Milbank Insurance Company v. Rushmore Photo & Gifts, Inc.

CourtDistrict Court, D. South Dakota
DecidedSeptember 4, 2018
Docket5:17-cv-05066
StatusUnknown

This text of Milbank Insurance Company v. Rushmore Photo & Gifts, Inc. (Milbank Insurance Company v. Rushmore Photo & Gifts, Inc.) is published on Counsel Stack Legal Research, covering District Court, D. South Dakota primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Milbank Insurance Company v. Rushmore Photo & Gifts, Inc., (D.S.D. 2018).

Opinion

UNITED STATES DISTRICT COURT

DISTRICT OF SOUTH DAKOTA

WESTERN DIVISION

MILBANK INSURANCE COMPANY, CIV. 17-5066-JLV Plaintiff, vs. ORDER RUSHMORE PHOTO & GIFTS, INC., a South Dakota Corporation, JRE, INC., a South Dakota Corporation, CAROL NIEMANN, PAUL A. NIEMANN, and BRIAN M. NIEMANN, Defendants.

INTRODUCTION Defendants Rushmore Photo & Gift, Inc., JRE, Inc., Carol Niemann, Paul A. Niemann and Brian M. Niemann (jointly the “RPG Defendants”) filed a motion to dismiss count I, count II and paragraphs 68(a), (b), (c), (d), (e), (g) and (k) of count III of plaintiff’s complaint pursuant to Federal Rules of Civil Procedure 12(b)(5) and (6). (Docket 7). Plaintiff resists defendants’ motion. (Docket 19). For the reasons stated below, defendants’ motion is granted. ANALYSIS For purposes of resolving the RPG Defendants’ motion, the facts alleged in the complaint are accepted as true. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (“To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ ”) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Plaintiff Milbank Insurance Company (“Milbank”) filed a complaint

against the RPG Defendants on August 22, 2017. (Docket 1). The complaint asserts the court has diversity of citizenship jurisdiction pursuant to 28 U.S.C. § 1332(a).1 Id. ¶ 18. The complaint seeks a “declaratory judgment, brought pursuant to 28 U.S.C. §§ 2201 & 2202, for the purpose of determining the rights and legal obligations under insurance policies issued by Milbank to the RPG Defendants.” (Docket 1 ¶ 1). Plaintiff alleges “[t]he Milbank Policies do not apply to claims for trademark infringement, intentional violations of the known rights of another, and injunctive relief.” Id. ¶ 2. Milbank states that

“[o]n June 22, 2011, Sturgis Motorcycle Rally, Inc. (“SMRI”), filed suit against the RPG Defendants alleging trademark infringement relating to the Sturgis Motorcycle Rally in Sturgis, South Dakota.” Id. ¶ 3. See Sturgis Motorcycle Rally, Inc. v. Rushmore Photo & Gifts, Inc., et al., Civ. 11-5042 (D.S.D. 2011) (the “SMRI Lawsuit”). The complaint alleges that “Milbank agreed to defend the RPG Defendants, subject to a reservation of rights that the Milbank Policies do not provide coverage for trademark violations, intentional violations of the known rights of another, or claims for injunctive relief.” (Docket 1 ¶ 4).

1The RPG Defendants acknowledge the court has diversity jurisdiction over plaintiff’s complaint. (Docket 8 at p. 5).

