Wetch v. Crum & Forster Commerical Ins et al

Filing 156

ORDER. Signed by Chief Judge Jeffrey L. Viken on 9/30/19. (SB)

UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH DAKOTA
WESTERN DIVISION
CIV. 17-5033-JLV

DAVID WETCH,
Plaintiff,
vs.
CRUM & FORSTER COMMERCIAL
INS.; NORTH RIVER INSURANCE
COMPANY; UNITED STATES FIRE
INSURANCE COMPANY; and CRUM &
FORSTER HOLDINGS CORP.,
Defendants.

INTRODUCTION
United States Magistrate Judge Veronica L. Duffy filed a report and
recommendation (“R&R”). (Docket 82). Defendants filed objections to the
R&R. (Dockets 83 & 83-1). Plaintiff filed a response to defendants’
objections. (Docket 94). By a March 21, 2019, order the court granted the
defendants’ motion to dismiss “count VI of the amended complaint, exploitation
of an adult with a disability.” (Docket 120 at p. 11). The court reserved
ruling on “the remainder of the recommendations in the R&R (Docket 82)
associated with defendants’ Rule 12(b)(6) motions to dismiss and the remainder
of defendants’ objections (Docket 83)[.]” Id. For the reasons stated below,
defendants’ objections (Dockets 83 & 83-1) to the R&R are overruled.
court adopts the R&R consistent with this order.

The

ANALYSIS
Plaintiff David Wetch filed a six-count amended complaint against all
four defendants.1 (Docket 44). The five claims remaining asserted the
following: count I, bad faith; count II, intentional infliction of emotional
distress; count III, Medicare Secondary Payer Act private cause of action; count
IV,2 conversion; and count V, exemplary and punitive damages. Id. at pp. 1317.
Defendants Crum & Forster Commercial Insurance (“C&F Commercial”),
Crum & Forster Holdings Corporation (“C&F Holdings”) and North River
Insurance Company (“North River”) filed motions to dismiss the amended
complaint pursuant to Fed. R. Civ. P. 12(b)(2) and(b)(6). (Dockets 45 & 46).
They assert the amended complaint fails to state a claim upon which relief may
be granted. Id. Defendant United States Fire Insurance Company (“U.S.
Fire”) filed a motion pursuant to Rule 12(b)(6) to dismiss plaintiff’s count VI of
the amended complaint (Docket 47) and subsequently filed an answer asserting
the amended complaint “fails to state a claim for relief against defendant and
should therefore be dismissed.” (Docket 50 at p. 26 ¶ 2).

1Count

VI was dismissed by the March 21, 2019, order. (Docket 120 at

p. 11).
2Plaintiff

mistakenly labeled this as “count III.” (Docket 44 at p. 15)
(capitalization and bold omitted). Because of this mistake, the remaining
counts were misnumbered. The court will identify each count of the amended
complaint as though they were correctly numbered.
2

Pursuant to 28 U.S.C. § 636, the case was referred to Magistrate Judge
Duffy “for the purposes of resolving pretrial motions and conducting any
necessary hearings, including evidentiary hearings . . . .” (Docket 75). The
magistrate judge issued a R&R addressing defendants’ motions. (Docket 82).
The report recommended, in relevant part, the following:
1.

C&F Holdings’ “arguments for dismissal on the basis of Rule
12(b)(6) (failure to state a claim) . . . be denied as moot.” Id.
at p. 49 ¶ 1 (bold and capitalization omitted);

2.

C&F Commercial’s and North River’s motion to dismiss the
“remaining counts against these two defendants should be
denied.” Id. (bold and capitalization omitted); and

3.

U.S. Fire’s motion to dismiss “should be . . . denied as to all
. . . counts.” Id. ¶ 3 (bold and capitalization omitted).

C&F Commercial and North River timely filed objections to the R&R. (Docket
83).3 Pursuant to Fed. R. Civ. P. 72(b)(2) plaintiff timely filed a response
(Docket 94) to defendants’ objections. See Docket 120 at p. 8.
Defendants filed 39 specific objections to the R&R. (Docket 83-1).
Several of defendants’ objections relate to the R&R’s consideration of the 1992
litigation captioned Wetch v. North River Insurance Co. and Crum & Forster

3C&F

Holdings did not file objections to the R&R because the report
recommended granting the defendant’s motion to dismiss on the basis of lack
of personal jurisdiction. (Docket 82 at p. 49 ¶ 1). C&F Holdings
subsequently withdrew its motion to dismiss on the basis of personal
jurisdiction. (Docket 107). For purposes of the present motion, the court will
consider the objections filed by C&F Commercial and North River as having
been filed on behalf of C&F Holdings. For purposes of this order, the term
“defendants” refers jointly to C&F Commercial, Norther River and C&F
Holdings, the parties which filed objections to the R&R.
3

Commercial Insurance Co., CIV. No. 92-5123 (D.S.D. 1992) (“1992 litigation”).
Defendants claim the R&R “includes independent research relating to plaintiff’s
1992 litigation, which was not submitted by either party, and for which
defendants were not given any notice or an opportunity to be heard before the
[R&R] was filed.” (Docket 83 at p. 2). Defendants contend “[p]laintiff did not
produce [the] 1992 complaint, [d]efendants’ 1992 motion and answer (which,
while not discussed in the [R&R], included a motion to dismiss) or any evidence
adduced by either party in the 1992 litigation.” Id. at p. 10. For these
reasons, defendants argue their objections to the R&R “should be granted on
the basis . . . the 1992 litigation was not part of the record.” Id.
With each specific objection associated with the 1992 litigation,
defendants’ basis for the objection is “[j]udicial [n]otice of facts without notice
and opportunity.” (Docket 83-1 at pp. 1-2, 5-6 & 10). Other variations of the
same objection interposed by the defendants are the “[e]vidence not in record,”
“[n]ot in evidence,” “[i]t is not part of the record in this case,” “[e]vidence not
before court” or “[a]nswer not in evidence.” Id. at pp. 1, 5-6 & 9-10. While
making these objections, defendants also ask the court to specifically consider
parts of the 1992 litigation. Id. at pp. 1-2, 6-10; see also Dockets 83 at pp. 3,
5-8 & 15 and 84-1 through 84-8.
Defendants were on notice by plaintiff’s complaint that the 1992
litigation would play some role in the present litigation. See Dockets 1 ¶¶ 16-

