Federal Trade Commission et al v. Affiliate Strategies, Inc. et al

Filing 474

MEMORANDUM AND ORDER denying 459 Garnishee State Farm Fire and Casualty Company's Motion for Hearing; granting 469 Garnishee State Farm Fire and Casualty Company's Motion to Quash plaintiffs' writ of garnishment. Signed by District Judge Richard D. Rogers on 9/20/2013. (jl)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
FEDERAL TRADE COMMISSION, et al.,

)
)
Plaintiffs,
)
)
v.
)
)
AFFILIATE STRATEGIES, INC. et al., )
)
Defendants.
)
_

Case No. 09-4104-RDR

MEMORANDUM AND ORDER
Judge

Robinson

this

court

entered

a

against

defendant

Meggie

Chapman

in

consumer

protection

action

brought

by

$1,682,950
captioned

of

Trade Commission and four states.

judgment
the
the

of

aboveFederal

Subject to a reservation of

rights, State Farm Fire and Casualty Company provided defense
counsel for Chapman during the case before Judge Robinson and on
appeal.

Judge

Robinson’s

order

was

affirmed

by

the

Tenth

Circuit on May 7, 2013 and Judge Robinson has transferred the
case to the undersigned judge for further proceedings.
Plaintiffs, as judgment creditors, have filed a writ of
garnishment

(Doc.

No.

447)

to

collect

upon

the

judgment

by

garnishing an errors and omissions insurance policy issued by
State Farm to Chapman.

This case is now before the court upon

the motion of the garnishee State Farm to quash plaintiffs’ writ
of garnishment.

Doc. No. 469.

The issue before the court is whether the insurance policy
covers the conduct encompassed in this lawsuit.

I.

Factual background
The relevant facts appear to be undisputed.

alleged

and

defendants

prevailed

violated

in

the

proving

Telemarketing

that
and

Plaintiffs

Chapman

and

other

Consumer

Fraud

and

Abuse Prevention Act, 15 U.S.C. §§ 1601-1608, while marketing
and selling goods and services upon the unfounded promise or
representation that the buyers of the goods and services would
have success in obtaining government grants.

Specifically as to

defendant Chapman, Judge Robinson found that she violated the
Telemarketing
prohibits

Sales

anyone

Rule

from

(TSR),

providing

16

C.F.R.

310.3(b),

“substantial

which

assistance

or

support to any seller or telemarketer when that person knows or
consciously avoids knowing that the seller or telemarketer is
engaged

in

prohibiting

any

act

deceptive

or
or

practice
abusive

that

violates”

telemarketing

regulations

conduct.

support of this holding, Judge Robinson found that:
- Chapman wrote portions of a “Grant Guide” which was
sold to consumers;
- she researched potential money sources for the
consumers who purchased grant research services and
completed lists of potential money sources which
were then provided to purchasing consumers;
- she helped develop a questionnaire for telemarketers
to use in collecting information from consumers and
provided limited training to telemarketers;
- she performed the “vast majority if not all of the
research fulfillment for the Kansas Defendants”
which was provided to more than 8,000 individual
consumers;
2

In

- she performed grant-research, grant writing, and
grant coaching and mentoring services sold by other
defendants;
- she supplied talking points to respond to questions
or complaints from consumers;
- she responded to inquiries from two state attorneys
general regarding the Kansas Defendants’ grantrelated services, but she never reviewed defendants’
telemarketing
materials
or
tracked
whether
purchasing consumers ever received a grant after
purchasing defendants’ goods and services; and
- she performed similar work for a different operation
after receiving notice of the original complaint and
notice of a restraining order against the defendants
in this case.
In
Robinson

her

findings

agreed

with

of

fact

and

plaintiffs

conclusions

that

the

of

court

law,

Judge

should

award

“damages in the amount of the gross revenue collected by Chapman
in

the

course

Defendants.”
that

there

$1,682.950

of

assisting

and

Doc. No. 422, p. 23.
was

in

sufficient

the

course

facilitating

Kansas

Judge Robinson determined

evidence
of

the

that

assisting

and

Chapman

collected

facilitating

the

Kansas Defendants’ violation of the TSR.

She awarded plaintiffs

damages against Chapman in this amount.

Later, in the judgment

entered by the court, Judge Robinson ordered that funds paid to
plaintiffs as a result of this lawsuit “be deposited into a fund
or funds administered by the Plaintiffs or their designees to be
used for consumer redress and any attendant expenses for the
administration of any redress fund.”
further ordered that:
3

Doc. No. 423, p. 2.

