Richards v. Great Western Insurance Company et al

Filing 211

MEMORANDUM OPINION AND ORDER adopting Magistrate Judge's 190 Report and Recommendation. (1) The Federal Defendants' Motion to Dismiss 29 is granted. (2) Richards' Motion for Sanctions and for a Protective Order (Under Fed. R. Civ. P. 5(e)) 76 is denied. (3) This matter, including but not limited to the remaining pending motions of Richards 115 182 , Gill Brothers Funeral Chapels, Inc. 23 , Great Western Insurance Company [1 7], David J. Benke, the State of Minnesota, Michael J. Rothman, and Thomas Roy [. 95] is remanded to the State of Minnesota District Court, Second Judicial District, County of Ramsey.(Written Opinion). Signed by Judge John R. Tunheim on March 5, 2012. (DML) (cc: Leonard J. Richards) Modified on 3/5/2012 (akl).

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
LEONARD J. RICHARDS,

Civil No. 11-00965 (JRT/TNL)
Plaintiff,

v.
GREAT WESTERN INSURANCE
COMPANY, a foreign corporation doing
business in Minnesota; GILL BROTHERS
FUNERAL CHAPELS, INC., a Minnesota
Chapter 302A business corporation;
FEDERAL TRADE COMMISSION;
PATRICK DONAHOE, U.S. Postmaster
General; STATE OF MINNESOTA, by
Lori R. Swanson, its Attorney General;
DAVID J. BENKE, Supervisor, Minnesota
Department of Health;
MICHAEL J. ROTHMAN, Commissioner,
Minnesota Department of Commerce;
THOMAS ROY, Commissioner,
Minnesota Department of Corrections; and
all person acting in concert with any of the
defendants or on their behalf;

MEMORANDUM OPINION AND
ORDER ADOPTING THE REPORT
AND RECOMMENDATION OF THE
MAGISTRATE JUDGE

Defendants.

Leonard J. Richards, #149837, Minnesota Corectional Facility-Faribault,
1101 Linden Lane, Faribault, MN 55021, plaintiff pro se.
Michael P. Eldridge and Timothy J. Nolan, MCGRANN SHEA
CARNIVAL STRAUGHN & LAMB, CHARTERED, 800 Nicollet
Mall, Suite 2600, Minneapolis, MN 55402, for defendant Great Western
Insurance Co.
Tamara O’Neill Moreland & Julie N. Nagorski, LARKIN HOFFMAN
DALY & LINDGREN LTD, 7900 Xerxes Avenue South, Suite 1500,
Minneapolis, MN 55431, for defendant Gill Brothers Funeral Chapels, Inc.

24/SR

Ana H. Voss, Assistant United States Attorney, UNITED STATES
ATTORNEY’S OFFICE, 600 United States Courthouse, 300 South
Fourth Street, Minneapolis, MN 55415, for defendants Federal Trade
Commission and Patrick Donahoe.
Jocelyn F. Olson, Assistant Attorney General, MINNESOTA
ATTORNEY GENERAL’S OFFICE, 445 Minnesota Street, Suite 900,
Saint Paul, MN 55101, for defendants State of Minnesota, David J. Benke,
Michael J. Rothman, and Thomas Roy.