4

18 and 1-2.4 Plaintiff’s submissions in response to defendants’ motion to
dismiss specifically referenced the 1992 litigation. See Dockets 24; 28 at
pp. 3-5; and 28-1 at pp. 2-4. In fact, defendants’ reply brief specifically drew
the magistrate judge’s attention to the 1992 litigation. See Docket 30 at
pp. 6 & 9. Plaintiff’s supplemental response again referenced the 1992
litigation. See Dockets 52 at pp. 5-6 and 53-4 at pp. 2-3.
As will be highlighted later in this order, the magistrate judge took
judicial notice of facts which were part of the earlier litigation between the
same parties. See Fed. R. Evid. 201(b) and (b)(2) (“The court may judicially
notice a fact that is not subject to reasonable dispute because it . . . can be
accurately and readily determined from sources whose accuracy cannot
reasonably be questioned.”). Rule 201 further provides that “[o]n timely
request, a party is entitled to be heard on the propriety of taking judicial notice
and the nature of the fact to be noticed. If the court takes judicial notice
before notifying a party, the party, on request, is still entitled to be heard.”
Fed. R. Evid. Rule 201(e). Finally, under Rule 201, the magistrate judge “must
take judicial notice if a party requests it and the court is supplied with the
necessary information.” Fed. R. Evid. 201(c)(2). Defendants were on notice
the court would likely review the 1992 litigation since it was readily accessible
through the CM/ECF court indexing system and had been referenced by both

4The

amended complaint made similar reference to the 1992 litigation.
(Docket 44 ¶¶ 17-18).
5

parties. At no time during briefing on defendants’ motion to dismiss did they
request leave to be heard regarding the propriety of considering the 1992
litigation. It is disingenuous for defendants to assert objections to the work of
the magistrate judge when defendants themselves made reference to the 1992
litigation.
The court finds defendants’ judicial notice objections are without merit.
The magistrate judge properly considered the 1992 litigation and incorporated
facts which could not be challenged. Defendants’ objections based on judicial
notice are overruled.
Turning to defendants’ specific objections to statements in the R&R, the
court will address each objection without reference to the page of the R&R
where the statement was made. Defendants’ objections are as follows:
1.

North River and C&F Commercial Ins. specifically admitted they
provided the relevant workers compensation insurance and
adjusting services in connection with Mr. Wetch’s claim.
(Referencing 1992 litigation, Docket 5 at p. 4).
Defendants claim there is no evidence in the record to support this

statement. (Docket 83-1 at p. 1). In plaintiff’s complaint in the 1992
litigation, Mr. Wetch alleged:
4.

At all times relevant herein, North River Insurance Company
provided worker’s compensation insurance to the Employer.

5.

At all times relevant herein, the Defendant Crum & Forster
Commercial Insurance provided adjusting and claims services
to the Insurer, North River Insurance Company.

6

(1992 litigation, Docket 1 at p. 7 ¶¶ 4 & 5). In their joint answer, North River
and C&F Commercial admitted paragraphs 4 and 5 of the complaint. Id.,
Docket 5 ¶ XI.
Defendants’ objection to the factual statement made in the R&R is
without merit. It is first-year law school civil procedure that an answer which
admits an allegation of a complaint is deemed to be true and no further proof is
required of the fact stated. “In responding to a pleading, a party must . . .
admit or deny the allegations alleged against it by an opposing party.” Fed. R.
Civ. P. 8(b)(1)(B). An answer which admits an allegation in the complaint
concedes the statement is true. See Commonwealth of Kentucky v. State of
Indiana, 281 U.S. 163, 175 (1930) (“By admitting in its answer that the
allegations of the complaint are true, the state of Indiana admits the making of
the contract and the authority of its officers to make it under the applicable
legislation. Not only are the allegations of fact in the complaint conceded to be
true, but there is also no dispute as to the legal import of these facts.”).
The statement in the R&R is an accurate summary of the allegations in
the complaint and the defendants’ answer in the 1992 litigation. Defendants’
objection 1 is overruled.
2.

North River and C & F Commercial Ins. filed a very extensive joint
answer in which a veritable litany of affirmative defenses were [sic]
raised, but they never argued that the court lacked personal
jurisdiction over them. (Referencing 1992 litigation, Docket 5).

7

Defendants contend this statement is not based on any evidence in the
record. (Docket 83-1 at p. 1). A cursory examination of the answer filed by
North River and C&F Commercial in the 1992 litigation allows the court to
conclude the answer was extensive and contained several affirmative defenses
but the defendants never raised the absence of personal jurisdiction to claim
the court should not proceed on plaintiff’s complaint. See 1992 litigation,
Docket 5.
The statement in the R&R is an accurate summary of defendants’ 1992
litigation answer. Defendants’ objection 2 is overruled.
3.

Neither North River nor C & F Commercial Ins. ever moved to
dismiss for lack of personal jurisdiction in this prior federal case
involving these same parties, this same work injury, and this same
obligation or lack thereof to pay workers compensation benefits.
Defendants argue this observation in the R&R is not based on any

evidence in the record. (Docket 83-1 at p. 1). Defendants fail to point to any
filing in the 1992 litigation which supports their objection. A review of the
1992 litigation permits the court to find the statement in the R&R is a proper
conclusion derived from the earlier case.
The statement in the R&R is an appropriate observation and conclusion
derived from a review of the 1992 litigation. Defendants’ objection 3 is
overruled.
4.