She

In the event that direct redress to consumers is
wholly or partially impracticable or funds remain
after redress is completed, the Plaintiffs may apply
any remaining funds for any other equitable relief . .
. that they determine to be reasonably related to
Defendant’s practices alleged in the Second Amended
Complaint.
Any funds paid to the [Federal Trade]
Commission not used for equitable relief shall be
deposited into the U.S. Treasury as disgorgement.
Id. at pp. 2-3.
II. Choice of law
It is alleged without dispute that defendant Chapman is a
resident

of

Arizona,

and

that

her

business

Arizona and conducted its business there.
in question was purchased in Arizona.

was

located

in

The insurance policy

State Farm contends that

Arizona law applies to this case because Kansas applies the
doctrine of lex loci contractus – the place of the making of the
contract (in this instance Arizona) controls.

See Clements v.

Emery Worldwide Airlines, Inc., 44 F.Supp.2d 1141, 1145 (D.Kan.
1999).

Plaintiffs do not disagree that Kansas choice-of-law

principles apply, but suggest that Kansas law

should control

because State Farm has not established that there is a conflict
between Kansas and Arizona law.
It appears to the court that there is no conflict between
Kansas and Arizona law.
academic.

So, the choice of law question may be

But, if the court had to decide, the court would find

that Kansas choice-of-law principles govern.

See A.I. Trade

Finance,

Corporation,

Inc.

v.

Petra

International
4

Banking

62

F.3d 1454, 1465 (D.C.Cir. 1995)(it is the source of the right,
not

the

basis

of

controlling law);

federal

jurisdiction,

see also

which

determines

the

Commercial Union Ins. Co. v. Sea

Harvest Seafood, 75 F.Supp.2d 1264, 1269 (D.Kan. 1999)(in the
absence

of

concerning

a

federal

maritime

rule,

state

insurance

law

policies,

controls
and

if

disputes

state

laws

conflict, the court determines the choice of state law using
choice of law rules of the forum).1

Under those principles,

Arizona law controls the construction of the insurance contract.
III.

Arizona insurance policy construction principles
Under Arizona law, the provisions of an insurance policy

are construed according to their plain and ordinary meaning.
Samsel v. Allstate Ins. Co., 59 P.3d 281, 284 (Ariz. 2002);
Sparks

v.

Republic

Nat.

Life

Ins.

Co.,

647

P.2d

1127,

1132

(Ariz. 1982).

Ambiguous provisions are construed against the

insurer.

Id.

The insured carries the burden of establishing

coverage

under

establish

the

an

insuring

applicability

clause,
of

any

while

the

exclusion.

insurer

must

Sciranko

v.

Fidelity & Guar. Life Ins. Co., 503 F.Supp.2d 1293, (D.Ariz.
2007); Keggi v. Northbrook Prop. & Cas. Ins. Co., 13 P.3d 785,
788 (Ariz.App. 2000).

In reviewing exclusion clauses which are

subject

constructions,

to

different

1

the

court

examines

the

The court recognizes that there is contrary authority holding that federal
common law provides the conflict of law principles for deciding these issues.
E.g., Edelmann v. Chase Manhattan Bank, 861 F.2d 1291, 1294 (2d Cir. 1988).
Using those principles, however, might lead to the same result.

5

purpose

of

the

exclusion

in

question,

the

public

policy

considerations involved, and the transaction as a whole.
Cas.

Ins.

Co.

v.

Henderson,

939

P.2d

1337,

1339

Ohio
(Ariz.

1997)(quoting Transamerica Ins. Group v. Meere, 694 P.2d 181,
185 (Ariz. 1984)).

In this case, plaintiffs have stepped into

the

judgment

shoes

of

the

debtor,

Chapman.

Superior Court, 422 P.2d 129, 131 (Ariz. 1966).

Carpenter

v.

Consequently,

they have the burden of proof where an insured would have the
burden of proof.
IV.
Chapman’s conduct does not constitute a “Wrongful Act”
under State Farm’s policy.
State

Farm’s

first

argument

to

quash

the

writ

of

garnishment is that State Farm is not legally obliged to pay
under

the

policy

because

the

damages

did

not

result

“Wrongful Act” as that term is defined in the policy.

from

a

The court

agrees.
The policy provides that State Farm shall pay those sums
for which Chapman and/or her company “become legally obligated
to pay as Damages . . . as a result of a Wrongful Act in
performing Insured Services for others.”
Act”

is

defined

omission.”2

as

including

“[a]

The term “Wrongful

negligent

act,

error

or

The question is whether Chapman’s conduct in this

case constitutes “a negligent act, error or omission.”

