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Hartford Underwriters Insurance Co. v. State Farm Mutual Automobile Insurance Co.

United States District Court, N.D. Oklahoma

August 3, 2017




         Before the Court is the Motion to Dismiss or, in the Alternative, Motion for Summary Judgment (Doc. 22) filed by the defendant, State Farm Mutual Automobile Insurance Company (State Farm).

         I. Background

         Plaintiff, Hartford Underwriters Insurance Company (Hartford), initiated this action based upon diversity jurisdiction. Charles Dawson, now deceased, was injured in an automobile accident in Kansas. At the time of the accident, Dawson was acting in the course and scope of his employment. Dawson was deemed an Oklahoma employee, and he accepted benefits under Oklahoma's workers' compensation law. Hartford was the workers' compensation insurance carrier for Dawson's employer, and Hartford made the workers' compensation payments to Dawson.

         Dawson sued the estate of the third party tortfeasor in Sedgwick County, Kansas district court. On September 18, 2012, the judge in the Kansas case entered a Journal Entry of Judgment awarding Dawson a total of $688, 217.93 in damages against the tortfeasor's estate. Dawson entered into a settlement agreement with the tortfeasor's estate and State Farm, which was the tortfeasor's automobile insurance carrier, for a total payment of the policy limits of $100, 000.00. State Farm deposited its policy limits with the Kansas court, which ordered payout of the settlement funds to Dawson.

         In this case, Hartford alleges that it was “statutorily assigned Dawson's claim against the tortfeasor to the extent of the payments [Hartford] made for workers' compensation benefits” and that Hartford “is entitled to recoupment of its payments from Dawson [under Oklahoma law].” (Doc. 2 at 3, ¶¶ 16-17). Hartford further alleges that “State Farm['s] distribution of the settlement funds were wrongful payments in derogation of [Hartford's] statutorily assigned interest in Dawson's settlement funds, made after [defendant was] placed on notice of [Hartford's] interest.” (Id. at ¶ 18).

         State Farm alleges that: Hartford has not stated a claim; the Court lacks subject matter jurisdiction and personal jurisdiction over State Farm; and venue here is improper.

         II. Discussion

         A. Plaintiff has stated a plausible claim

         State Farm moves for dismissal under Fed.R.Civ.P. 12(b)(6), arguing that Kansas workers' compensation law does not provide an abrogation claim. (See Doc. 22 at 14 [incorporating arguments from Doc. 18]). On a Rule 12(b)(6) motion, the Court must determine whether Hartford has stated a claim to relief under Count One that is “plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-569 (2007). In making that determination, the Court must accept all well-pleaded allegations of the Complaint as true, even if doubtful, and must construe the allegations most favorably to the plaintiff. See Id. at 555.

         In this case, Hartford's Complaint cites the Oklahoma workers' compensation statutes as the basis for its right to recover in this case. As noted, the payments Hartford made to Dawson were made via the Oklahoma workers' compensation court, not the Kansas court. At this time, and without deciding the ultimate question of whether or not Hartford is entitled to recover under Oklahoma workers' compensation law, the Court determines that Hartford has stated a plausible claim to recover money from State Farm.

         B. The Court has subject matter jurisdiction

         This action is based on diversity jurisdiction under 28 U.S.C. § 1332. To meet diversity jurisdiction, a plaintiff must establish that there is complete diversity and the value of the claim exceeds $75, 000. Id. A corporation is “deemed to be a citizen of every State and foreign state by which it has been incorporated and of the State or foreign state where it has its principal place of business.” 28 U.S.C. § 1332(c)(1). In its Complaint, Hartford asserts that it is incorporated in Connecticut with its principle place of business in Connecticut, and State Farm does not challenge that jurisdictional allegation. State Farm is incorporated in Illinois with its principle place of business in Illinois. Thus, diversity exists. Hartford also alleges that it paid more than $200, 000 in medical benefits and indemnity to and on behalf of Dawson and claims to be owed more than $75, 000 based on those payments. Both diversity and the amount in controversy are satisfied, and the Court has subject matter jurisdiction.

         Characterizing this case as a collateral attack on the Kansas District Court's Order to pay out settlement funds, State Farm argues that this Court lacks subject matter jurisdiction over Harford's claim. Collateral estoppel or claim preclusion is an affirmative defense, which the defendant must plead and prove. See Pelt v. Utah, 539 F.3d 1271, 1283 (10th Cir. 2008). “Under Tenth Circuit law, claim preclusion applies when three elements exist: (1) a final judgment on the merits in an earlier action; (2) identity of parties or privies in the two suits; and (3) identity of the cause of action in both suits.” Id. (quoting MACTEC Inc. v. Gorelick, 427 F.3d 821, 831 (10th Cir. 2005)). Hartford was not a party in the Kansas suit, and that suit involved a personal injury claim between Dawson and the third-party tortfeasor, whereas this suit is between a workers' compensation insurer (Hartford) and the ...

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