Apparently the distinction was being drawn for purposes of
determining the appropriate defendant’s net worth to submit to the
jury in connection with Mr. Wetch’s claim for punitive damages.
(Referencing 1992 litigation, Dockets 57 & 58).
8

Defendants submit this observation in the R&R is not based on any
evidence in the record. (Docket 83-1 at p. 2). While the magistrate judge may
not have the opportunity to specifically review the defendants’ pleadings in the
1992 litigation, it is clear from the docket text in CM/ECF the documents were
associated with the financial condition of North River and C&F Commercial.
See 1992 litigation, Dockets 57 (“Motion in limine re: punitive
damages/financial condition by defendant North River . . . [and] Crum and
Forster Ins[.]”) and 58 (“Memorandum by defendant North River . . ., defendant
Crum & Forster Ins[.] in support of motion in limine re: punitive dam[ages]/
financial condition[.]”).
The magistrate judge’s statement is a fair comment on at least one of the
reasons the defendants may have wanted to separate themselves from Mr.
Wetch’s claims. Defendant’s objection 4 is overruled.
5.

Mr. Donovan further asserted that C & F Commercial Ins. undertook
actions on behalf of North River—i.e. that C & F Commercial Ins.
was the agent of North River.
Defendants assert this statement “is in error.” (Docket 83-1 at p. 2).

They claim Mr. Donovan’s affidavit did not state “that Crum & Forster
Commercial Insurance was an agent of North River or that it had undertaken
any actions on behalf of North River.” Id. Instead, defendants claim “Mr.
Donovan actually attested all actions taken in the [1992 litigation was]
undertaken by North River, which does business under the trade name Crum
& Forster Commercial Insurance.” Id.
9

Mr. Donovan’s 1993 affidavit was filed in the current case as an exhibit
in support of plaintiff’s brief in resistance to defendants’ motions. See Docket
28-1 at pp. 2-5. Mr. Donovan stated “[t]he proper trade name pursuant to
which several insurers owned directly or indirectly by Crum and Forster, Inc., a
New Jersey corporation did business [as] ‘Crum & Forster Commercial
Insurance.’ ” Id. ¶ III. The affidavit continued, “[t]he activities of The North
River Insurance Company in this action [the 1992 litigation] were undertaken
by that company. No contention is being made that The North River
Insurance Company should not be held liable for any act done by it or its
representative under the trade name ‘Crum and Forster Commercial
Insurance.’ ” Id. ¶ V (emphasis added).
While Mr. Donovan’s affidavit did not use the term “agent,” it is a fair
reading of the statement that its representative, its agent, was “Crum and
Forster Commercial Insurance.” Id. The R&R is a fair interpretation of Mr.
Donovan’s affidavit. Defendants’ objection 5 is overruled.
6.

Mr. Donovan assured the court it was not making any contention
that North River should not be held liable for any acts undertaken
by C & F Commercial Ins. on its behalf. (Emphasis in R&R).
Defendants claim this statement “is in error . . . . [because] Mr.

Donovan’s affidavit plainly states that the actions taken in the underlying
matter were taken by North River―not Crum & Forster Commercial Insurance,
which is merely a trade name under which North River did business.” (Docket
83-1 at p. 2). Again, the affidavit specifically stated that “[n]o contention is
10

being made that The North River Insurance Company should not be held liable
for any act done by it or its representative under the trade name ‘Crum and
Forster Commercial Insurance.’ ” (Docket 28-1 ¶ V) (emphasis added).
If defendants’ argument was correct, the affidavit would not have
referenced North River’s “representative” and the declaration made by Mr.
Donovan would have simply ended with the words “done by it.” Id. The
statement by the magistrate judge is a proper interpretation of Mr. Donovan’s
1993 affidavit. Defendants’ objection 6 is overruled.
7.

If Mr. Donovan’s affidavit was truthful and C & F Commercial Ins.
has no employees, then Ms. Hoek appears to have been employed
by both North River and US Fire Ins. simultaneously as their claims
adjustor. . . . Another possibility is that Mr. Donovan’s affidavit was
untruthful and Ms. Hoek was an employee of C & F Commercial Ins.
(Emphasis in R&R; referencing Docket 53-5).
Defendants argue “[i]t is uncommon for an employee to work for both the

parent company and its subsidiary.” (Docket 83-1 at p. 2).

Defendants

submit that just because “Ms. Hoek was employed by both North River and US
Fire does not make Mr. Donovan’s affidavit untruthful.” Id.
Mr. Donovan claims C&F Commercial has no employees, yet it may have
been a representative of North River. (Docket 28-1 ¶¶ IV and V). Ms. Hoek,
on the other hand, acted as both a claims adjustor for U.S. Fire and North
River. (Docket 52 at pp. 5-6). Notwithstanding defendants’ assertions, C&F
Commercial was the only named insurer in the case cited by plaintiff, Suhn v.
Hyland Angus Ranch, Employer, and Crum & Forster Commercial Insurance,
11

Insurer, S.D. Department of Labor, HF No. 278, 1990/91, 1992 WL 518728
(May 5, 1992).
The court finds the magistrate judge’s statement was a fair comment on
the confusion created by C&F Commercial, North River and U.S. Fire. Since
Ms. Hoek was the claims adjustor in Suhn and C&F Commercial was the only
identified insurer in that workers’ compensation case before the South Dakota
Department of Labor, Division of Labor and Management (“SDDOL”), it is
reasonable to conclude Ms. Hoek was an employee of C&F Commercial. If that
conclusion is correct, then it is a “possibility” that Mr. Donovan’s statement
was untruthful. (Docket 82 at p. 5). Defendants’ objection 7 is overruled.
8.

In proceedings before the SDDOL in late 2015, C & F Commercial
Ins. appeared and defended its position that the medical expenses
were not, or not wholly, its obligation to pay under the 1994
stipulation. (Referencing Docket 1-15).
Defendants claim this statement in the R&R is not accurate because “C

& F Commercial Ins. did not ‘appear and defend’ [in the 2015 SDDOL
proceeding].” (Docket 83-1 at p. 3). Like in Suhn, C&F Commercial is the
only named insurer identified in Mr. Wetch’s worker’s compensation case
before the SDDOL. See Docket 1-15. C&F Commercial did appear and
defend against Mr. Wetch’s claims in 2015. Id. The statement in the R&R is
an accurate analysis of the 2015 proceedings. Defendants’ objection 8 is
overruled.

