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 Fire and Casualty Company, Judge Jeffrey M. Bryan granted State Farm's motion for summary judgment and dismissed all three of Kelly Richards's claims with prejudice, finding that Richards — suing as the assignee of two insureds — had no valid right to pursue claims under a personal liability umbrella policy because neither assignment of rights was legally effective.
Injured plaintiffs who obtain assignments of insurance rights from insureds through settlement agreements (particularly Miller-Shugart-type agreements); policyholders seeking umbrella coverage for household members who are not related by blood, adoption, or marriage; and attorneys litigating insurance coverage disputes who need to be aware of the risks of failing to conduct timely discovery.
What happened
In Richards v. State Farm Fire and Casualty Company, Kelly Richards sued State Farm after a 2018 bicycle collision left her injured by William Dobbs, who was insured under a condominium policy issued by State Farm. Richards, Dobbs, and Dobbs's partner Karen Arntzen entered into a settlement agreement in which Dobbs and Arntzen purported to assign their rights under a separate personal liability umbrella policy (a policy with a $1 million coverage limit, separate from the condo policy) to Richards, so she could sue State Farm directly for that additional coverage. Richards then brought three claims: that State Farm breached the umbrella policy by refusing to cover Dobbs's liability to her; that State Farm's agent negligently set up the insurance in a way that left gaps in coverage; and that the umbrella policy should be rewritten by the court to cover Dobbs.
The court also addressed a discovery dispute. During the months-long discovery period, Richards served no discovery requests on State Farm and failed to timely respond to State Farm's requests. After the discovery deadline had passed, Richards's attorney issued a subpoena to a third party — insurance agent Ian Davy — seeking his files about Dobbs and Arntzen. Magistrate Judge Shannon G. Elkins granted State Farm's motion to quash that subpoena, finding it was served too late and circumvented the court's scheduling deadlines. Judge Bryan agreed and overruled Richards's objection to that ruling. Richards also asked the court to delay ruling on summary judgment so she could gather more discovery, but the court denied that request because Richards had not explained what specific facts she hoped to find or why she had not sought that discovery during the proper period.
Judge Bryan granted summary judgment in favor of State Farm on all three counts and dismissed the case with prejudice — meaning Richards cannot refile these claims. On the breach-of-contract claim, the court found that Dobbs was never an insured under the umbrella policy (he was not related to the named insured, Arntzen, by blood or marriage), so he had no rights to assign to Richards. Arntzen's assignment was also invalid because the umbrella policy required State Farm's written consent for any assignment — which was never given — and because Arntzen received nothing in return for her purported assignment, making it unenforceable for lack of consideration. On the negligent procurement claim, the court found no evidence that agent Davy failed to follow Arntzen's instructions or did anything wrong. On the contract reformation claim, the court found no evidence — let alone the required clear and convincing evidence — that State Farm and Arntzen had a shared, identical pre-agreement understanding that Dobbs would be covered under the umbrella policy.
The detailed version
Case: Richards v. State Farm Fire and Casualty Company, No. 24-CV-03192 (JMB/SGE) ## Judge: Jeffrey M. Bryan, United States District Court, District of Minnesota ## Date: September 19, 2025
Background and Parties
Plaintiff Kelly Richards sues as the assignee of William Dobbs and Karen Arntzen, a couple who were not married but lived together and held separate insurance policies through State Farm. Dobbs was the named insured on a Condominium Unitowners policy (Condo Policy) with a $300,000 liability limit. In 2017, Arntzen separately purchased a Personal Liability Umbrella Policy (PLUP) with a $1,000,000 limit; Dobbs is not a named insured on the PLUP. The PLUP defines covered persons as Arntzen and relatives related by blood, adoption, or marriage — a definition Dobbs does not meet. The PLUP also contains an anti-assignment clause requiring State Farm's written consent before any rights under the policy may be assigned.
In August 2018, Dobbs was involved in a bicycle collision with Richards in Minneapolis, injuring Richards. Richards sued Dobbs in Minnesota state court for negligence. The parties entered into a Miller-Shugart agreement (a settlement mechanism recognized under Minnesota law in which an insured and an injured plaintiff agree to judgment against the insured, collectible only from the insurer, when the insurer has denied coverage). Under that agreement, Dobbs and Arntzen stipulated Richards sustained over $1.3 million in damages, State Farm agreed to pay $300,000 under the Condo Policy, and both Dobbs and Arntzen purported to assign their rights under the PLUP to Richards so she could pursue a separate coverage action against State Farm. State Farm was not a party to that agreement and had declined to participate in related settlement negotiations regarding the PLUP.
Claims
Richards filed a three-count complaint in federal court in August 2024: - 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's agent Ian Davy negligently procured insurance for Dobbs and Arntzen, creating a coverage gap. (Davy was not named as a defendant.) - Count III (Contract Reformation): The PLUP should be judicially rewritten (reformed) to cover Dobbs, eliminating the gap between the Condo Policy and the PLUP.