Plaintiff, Leonard J. Richards, filed this action against Defendants Great Western
Insurance Company (“Great Western”); Gill Brothers Funeral Chapels, Inc. (“Gill
Brothers”); the Federal Trade Commission (“FTC”); Patrick Donahoe, United States
Postmaster General (the FTC and Donahoe are, collectively, “Federal Defendants”); the
State of Minnesota; David J. Benke, Supervisor of the Minnesota Department of Health;
Michael J. Rothman, Commissioner of the Minnesota Department of Commerce; and
Thomas Roy, Commissioner of the Minnesota Department of Corrections (the State of
Minnesota, Benke, Rothman, and Roy are, collectively, “State Defendants”). Richards
seeks declaratory and other relief from injuries he asserts are the result of mishandling of
his irrevocable funeral trust. Great Western, Gill Brothers, and the Federal Defendants
each filed a motion to dismiss. (Docket Nos. 17, 23, and 29, respectively.) Richards
objected to material filed in Gill Brothers’ materials supporting their motion to dismiss
and filed a Motion for Sanctions and a Motion for a Protective Order (Under Fed. R. Civ.
P. 5.2(a), (e)). (Docket No. 76.) Richards also filed a motion to Strike Great Western’s
Reply [Memorandum in Support of its Motion to Dismiss] and Supporting Affidavit.
(Docket No. 115.) On January 13, 2012, United States Magistrate Judge Tony N. Leung
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issued a Report and Recommendation (“R&R”) recommending that the Court grant the
Federal Defendants’ motion to dismiss, remand Great Western and Gill Brothers’
motions to dismiss, and deny Richards’ motions. Great Western, Gill Brothers, and
Richards all made timely objections to the R&R.1 Having conducted a de novo review of
those portions of the R&R to which the parties object, see 28 U.S.C. § 636(b)(1)(C),
D. Minn. L.R. 72.2(b), and having carefully reviewed the submitted materials, the Court
overrules the parties’ objections and adopts the R&R in its entirety.

BACKGROUND
Richards’ half-sister established a preneed irrevocable funeral trust (“Trust”) for
Richards in 1999. (Compl. ¶ 28, Docket No. 1.) Minnesota Statute § 149A.97 permits a
funeral home to accept funds in prepayment of funeral services. The funds are to be held
in trust or used to purchase an insurance policy. Minn. Stat. §§ 149A.02, subd. 33a;
149A.97. The original trustee was Washburn-McReavy Funeral Chapels, Inc. (Compl.
¶ 29), which deposited the trust’s funds into an account at Associated Bank, N.A. (Id.
¶ 31).2 In July 2010, Richards removed Washburn-McReavy Funeral Chapels, Inc. as
trustee, in favor of Gill Brothers. (Id. ¶ 33.) Gill Brothers submitted a life insurance
application to Great Western on Richards’ behalf. (See id. ¶¶ 18-19.) Great Western

1

The Court has read and carefully considered all of Richards’ filings objecting to the
R&R, including his Initial Objection to the R&R (Docket No. 196), his responses to Gill
Brothers’ and Great Western’s objections (Docket Nos. 203, 204), and his additional Statement
and Declaration (Docket Nos. 206, 207).
2

Neither Washburn-McReavy Funeral Chapels, Inc. nor Associated Bank is a party to
this litigation.
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refused to insure Richards because he is incarcerated.3 (Id. ¶ 21.) Gill Brothers returned
the trust funds to Richards. (Id. ¶ 49.) Because Richards is incarcerated, when Gill
Brothers sent the funds to Richards, the Minnesota Department of Corrections imposed a
ten-percent surcharge of $90.48 on the funds.4 See Minn. Stat. § 243.23, subd. 3; Weber
v. Hvass, 626 N.W.2d 426, 436 (Minn. Ct. App. 2001) (upholding a ten-percent cost-ofconfinement surcharge on non-exempt, non-wage funds).
Richards asserts that Gill Brothers was obligated to present Richards with an
alternative method of forming a preneed irrevocable funeral trust and their failure to do
so violated the federal “Funeral Rule,” 16 C.F.R. §§ 453.1 et seq.5 (Compl. ¶ 46.)

3

Richards is serving consecutive life terms. See Minnesota v. Richards, 552 N.W.2d 197
(Minn. 1996); Minnesota v. Richards, 495 N.W.2d 197 (Minn. 1992); In re Application of
Richards, No. CX-97-1259, 1998 WL 2427, at *1 (Minn. Ct. App. 1998). Richards asserts in his
objections to the R&R that mention of this history is indicative of a “biased view of Plaintiff.”
(Initial Obj. of Pl. to R&R at 2, Docket No. 196.) On the contrary, Richards’ history is relevant
to this case, and, indeed, was noted by him in his Complaint. (See Compl. ¶ 54.)
4

Richards asserts that Gill Brothers “bungled its nefarious placating donation” by
returning the money to him via the Department of Corrections. (See Compl. ¶ 49.) Gill Brothers
asserts that it returned “to Richards, pursuant to his instructions, Richards’ un-cashed check[.]”
(Gill Brothers’ Mem. in Supp. of Mot. to Dismiss at 1, Docket No. 25.)
5