12

9.

C & F Commercial Ins. never argued that it was not connected to
Mr. Wetch’s worker’s compensation claim or that Mr. Wetch had
named the wrong party. (Referencing Docket 1-15).
Defendants contend this statement in the context of the 2015 proceeding

before the SDDOL is in error. (Docket 83-1 at p. 3). The court finds, in the
context of Mr. Wetch’s motion for partial summary judgment, C&F
Commercial’s briefs did not assert it was not the insurer or that he had
identified the wrong party as the employer’s worker’s compensation insurance
company. (Docket 1-15). The statement in the R&R is an accurate analysis
of the 2015 SDDOL proceedings. Defendants’ objection 9 is overruled.
10.

It also never argued that the SDDOL had no personal jurisdiction
over it. (Referencing Docket 1-15).
Defendants contend this reference to the 2015 proceeding is in error.

(Docket 83-1 at p. 3). The court finds the insurer’s brief did not assert that
the SDDOL did not have personal jurisdiction over C&F Commercial. (Docket
1-15). The statement in the R&R is an accurate analysis of the 2015
proceedings. Defendants’ objection 10 is overruled.
11.

A 2018 affidavit executed by Jeanine Ramstack casts doubt on Mr.
Donovan’s assertion in his 1993 affidavit that C & F Commercial
Ins. has no employees.
Defendants assert this statement is in error because C&F Commercial

has no employees. (Docket 83-1 at p. 3). To place the magistrate judge’s
observation in context, the court must compare Ms. Ramstack’s affidavit with
the affidavit of Mr. Donovan. Compare Dockets 28-1 and 52-1. Mr. Donovan
13

declared C&F Commercial “has no employees.” (Docket 28-1 ¶ IV). Ms.
Ramstack’s affidavit begins with her declaration that she is “a Regional
Director for workers compensation claims at Crum & Forster Commercial
Insurance (‘Crum & Forster’).” (Docket 52-1 ¶ 1).
The court finds Ms. Ramstack’s affidavit casts doubt on the veracity of
Mr. Donovan’s statement. The court finds the magistrate judge’s statement
was a fair comment on presentations made by the defendants’ employees.
Defendants’ objection 11 is overruled.
12.

In a 2018 affidavit filed in proceedings involving Mr. Wetch’s case in
South Dakota state court, Ms. Ramstack filed an affidavit purporting
to be the “Regional Director for workers compensation claims” for
“Crum & Forster Commercial Insurance.” (Referencing Docket
52-1).
Defendants suggest the magistrate judge’s summary is mistaken because

“[Ms.] Ramstack uses a fictitious name in describing her position as ‘the
Regional Director for workers compensation claims,’ but that alone does not
prove she is an employee of the fictitious name (which she unmistakably
abbreviates as ‘Crum & Forster’).” (Docket 83-1 at p. 3) (bold omitted; italics
substituted). Defendants contend her “use of the trade name (which she
unmistakably abbreviates as ‘Crum & Forster’) should not be surprising since
‘Crum & Forster’ is the well-known registered trademark of US Fire . . . .” Id.
Defendants argue “[Ms.] Ramstack’s representation is unremarkable and
certainly not fraudulent.” Id.

14

Neither the magistrate judge nor the court suggest Ms. Ramstack’s
statement is fraudulent. Rather, the only significance of the magistrate
judge’s statement is that it is a proper summary of the introductory paragraph
of Ms. Ramstack’s affidavit. The court finds the statement is an accurate
recounting of Ms. Ramstack’s testimony under oath. Defendants’ objection
12 is overruled.
13.

Furthermore, [Ms. Ramstack] makes reference to Mr. Wetch’s claims
file which [she] said, under oath, consisted of documentation and
entries made by Crum & Forster Commercial Insurance “personnel.”
(Referencing Docket 52-1).
Defendants object to this statement on the basis that Ms. Ramstack “did

not identify ‘employees’ of that entity or ‘Crum & Forster Commercial
Insurance.’ ” (Docket 83-1 at pp. 3-4). Defendants contend she did not “aver
under oath that . . . ‘Crum & Forster Commercial Insurance’ ‘employed
“personnel” ’ who handled Mr. Wetch’s claim.” Id. (referencing Docket 52-1;
bold omitted; italics substituted). Rather, defendants argue Ms. “Ramstack
averred only ‘the Wetch claim file contains documentation and entries made
and maintained by Crum and Forster claim personnel.’ ” Id. (referencing
Docket 52-1; bold omitted; italics substituted).
Throughout Ms. Ramstack’s affidavit she intended Crum & Forster to be
a short-cut reference for Crum and Forster Commercial Insurance. (Docket
52-1 ¶ 1). She specifically stated Mr. Wetch’s “claim file contains
documentation and entries made and maintained by Crum & Forster claim
15

personnel in the course of Crum & Forster’s regular business.” Id. ¶ 3. It is
not relevant to this order that Ms. Ramstack did not specifically identify by
name or status the individuals within C&F Commercial who worked on Mr.
Wetch’s claim file. It is clear Ms. Ramstack intended there were individuals
within C&F Commercial who worked on Mr. Wetch’s file.
Defendants’ objection is without merit. Defendants’ objection 13 is
overruled.
14.

Thus, unlike Mr. Donovan, Ms. Ramstack affirmatively identified
employees of C & F Commercial Ins., including herself.
Defendants interpose the same objection to this statement as made in

objection 13. (Docket 83-1 at p. 4). Ms. Ramstack specifically stated under
oath she was “a Regional Director for workers compensation claims at Crum &
Forster Commercial Insurance (‘Crum & Forster’).” (Docket 52-1 ¶ 1). This
declaration cannot be clearer. As indicated in the analysis to objection 13, it
is not relevant Ms. Ramstack did not name those individuals within C&F
Commercial who worked on plaintiff’s worker’s compensation file. What is
relevant is that she indicated there were people within C&F Commercial who
worked on the file.
Defendants’ objection is without merit. Defendants’ objection 14 is
overruled.
15.