2

The term “Wrongful Act” is defined to include other types of conduct as
well. But, those types of conduct are not alleged in this case.

6

The

term

“negligent

act,

error

or

omission”

means

a

“negligent act, [a negligent] error or [a negligent] omission.”
This is how this court interpreted the phrase in Golf Course
Superintendents

Association

of

America

v.

Underwriters

Lloyd’s, London, 761 F.Supp. 1485, 1490 (D.Kan. 1991).

at
See

also, New Hampshire Ins. Co. v. Westlake Hardware, Inc., 11
F.Supp.2d 1298, 1301 (D.Kan. 1998) aff’d, 1999 WL 1066836 *3
(10th Cir. 11/26/1999).
The conduct ascribed to Chapman and her company in Judge
Robinson’s

order

does

not

constitute

negligence.

It

is

intentional and conscious wrongdoing or conscious avoidance of
knowledge of other defendants’ wrongdoing. Therefore, it is not
covered by the State Farm insurance policy.
Plaintiffs cite Continental Cas. Co. v. Reed, 306 F.Supp.
1072 (D.Minn. 1969) for a contrary construction of the phrase
“negligent act, error or omission.”

But, this court and the

Tenth Circuit declined to follow that case’s holding in Golf
Course Superintendents and Westlake Hardware.

We do not believe

the result would be different applying Arizona law.
Plaintiffs
Insurance

also
of

Co.

1990)(”PCS”).

cite
North

Phoenix

Control

America,

796

Systems,
P.2d

463

Inc.

v.

(Ariz.

In PCS, the insurance policy in question covered

only injury or damage which was “neither expected nor intended
by the insured.”

The court held that there was a factual issue
7

precluding

summary

infringement

were

judgment

as

intentional

to

whether

because

the

acts

of

copyright

insured

may

have

believed the materials in question were in the public domain.
The court referred to a “two-prong inquiry” under Arizona law to
determine an insured’s intent.

796 P.2d at 467.

Under this

two-pronged approach, the court must determine either that the
insured had a “subjective desire to cause harm” or that “the
nature and circumstances of the insured’s intentional act were
such that harm was substantially certain to result.”
467-8.

Id. at

The court stated that the question must be “whether the

insured

intentionally

acted

wrongfully

or

whether

his

intentional act unintentionally resulted in wrongful conduct.”
Id.

This analytical format was repeated in Henderson, 939 P.2d

at 1344.
The

pleadings

before

the

court

plaintiffs meeting their burden.

show

no

possibility

of

Judge Robinson found that “the

Kansas Defendants” violated the TSR by misrepresenting, directly
or indirectly, material aspects of the performance, efficacy,
nature, or central characteristics of the grant-related goods or
services they sold.”

Doc. No. 422, p. 16.

She further found

that “Chapman did not provide incidental services to the Kansas
Defendants”

and

that

“Chapman

both

provided

substantial

assistance and support, and knew or consciously avoided knowing
that

the

Kansas

Defendants

engaged
8

in

a

deceptive

act

or

practice under the TSR.”

Id. at p. 17.

These findings and the

others set forth earlier in this opinion do not allow for the
possibility

that

unintentionally

Chapman

assisted

in

acted
the

intentionally,

Kansas

Defendants’

but

wrongful

conduct.

Chapman “knew or consciously avoided knowing” of the

deceptive

acts

or

practices

that

violated

the

TSR.

These

findings distinguish this case from PCS.
Plaintiffs

further

assert

that

“State

Farm

appears

to

argue” that the definition of “Wrongful Act” does not include
any

knowing

acts

and

that

such

a

construction

would

render

superfluous the policy’s exclusion (in a separate provision) of
dishonest and fraudulent acts from coverage.
4.

Plaintiffs

concurrent

contend

meanings

to

that

the

these

two

court

Doc. No. 470, p.

should

provisions.

avoid

giving

The

court

disagrees with plaintiffs’ argument.
The plain meaning of each provision works to bar coverage
of knowingly wrongful acts.

