United States District Court, E.D. Missouri, Eastern Division
ORDER AND RECOMMENDATION
D. NOCE, UNITED STATES MAGISTRATE JUDGE
action is before the Court upon several motions of plaintiff
Country Mutual Insurance Company for default judgment against
defendant Medical Weight Loss Centers, LLC,
("Centers") (Doc. 13) and for leave to file a first
amended complaint (Doc. 16), and the motion of defendant
Herbert W. Vincent to dismiss plaintiff's complaint (Doc.
14). Arguments on these motions were heard on February 6,
the original complaint was filed, the case was assigned to
the undersigned magistrate judge pursuant to the Court's
random assignment process. Pursuant to E. D. Mo. Local Rule
2.08, the case was referred to a magistrate judge for the
exercise of plenary authority to the extent authorized by
law, including 28 U.S.C. § 636. (Doc. 4). Under §
636(c)(1), if all parties in the action consent thereto, the
assigned magistrate judge may determine all non-dispositive
and dispositive matters, including the entry of judgment
following trial. Otherwise, under § 636(b), the
magistrate judge is limited to determining non-dispositive
matters and recommending the determination of dispositive
matters, such as motions to dismiss a case involuntarily. 28
U.S.C. § 636(b)(1)(A). Without the § 636(c)
consents of all parties, including those who have
entered the case and those who have not, the dispositive
matters must be decided ultimately by a district judge.
Medical Weight Loss Centers, LLC, cannot have consented to a
magistrate judge exercising plenary authority under §
636(c), because that party has not entered the case.
Therefore, the undersigned has taken up plaintiff's
motion for leave to file an amended complaint on its merits,
because it is a non-dispositive matter, and recommends a
decision on defendant's motion to dismiss, because it is
a dispositive matter.
for leave to file amended complaint
commenced this action by filing its complaint for declaratory
judgment on September 17, 2018. It invokes the diversity of
citizenship subject matter jurisdiction granted this Court by
28 U.S.C. § 1332, alleging that it is an Illinois
corporation and that defendant Medical Weight Loss Centers,
LLC, is a corporate citizen of Missouri and that defendant
Herbert W. Vincent likewise is a citizen of Missouri, and
that the amount in controversy exceeds the sum of $75,
000.00, exclusive of interest and costs.
alleges the following facts. It issued the business insurance
policy, which is attached to the complaint, to Centers,
covering the period February 27, 2016, through February 27,
2017. The named insured is defendant Medical Weight Loss
Centers, LLC. On December 7, 2017, defendant Vincent sued
Centers and four others in the Circuit Court of St. Louis
County ("state court suit"). The state court suit
seeks monetary damages, both compensatory and punitive, due
to false and misleading statements made by "agents and
representatives" of Centers. Centers requested that
plaintiff Country Mutual Insurance Company defend and
indemnify it for defendant Vincent's claims in the state
court suit. Plaintiff alleges that its insurance policy does
not cover the claims alleged in the state court suit.
Plaintiff alleges that the dispute between it and defendants
in the federal suit is ripe for decision because Centers has
demanded defense and indemnification. Plaintiff seeks a
declaration of this Court that it is not obligated under its
policy to defend or indemnify Centers for the claims in the
state court suit. (Doc. 1).
proposed first amended complaint, plaintiff Country Mutual
alleges that defendant Vincent filed an amended petition in
the state court suit and that the claims made in the state
court suit remain outside the coverage of the policy it
issued to Centers. It alleges that "[a] justiciable
controversy exists between [it] and [Centers]" over
whether it is obligated by the policy to defend or indemnify
Centers. (Doc. 16-1).
Herbert W. Vincent has not objected to plaintiff's filing
its first amended complaint. "The court should freely
give leave [to amend] when justice so requires." F. R.
Civ. P. 15(a)(2). The Court grants the motion to file the
first amended complaint.
filing of the first amended complaint does not moot the issue
presented by defendant's motion to dismiss. Defendant
argues that plaintiff's claim for declaratory relief is
not ripe for decision because the state court suit is
ongoing. Plaintiff argues that a justiciable controversy
currently exists between it and Centers. In this diversity
action, the rule of Erie R.R. Co. v. Tompkins, 304
U.S. 64 (1938), applies. A federal district court exercising
diversity jurisdiction looks to the law of the forum state,
including choice of law rules. 28 U.S.C. § 1652;
Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487,
496 (1941); Nationwide Mut. Ins. Co. v. Harris Medical
Ass's., LLC, 2013 WL 5532691 at *2 (E. D. Mo. 2013).
More specifically, the Court is bound by the decisions of the
Missouri Supreme Court, although indications of how the
Supreme Court of Missouri would rule on an issue may be
indicated by decisions of the Missouri Court of Appeals.
Owners Ins. Co. v. Hughes, 712 F.3d 392, 393 (8th
and defendant Vincent argue over whether the insurance
coverage dispute is "ripe" or an existing
"justiciable controversy" that ought to be decided
now or at another time. To decide this issue, the Court must
look to the applicable rules of decision under the
substantive law of Missouri. Generally a liability insurer
has two important duties under its policy, to defend the
insured against claims covered by the policy and to indemnify
the insured for a covered claim reduced to judgment.
Piatt v. Indiana Lumbermen's Mut. Ins. Co., 461
S.W.3d 788, 792 (Mo. 2015) (en banc); Allen v.
Continental Western Ins. Co., 436 S.W.3d 548, 553 (Mo.
Missouri law, the duty to defend is broader than the duty to
indemnify. The Missouri Supreme Court has described the duty
to defend thus:
[I]t arises only when there is a possibility or
potential for coverage at the outset of the case. It
hinges on facts: "(1) alleged in the petition; (2) the
insurer knows at the outset of the case; or (3) that are
reasonably apparent to the insurer at the outset of the
case." Unless these facts support some reasonably
apparent theory of recovery against ...