Cargill, Incorporated v.National Union Fire Insurance Company of Pittsburgh, Pa.

U.S. District Court, District of Minnesota September 27, 2023

Trial Court Opinion

                 UNITED STATES DISTRICT COURT                            
                    DISTRICT OF MINNESOTA                                


Cargill, Incorporated,             Case No. 21-cv-2563 (WMW/DTS)         

                  Plaintiff,

ORDER

National Union Fire Insurance
Company of Pittsburgh, Pa.,

Defendant.

Before the Court is Plaintiff Cargill, Incorporated’s (“Cargill”) appeal, (Dkt. 127),
of the May 23, 2023 Order of United States Magistrate Judge David T. Schultz, (Dkt. 122).
The May 23, 2023 Order granted Defendant National Union Fire Insurance Company of
Pittsburgh, Pa.’s (“National Union”) motion to amend its answer to assert a counterclaim,
denied Cargill’s motion to amend its complaint and denied Cargill’s motion to correct and
supplement the record. For the reasons addressed below, the Court affirms the May 23,
2023 Order.
BACKGROUND
This matter arises out of an insurance coverage dispute between Cargill and
National Union. From 2009 to 2016, a group of Cargill’s employees and one of its
suppliers defrauded Cargill. Cargill subsequently made a claim through its insurance
policy issued by National Union. After National Union disputed the coverage, Cargill
initiated this litigation against National Union, seeking declaratory judgment that National
Union must pay Cargill the policy limits under the applicable insurance policy. National
Union subsequently determined that Cargill suffered a covered loss totaling approximately
$17 million, and National Union paid Cargill $4 million.1 Cargill contends that the total

loss exceeds $44 million. Cargill now brings this matter to recover the difference between
the $4 million it has received from National Union and the policy limit of $25 million.
In February 2023, National Union moved to amend its answer to add a counterclaim
against Cargill. National Union contends that it received information during discovery that
it requested but did not receive during the claims investigation because Cargill denied the
existence of the information. Because of those misrepresentations, National Union seeks

to add a counterclaim to void the insurance policy under its fraud provision. Cargill
opposed the motion and moved to amend the complaint to add a claim under

Minn. Stat. § 604.18

, alleging that National Union’s attempt to void the policy is made in bad faith.  
Shortly after the March 21, 2023 hearing on these motions, Cargill also moved to “correct 
and supplement” the record, arguing that National Union made misrepresentations at the 

hearing about when and whether National Union had access to information that it relies on 
for its proposed counterclaim.                                            
    On May 23, 2023, Magistrate Judge Schultz granted National Union’s motion to 
amend its answer to assert a counterclaim, denied Cargill’s motion to amend its complaint 
and denied Cargill’s motion to correct and supplement the record.  Cargill now appeals the 

May 23, 2023 Order.                                                       


1 National Union arrived at around $4 million after subtracting its $10 million deductible 
and Cargill’s other recovery.                                             
                           ANALYSIS                                      
    When reviewing an appeal of a magistrate judge’s ruling on a non-dispositive issue, 

the standard of review is “extremely deferential.”  Johannessohn v. Polaris Indus., Inc., 
No. 16-CV-3348 (WMW/LIB),

2022 WL 3585152

, at *2 (D. Minn. Aug. 22, 2022); Scott 
v. United States,

552 F. Supp. 2d 917, 919

 (D. Minn. 2008).  Such a ruling will be modified 
or set aside only if it is clearly erroneous or contrary to law.  See

28 U.S.C. § 636

(b)(1)(A); 
Fed. R. Civ. P. 72(a); LR 72.2(a)(3); see also Ferguson v. United States,

484 F.3d 1068, 1076

 (8th Cir. 2007).  A ruling is clearly erroneous when the reviewing court “is left with 

the definite and firm conviction that a mistake has been committed.”  Wells Fargo & Co. 
v. United States,

750 F. Supp. 2d 1049, 1050

 (D. Minn. 2010) (internal quotation marks 
omitted).  When a court “fails to apply or misapplies relevant statutes, case law or rules of 
procedure,” its decision is contrary to law.

Id.