During 2017 and 2018, Linda Hanke and Jeanine Ramstack
communicated via email with various people in connection with Mr.
Wetch’s workers compensation claim. . . . Ms. Hanke identified
herself by the title “Senior Specialist, Workers Compensation
16

Claims” for “Crum & Forster.” . . . Ms. Ramstack, consistent with
her affidavit discussed above, identified herself as “Regional Director
/Workers Compensation Claims” (“Crum & Forster.”). (Referencing
Docket 52-1).
Defendants do not specifically challenge the statements made here, but
object because Ms. Hanke’s and Ms. Ramstack’s “signature lines in various
communications refer[] to ‘Crum & Forster,’ the registered trademarks of US
Fire, the only real party-in-interest here.” (Docket 83-1 at p. 4).
Defendants’ objection is not relevant to the statements of the magistrate
judge. Ms. Hanke specifically identified herself as a “Senior Specialist,
Workers Compensation Claims Crum & Forster.” (Docket 52-1 at p. 13, 15-16
& 18). These declarations are consistent with the earlier statement, under
oath, by Ms. Ramstack.
Defendants’ objection is without merit. Defendants’ objection 15 is
overruled.
16.

The court clearly has personal jurisdiction over C & F Commercial
Ins. The question is not even close.
This objection (Docket 83-1 at p. 4) was withdrawn when C&F

Commercial stipulated to personal jurisdiction. See Docket 107. Defendants’
objection 16 is overruled.
17.

C & F Commercial Ins. waived any personal jurisdiction defense it
may have had in regard to Mr. Wetch’s 1992 bad faith action in this
court by appearing generally and never raising an objection based
on personal jurisdiction.

17

This objection (Docket 83-1 at pp. 4-5) was withdrawn when C&F
Commercial stipulated to personal jurisdiction. See Docket 107. Defendants’
objection 17 is overruled.
18.

In its answer to Mr. Wetch’s 1992 bad faith complaint, C & F
Commercial Ins. admitted it provided the adjusting services as to
Mr. Wetch’s workers compensation claim.
(Referencing 1992
litigation Docket 5 at p. 4).
Defendants’ objection (Docket 83-1 at p. 5) that the answer in the 1992

litigation is not properly evidence in the current case was resolved earlier in
this order. Defendants’ objection to this statement was resolved in the court’s
analysis of objection one. For the same reasons, defendants’ objection is
without merit. Defendants’ objection 18 is overruled.
19.

C & F Commercial Ins. then voluntarily entered into a stipulation,
identifying itself as the “insurer,” which stipulation was adopted by
the SDDOL, regarding provision of workers compensation benefits
to Mr. Wetch in the 1994 stipulation. Since then, it has voluntarily
appeared multiple times in proceedings before both the SDDOL and
the state courts of South Dakota.
Defendants’ objection to these statements does not specifically challenge

the factual basis for the statements. (Docket 83-1 at p. 5). Rather,
defendants repeat the same objection interposed to earlier objections. Id. For
the same reasons stated in the court’s analysis of earlier objections,
defendants’ objection is without merit. Defendants’ objection 19 is overruled.
20.

The motion to dismiss by C & F Commercial Ins. for lack of personal
jurisdiction is all but specious.

18

This objection (Docket 83-1 at p. 5) was withdrawn when C&F
Commercial stipulated to personal jurisdiction. See Docket 107. Defendants’
objection 20 is overruled.
21.

Supposedly, Westchester was the appropriate entity handling Mr.
Wetch’s claim until US Fire took over in September, 1993.
(Referencing Docket 24 at p. 5).
Defendants’ objection simply refers to exhibits attached to the affidavit of

Eric Tibak. (Docket 83-1 at p. 5) (referencing Dockets 86-1 & 86-3). Relevant
to this case, the assumption and indemnity reinsurance agreement indicated
that as of January 1, 1993, Westchester agreed to transfer all of its insurance
business to U.S. Fire. (Docket 86-1).
The R&R references the affidavit of Sonia Scala. (Docket 24). Ms. Scala
is employed by U.S. Fire and is the assistant secretary of both U.S. Fire and
North River. Id. ¶ 1. She declared that “[i]n September, 1993, US Fire,
through novation or as the assumptive reinsurer, became responsible for
certain Westchester policies, including [Mr. Wetch’s policy].” Id. ¶ 21.
Defendants’ brief specifically references Ms. Scala’s statement. (Docket 23 at
p. 1 n.1).
Defendants do not explain the discrepancy why the assumption and
indemnity reinsurance agreement states the transfer was effective January 1,
1993, and Ms. Scala’s October 2017 affidavit states the transfer from
Westchester to U.S. Fire occurred in September 1993. If defendants are

19

intending to impeach Ms. Scala’s sworn testimony, the reason in unclear. The
magistrate judge took Ms. Scala’s statement as accurate.
The statement in the R&R is reasonable based on Ms. Scala’s affidavit.
Defendants’ objection 21 is overruled.
22.

Ms. Scala’s affidavit fails to explain why, in October 1992, counsel
for North River and C & F Commercial Ins. filed an answer to Mr.
Wetch’s first bad faith complaint admitting that “at all times relevant
[to Mr. Wetch’s claims] North River Insurance Company [not
Westchester or US Fire] provided worker’s compensation insurance
to [Midcontinent].”
(Italics in R&R; bold omitted and italics
substituted) (referencing 1992 Dockets 1 ¶ 4 and 5 ¶ XI).
Defendants do not challenge the magistrate judge’s inquiry. (Docket 83-

1 at p. 5). The inquiry is intended to address defendants’ challenge to
personal jurisdiction. This objection was withdrawn when North River
stipulated to personal jurisdiction. See Docket 107. Defendants’ objection 22
is overruled.
23.