The FTC promulgated the “Funeral Rule” in September 1992. Funeral Consumer
Alliance, Inc. v. Fed. Trade Comm’n, 481 F.3d 860, 861 (D.C. Cir. 2007). The Rule “prohibits
funeral providers from making misrepresentations about legal requirements, and it requires that
providers make certain disclosures and give customers an itemized price list. See 16 C.F.R.
§§ 453.1-453.9.” Id.
Federal courts that have considered the issue have uniformly found no private cause of
action under the Funeral Rule. SCI Tex. Funeral Servs., Inc. v. Hijar, 214 S.W.3d 148, 154 (Tex
Ct. App. 2007). Moreover, Richards admits that he is not asserting a claim against Gill Brothers
for violation of the Funeral Rule. (Pl.’s Response to Gill Brothers’ Objection to the R&R at 2,
Docket No. 204.) Consequently, the Court finds that Richards has not pled violation of the
Funeral Rule as a cause of action.
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Richards asserts claims against Gill Brothers for breach of its fiduciary obligations,
negligence, conversion, and tortious conduct. (See id. ¶¶ 41-51.)
Richards argues that by denying him coverage, Great Western acted negligently
and violated the Minnesota Human Rights Act, Minn. Stat. §§ 363A.01 et seq., and Minn.
Stat. § 145C.05 (noting the provisions that may be included in a health care directive).6
(Compl. ¶ 23.) Richards claims that both Great Western and Gill Brothers violated Minn.
Stat. §149A.97, subd. 5 (describing a funeral provider’s obligations regarding trust
funds). (Id. ¶¶ 35-36.)
In an attempt to resolve his dispute with Gill Brothers and Great Western,
Richards consulted a booklet published by the FTC entitled Funerals: A Consumer
Guide. (Id. ¶¶ 54-55.) On November 16, 2010, Richards sent a certified letter7 through
the United States Post Office to the address provided in Funerals: A Consumer Guide for
the Funeral Service Consumer Assistance Program. (Id. & Ex. E.) Richards alleges that
the address was incorrect and so his letter was not delivered. (Id. ¶ 55.) Richards asserts
claims against the FTC for tortious conduct and claims against Donahoe, in his capacity
as Postmaster General, for breach of contract.

6

In his objections to the R&R, Richards also asserts that Great Western, Gill Brothers
and the State Defendants violated the Religious Land Use and Institutionalized Persons Act of
2000, 42 U.S.C. §§ 2000cc-1. Richards did not raise these allegations in his Complaint.
Richards has not asked the Court’s permission to amend his Complaint nor have the other parties
given their written consent. See Fed. R. Civ. P. 15(a). Consequently, the Court will not consider
this claim. Id.
7

Richards was charged $6.15 in postage and fees to mail the letter. (Compl. ¶ 58.) In his
objection to the R&R, Richards suggests he mailed multiple letters by certified mail. (See Initial
Obj. of Pl. to R&R at 21 n.14.) The number of letters sent is irrelevant. (See Part I.C, infra.)
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Richards also brings a variety of claims against the State Defendants.

(See

generally id. ¶¶ 60-69.) Richards seeks an order compelling Rothman, Commissioner of
the Minnesota Department of Commerce, to respond to a letter.

Richards seeks

injunctive relief against Benke and Roy and asks that the Court order an investigation of
Gill Brothers’ conduct. Richards also asks the Court to order the State Defendants to
implement the mortuary provisions of his health care directive. Finally, Richards seeks
declaratory relief against all Defendants, in effect asking for a directed verdict, injunctive
relief, punitive damages, and costs. (Id. ¶ 70.)
Procedural History
This case originated in Ramsey County District Court, and the Federal Defendants
removed it to this Court. (Notice of Removal, Docket No. 1) Instead of responding to
Richards’ Complaint, Great Western, Gill Brothers, and the Federal Defendants filed
motions to dismiss. Great Western and Gill Brothers both bring Rule 12(b)(6) motions to
dismiss, asserting that Richards’ Complaint failed to state a claim upon which relief may
be granted. (Docket Nos. 17, 23.) The Federal Defendants bring a Rule 12(b)(1) motion
to dismiss, asserting that this Court lacks subject matter jurisdiction over Richards’
claims against them. The Magistrate Judge recommended that Great Western and Gill
Brothers’ motions be remanded to the state court for resolution 8 and that the Federal
Defendants’ motion be granted. Richards objects to each of these recommendations,

8

The Magistrate Judge recommended, in the alternative, that the matter be remanded and
such motions be denied without prejudice to permit refilling in state court.