  (internal quotation marks omitted).  
    Cargill objects to the May 23, 2023 Order, arguing that the magistrate judge erred 

by (1) granting National Union’s motion to amend its answer and (2) denying Cargill’s 
motion to amend the complaint. The Court addresses each argument in turn. 
I.   National Union’s Motion to Amend Its Answer                          
    Cargill  contends  that  the  magistrate  judge  committed  plain  error  by  allowing 
National Union to amend its answer because National Union’s amendment is futile.  The 

futility arises, Cargill argues, because the amendment fails to plead fraud with specificity 
and is grounded in information that is not relevant to the insurance claims.  Cargill also 
contends that the magistrate judge erred because National Union lacked good cause to 
amend.  National Union opposes the motion, arguing that the counterclaim is not futile and 
that the determination of good cause is well founded.                     

    Rule  15  “requires  the  court  to  ‘freely  give  leave’  to  amend  ‘when  justice  so 
requires.’ ” Shank v. Carleton Coll.,

329 F.R.D. 610

, 613 (D. Minn. 2019) (quoting Fed. 
R. Civ. P. 15(a)(2)).  “A motion to amend may be denied for compelling reasons such as 
undue  delay,  bad  faith,  or  dilatory  motive,  repeated  failure  to  cure  deficiencies  by 
amendments previously allowed, undue prejudice to the non-moving party, or futility of 
the  amendment.”

Id. at 613

 (emphasis  added)  (citations  and  internal  quotation  marks 

omitted). “An amendment is futile if the amended claim could not withstand a motion to 
dismiss under Rule 12(b)(6).”  Hillesheim v. Myron’s Cards & Gifts, Inc.,

897 F.3d 953, 955

 (8th Cir. 2018) (internal quotation marks omitted).  When a motion to amend a 
pleading is opposed on grounds of futility and a party seeks review of the magistrate 
judge’s determination of the issue, the district court’s review is de novo.  LR 72.2(a)(3). 

    Here, the magistrate judge granted National Union’s motion to amend its answer, 
concluding that the amendment was not futile and good cause existed for National Union 
to  do  so.   After  conducting  a  de  novo  review,  the Court  agrees.    National  Union’s 
amendment is not futile.  National Union has met the pleading standards as established by 
the Federal Rule of Civil Procedure, Ashcroft v. Iqbal,

556 U.S. 662

 (2009) and Bell 

Atlantic Corp. v. Twombly,

550 U.S. 544

 (2007). Moreover, many of Cargill’s futility 
arguments pertain to the weight of the facts alleged in the case.  At this stage in the 
proceedings, the Court must accept as true the factual allegations in the complaint and draw 
all reasonable inferences in the plaintiff’s favor.  See Blankenship v. USA Truck, Inc.,

601 F.3d 852, 853

 (8th  Cir. 2010).  As such, the Court concludes that National Union’s 
amendment is not futile.                                                  

    Having determined that the amendment is not futile, the Court next considers 
whether good cause exists to change the Court’s scheduling order and allow National 
Union to amend its answer.  The moving party must demonstrate good cause in order to 
amend a pleading.  Fed. R. Civ. P. 16(b)(4).  When assessing good cause, the moving 
party’s diligence in attempting to abide by the scheduling order’s timelines is the prominent 
consideration.  Sherman v. Winco Fireworks, Inc.,

532 F.3d 709, 717

 (8th Cir. 2008).  A 

change in the law, newly discovered facts, or other changed circumstances may constitute 
good cause to amend a scheduling order.

Id. at 718

.                      
    Cargill contends that National  Union has  not met  the good-cause requirement 
because National Union had the relevant documents to make a counterclaim.  National 
Union claims that it received the documents for the counterclaim when discovery was 

provided in December 2022 and January 2023.  The magistrate judge concluded that 
National Union has diligently pursued this information throughout the claims adjudication 
process and that both parties are arguing for their positions in good faith.  Having reviewed 
the record, the Court agrees.  Good cause existed to modify the scheduling order.  The 
magistrate judge’s decision was neither clearly erroneous nor contrary to law.       

