged in a series of aggressive acts that escalated in severity between August 24, 2017, and October 14, 2017. Chambers threw batteries, a remote control, and a bottle at Lundblad, threatened Lundblad with a butter knife, and punched O'Brien in the face. And Lundblad alleges that on the evening of October 14, 2017-while she was the only employee assigned to supervise Chambers-Chambers violently raped her.

         O'Brien and Lundblad brought a lawsuit against CLO in state court for failure to take reasonable precautions to protect them; failure to use reasonable care to provide a safe work environment; discrimination on the basis of sex based on CLO's terms, conditions and requirements of employment; failure to take remedial measures to prevent sexual harassment and discrimination; creation of a hostile work environment; and allowing unwelcomed sexual harassment.[2]

         CLO sought insurance coverage by Selective Insurance to defend against these claims. Selective Insurance initially refused to defend CLO, contending that the claims were excluded by the insurance policy. But, after a workers' compensation ruling in Minnesota state court on related matters, Selective Insurance acknowledged that one of the claims could “potentially trigger coverage outside the exclusion.” In its agreement to defend CLO, Selective Insurance reserved the right to withdraw its defense after additional investigation of the claims and facts. Selective Insurance now seeks to withdraw its defense.

         At issue here is whether the state-court claims against CLO are covered under its insurance policy. Selective Insurance maintains that it has no duty to defend or indemnify CLO in the state-court action and seeks a declaratory judgment to that effect. In its counterclaim, CLO asserts that Selective Insurance breached its contract with CLO. CLO also filed a cross-motion for partial judgment on the pleadings, arguing that Selective Insurance at least has a duty to defend CLO in the Minnesota state-court action.


         Both Selective Insurance and CLO seek declaratory judgment in their respective motions for judgment on the pleadings. When there is a “case of actual controversy within its jurisdiction, ” a federal court has the authority to “declare the rights and other legal relations of any interested party seeking such declaration.” 28 U.S.C. § 2201(a).

         A party may move for judgment on the pleadings “[a]fter the pleadings are closed- but early enough not to delay trial.” Fed.R.Civ.P. 12(c). Accepting as true all facts pled by the non-moving party and drawing all reasonable inferences in the non-moving party's favor, a court shall grant a motion for judgment on the pleadings when “the moving party has clearly established that no material issue of fact remains and the moving party is entitled to judgment as a matter of law.” Potthoff v. Morin, 245 F.3d 710, 715 (8th Cir. 2001). Here, the material facts are undisputed for the purpose of the present motions.

         Minnesota state law governs the substantive issue of insurance coverage in this case. See Corn Plus Coop. v. Cont'l Cas. Co., 516 F.3d 674, 678 (8th Cir. 2008) (applying Minnesota substantive law to an insurance case based on diversity jurisdiction). And under Minnesota law, principles of contract law govern the construction of insurance policies. Nathe Bros., Inc. v. Am. Nat. Fire Ins. Co., 615 N.W.2d 341, 344 (Minn. 2000). The interpretation of an insurance policy presents a question of law, requiring a court to construe the policy “as a whole with all doubts concerning the meaning of language employed to be resolved in favor of the insured.” Haarstad v. Graff, 517 N.W.2d 582, 584 (Minn. 1994) (internal quotation marks omitted). When an insurance policy is unambiguous, the “usual and accepted meaning” prevails. Lobeck v. State Farm Mut. Auto. Ins. Co., 582 N.W.2d 246, 249 (Minn. 1998).

         I. ...

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