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asserting that this Court has jurisdiction over all of his claims. Great Western and Gill
Brothers object that their motions should be dismissed in full, not remanded.
In support of its motion to dismiss, Gill Brothers submitted supporting material
that contained Richards’ personal data identifiers. (See Docket No. 26.) Richards moved
for sanctions and a protective order. (Docket No. 76.) The Magistrate Judge ordered the
relevant documents to be placed under seal and ordered Gill Brothers to refile the
materials with the personal data identifiers redacted. (Docket No. 91.) The Magistrate
Judge further recommended that Richards’ motions be denied. Richards objects to this
recommendation, asserting that he is entitled to compensation.
Richards also moved to strike Great Western’s reply to his motion to dismiss
(Docket No. 92) asserting that it was untimely submitted and that “Great Western did not
mail its reply papers to Plaintiff.”

(Docket No. 115.)

The Magistrate Judge

recommended that this motion be remanded to the state court for resolution.9
Finally, the State Defendants move the Court for judgment on the pleadings, or, in
the alternative, for summary judgment.

(Docket No. 95.)

The Magistrate Judge

recommended that this motion be remanded to the state court for resolution.10 The State
Defendants did not file an objection to the R&R. Richards appears to object to this
portion of the recommendation only to the extent he asserts this Court has jurisdiction
over all of the claims.
9

The Magistrate Judge recommended, in the alternative, that the matter be remanded and
such motions be denied without prejudice to permit refilling in state court.
10

The Magistrate Judge recommended, in the alternative, that the matter be remanded
and such motions be denied without prejudice to permit refilling in state court.
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ANALYSIS
I.

FEDERAL DEFENDANTS’ MOTION TO DISMISS
A.

Standard of Review

The Court may dismiss a complaint for lack of subject matter jurisdiction under
Federal Rule of Civil Procedure 12(b)(1).

“Dismissal for lack of subject matter

jurisdiction will not be granted lightly. Dismissal is proper, however, when a facial
attack11 on a complaint’s alleged basis for subject matter jurisdiction shows there is no
basis for jurisdiction.” Wheeler v. St. Louis Sw. Ry., 90 F.3d 327, 329 (8th Cir. 1996)
(citation omitted). It is the burden of the party asserting jurisdiction to prove by a
preponderance of the evidence that jurisdiction exists. V S Ltd. P’ship v. Dep’t of Hous.
and Urban Dev., 235 F.3d 1109, 1112 (8th Cir. 2000). If the Court finds that jurisdiction
is not present, it must dismiss the matter. Fed. R. Civ. P. 12(h)(3); Ruhrgas AG v.
Marathon Oil Co., 526 U.S. 574, 583 (1999).
The Court has subject-matter jurisdiction over a claim against the United States
only if the United States has waived its sovereign immunity. United States v. Orleans,
425 U.S. 807, 814 (1976). The United States has waived immunity for some actions in
tort, under the Federal Tort Claims Act (“FTCA”). 28 U.S.C. § 2674. The FTCA
expressly excludes certain actions from this waiver, 28 U.S.C. § 2680; and prior to
asserting a tort claim against the United States, a claimant must exhaust his

11

The Magistrate Judge determined that the Federal Defendants’ jurisdictional challenge
should be treated as a facial attack. (R&R at 9-10.) No party has contested this determination
and so the Court adopts the reasoning of the Magistrate Judge.
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administrative remedies within the appropriate federal agency, 28 U.S.C. § 2675(a).
Courts “should not take it upon [them]selves to extend the waiver beyond that which
Congress intended.” United States v. Kubrick, 444 U.S. 111, 117-18 (1979).

B.