    In summary, the May 23, 2023 Order granting National Union’s motion to amend 
is affirmed.                                                              
II.  Cargill’s Motion to Amend the Complaint                              
    Next, Cargill challenges the magistrate judge’s denial of Cargill’s motion to amend 

the  complaint.    Specifically,  Cargill  contests  the  magistrate  judge’s  conclusion  that 
Cargill’s proposed amendment fails the futility test.  The Court conducts a de novo review 
of the magistrate judge’s decision to deny Cargill’s motion to amend.     
    Cargill’s proposed amendment would add a claim under

Minn. Stat. § 604.18

, which 
provides a cause of action against an insurer who acts in bad faith in denying insurance 
benefits.  To establish bad-faith denial of insurance benefits, under

Minn. Stat. § 604.18

, 

subd. 2(a), an insured must show: (1) the absence of a reasonable basis for denying the 
benefits of the insurance policy; and (2) that the insurer knew of the lack of a reasonable 
basis for denying the benefits of the insurance policy or acted in reckless disregard of the 
lack of a reasonable basis to do so.  Friedberg v. Chubb & Son, Inc.,

800 F. Supp. 2d 1020, 1025

 (D. Minn. 2011).  Courts have articulated a two-part test for liability under this 

section.  First, “whether a reasonable insurer would have denied or delayed payment of the 
claims under the facts and circumstances” at issue.

Id.

  Second, a district court looks at 
“what the insurer knew and when.”  See Adam v. Stonebridge Life Ins. Co.,

612 F.3d 967, 974

 (8th  Cir. 2010).                                                     
    Here, as to part one, Cargill does not make any allegation regarding a denial or delay 

of benefits.  Instead, Cargill’s allegations are premised on National Union’s attempt to void 
the policy under its fraud provision. But the language of

Minn. Stat. § 604.18

 pertains to 
an insurer’s denial or delay of payment of the claims. See Friedberg,

800 F. Supp. 2d at 1025

; see also Selective Ins. Co. of S.C v. Sela, 353 F. Supp. 3d. 847, 856-83 (D. Minn. 
2018).  It is undisputed that National Union has already decided the policy claim and paid 
Cargill.  Indeed, Cargill does not allege that National Union denied or delayed payment.  

Rather, Cargill alleges that National Union violated the statute by attempting to void the 
policy.  Cargill does not cite, nor is the Court aware of, any legal basis to support the 
contention that

Minn. Stat. § 604.18

 applies under these circumstances.  Cargill fails to 
state a claim that would withstand a motion to dismiss under Rule 12(b)(6).  See Hillesheim,

897 F.3d at 955

.  Accordingly, the May 23, 2023 Order denying Cargill’s motion to amend 
is affirmed.

ORDER

    Based on the foregoing analysis and all the files, records and proceedings herein, IT 
IS HEREBY ORDERED the May 23, 2023 Order, (Dkt. 122), is AFFIRMED.        

LET JUDGMENT BE ENTERED ACCORDINGLY.                                      


Dated: September 27, 2023       s/Wilhelmina M. Wright                   
                                Wilhelmina M. Wright                     
                                United States District Judge

Trial Court Opinion

                 UNITED STATES DISTRICT COURT                            
                    DISTRICT OF MINNESOTA                                


Cargill, Incorporated,             Case No. 21-cv-2563 (WMW/DTS)         

                  Plaintiff,

ORDER

National Union Fire Insurance
Company of Pittsburgh, Pa.,

Defendant.

to add a counterclaim to void the insurance policy under its fraud provision. Cargill
opposed the motion and moved to amend the complaint to add a claim under

Minn. Stat. § 604.18

, alleging that National Union’s attempt to void the policy is made in bad faith.  
Shortly after the March 21, 2023 hearing on these motions, Cargill also moved to “correct 
and supplement” the record, arguing that National Union made misrepresentations at the 

hearing about when and whether National Union had access to information that it relies on 
for its proposed counterclaim.                                            
    On May 23, 2023, Magistrate Judge Schultz granted National Union’s motion to 
amend its answer to assert a counterclaim, denied Cargill’s motion to amend its complaint 
and denied Cargill’s motion to correct and supplement the record.  Cargill now appeals the 

May 23, 2023 Order.                                                       