Plaintiffs, in essence, are asking

the court to create a conflict between two provisions
would

have

provision

to

be

reconciled,

unreasonably

other provision.

and

emasculates

to

consider

coverage

whether

promised

in

which
one
the

The court declines to do so because we believe

our interpretation of the policy is a reasonable one which is
consistent with the plain and ordinary meaning of its terms.

9

Plaintiffs also argue that State Farm has waived its claim
that Chapman’s conduct was not covered by the policy by virtue
of

its

statements

plaintiffs’

claims

and

actions

against

in

Chapman.

providing

a

defense

Arizona

law

to

recognizes,

however, that an insurer may perform its contractual duty to
defend while reserving the right to assert a potential coverage
defense.

Parking

Concepts,

Inc.

v.

Tenney,

83

P.3d

19,

22

(Ariz. 2004); see also, United Services Auto. Ass’n v. Morris,
741 P.2d 246, 249 (Ariz. 1987).

We find no waiver by State

Farm.
V.
The judgment issued in this case qualifies as “Damages”
under the State Farm policy.
State Farm contends that the writ of garnishment should be
quashed

because

the

judgment

issued

in

this

case

does

not

qualify as “damages” under the terms of the insurance policy.
We reject this argument.
“Damages” is defined in the policy as follows:
“Damages” means money judgment, award or settlement,
except those for which insurance is prohibited by law.
Damages does not include fines or penalties; or fee,
deposits,
commissions
or
charges
for
goods
or
services.
The

court

finds

that

the

money

judgment

ordered

by

Judge

Robinson reasonably falls within this broad definition.

While

State Farm asserts correctly that the term “damages” is not
stated

in

monetary

the
award

judgment,
as

Judge

“damages”

in
10

Robinson
her

does

findings

refer
of

to

the

fact

and

conclusions of law (Doc. No. 422, p. 23), as well as in her
order

denying

defendant

Chapman’s

motion

to

alter

and

amend

(Doc. No. 443, p. 1).
It may be contended that state law would prohibit insurance
coverage for a judgment depriving Chapman of “ill-gotten gains.”
See, e.g., Level 3 Communications, Inc. v. Federal Ins. Co., 272
F.3d

908,

910

(7th

Cir.

2001)(employing

this

concept

as

an

“interpretative principle” for construing a policy, not as an
issue of enforceability).

But, while Arizona courts consider

public policy in construing insurance policy provisions, they do
not always hold that damages awarded as restitutionary relief
are prohibited by public policy.

See Cohen v. Lovitt & Touche,

Inc., 2013 WL 4779630 *3-4 (Ariz.App. 9/6/2013)(public policy
does

not

payments);
Casualty

prohibit

insurance

but

Alanco

Ins.

see

Co.,

coverage

Technologies,

2006

WL

for

restitutionary

Inc.

1371633

v.
*4

Carolina
(D.Ariz.

5/17/2006)(finding that rescissory damages are uninsurable under
the law in reliance upon Level 3 and other cases).
As this is an area of some ambiguity, for the purposes of
this order the court shall construe “damages” more broadly than
argued by State Farm.
VI. Coverage is excluded by the “regulatory authority” exclusion
in the State Farm policy.
State Farm’s next argument is that coverage is excluded by
a

Management

Consultant

Endorsement
11

contained

in

the

policy

which provides that State Farm is “not obligated to pay Damages
. . . . or defend Claims made by:

e.

Any regulatory authority

or any administrative actions brought by any federal, state or
local governmental entity.”

The court finds that the exclusion

does apply.
This

case

involved

allegations

by

the

FTC

and

State

Attorneys General that Chapman violated an FTC regulation, the
TSR, 16 C.F.R. Part 310.

Doc. No. 422, pp. 14-15.

Thus, the

FTC is a regulatory authority which made a claim which required
Chapman to pay damages.

Because the State Attorneys General are

empowered to enforce the TSR through this litigation, they also
constitute

a

regulatory

authority.

A

common

definition

“authority” is the power or right to enforce obedience.

of

Oxford

Legal Dictionary, www.oed.com.
We reject plaintiffs’ arguments against the application of
this

exclusion

from

coverage.

