McKenzie v. Farmers Insurance Exchange

Filing 29

ORDER re 23 MOTION to Dismiss for lack of jurisdiction. Signed by U.S. District Judge Lawrence L. Piersol on 5/24/2017. (Attachments: # 1 Exhibit A - CIV 96-4238 Daniel Athey v. Farmers Insurance Exchange; Illinios Farmers Insurance Company)(JLS)

FILED
UNITED STATES DISTRICT COURT

DISTRICT OF SOUTH DAKOTA

MAY 2 5 2017

SOUTHERN DIVISION

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JULIE McKENZIE,

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CIV 17-4011

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Plaintiffs,

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vs.

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ORDER

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FARMERS INSURANCE EXCHANGE,

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Defendant.

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Defendant Farmers Insurance Exchange filed its Motion to Set Aside Default Judgment and
Motion to Dismiss. The Court notes that the heading of the case for the Motion is in the Westem
Division,butthe case is actually pending in the Southern Division. Despite that heading,the Motion
and supporting papers are considered by the Court to be properly filed.

Plaintiff may have thirty (30) days within which to respond to the Motion. The Court
requests that only the Motion to Dismiss for lack ofjurisdiction be addressed at this time. The
reason is that ifthere is no jurisdiction then the Court has no reason to determine whether or not to
set aside the Default Judgment.

In considering Plaintiffs Response and Defendant's Reply, the Court makes some
observations along with those to be raised by counsel. To begin with, the Court is concerned with
those instances in which Farmers Insurance Exchange has taken the contrary position as set forth in

footnote 3 ofStaggs v. Farmers Ins. Exch,2016 U.S. Dist. LEXIS 57791 (Dist. of Ore. 20116)as
attached to Defendant's moving papers. In a previous insurance bad faith case in this Court,Daniel
Athey v. Farmers Insurance Exchange; Elinois Farmers Insurance Company, CIV 96-4238, the

jurisdiction issue was apparently not raised and judgment from the jury verdict was satisfied by
payment of $728,637.44. See Exhibit A attached.

If as Defendant urges, an insurance exchange is a resident of any state in which it has a
member pollcyholder, then there is no federal diversity jurisdiction in any state for its resident
policyholders. That means that policyholders ofthe insurance exchange are assured that there is no
federal courtjurisdiction for any claim against their own insurer. Since Farmers Insurance Exchange

apparently operates in all fifty(50)states, they would be free offederal jurisdiction nationwide to
not only claims by their own policyholders, but also claims from any other persons or entities.
Assuming for purposes ofdiscussion that is true for insurance exchanges, then the same would be
true for mutual insurance companies and their policyholders and any other persons or entities
bringing suit against them. Is that the law applicable to this case? Accordingly,
IT IS ORDERED that Plaintiff has thirty (30) days within which to respond to
Defendant's Motion to Dismiss. Defendant has ten(10)days to reply.

Dated this^H^day of May,2017.
BY THE COURT:

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iwrence L. Piersol

ATTEST:

United States District Judge

JOSEPH HAAS,CLERK

BY:

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DEPUTY