1 National Union arrived at around $4 million after subtracting its $10 million deductible 
and Cargill’s other recovery.                                             
                           ANALYSIS                                      
    When reviewing an appeal of a magistrate judge’s ruling on a non-dispositive issue, 

the standard of review is “extremely deferential.”  Johannessohn v. Polaris Indus., Inc., 
No. 16-CV-3348 (WMW/LIB),

2022 WL 3585152

, at *2 (D. Minn. Aug. 22, 2022); Scott 
v. United States,

552 F. Supp. 2d 917, 919

 (D. Minn. 2008).  Such a ruling will be modified 
or set aside only if it is clearly erroneous or contrary to law.  See

28 U.S.C. § 636

(b)(1)(A); 
Fed. R. Civ. P. 72(a); LR 72.2(a)(3); see also Ferguson v. United States,

484 F.3d 1068, 1076

 (8th Cir. 2007).  A ruling is clearly erroneous when the reviewing court “is left with 

the definite and firm conviction that a mistake has been committed.”  Wells Fargo & Co. 
v. United States,

750 F. Supp. 2d 1049, 1050

 (D. Minn. 2010) (internal quotation marks 
omitted).  When a court “fails to apply or misapplies relevant statutes, case law or rules of 
procedure,” its decision is contrary to law.

Id.

  (internal quotation marks omitted).  
    Cargill objects to the May 23, 2023 Order, arguing that the magistrate judge erred 

by (1) granting National Union’s motion to amend its answer and (2) denying Cargill’s 
motion to amend the complaint. The Court addresses each argument in turn. 
I.   National Union’s Motion to Amend Its Answer                          
    Cargill  contends  that  the  magistrate  judge  committed  plain  error  by  allowing 
National Union to amend its answer because National Union’s amendment is futile.  The 

futility arises, Cargill argues, because the amendment fails to plead fraud with specificity 
and is grounded in information that is not relevant to the insurance claims.  Cargill also 
contends that the magistrate judge erred because National Union lacked good cause to 
amend.  National Union opposes the motion, arguing that the counterclaim is not futile and 
that the determination of good cause is well founded.                     

    Rule  15  “requires  the  court  to  ‘freely  give  leave’  to  amend  ‘when  justice  so 
requires.’ ” Shank v. Carleton Coll.,

329 F.R.D. 610

, 613 (D. Minn. 2019) (quoting Fed. 
R. Civ. P. 15(a)(2)).  “A motion to amend may be denied for compelling reasons such as 
undue  delay,  bad  faith,  or  dilatory  motive,  repeated  failure  to  cure  deficiencies  by 
amendments previously allowed, undue prejudice to the non-moving party, or futility of 
the  amendment.”

Id. at 613

 (emphasis  added)  (citations  and  internal  quotation  marks 

omitted). “An amendment is futile if the amended claim could not withstand a motion to 
dismiss under Rule 12(b)(6).”  Hillesheim v. Myron’s Cards & Gifts, Inc.,

897 F.3d 953, 955

 (8th Cir. 2018) (internal quotation marks omitted).  When a motion to amend a 
pleading is opposed on grounds of futility and a party seeks review of the magistrate 
judge’s determination of the issue, the district court’s review is de novo.  LR 72.2(a)(3). 

    Here, the magistrate judge granted National Union’s motion to amend its answer, 
concluding that the amendment was not futile and good cause existed for National Union 
to  do  so.   After  conducting  a  de  novo  review,  the Court  agrees.    National  Union’s 
amendment is not futile.  National Union has met the pleading standards as established by 
the Federal Rule of Civil Procedure, Ashcroft v. Iqbal,

556 U.S. 662

 (2009) and Bell 

Atlantic Corp. v. Twombly,

550 U.S. 544

 (2007). Moreover, many of Cargill’s futility 
arguments pertain to the weight of the facts alleged in the case.  At this stage in the 
proceedings, the Court must accept as true the factual allegations in the complaint and draw 
all reasonable inferences in the plaintiff’s favor.  See Blankenship v. USA Truck, Inc.,

601 F.3d 852, 853

 (8th  Cir. 2010).  As such, the Court concludes that National Union’s 
amendment is not futile.                                                  

    Having determined that the amendment is not futile, the Court next considers 
whether good cause exists to change the Court’s scheduling order and allow National 
Union to amend its answer.  The moving party must demonstrate good cause in order to 
amend a pleading.  Fed. R. Civ. P. 16(b)(4).  When assessing good cause, the moving 
party’s diligence in attempting to abide by the scheduling order’s timelines is the prominent 
consideration.  Sherman v. Winco Fireworks, Inc.,

532 F.3d 709, 717

 (8th Cir. 2008).  A 

change in the law, newly discovered facts, or other changed circumstances may constitute 
good cause to amend a scheduling order.

