Richards v. State Farm Fire and Casualty Company
- Jeffrey Bryan
- 0:24-cv-03192
- U.S. District Court · District of Minnesota
- 22
In Richards v. State Farm, Judge Bryan granted summary judgment for State Farm, dismissing all insurance coverage claims by plaintiff Kelly Richards with prejudice.
Plaintiffs who seek to bring insurance coverage lawsuits as assignees of policyholders, particularly in cases involving umbrella insurance policies and Miller-Shugart-style settlement agreements. Also relevant to litigants and their counsel regarding the consequences of failing to conduct discovery within court-ordered deadlines.
What happened
In Richards v. State Farm Fire and Casualty Company, plaintiff Kelly Richards — acting as the assignee of William Dobbs and Karen Arntzen — sued State Farm seeking coverage under a personal liability umbrella policy (PLUP) after Dobbs was involved in a bicycle collision with Richards in 2018. Richards, Dobbs, and Arntzen had entered into a settlement agreement in which Dobbs and Arntzen purported to assign their rights under the PLUP to Richards so she could pursue a separate coverage lawsuit against State Farm. State Farm denied that it owed coverage to Dobbs under the PLUP and disputed the validity of the assignment.
The court addressed two motions. First, it upheld a magistrate judge's decision to quash a third-party subpoena that Richards's lawyer had served on insurance agent Ian Davy just after the close of the discovery period, finding the subpoena imposed an undue burden on a nonparty and was an attempt to circumvent the court's discovery deadlines, particularly since Richards had never sought any discovery from State Farm during the discovery period. Second, the court denied Richards's request to delay the summary judgment ruling so she could gather more evidence, finding her lawyer's affidavit too vague and her failure to conduct discovery during the allotted period insufficiently explained.
Judge Jeffrey M. Bryan granted State Farm's motion for summary judgment and dismissed the case with prejudice on all three of Richards's claims. On the breach of contract claim, the court found that Dobbs was never an insured under the PLUP and therefore had no rights to assign; and that Arntzen's purported assignment was invalid both because the policy required State Farm's written consent (never given) and because Arntzen received nothing in return for the assignment. On the negligent procurement claim, the court found no evidence that insurance agent Davy breached any duty to Dobbs or Arntzen. On the contract reformation claim, the court found no evidence — let alone the required clear and convincing evidence — that State Farm and Arntzen had shared a mutual understanding before the PLUP was issued that Dobbs would be covered by it.
The detailed version
- Richards v. State Farm Fire and Casualty Company · No. 0:24-cv-03192
- Jeffrey M. Bryan
- Sept. 19, 2025
Background
William Dobbs and Karen Arntzen were in a romantic relationship and lived together but were not married. Dobbs was the named insured on a State Farm Condominium Unitowners policy (Condo Policy) with a $300,000 liability limit. Arntzen, after purchasing a vehicle in 2017, consulted insurance agent Ian Davy about additional coverage. Davy suggested she purchase a personal liability umbrella policy (PLUP), which she did through State Farm, with a $1,000,000 liability limit. Dobbs was not named on the PLUP. The PLUP defined covered persons as Arntzen and her relatives by blood, adoption, or marriage, plus persons under 21 in her household, and certain others for vehicle-related liability. Dobbs — not related to Arntzen by blood, adoption, or marriage — did not qualify as an insured under these terms. The PLUP also required State Farm's written consent for any assignment of rights under the policy.
In August 2018, Dobbs and Richards were involved in a bicycle collision in Minneapolis. Richards was injured and sued Dobbs in Minnesota state court for negligence, claiming significant damages. The parties — Richards, Dobbs, and Arntzen (not a named defendant) — eventually entered into what Minnesota law calls a Miller-Shugart-style settlement agreement. Under Minnesota's Miller-Shugart doctrine (from Miller v. Shugart, 316 N.W.2d 729 (Minn. 1982)), when an insurer denies coverage, a plaintiff and the insured may agree to entry of a judgment against the insured that is collectible only from the insurer. Here, the parties agreed that Richards suffered damages exceeding $1.3 million due to Dobbs's negligence. State Farm acknowledged it was obligated to pay under the Condo Policy, but denied any obligation under the PLUP. The agreement required State Farm to pay $300,000 under the Condo Policy. Dobbs and Arntzen purported to assign their rights under the PLUP to Richards so she could pursue a separate coverage action. State Farm was not a party to the agreement and never consented to any assignment.