Contrary

to

plaintiffs’

contention, we believe our construction of the relevant language
follows

its

“regulatory

plain

meaning.

authority”

Plaintiffs

clauses

are

suggest

enforced

that

only

such

when

the

clauses specifically identify the agencies to which they apply.
The court does not find case law for this proposition.
Plaintiffs
unambiguous,

further

should

not

contend
be

that

enforced

expectations” doctrine of Arizona law.
12

the

exclusion,

under

the

even

if

“reasonable

Under the “reasonable

expectations” doctrine, “a contract term is not enforced if one
party

has

reason

to

believe

that

the

other

would

not

assented to the contract if it had known of that term.”

have
First

American Title Ins. Co. v. Action Acquisitions, LLC, 187 P.3d
1107,

1113

(Ariz.

2008).

We

do

not

believe

that

doctrine

expectations

doctrine

applies here.
“A
when

a

policy

court

may

apply

reasonably
language;

the

reasonable

intelligent
when

an

consumer

insured

cannot

does

not

understand

receive

full

the
and

adequate notice and the provision is unusual, unexpected, or
emasculates

apparent

coverage;

when

some

activity

reasonably

attributable to the insurer would create an objective impression
of coverage in the mind of a reasonable insured; or when some
activity reasonably attributable to the insurer has induced an
insured to reasonably believe that coverage exists, although the
policy clearly denies such coverage.”

American Family Mut. Ins.

Co. v. White, 65 P.3d 449, 455 (Ariz.App. 2003); see also Darner
Motor Sales, Inc. v. Universal Underwriters Ins. Co., 682 P.2d
388, 399 (Ariz. 1984)(rule applies to contracts “made up of
standardized

forms

which,

because

of

the

nature

of

the

enterprise, customers will not be expected to read and over
which they have no real power of negotiation”).
Plaintiffs

proffer

little

evidence

regarding

reasonable expectations as to the insurance policy.
13

Chapman’s
Plaintiffs

argue,

however,

“regulatory

that

the

authority”

doctrine

exclusion

should

was

not

apply

because

negotiated;

was

the
not

placed prominently within the policy; is vaguely phrased; has
the potential to dramatically subtract from coverage; and was
not referred to in State Farm’s first two reservation of rights
letters

(although

it

was

referred

to

in

a

“supplemental

reservation of rights” letter dated April 19, 2012).
The

court

finds

that

the

language

of

the

“regulatory

authority” exclusion is sufficiently clear and obvious to an
insured that it should not be considered contrary to reasonable
expectations.

The exclusion is not hidden within boilerplate

language in the policy.

No evidence has been proffered of any

understanding between Chapman and State Farm which was part of
the negotiations, but is adverse to the policy language.

Nor do

we believe that case law supports a finding that State Farm’s
failure to raise the exclusion in some reservation of rights
letters or other litigation proves that the exclusion language
contradicts
Therefore,

the
the

reasonable
court

finds

expectations
that

the

of

the

“regulatory

insured.
authority”

exclusion prevents coverage.3
VII.
Coverage is also excluded by the clause barring coverage
of claims alleging “Gain, Profit or Advantage to which the
Insured is not Legally Entitled.”
3

We do not reach State Farm’s claim that plaintiffs are estopped from arguing
against the “regulatory authority” exclusion by virtue of their contention
before the Tenth Circuit that, pursuant to 11 U.S.C. § 362(b)(4), an
automatic bankruptcy stay did not apply to this matter because this action
was brought to enforce governmental police and regulatory power.

14

State Farm contends that coverage is also excluded by the
policy provision which states:

“We are not obligated to pay

Damages or Defense Costs or defend Claims for, arising directly
or indirectly out of, or alleging: . . . e.

Gain, profit or

advantage to which any of You are not legally entitled.”
Farm

contends

that

the

judgment

rendered

against

State
Chapman

represented the recovery of funds to which she was not legally
entitled

because

“consumer

Judge

amount

of

Chapman

pay

as

received while substantially assisting the TSR violation.

The

that

entire

that

she

finds

the

ordered

compensation

court

redress”

Robinson

Judge

Robinson’s

award

of

damages

arose

“directly or indirectly” from “gain, profit or advantage” to
which Chapman was not legally entitled, because it derived from
her

substantial

violation.

assistance

and

facilitation

of

the

TSR

The cases cited by plaintiffs in opposition to this

finding are not persuasive.
Plaintiffs cite Alstrin v. St. Paul Mercury Ins. Co., 179
F.Supp.2d 376 (D.Del. 2002).

In Alstrin, the court held that

exclusion language barring claims “arising out of, based upon or
attributable to the gaining in fact of any profit or advantage
to which an insured was not legally entitled” did not exclude
federal

securities

law

claims.

