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Estvold Oilfield Services, Inc. v. The Hanover Insurance Co.

United States District Court, D. North Dakota

April 27, 2018

Estvold Oilfield Services, Inc., Plaintiff,
v.
The Hanover Insurance Company and PayneWest Insurance, Inc., Defendants.

          ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS AND DENYING REQUEST FOR A HEARING

          Charles S. Miller, Jr., United States District Court Magistrate Judge

         Before the court is a “Motion to Dismiss for Failure to State a Claim” filed by the Hanover Insurance Company (“Hanover”) on May 26, 2017. See Doc. Nos. 26 and 27. Also before the court is Estvold Oilfield Services, Inc.'s (“Estvold”) motion for a hearing on Hanover's motion. For the reasons set forth below, Hanover's motion is granted in part and denied in part and Estvold's motion for a hearing is denied.

         I. BACKGROUND

         The following facts are either undisputed or are otherwise accepted as true for the purposes of this motion. McAuley v. Federal Ins. Co., 500 F.3d 784, 787 (8th Cir. 2007).

         Estvold purchased a Hanover-underwritten insurance policy through PayneWest in January 2016 for properties it owned in or near three North Dakota towns: New Town, Alexander, and Richardton. One of Estvold's properties, a Steel Shop located at 8449 39th St. NW, New Town, North Dakota (hereinafter referred to as the “39th St. Steel Shop”) was destroyed in a conflagration on April 23, 2016. Estvold promptly tendered a fire loss claim to Hanover. Hanover denied the claim on the ground that the 39th St. Steel Shop was not amongst properties covered by Estvold's insurance policy.

         Estvold initiated the above-entitled action on January 18, 2017. It has asserted claims against Hanover for breach of contract, declaratory judgment, reformation of contract and specific performance, and violation of the State's Unfair Insurance Practices Act. It has asserted the same claims along with additional claims for professional negligence and negligence against PayneWest. It seeks a declaration that its insurance policy covers the fire damage to the 39th St. Steel Shop. In the alternative, it seeks either reformation of the policy to reflect that the 39th St. Steel Shop was covered and payment from Hanover for the fire loss claim, or a finding that PayneWest was negligent for failing to correctly identify the 39th St. Steel Shop in the insurance proposal.

         The insurance proposal prepared by PayneWest (and presumably accepted as is by Estvold) listed the following schedule of properties to be covered by the policy:

Loc. No. 1- 3962 84th Ave. NW, New Town, ND 58763:
Building #1 Office/Shop: Steel
Loc. No. 2 - 3914 84th Ave. NW, New Town, ND 58763:
Building #1 Steel Shop
Building #2 Shop
Loc. No. 3 - Lot 1; Blk 6, Alexander Energy park, Alexander, ND:
Building #1 Storage Loc. No. 4 - 4211 Hwy 8, Richardton, ND 58652:
Building #1 Steel Shop
Building #2 TBD
Building #3 Office
Building #4 Propane/water Depot tanks/pumps

(Doc. No. 1). Conspicuously absent from this schedule was any explicit identification of a fifth location, i.e., 8449 39th St. NW, New Town, or mention of the 39th St. Steel Shop.

         In its Complaint, Estvold contends that the 39th St. Steel Shop was not really omitted from the insurance proposal but rather misidentified as Building #1 at Loc. No. 4, that there was mutual understanding amongst the parties that 39th St. Steel Shop was covered by the policy, and that such coverage was calculated into the insurance premiums that were timely paid and that Hanover accepted. Specifically, Estvold asserts that its intent was clear from the outset that it was seeking coverage for all of its property, including the 39th St. Steel Shop; PayneWest understood this and twice inspected the 39th St. Steel Shop during coverage negotiations; PayneWest prepared an insurance proposal that listed a nonexistent property, Building #1 at Loc. No. 4; it and PayneWest mutually understood and agreed that the insurance proposal's reference to ...


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