2 “On April 24, 2012, SMRI filed an Amended Complaint alleging the same causes of action as its original Complaint, but adding Wal-Mart as a defendant.” (Docket 1 ¶ 40) (referencing Civ. 11-5052, Docket 52). “Without

consulting Milbank, Rushmore agreed to defend and indemnify Wal-Mart relative to the [SMRI] Lawsuit.” Id. ¶ 43. “Until its decision to amicably withdraw[ ] from the RPG Defendants’ defense, Milbank was also paying for [RPG Defendants’ attorneys] defense of Wal-Mart subject to a reservation of rights.” Id. ¶ 45. “Milbank now seeks a ruling that Milbank has no duty to defend the RPG Defendants in the [SMRI] [L]awsuit.” Id. ¶ 10. Count I seeks a declaratory judgment that “the Trademark Exclusion bars coverage for the [SMRI] Lawsuit in its entirety.” Id. ¶ 60. Count II seeks

a declaratory judgment that “the Intentional and/or Willful Conduct Exclusion bars coverage for the [SMRI] Lawsuit in its entirety.” Id. ¶ 66. Count III seeks a declaratory judgment “that Milbank has no duty to provide coverage, or is entitled to recover certain amounts spent in connection with the [SMRI] Lawsuit, based on [certain] grounds . . . .” Id. ¶ 68. Relevant to the RPG Defendants’ motion, the complaint alleged that Milbank had no duty to: 1. defend claims for “personal and advertising injury” where such injury arises from publications or distributions of infringing material that occurred prior to the inception of any Milbank Policy. Id. ¶ 68(a).

2. defend claims for any liability or potential liability which the RPG Defendants knew of, and did not disclose to Milbank, prior to the inception of any Milbank Policy. Id. ¶ 68(b).

3 3. defend claims for “personal and advertising injury” arising out of oral or written publication of material, if done by or at the direction of the RPG Defendants with knowledge of its falsity. Id. ¶ 68(c).

4. defend claims for “personal and advertising injury” arising out of the failure of goods, products or services to conform with any statement of quality or performance made in the RPG Defendants’ “advertisement.” Id. ¶ 68(d).

5. defend claims that do not seek damages, or claims that . . . seek solely injunctive or equitable relief. Id. ¶ 68(e).

6. pay defense costs that are not reasonable and necessary, or are otherwise unrelated to a covered claim. Id. ¶ 68(g).

7. defend the RPG Defendants to the extent that coverage is precluded by the terms, conditions, and exclusions of the Milbank Policies. Id. ¶ 68(k).

The RPG Defendants seek dismissal of count I, count II and the above referenced subsections of count III pursuant to Fed. R. Civ. P. 12(b)(6) as being time-barred by the applicable South Dakota statute of limitations. (Docket 8 at p. 7). Defendants identify SDCL § 15-2-13 as the applicable statute of limitations. Id. In relevant part, that statute provides “the following civil actions . . . can be commenced only within six years after the cause of action shall have accrued . . . [a]n action upon a contract, obligation, or liability, express or implied . . . .” SDCL § 15-2-13(1). The RPG Defendants argue that because Milbank’s claim “accrued no later than June 22, 2011,” when the SMRI Lawsuit complaint was filed and Milbank’s complaint was not filed until “August 22, 2017, and served on

4 August 31, 2017,2 . . . the statute of limitations had run on all claims related to Milbank’s duty to defend under the contract of insurance.” (Docket 8 at pp. 6-7). For these reasons, the RPG Defendants assert the identified Milbank

claims “should be dismissed with prejudice.” Id. at p. 7. Milbank resists defendants’ motion on several grounds. First, “[t]he operative pleading in the [SMRI] Lawsuit is the First Amended Complaint filed April 24, 2012.” (Docket 19 at p. 2) (referencing Civ. 11-5052, Docket 52). “[T]o the extent that a six-year statute of limitations applies and a cause of action for declaratory relief can accrue upon the filing of an underlying complaint, the applicable statute of limitations for this matter began to toll on April 24, 2012.” Id. at p. 3. Milbank argues “the allegations contained in [the

amended complaint] . . . will be used to determine Milbank’s defense obligations, if any, to the RPG Defendants.” Id.

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Milbank Insurance Company v. Rushmore Photo & Gifts, Inc., Counsel Stack Legal Research, https://law.counselstack.com/opinion/milbank-insurance-company-v-rushmore-photo-gifts-inc-sdd-2018.