The

court

noted

that

the

complaints in question did not allege the acquisition of any
profit or advantage to which the insured were not entitled.
15

In

addition, the court noted that applying the exclusion to the
securities law claims would render valueless the broad coverage
for securities law claims promised elsewhere in the policy.

In

contrast, in the case at bar, plaintiffs did make a claim in the
complaint for restitution and disgorgement of ill-gotten gains.
In addition, there is no specifically identified coverage in the
insurance
court’s

policy

in

this

interpretation

exclusion.

case

of

Therefore,

which

the

we

is

“gain,

find

the

emasculated

profit
Alstrin

or

by

the

advantage”

case

to

be

Ins.

Co.

v.

distinguishable.
Plaintiffs

also

cite

National

Union

Fire

Continental Ill. Corp., 666 F.Supp. 1180 (N.D.Ill. 1987)(“CIC”).
In CIC, with one exception, the underlying litigation made no
claims of personal profiteering.
that

a

claim

that

bonus

The insurance company asserted

incentives

were

used

to

encourage

lending officers to take greater lending risks constituted a
claim of personal profiteering, but the court disagreed.

The

court determined that the officers were legally entitled to the
bonus incentives.

Thus, in contrast to the case at bar, the

alleged illegal profiteering in CIC was not illegal or connected
to the underlying litigation.

Here, Chapman profited from her

illegal substantial assistance of the TSR violation, and this
illegal profiteering was directly connected to the underlying
litigation.
16

Finally, plaintiffs cite Research Corp. v. Westport Ins.
Corp., 289 Fed.Appx. 989 (9th Cir. 2008).

In this case the court

found that an insurance company had a duty to defend because the
exclusion

clause

did

not

apply

to

all

the

claims

in

the

underlying litigation, some which did not require a showing of
unjust enrichment or illegal profit.

Again, the court finds

this case distinguishable because Judge Robinson made a finding
in the case at bar that the damages awarded constituted revenue
collected by Chapman in the course of illegally assisting and
facilitating the violation of the TSR.
The court finds that the damages awarded by Judge Robinson
arise from claims alleging gain, profit or advantage to which
Chapman was not legally entitled.

Therefore, they are excluded

from coverage by the State Farm policy.
VIII.
Coverage is also excluded by a clause providing that
State Farm is not obligated to pay damages for acts which are
dishonest, fraudulent, or intentionally committed while knowing
it was wrongful.
State Farm contends that the writ of garnishment should be
quashed

because

the

policy

states

that

State

Farm

is

not

obligated to pay damages for “An act or omission that a . . .
court . . . finds dishonest, fraudulent, criminal, malicious or
was intentionally committed while knowing it was wrongful.”

We

accept this argument for reasons which are consistent with our
previous

finding

that

Chapman’s
17

conduct,

because

it

was

intentionally wrongful, does not fall within the definition of a
“Wrongful Act.”
TSR,

which

Judge Robinson found that Chapman violated the

prohibits

anyone

from

providing

“substantial

assistance or support to any seller or telemarketer when that
person knows or consciously avoids knowing that the seller or
telemarketer is engaged in any act or practice that violates”
regulations
conduct.

prohibiting
Thus,

damages

for

knowing

they

a

actions
were

deceptive

court

has

which

or

found

were

wrongful.

abusive

that

Chapman

intentionally
This

telemarketing

finding

should

committed
satisfies

pay

while
the

exclusion claimed by State Farm.4
IX.

Other arguments
State Farm also argues that finding coverage here would be

contrary to Arizona public policy and that some of Chapman’s
actions are not covered because they preceded the effective date
of the insurance policy.

Given the court’s holdings as to State

Farm’s other arguments, we do not believe it is necessary to
decide these issues.

4

State Farm has argued further that plaintiffs are estopped from arguing
against this exclusion by plaintiffs’ contention before the Bankruptcy Court
that the judgment against Chapman may be nondischargeable, pursuant to 11
U.S.C. § 523(a)(2)(A), because the debt was for money obtained by “false
pretenses, a false representation, or actual fraud . . .” We do not decide
this argument.

18

X.

Conclusion
For the above-stated reasons, the court shall grant State

Farm’s motion to quash the writ of garnishment.

Doc. No. 469.

The motion for hearing (Doc. No. 459) shall be denied.
IT IS SO ORDERED.
Dated this 20th day of September, 2013, at Topeka, Kansas.

s/Richard D. Rogers
United States District Judge

19