Tort Claims

Richards asserts that the FTC engaged in tortious conduct by publishing a booklet
that “contained false information [the address of the Funeral Service Consumer
Assistance Program], which Plaintiff in good faith relied on to his detriment.” (Compl.
¶¶ 55-56.) Richards’ claim is barred, however, by the sovereign immunity doctrine. As
28 U.S.C. § 2680(h) makes clear, in the FTCA the United States explicitly did not waive
immunity from “any claim arising out of . . . misrepresentation[.]” Because Richards’
claims against the FTC rest on an alleged misrepresentation, the Court must dismiss them
for lack of subject matter jurisdiction.
Similarly, to the extent that Richards asserts a claim against Donahoe or the
United States Post Office for negligent handling of his certified letter, that claim is also
barred. See 28 U.S.C. § 2680(b) (“[No waiver for a]ny claim arising out of the loss,
miscarriage, or negligent transmission of letters or postal matter.”).

C.

Contract Claims

Richards also raises a breach of contract claim against Donahoe, in his capacity as
United States Postmaster General. Richards’ claim, although it may “echo [in] contract,”
is essentially a dispute over postal services. LeMay v. U.S. Postal Servs., 450 F.3d 797,
801 (8th Cir. 2006).

Moreover, 39 U.S.C. § 3662 gives exclusive jurisdiction over
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disputes involving postal services to the Postal Rate Commission. LeMay, 450 F.3d at
800. Richards cannot avoid the Postal Rate Commission’s jurisdiction through “artful
pleading.” See id. at 801. The Court will dismiss Richards’ claims against the United
States Post Office for lack of subject matter jurisdiction.

D.

Other Claims Against Federal Defendants

Richards also asserts that he is entitled to declaratory relief because Defendants
did not contest his claims. Richards, however, asserts no additional claims in his request
for declaratory relief. Because the Court has already determined that it has no subject
matter jurisdiction over Richards’ claims against the Federal Defendants, the Court lacks
subject matter jurisdiction to resolve this claim. Finding that it lacks subject matter
jurisdiction over any claim asserted against the Federal Defendants, the Court will grant
the Federal Defendants’ motion to dismiss.

II.

JURISDICTION OVER REMAINING CLAIMS
This action was removed to this Court pursuant to 28 U.S.C. § 1442(a) (allowing

defendant federal officers and agencies to remove an action from state court to the federal
district court in which the action is pending). Following removal, this Court arguably
possessed supplemental jurisdiction over Richards’ state-law claims.

See 28 U.S.C.

§ 1367(a). With the dismissal of all the claims against the Federal Defendants, the
original basis for this Court’s jurisdiction no longer exists. The Magistrate Judge found
that there are no federal questions and the parties lack complete diversity and
recommended the case be dismissed. Richards objects, asserting that this Court still has
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federal-question jurisdiction. Great Western objects, asserting that this court still has
diversity jurisdiction. Gill Brothers objects, asserting that this Court should exercise its
discretion and dismiss its entire claim.

A.

Standard of Review

“It is a fundamental precept that federal courts are courts of limited jurisdiction,”
whose power extends only to those controversies that satisfy certain constitutional and
statutory requirements. Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 371-72,
374 (1978). The Court is “required to resolve all doubts about federal jurisdiction in
favor of remand.” In re Bus. Men’s Assurance Co. of Am., 992 F.2d 181, 183 (8th Cir.
1993). However, “[a] district court has no discretion to remand a claim that states a
federal question.” Gaming Corp. of Am. v. Dorsey & Whitney, 88 F.3d 536, 542 (8th Cir.
1996). The party opposing remand has the burden of establishing federal subject matter
jurisdiction. In re Bus. Men’s Assurance Co. of Am., 992 F.2d at 183.

B.