Nor does Ms. Scala’s affidavit explain why, in October 1992, counsel
for North River and C & F Commercial Ins. filed an answer to Mr.
Wetch’s first bad faith complaint admitting that “at all times relevant
[to Mr. Wetch’s claims] Crum & Forster Commercial Insurance [not
Westchester or US Fire] provided adjusting and claims services to
the Insurer, North River.” (Italics in R&R; bold omitted and italics
substituted) (referencing 1992 Dockets 1 ¶ 5 and 5 ¶ XI).
Defendants interpose the same objection as asserted in objection 22.

(Docket 83-1 at pp. 5-6). For the reasons stated above, that portion of
defendants’ objection is overruled.
Defendants do not challenge the magistrate judge’s inquiry. The inquiry
is intended to address defendants’ challenge to personal jurisdiction. This
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objection was withdrawn when C&F Commercial stipulated to personal
jurisdiction. See Docket 107. Defendants’ objection 23 is overruled.
24.

Ms. Scala would have this court accept her word that only
Westchester or US Fire had any claims handling responsibilities for
Mr. Wetch’s claim, despite the admissions made by North River and
C & F Commercial in the earlier 1992 litigation.
Defendants interpose the same objection as asserted in objection 22.

(Docket 83-1 at p. 6). For the reasons stated above, that portion of
defendants’ objection is overruled.
Defendants’ objection does not otherwise challenge the magistrate
judge’s inquiry. The inquiry is intended to address defendants’ challenge to
personal jurisdiction. This objection was withdrawn when North River and
C&F Commercial stipulated to personal jurisdiction. See Docket 107.
Defendants’ objection 24 is overruled.
25.

Significantly, the court notes that the stipulation settling Mr.
Wetch’s entitlement to workers compensation benefits was signed in
November, 1994. . . . According to Ms. Scala, this was 13 months
after US Fire had assumed responsibility for Mr. Wetch’s claim (in
September, 1993). Yet the named party in that stipulation is
“Crum & Forster Commercial Ins., Insurer,” not US Fire. (Italics in
R&R; bold omitted and italics substituted) (referencing Docket 1-1).
Defendants’ objection again asserts the same claim that C&F

Commercial is a fictitious name under which U.S. Fire was doing business at
the time of plaintiff’s original injury. (Docket 83-1 at p. 6). Defendants do not
offer any specific response to these statements in the R&R. Defendants
submitted the release of all claims from the 1992 litigation. (Docket 84-5).
21

The release specifically identified the “Releasees” as “The North River Insurance
Company and Crum & Forster Commercial Insurance.” Id. at p. 1.
The statements in the R&R are reasonable based on the evidence before
the court. Defendants’ objection 25 is overruled.
26.

Did defendants perpetrate a fraud on the parties and the SDDOL in
1994? Or are they trying to perpetrate a fraud now? In late 2015,
C & F Commercial Ins. again appeared before the SDDOL under a
caption identifying it as “insurer” and filed a response to Mr. Wetch’s
summary judgment motion, never “revealing” that it was not a legal
entity, let alone not the “insurer.” (Referencing Docket 1-15).
Defendants assert it was Mr. Wetch who created the caption of the 1992

litigation not the defendants. (Docket 83-1 at p. 6). Defendants submit the
first report of injury “plainly notes who the insurer was—not Crum & Forster
Commercial Insurance—but Worchester [sic] Fire.” Id.
Since U.S. Fire took over the claim, defendants contend “US Fire has
charged and received premiums on the policy; participated in and made all
decisions regarding the adjustment, settlement, and/or payment of plaintiff’s
claim; and employed all individuals who handled plaintiff’s underlying worker’s
compensation claim.” Id. at p. 7. Defendants argue “[t]o be clear, there has
been no ‘perpertration [sic] of fraud’ on any court or administrative agency.”
Id. (brackets omitted).
While the term “fraud” may be harsh, it is used in a fair rhetorical
inquiry about the defendants’ manner of conducting business. Certainly,
defendants’ employees reviewed the pleadings filed by plaintiff in 1992 and
22

their attorneys’ proposed pleadings and responses filed both before the SDDOL,
the state circuit court and the federal district court. At best, defendants’
conduct is sloppy and at worst is a fraud upon the agency and the courts.
The statements in the R&R are reasonable based on the evidence before
the court. Defendants’ objection 26 is overruled.
27.

However, Jeanine Ramstock [sic] submitted an affidavit in South
Dakota state court in June, 2018—just six months ago—stating in
connection with further litigation over Mr. Wetch’s claim that she
was an employee of C & F Commercial Ins. (Italics in R&R).
Defendants’ interpose the same objection to this statement as to the

statement in objection 12. (Docket 83-1 at p. 7). The court incorporates the
analysis of objection #12 and rejects defendants’ objection to the statement
here.
The court finds the statement is an accurate recounting of Ms.
Ramstack’s testimony under oath. Defendants’ objection 27 is overruled.
28.

Furthermore, Ms. Ramstock [sic] averred under oath that C & F
Commercial Ins. employed “personnel” who handled Mr. Wetch’s
claim.
Defendants interpose the same objection to this statement as interposed

in objection 13. (Docket 83-1 at pp. 7-8). But this time defendants contend
Ms. “Ramstack actually averred ‘[t]he Wetch claim file contains documentation
and entries made and maintained by Crum and Forster claim personnel.’ ” Id.
(referencing Docket 52-1; bold omitted; italics substituted). Defendants
remind the court that “Crum and Forster” was a reference to it as a registered
23

trademark of U.S. Fire. Id. They suggest that Ms. Ramstack really meant
Crum and Forster to reference only U.S. Fire. Id.
As the court pointed out in its analysis of objection 13, Ms. Ramstack’s
affidavit referenced Crum & Forster Commercial Insurance as “Crum &
Forster.” (Docket 52-1 ¶ 1). She intended “Crum & Forster” to be a shortcut
reference to Crum and Forster Commercial Insurance. Id.
Defendants’ objection is disingenuous and without merit. Defendants’
objection 28 is overruled.
29.