This Lawsuit
In August 2024, Richards filed a three-count complaint in federal court, suing as the assignee of both Dobbs and Arntzen:
- Count I (Breach of Contract): State Farm breached the PLUP by refusing to cover Dobbs's liability to Richards. - Count II (Negligent Procurement): State Farm agent Ian Davy negligently procured insurance, failing to obtain coverage that would protect Dobbs. Notably, Davy was not named as a defendant. - Count III (Contract Reformation): The court should rewrite the PLUP to conform with the Condo Policy and cover Dobbs, avoiding a gap in coverage.
Discovery Failures
The magistrate judge set a fact discovery cutoff of May 1, 2025, meaning discovery requests needed to be served by April 1, 2025. Richards served no discovery requests on State Farm at any point during the discovery period. She also failed to respond timely to State Farm's discovery requests, and when she did respond (late), her answers consisted of identical, nonspecific objections and a note that "discovery is continuing." Critically, Richards never responded to State Farm's requests for admissions — a procedural failure that caused those requested facts to be deemed admitted as a matter of law under Federal Rule of Civil Procedure 36(a)(3). Richards also never moved to extend the discovery deadlines.
On April 2, 2025 — one day after the deadline for serving timely discovery requests — State Farm filed its initial summary judgment motion. About a week later, Richards's counsel issued a third-party subpoena (a court-authorized request for documents from someone who is not a party to the lawsuit) on agent Davy, seeking his complete files and communications relating to Dobbs and Arntzen. State Farm moved to quash the subpoena (i.e., to cancel it), arguing the documents were State Farm's property, not Davy's, and that the subpoena was improperly late. Davy neither objected nor responded. After the response date passed, Richards did not move to compel Davy's compliance.
Magistrate Judge Shannon G. Elkins granted State Farm's motion to quash on the grounds that the subpoena was "just served too late" and that "discovery should have been sought months ago." The magistrate judge also noted (but did not primarily rely on) the fact that Davy could not have responded before the discovery cutoff.
Ruling on the Subpoena Objection
District courts review magistrate judge decisions on nondispositive (non-case-ending) pretrial matters under a deferential standard: such rulings are reversed only if they are "clearly erroneous" (a definite mistake) or "contrary to law" (misapplying statutes, case law, or procedural rules).
Richards argued the magistrate judge relied on inapposite cases, specifically Marvin Lumber & Cedar Co. v. PPG Industries, Inc., 177 F.R.D. 443 (D. Minn. 1997), and Jacobson v. Hound Dog Pet Hotel, LLC, No. 04-CV-3809, 2005 WL 8164434 (D. Minn. May 23, 2005). Judge Bryan disagreed. He found the Jacobson case directly on point: there, as here, a plaintiff issued a third-party subpoena one week before the close of discovery to obtain documents the plaintiff had never sought from the defendant, and the court found this violated the Rule 45 obligation to avoid imposing undue burdens on nonparties and constituted an attempt to circumvent discovery deadlines. Judge Bryan applied the same reasoning: even if the documents might legitimately be in Davy's possession, Richards's failure to seek them from State Farm during the discovery period — without any adequate explanation — made the late subpoena an undue burden on Davy. The objection was overruled.
Ruling on Summary Judgment
Rule 56(d) Request Denied
Before addressing the merits, the court addressed Richards's request under Federal Rule of Civil Procedure 56(d), which allows a court to delay ruling on summary judgment if the opposing party shows it cannot yet present essential facts. To qualify, the party must identify in an affidavit (1) the specific facts hoped to be uncovered, (2) that those facts exist, and (3) that they are essential to opposing summary judgment. Richards's counsel's affidavit was found insufficient: it did not identify what specific facts would be uncovered or how they would help Richards's case, and it did not explain why the discovery was not obtained during the months-long discovery period. The Rule 56(d) request was denied.