Discovery Disputes
The pretrial scheduling order set a fact discovery cutoff of May 1, 2025, meaning discovery requests had to be served by approximately April 1, 2025. Richards served no discovery requests on State Farm during the discovery period, did not timely respond to State Farm's discovery requests (and when she did, provided only boilerplate objections), and never responded to State Farm's Requests for Admissions (RFAs) — a failure that caused those requests to be deemed admitted under Federal Rule of Civil Procedure 36(a)(3). Richards also never moved to extend discovery deadlines.
After State Farm filed its initial summary judgment motion on April 2, 2025, Richards's counsel issued a third-party subpoena to non-party Davy on approximately April 11, 2025, requesting his complete files, documents, and communications relating to Dobbs and Arntzen. State Farm moved to quash the subpoena. Magistrate Judge Shannon G. Elkins granted the motion to quash, holding that the subpoena was "just served too late" and should have been sought months earlier. Davy neither responded to nor objected to the subpoena, and Richards did not move to compel compliance after the return date passed.
Judge Bryan overruled Richards's objection to the Magistrate Judge's ruling. The standard of review is highly deferential — a magistrate judge's nondispositive ruling is reversed only if it is clearly erroneous or contrary to law. The court applied reasoning from Jacobson v. Hound Dog Pet Hotel, LLC and Marvin Lumber cases: serving a subpoena on a non-party after the discovery deadline, when the requesting party made no effort to obtain the same documents during the discovery period, constitutes an undue burden on the non-party under Federal Rule of Civil Procedure 45(d)(1) and an improper attempt to circumvent the scheduling order. The court found the Magistrate Judge's ruling neither clearly erroneous nor contrary to law.
Rule 56(d) Request (Request to Delay Summary Judgment)
Richards asked the court to delay ruling on summary judgment under Federal Rule of Civil Procedure 56(d), which allows a court to defer consideration of a summary judgment motion when the opposing party cannot yet present facts essential to its opposition. To invoke this rule, a party must show by affidavit: (1) the specific facts they hope to find through further discovery; (2) that those facts exist; and (3) that those facts are essential to opposing summary judgment. The court denied Richards's request because her counsel's affidavit failed to identify specific facts that would be uncovered or explain why discovery was not obtained during the months-long discovery period. The court noted Richards also never sought to extend the discovery deadline.
Summary Judgment Analysis
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 nonmoving party must point to specific facts in the record — mere denials or speculation are insufficient.
Count I — Breach of Contract
The court granted summary judgment for State Farm on two independent grounds:
1. Dobbs had no rights to assign. The PLUP covers Arntzen and relatives related by blood, adoption, or marriage. Dobbs, as Arntzen's unmarried partner, does not qualify. Because Richards failed to respond to State Farm's RFAs — which sought admissions that Dobbs was not insured under the PLUP — those facts are deemed conclusively admitted. An insured cannot assign rights he does not have.
2. Arntzen's assignment was invalid for two independent reasons. First, the PLUP's anti-assignment clause required State Farm's written consent, which was never obtained. State Farm was not a party to the settlement agreement and is not bound by it. Second, even setting aside the anti-assignment clause, the purported assignment lacked consideration — a required element of a valid contract in Minnesota. Arntzen received nothing in exchange for assigning her rights; Richards settled claims against Dobbs (not Arntzen), and Arntzen had no personal injury claims pending against her.
Because both purported assignments are invalid, Richards is a stranger to the PLUP with no privity of contract, and therefore lacks standing to bring a breach-of-contract claim against State Farm.
Count II — Negligent Procurement
To prevail, Richards must show that Davy (1) owed a duty to exercise reasonable care in procuring insurance; (2) breached that duty; and (3) caused a compensable loss. The only evidence in the record about Davy's conduct is Arntzen's declaration, which states she asked Davy about insuring her new vehicle with the same company as Dobbs's condo policy, Davy suggested an umbrella policy, and she agreed. The court found this evidence shows Davy followed Arntzen's instructions and revealed no evidence of any breach. The court also noted (without deciding) concerns about Richards's standing to bring this claim on behalf of Dobbs and Arntzen, given Richards's admissions (by default) that she has no knowledge of conversations between those parties and State Farm or of their insurance applications.
Count III — Contract Reformation
Under Minnesota law, a court may reform an insurance policy only upon clear and convincing evidence of: (1) a valid agreement between the parties expressing their real intentions; (2) that the written policy failed to express those real intentions; and (3) that this failure resulted from mutual mistake or unilateral mistake accompanied by fraud or inequitable conduct. The burden is described as "onerous."
The court found no evidence — let alone clear and convincing evidence — that State Farm and Arntzen had a pre-contractual, shared understanding that Dobbs would be covered under the PLUP that was then accidentally omitted from the policy. Arntzen's declaration addresses only the general circumstances of the purchase; it says nothing about what State Farm understood. The court also noted that Richards's arguments focused improperly on post-issuance conduct rather than the required pre-agreement intent inquiry.
Disposition
- Richards's objection to the Magistrate Judge's order quashing the subpoena: OVERRULED. - State Farm's motion for summary judgment: GRANTED on all three counts. - Case: DISMISSED WITH PREJUDICE (Richards may not refile these claims).
Reviewer note from the AI+
Read the full 22-page opinion on CourtListener, the free public archive maintained by the Free Law Project.