Finally, Ms. Ramstock [sic] appeared in person in that state court
proceeding as a representative of C & F Commercial Ins.
(Referencing Docket 53-1 at p. 3:16-20; p. 4:1; and p. 5:13).
Defendants contend that nowhere in the referenced transcript did Ms.

Ramstack appear as a representative of C&F Commercial. (Docket 83-1 at
p. 8). Defendants acknowledge she “was present for the hearing, [but] she was
not put on the stand, was not under oath, and made no such representations.”
Id.
The only insurer identified in the caption of the transcript was the same
insurer designated in the caption of the SDDOL file, C&F Commercial.
Compare Dockets 53-1 at p. 1 and 80-1. Counsel for C&F Commercial
specifically acknowledged a representative of the defendant insurer was present
for the hearing before the Seventh Judicial Circuit Court, Pennington County,

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South Dakota. (Docket 53-1 at p. 5:1).5 When the circuit court judge
suggested the representative “take the message home [that plaintiff can prove
his case],” Ms. Ramstack declared “I can.” Id. at p. 6:13. At no time during
the hearing was there any suggestion that C&F Commercial was an improper
party or that Ms. Ramstack appeared on behalf of anyone other than C&F
Commercial.
Defendants’ objection is without merit. Defendants’ objection 29 is
overruled.
30.

Whether C & F Commercial Ins. is perpetrating a fraud now, or did
so in past litigation relating specifically to Mr. Wetch and specifically
to this claim, is not necessary to sort out at this juncture.
Defendant interposes the same objection as it interposed in objection 26.

(Docket 83-1 at p. 8). For the same reasons stated in the analysis of objection
26, the court finds defendants’ objection is without merit. The statement of
the magistrate judge is a fair inquiry and is not a final resolution of the
question. Defendants’ objection 30 is overruled.
31.

Here, Mr. Wetch has shown that C & F Commercial Ins. availed itself
of South Dakota forums—administrative, state court and federal
court--for the better part of the last 25 years essentially litigating
the same work-related injury from July, 1991.
Defendants contend this statement “is in error for multiple reasons.”

(Docket 83-1 at p. 9). While several of defendants’ objections are repetitive of

5The

court references the page in CM/ECF as opposed to the page of the

transcript.
25

previous objections asserted, they contend “[p]laintiff did not submit this
evidence in resisting defendants’ motions to dismiss. It is not part of the
record.” Id. Contrary to defendants’ argument, Mr. Wetch did submit
substantial evidence of C&F Commercial’s participation in multiple forums
litigating plaintiff’s claims. That evidence has been mentioned throughout this
order and need not be restated here.
Defendants’ objection is without merit. Defendants’ objection 31 is
overruled.
32.

Nor does this court’s exercise of jurisdiction over C & F Commercial
Ins. offend “traditional notions of fair play and substantial justice.”
Defendants’ objection reargues their previous positions and need not be

restated here. (Docket 83-1 at p. 9). This objection was withdrawn when
C&F Commercial stipulated to personal jurisdiction. See Docket 107.
Defendants’ objection 32 is overruled.
33.

Especially because of the conflicting sworn testimony submitted in
various forums in this state, South Dakota has a keen interest in
getting to the bottom of this shell game and finding out the truth.
Mr. Wetch has satisfied his burden to establish personal jurisdiction
over C & F Commercial Ins.
Defendants object to the magistrate judge describing defendants past

conduct as a “shell game.” (Docket 83-1 at p. 9). As described earlier in this
order, the court finds conflict in the sworn testimony before the forums in
which Mr. Wetch litigated his claims. Defendants now consider these conflicts
“some confusion in the early stages in the 1990s . . . .” Id.
26

The testimony certainly has been confusing but resolution of the
conflicting sworn testimony cannot be performed in this Rule 12(b)(6)
proceeding. Braden v. Wal-Mart, 588 F.3d 585, 594 (8th Cir. 2009).
Defendants’ objection 33 is overruled.
34.

Mr. Wetch named North River as the insurer in his 1992 bad faith
case. North River admitted that it was the insurer and waived any
argument it may have had that the court lacked personal
jurisdiction over it.
Defendants interpose the same objections interposed in objection one.

(Docket 83-1 at p. 10). For the same reasons articulated earlier, defendants’
objections are without merit. Defendants’ objection 34 is overruled.
35.

Unless North River was perpetrating a fraud on the court in 1992,
there is sufficient evidence to exercise specific jurisdiction over
North River in this case—by it’s [sic] own admission, it was the
insurer for Mr. Wetch’s claim.
Defendants interpose the same objections interposed in objection one.

(Docket 83-1 at p. 10). For the same reasons articulated earlier, defendants’
objections are without merit. Defendants’ objection 35 is overruled.
36.

Again, the court is faced with the issue of determining whether North
River was lying in 1992 when it urged the district court to consider
only its own financial situation and not US Fire’s, or whether it is
lying now.
Defendants interpose the same objections interposed in earlier

objections. (Docket 83-1 at p. 10). For the same reasons articulated earlier,
defendants’ objections are without merit. The credibility of the evidence

27

cannot be resolved in this Rule 12(b)(6) proceeding. Braden, supra.
Defendants’ objection 36 is overruled.
37.

North River admitted and also affirmatively asserted in 1992
through the Donovan affidavit that it was the insurer who provided
Midcontinent with workers compensation insurance covering Mr.
Wetch’s work injury.
Defendants interpose the same objections interposed in earlier

objections. (Docket 83-1 at p. 10). For the same reasons articulated earlier,
defendants’ objections are without merit. Defendants’ objection 37 is
overruled.
38.

North River’s course of conduct over the last 25 years in South
Dakota relating to Mr. Wetch’s worker’s compensation claims was
such that North River should have reasonably anticipated being
haled into court here.
Defendants interpose the same objections interposed in earlier

objections. (Docket 83-1 at p. 10). For the same reasons articulated earlier,
defendants’ objections are without merit. Defendants’ objection 38 is
overruled.
39.