Count I — Breach of Contract: Granted for State Farm
Summary judgment is appropriate when there is no genuine dispute of material fact and the moving party is entitled to judgment as a matter of law (Federal Rule of Civil Procedure 56(a)).
The court found that Richards lacked standing (i.e., the legal right) to bring a breach of contract claim under the PLUP for two independent reasons:
Dobbs's purported assignment
The PLUP's plain language limited coverage to Arntzen and her relatives by blood, adoption, or marriage. Dobbs — Arntzen's unmarried partner — did not qualify. Moreover, Richards had failed to respond to State Farm's requests for admissions asking Richards to admit that Dobbs was not an insured under the PLUP. Because Richards never responded, those facts were deemed conclusively admitted under Rule 36(a)(3). Since Dobbs had no rights under the PLUP, he had nothing to assign to Richards.
Arntzen's purported assignment
The PLUP expressly required State Farm's written consent for any assignment. No such consent was given; indeed, State Farm was not even a party to the settlement agreement and expressly declined to participate in settlement negotiations regarding the PLUP. Additionally, even if consent had existed, Arntzen's assignment would fail for lack of consideration — the legal requirement that both parties to an agreement receive something of value. Richards settled her claims against Dobbs (who was not insured under the PLUP anyway) in exchange for Arntzen's assignment, but Arntzen received nothing of value in return.
Because neither assignment was valid, Richards was a stranger to the PLUP, lacked privity of contract with State Farm, and had no right to sue for breach. Summary judgment was granted for State Farm on Count I.
Count II — Negligent Procurement: Granted for State Farm
To prove negligent procurement of insurance, Richards needed to show: (1) the agent owed a duty of reasonable skill and care; (2) the agent breached that duty; and (3) a loss resulted from that breach. The only relevant evidence in the record was Arntzen's own declaration, which described asking Davy about obtaining vehicle coverage from the same company as Dobbs's policy, Davy suggesting an umbrella policy, and Arntzen accepting that advice. The court found nothing in this account suggesting Arntzen ever expressed a desire to extend coverage to Dobbs, or that Davy departed from Arntzen's instructions. There was no evidence of a breach of duty. The court also noted concerns — without fully resolving them — about whether Richards had standing to pursue a negligent procurement claim at all, given that she admitted (through failure to respond to requests for admissions) that she had no knowledge of the conversations between Dobbs or Arntzen and State Farm, or of their applications for coverage. Summary judgment was granted for State Farm on Count II.
Count III — Contract Reformation: Granted for State Farm
Under Minnesota law, an insurance policy may be reformed (rewritten by a court) only upon clear and convincing evidence that: (1) there was a valid prior agreement between the parties reflecting their true intentions; (2) the written policy failed to reflect those intentions; and (3) the failure was due to a mutual mistake by both parties, or a unilateral mistake accompanied by fraud or inequitable conduct. This is described as an "onerous" burden.
Richards argued the PLUP should be reformed to cover Dobbs, but the court found no record evidence — let alone clear and convincing evidence — that State Farm and Arntzen shared a pre-policy mutual understanding that Dobbs would be covered. The only evidence was Arntzen's declaration describing her request for vehicle coverage, Davy's suggestion of an umbrella policy, and her agreement to purchase it. That evidence said nothing about any shared intent to cover Dobbs. Additionally, the court noted that Richards's arguments focused on post-claim conduct (what the parties understood after the policies issued), whereas the reformation inquiry requires proof of what the parties intended before the written policy was finalized. Summary judgment was granted for State Farm on Count III.
Disposition
The court overruled Richards's objection to the magistrate judge's ruling quashing the subpoena, denied Richards's Rule 56(d) request for a continuance, and granted State Farm's motion for summary judgment on all three counts. The matter was dismissed with prejudice.
Read the full 22-page opinion on CourtListener, the free public archive maintained by the Free Law Project.