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State Farm Insurance Companies v. Turtle Mountain Fleet Farm LLC

United States District Court, D. North Dakota, Southwestern Division

May 12, 2014

State Farm Insurance Companies, Plaintiff,
Turtle Mountain Fleet Farm LLC; Rich's Construction, by its owner Rich Parisien; Lloyd Greenwood and Brenda Greenwood, Defendants.


CHARLES S. MILLER, Jr., Magistrate Judge.

Before the court are cross-motions for summary judgment by plaintiff State Farm Insurance Companies ("State Farm'") (Doc. No. 26) and defendants Lloyd and Brenda Greenwood (Doc. 24). On April 25, 2014, the court heard oral argument on the motions. Except as otherwise indicated, the facts set forth below come from the opinion of the tribal appellate court (Doc. No. 25-1) and are either undisputed or have not been demonstrated to be clearly erroneous.[1]


A. The initial dispute

The Greenwoods are members of the Turtle Mountain Band of Chippewa Indians (the "Tribe"). On July 7, 2008, the Greenwoods' home was damaged by a tornado. The home was insured by State Farm. (Doc. No. 25-1).

The Greenwoods' home is located on the Turtle Mountain Indian Reservation. (Id.). Neither the tribal record nor the written record here are clear about the status of the land upon which the home is located. The Greenwoods' attorney stated during argument that it is situated on trust property. No evidence has been offered to the contrary - particularly evidence indicating it is on non-Indian owned fee land.

Following the occurrence of the loss, State Farm's adjustor inspected the premises. Based on estimates he prepared, State Farm issued a check to the Greenwoods for the repairs. (Id.).

Defendant Rich Parisien d/b/a Rich's Construction ("Rich's Construction") was engaged to perform the repair work. Materials were supplied by the Turtle Mountain Fleet Farm, LLC ("Fleet Farm") of which Parisien is also a principal. State Farm's involvement in the retention of Rich's Construction and later in the repair process is disputed. (Id.).

The Greenwoods became dissatisfied with the work performed by Rich's Construction and the materials supplied by Fleet farm and stopped paying. This led to the filing of an action in tribal court by Rich's Construction and Fleet Farm to collect on the remaining amounts they claimed were owed for labor and materials. (Id.).

B. The filing of the tribal court action by Rich's Construction and Fleet Farm and the counterclaim and cross-claim by the Greenwoods

Rich's Construction and Fleet Farm instituted their collection action in the Turtle Mountain Tribal Court ("tribal court") by way of a complaint dated December 5, 2008. In addition to suing the Greenwoods, the tribal court plaintiffs named State Farm as a defendant, claiming that State Farm had dealt directly with them with respect to the repairs. They also contended that State Farm should have put their names on the check issued to the Greenwoods for the repair work. (Id.; Doc. No. 27-1).

The Greenwoods answered the tribal court complaint, denying liability and asserting a counterclaim against the tribal court plaintiffs for the damages they claimed they had incurred as result of the alleged defective workmanship and materials. In addition, the Greenwoods cross-claimed against State Farm, alleging it too was liable because (1) State Farm had acted as a "liaison" between them and the tribal court plaintiffs for the repairs, and (2) State Farm had expressly or implicitly misrepresented that the tribal court plaintiffs were licensed and bonded when it turned out that they were not. (Doc. Nos. 25-1 & 27-2).

State Farm denied the claims of the tribal court plaintiffs and the Greenwoods. State Farm alleged that it had discharged its obligation under the policy by paying the Greenwoods for the estimated amount of the damage and that it had no contractual relationship with the tribal court plaintiffs because they had been hired by the Greenwoods. (Doc. Nos. 25-1 & 27-3, p. 2).