Richards’ Objections

Richards objects that the Magistrate Judge failed to consider Defendants’ blocking
of his health care directive rights – rights, he asserts, which are protected by the Religious
Land Use and Institutionalized Person Act of 2000 (“RLUIPA”). 42 U.S.C. §§ 2000cc-1
et seq. Richards further asserts that “[f]ederal courts have original jurisdiction over
RLUIPA cases.” (Initial Obj. of Pl. to R&R at 16, Docket No. 196.)
First, Richards did not directly bring a violation of his rights under RLUIPA in his
Complaint. (See Compl.) Richards has not asked the Court’s permission to amend his
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Complaint nor have the other parties given their written consent. See Fed. R. Civ. P.
15(a). Consequently, the Court will not consider Richards’ assertions that he has a cause
of action under RLUIPA. See id.
Richards’ argument is that his claims of violations of his “health care directive
rights” implicate RLUIPA. (Initial Obj. of Pl. to R&R at 12 (citing Compl. ¶¶ 36-37, 50,
68).) But Richards cites to no authority to support this assertion. Nor has Richards cited
to any authority that a health care directive creates an enforceable right under RLUIPA.
The Court finds that Richards, as the party opposing remand, has not met his burden of
demonstrating that this Court has federal question jurisdiction.

C.

Great Western and Gill Brothers’ Objections

Great Western asserts that this Court should exercise diversity jurisdiction over its
claims. In order to exercise diversity jurisdiction, the matter in controversy must exceed
$75,000 and must be between citizens of different states. 28 U.S.C. § 1332(a). Section
1332 requires “complete diversity between all plaintiffs and all defendants.” Lincoln
Prop. Co. v. Roche, 546 U.S. 81, 89 (2005) (emphasis added). Richards and all of the
remaining defendants except Great Western are citizens of the state of Minnesota.
Consequently, complete diversity does not exist, and that means that this Court does not
possess diversity jurisdiction.12

12

Both Richards and Great Western assert in their objections that the amount in
controversy could exceed $75,000. The Court will not address these assertions because,
regardless of the amount in controversy, it cannot exercise diversity jurisdiction.
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Gill Brothers asserts that the Court’s determination that there is no private right of
action under the Funeral Rule is a “ruling on a portion of Gill Brothers’ motion to
dismiss” and it requests that the Court rule on its motion to dismiss in its entirety, also
ruling on Richards’ claim under Minn. Stat. § 149A.97. Gill Brothers offers no argument
that Richards’ claim under Minn. Stat. § 149A.97 is “so related to claims in the action”
within the jurisdiction of this court as to “form part of the same case or controversy.” See
28 U.S.C. § 1367(a). Indeed, ruling on Richards’ remaining claim would require this
Court to determine issues of state law. The Court concludes that Gill Brothers has not
met its burden of establishing federal subject matter jurisdiction, and the Court will
remand this matter to the more appropriate, state-court forum.
In the alternative, both Gill Brothers and Great Western request that the Court
remand their pending motions to the state court, rather than dismiss the matter without
prejudice so that Richards may refile his motions in state court. In the interests of
judicial efficiency, the Court will adopt the Magistrate Judge’s recommendation and will
remand the pending motions to state court, and suggest that the state court, which does
have jurisdiction, consider and decide the motions.

ORDER
Based on the foregoing, and all the files, records, and proceedings herein, the
Court OVERRULES the objections of Richards [Docket Nos. 196 and 207], Gill
Brothers Funeral Chapels, Inc. [Docket No. 193], and Great Western Insurance Company
[Docket No. 195], and ADOPTS the Report and Recommendation of the Magistrate

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Judge dated January 13, 2012 [Docket No. 190]. Accordingly, IT IS HEREBY
ORDERED that:
1.

The Federal Defendants’ Motion to Dismiss [Docket No. 29] is

GRANTED.
2.

Richards’ Motion for Sanctions and for a Protective Order (Under Fed. R.

Civ. P. 5(e)) [Docket No. 76] is DENIED.
3.

This matter, including but not limited to the remaining pending motions of

Richards [Docket Nos. 115, 182], Gill Brothers Funeral Chapels, Inc. [Docket No. 23],
Great Western Insurance Company [Docket No. 17], David J. Benke, the State of
Minnesota, Michael J. Rothman, and Thomas Roy [Docket No. 95] is REMANDED to
the State of Minnesota District Court, Second Judicial District, County of Ramsey.

LET JUDGMENT BE ENTERED ACCORDINGLY.
DATED: March 5, 2012
at Minneapolis, Minnesota.

____s/
____
JOHN R. TUNHEIM
United States District Judge

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