The state of South Dakota has a vested interest in getting some
answers to the question of who is really responsible for Mr. Wetch’s
workers compensation benefits after having entertained litigation
over that issue for 25 years.
Defendants’ objection and response is that the “State of South Dakota

has been informed of the identity of the insurer.” (Docket 83-1 at p. 10)
(referencing Docket 84-8 at pp. 1-2). The declaration to the South Dakota
Division of Insurance on September 23, 1997, simply stated:
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Please be advised that U.S. Fire Insurance provides workers’
compensation coverage for the above captioned claim [Mr. Wetch’s
claim]. Crum & Forster Insurance Group has two insurance
companies, North River Insurance and U.S. Fire Insurance.
According to my records, U.S. Fire Insurance issued the policy for
the above captioned loss.
(Docket 84-8 at p. 2). The declaration by Vickie Hilden, a claims examiner, is
neither complete nor accurate. Throughout these proceedings, North River
said it issued the policy covering Mr. Wetch’s claim. (1992 litigation, Dockets
1 at p. 7 ¶ 4 and 5 ¶ XI). Defendants subsequently asserted Westchester
issued the policy and U.S. Fire assumed responsibility for the obligations of the
original policy. (Docket 86-1).
The statement in the R&R is a fair comment on the status of the evidence
in this case. Defendants’ objection is without merit. Defendants’ objection 39
is overruled.
RULE 12(b)(6) MOTION
Defendants originally filed their motions to dismiss for failure to state a
claim upon which relief may be granted as Fed. R. C. P. 12(b)(6) motions.
(Dockets 45-47). Rule 12(b)(6) provides for dismissal if the plaintiffs fail to
state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). In
evaluating the defendants’ Rule 12(b)(6) motion, the court accepts as true all of
the factual allegations contained in plaintiffs’ amended complaint and grants
all reasonable inferences in favor of plaintiff as the nonmoving party. Braden,
588 F.3d at 594 (“a complaint must contain sufficient factual matter, accepted
29

as true, to ‘state a claim to relief that is plausible on its face.’ ”) (citing Ashcroft
v. Iqbal, 556 U.S. 662, 663 (2009). See also Crooks, 557 F.3d at 848 (the
court must review “a Rule 12(b)(6) motion to dismiss for failure to state a claim,
accepting the facts alleged in the complaint as true and granting all reasonable
inferences in favor of the plaintiff, the nonmoving party.”) (brackets omitted).
“While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need
detailed factual allegations, a plaintiff’s obligation to provide the ‘grounds’ of
his ‘entitle[ment] to relief’ requires more than labels and conclusions, and a
formulaic recitation of the elements of a cause of action will not do[.]” Bell
Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citations omitted).
“[O]nly a complaint that states a plausible claim for relief survives a motion to
dismiss.” Iqbal, 556 U.S. at 679. At this point in the litigation, the court is
“bound to accept as true, for purposes of [a Rule 12(b)(6)] motion, the facts
alleged by the plaintiff.” Stephens v. Associated Dry Goods Corp., 805 F.2d
812, 814 (8th Cir. 1986).
The court finds the R&R is an accurate and thorough recitation of the
facts and case law applicable to a Rule 12(b)(6) motion. The court further
finds the magistrate judge’s analysis is well-reasoned.
For the reasons stated earlier, the R&R did not complete the analysis as
to C&F Holdings’ Rule 12(b)(6) motion. Based on a review of the entire record,
the court finds plaintiff fails to state a claim against C&F Holdings. Plaintiff’s
amended complaint makes no specific allegation against C&F Holdings and he
30

presents no evidence by which the court could find C&F Holdings was engaged
in any activity associated with Mr. Wetch’s worker’s compensation claim. For
that reason, pursuant to Rule 12(b)(6), the court must grant C&F Holdings’
motion to dismiss for failure to state a claim upon which relief could be
granted.
Specific to the remaining defendants, the R&R
recommends denying defendants’ . . . motions to dismiss under Rule
12(b)(6). After a full and fair opportunity for discovery has been
accorded to Mr. Wetch, one or more of the defendants can make a
motion for summary judgment on the grounds that they were not
personally involved. The court notes all the defendants are
represented by the same counsel, so denial of the Rule 12(b)(6)
motion in favor of allowing discovery does not impose as much of a
burden as would be imposed if each were represented by separate
counsel.
(Docket 82 at p. 48).
Ordinarily because the magistrate judge considered matters outside the
pleadings, defendants’ Rule 12(b)(6) motions would have been be treated as
Rule 56 motions for summary judgment. Fed. R. Civ. P. 12(d). Considering
the status of this case and the fact plaintiff has not engaged in extensive
discovery to the point of the R&R, the court will adopt the R&R’s Rule 12(b)(6)
recommendations.
ORDER
Based on the above analysis, it is
ORDERED that defendants’ objections (Docket 83) are overruled.

31

IT IS FURTHER ORDERED that defendant C&F Holdings Corporation’s
motion to dismiss for failure to state a claim (Docket 45) is granted.
IT IS FURTHER ORDERED that plaintiff’s amended complaint (Docket
44) as it relates to C&F Holdings Corporation is dismissed with prejudice.
IT IS FURTHER ORDERED that the report and recommendation (Docket
82) as it relates to the remaining defendants’ motions to dismiss pursuant to
Fed. R. Civ. P. 12(b)(6) is adopted consistent with this order.
IT IS FURTHER ORDERED that the remaining defendants’ motions to
dismiss the amended complaint pursuant Rule 12(b)(6) for failure to state a
claim upon which relief can be granted (Dockets 46-47) are denied, except to
the extent those motions were granted as to Count VI of the amended
complaint, exploitation of an adult with a disability (Docket 120 at p. 11).
Dated September 30, 2019.
BY THE COURT:
/s/ Jeffrey L. Viken
JEFFREY L. VIKEN
CHIEF JUDGE

32