C. The dismissal of State Farm from the tribal action

On August 25, 2009, State Farm filed a motion to dismiss in the tribal action, contending the tribal court lacked jurisdiction over it as a non-Indian. In its brief in support of the motion, State Farm acknowledged the two exceptions set forth in Montana v. United States , 450 U.S. 544 (1981), to the general rule that an Indian tribe's sovereign powers (including the civil jurisdiction of its courts) do not extend to activities of nonmembers, but argued the exceptions did not apply given the decision by the United States Supreme Court in Plains Commerce Bank v. Long Family Land and Cattle Co. , 554 U.S. 316 (2008) ("Plains Commerce Bank"). (Doc. Nos. 25-1 & 27-3). With respect to the first Montana exception (sometimes referred to as the consensual relationship exception), State Farm argued it was no longer enough, given Plains Commerce Bank, that the consensual relationship be with a tribal member. Rather, according to State Farm, the insurance contract in this instance would have to impact the tribe's right to self-government or its internal relations, which "would require, in essence, that State Farm have entered into a contract with the tribe itself, not merely a tribal member." (Doc. No. 27-3, p. 6). With respect to the second Montana exception, State Farm argued that any economic impact resulting from its activities affected only the tribal members involved in the case and not the tribe.

On September 8, 2010, the tribal trial court dismissed State Farm from the action in a one page order after observing that (1) the tribal court plaintiffs had entered into a stipulation for dismissal of their claims against State Farm, and (2) State Farm had filed a motion to dismiss for lack of subject matter jurisdiction. Notably, the court did not discuss why it concluded there was a lack of jurisdiction over State Farm, much less make any factual findings or state any conclusions about tribal law that may have a bearing on the jurisdictional question. (Doc. No. 27-4).

D. The trial in tribal court and the denial of the Greenwoods' petition to rejoin State Farm

The tribal action then proceeded to trial on the tribal court plaintiffs' claims against the Greenwoods and the Greenwoods' counterclaim. During the trial, one of the witnesses for Rich's Construction claimed he had advised State Farm that the Greenwood's house should not be repaired because it was a total loss. The Greenwoods claimed this testimony came as surprise and was a "bombshell." The Greenwoods petitioned the trial court to reinstate State Farm as a party so that they could also pursue a bad faith claim against State Farm based on its failure to disclose the purported recommendation from Rich's Construction and not adjusting and paying their claim based on their residence being a total loss. The trial court denied the request. (Doc. No. 25-1).[2]

E. The tribal appellate court's reversal of the dismissal of State Farm

The Greenwoods then appealed the trial court's dismissal of State Farm and its subsequent refusal to order State Farm's reinstatement. In a decision dated November 28, 2011, the tribal appellate court concluded that State Farm should not have been dismissed on jurisdictional grounds and that it should be required to defend against the Greenwoods' bad faith claim. The court stated:

The Greenwoods petitioned this Court for review of the lower court's denial of their request to re-join State Farm as a Defendant in this lawsuit brought by a contractor and supplier against them for services and supplies provided. They claim that although State Farm was dismissed from suit as a Defendant and cross-party Defendant they discovered new facts after commencement of the lawsuit that required the lower court to permit them to rejoin State Farm as a Defendant. This Court granted review on March 11, 2011 and oral argument was heard on the 17th day of June 2011 with the Greenwoods and State Farm appearing through counsel. No appearance was made by Turtle Mountain Fleet Farm.
The facts in this case are relatively straightforward. The Greenwoods suffered damages to their home on July 7, 2008 when a tornado hit the Belcourt area. State Farm Insurance Company provided homeowner's insurance for the Greenwoods and after the tornado a State Farm assessor wrote up the claim and submitted it to either Turtle Mountain Fleet Farm and Rich's Construction for repair or to the Greenwoods. This appears to be a factual dispute that has not yet been resolved by the lower court. The Greenwoods were paid by State Farm, but allegedly failed to pay the Plaintiffs who commenced this lawsuit against them and State Farm. The Greenwoods then filed a cross-claim against State Farm, asserting that it had referred them to a contractor who performed inadequate work on the house, but the carrier was dismissed from the suit and only the suit by the contractor against the Greenwoods and their counterclaim against the contractor proceeded to trial.
At trial one of the witnesses for the contractor testified that he advised State Farm's assessor that the home was a total loss and should be torn down. The Greenwoods allege that this came as a complete surprise to them because their insurance carrier never notified them of this. The State Farm agent ...

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