Ma Amba Minnesota, Inc. v. Auto-Owners Insurance Company

Background

Ma Amba Minnesota, Inc., doing business as Countryside Motel, operated a motel with four buildings. Ma Amba renewed a flood-insurance policy that it says it believed covered all four buildings. After flooding substantially damaged two buildings, Auto-Owners and Cafourek told Ma Amba that the policy covered only one building. Auto-Owners later paid Ma Amba for damage to one building and its contents.

Ma Amba asserted five claims: breach of contract against Auto-Owners; negligence by Cafourek in training and supervising employees involved with the flood-insurance policies; reformation of the policies to cover all four buildings; equitable estoppel; and a request for a declaration that all four buildings were insured. Ma Amba demanded a jury trial. Auto-Owners moved to quash, meaning remove, the jury demand as to Auto-Owners. Ma Amba conceded that it had no right to a jury on the breach-of-contract claim but argued that a jury was available for the other claims. Ma Amba also requested an advisory jury on the contract claim.

Court’s Analysis

The court explained that the National Flood Insurance Program uses private insurers known as “Write Your Own” insurers to issue standard flood-insurance policies. Those insurers act as federal fiscal agents, and policy premiums, claims, and certain litigation costs involve federal money. The court relied on precedent holding that a breach-of-contract claim under a standard flood-insurance policy puts federal funds at stake and therefore does not carry a statutory right to a jury trial.

The court held that Ma Amba’s jury demand for Count 1, the breach-of-contract claim against Auto-Owners, was properly quashed. The court did not decide whether Ma Amba’s other claims were viable, preempted, or entitled to a jury. Those claims appeared to involve the sale or renewal of the policy, but the record was not developed enough to determine whether they were procurement claims or claims-handling claims. That distinction mattered because federal law preempts state-law tort claims arising from claims handling by a Write Your Own insurer, while the cited authorities stated that procurement claims are not preempted in the same way.

The court also noted that claims against Cafourek would not necessarily involve federal Treasury funds, and that the parties’ claims against Auto-Owners and Cafourek might later need to be separated. The court considered it premature to resolve those issues through a motion about the jury demand. Ma Amba’s request for an advisory jury on Count 1 was also premature and could be renewed in a motion before trial.

Disposition

The court granted in part and denied in part Auto-Owners Insurance Company’s motion to quash Ma Amba’s jury demand. Specifically, it quashed Ma Amba’s jury demand for Count 1; left the jury demand for the remaining counts in place at that time; and denied without prejudice, as premature, Ma Amba’s request for an advisory jury on Count 1. The order stated that an advisory-jury request could be made in a motion in limine before trial.