Id. at 718

.                      
    Cargill contends that National  Union has  not met  the good-cause requirement 
because National Union had the relevant documents to make a counterclaim.  National 
Union claims that it received the documents for the counterclaim when discovery was 

provided in December 2022 and January 2023.  The magistrate judge concluded that 
National Union has diligently pursued this information throughout the claims adjudication 
process and that both parties are arguing for their positions in good faith.  Having reviewed 
the record, the Court agrees.  Good cause existed to modify the scheduling order.  The 
magistrate judge’s decision was neither clearly erroneous nor contrary to law.       

    In summary, the May 23, 2023 Order granting National Union’s motion to amend 
is affirmed.                                                              
II.  Cargill’s Motion to Amend the Complaint                              
    Next, Cargill challenges the magistrate judge’s denial of Cargill’s motion to amend 

the  complaint.    Specifically,  Cargill  contests  the  magistrate  judge’s  conclusion  that 
Cargill’s proposed amendment fails the futility test.  The Court conducts a de novo review 
of the magistrate judge’s decision to deny Cargill’s motion to amend.     
    Cargill’s proposed amendment would add a claim under

Minn. Stat. § 604.18

, which 
provides a cause of action against an insurer who acts in bad faith in denying insurance 
benefits.  To establish bad-faith denial of insurance benefits, under

Minn. Stat. § 604.18

, 

subd. 2(a), an insured must show: (1) the absence of a reasonable basis for denying the 
benefits of the insurance policy; and (2) that the insurer knew of the lack of a reasonable 
basis for denying the benefits of the insurance policy or acted in reckless disregard of the 
lack of a reasonable basis to do so.  Friedberg v. Chubb & Son, Inc.,

800 F. Supp. 2d 1020, 1025

 (D. Minn. 2011).  Courts have articulated a two-part test for liability under this 

section.  First, “whether a reasonable insurer would have denied or delayed payment of the 
claims under the facts and circumstances” at issue.

Id.

  Second, a district court looks at 
“what the insurer knew and when.”  See Adam v. Stonebridge Life Ins. Co.,

612 F.3d 967, 974

 (8th  Cir. 2010).                                                     
    Here, as to part one, Cargill does not make any allegation regarding a denial or delay 

of benefits.  Instead, Cargill’s allegations are premised on National Union’s attempt to void 
the policy under its fraud provision. But the language of

Minn. Stat. § 604.18

 pertains to 
an insurer’s denial or delay of payment of the claims. See Friedberg,

800 F. Supp. 2d at 1025

; see also Selective Ins. Co. of S.C v. Sela, 353 F. Supp. 3d. 847, 856-83 (D. Minn. 
2018).  It is undisputed that National Union has already decided the policy claim and paid 
Cargill.  Indeed, Cargill does not allege that National Union denied or delayed payment.  

Rather, Cargill alleges that National Union violated the statute by attempting to void the 
policy.  Cargill does not cite, nor is the Court aware of, any legal basis to support the 
contention that

Minn. Stat. § 604.18

 applies under these circumstances.  Cargill fails to 
state a claim that would withstand a motion to dismiss under Rule 12(b)(6).  See Hillesheim,

897 F.3d at 955

.  Accordingly, the May 23, 2023 Order denying Cargill’s motion to amend 
is affirmed.

ORDER

    Based on the foregoing analysis and all the files, records and proceedings herein, IT 
IS HEREBY ORDERED the May 23, 2023 Order, (Dkt. 122), is AFFIRMED.        

LET JUDGMENT BE ENTERED ACCORDINGLY.                                      


Dated: September 27, 2023       s/Wilhelmina M. Wright                   
                                Wilhelmina M. Wright                     
                                United States District Judge

Reference

Status: Unknown