Timeless Bar, Inc. v. Illinois Casualty Company

                UNITED STATES DISTRICT COURT                             
                    DISTRICT OF MINNESOTA                                


Timeless Bar, Inc., doing business as The   No. 22-cv-1685 (KMM/LIB)      
Press Bar and Parlor, and Horseshoe Club,                                 
LLC,                                                                      

         Plaintiffs,                                                     

v.                                                                        

Illinois Casualty Company,                                                

         Defendant.                                                      


    Plaintiffs Timeless Bar, Inc. and Horseshoe Club, LLC brought this action against 
their  insurer,  Defendant  Illinois  Casualty  Company,  claiming  the  latter  breached  the 
parties’ insurance agreement. Specifically, the Plaintiffs allege that even though the fire 
that destroyed their property was intentionally set by an officer of the corporation and a 
member of the LLC, the insurer was obligated under the policy and Minnesota law to pay 
for the loss. This matter is before the Court on the parties’ cross-motions for summary 
judgment. For the reasons that follow, the Defendant’s motion is granted, the Plaintiffs’ 
motion is denied, and this matter is dismissed with prejudice.            
                         BACKGROUND                                      
I.   The Plaintiffs’ Businesses                                           
    In April 2016, while  still a married  couple, Andrew Welsh and Jessie Welsh 
purchased a bar in St. Cloud, Minnesota. They bought it from the previous owners on a 
contract for deed for $500,000. Prouty Decl., Ex. 7 (Doc. 63). The couple opened the 
business as The Press Bar and Parlor and operated it through a corporation, Timeless Bar, 
Inc. (“Timeless Bar”). They also set up a real estate holding company, Horseshoe Club, 
LLC (“Horseshoe Club”), and arranged the building purchase through that company. This 

case arises out of a February 17, 2020 fire that destroyed the bar. The Defendant and law 
enforcement later discovered that Andrew intentionally set the fire.      
    Andrew and Jessie incorporated Timeless Bar on February 18, 2016. Prouty Decl., 
Ex. 5. The company’s articles of incorporation provide that the Chief Executive Officer 
would                                                                     

         control all of the business and affairs of the Corporation [and] 
         have authority to sign, execute, and acknowledge, on behalf     
         of  the  Corporation,  all  deeds,  mortgages,  bonds,  stock   
         certificates, contracts, leases, reports, and all other documents 
         or  instruments  necessary  or  proper  to  be  executed  in  the 
         course of the Corporation’s regular business.                   

Prouty Decl., Ex. 6, Timeless Bar Bylaws, Art. IV, § 5; Alton Decl., Ex. 1.1 Andrew was 
the CEO of Timeless Bar. Timeless Bar Bylaws at TB00013 (signature block “Andrew 
Welsh, CEO”). He was also its majority owner, holding 510 shares, while Jessie owned 
the  other  490  shares.  Id.,  Ex. 4,  J.  Welsh  Dep.  114–116;  id.,  Ex. 7,  Asset  Purchase 
Agreement at 18 (signed by Andrew Welsh as CEO of Timeless Bar). As the CEO, 

    1  The  copies  of  both  the  corporation’s  bylaws  and  the  limited  liability  company’s 
membership operating agreement in the record are unexecuted. The executed versions were 
apparently destroyed in the fire. Aside from the fact that the operating agreement for Horseshoe 
Club contains a few references in its headings to a different, unaffiliated business known as 
“Legacy Place, LLC,”  see  Alton  Decl.,  Ex. 4  at  7–9, the parties do not  dispute that  these 
documents accurately reflect the terms governing operations of both Timeless Bar and Horseshoe 
Club.                                                                     
Andrew was authorized to obtain insurance and submit insurance claims on behalf of the 
company. J. Welsh Dep. 188–90.                                            
    The Welshes formed the Horseshoe Club on April 1, 2016, and Andrew and Jessie 

were  the  LLC’s  only  two  members.  Prouty  Decl.,  Ex. 3,  Horseshoe  Operating 
Agreement. Andrew was the chief executive manager and president of the Horseshoe 
Club. Id. at HC00031–32.2 Andrew had primary responsibility for the LLC’s operations 
and signed all legal documents on the company’s behalf. Id., Art. 4, § 4.4. 
    Timeless Bar obtained insurance under a Businessowners Policy (the “Policy”) 

with Defendant Illinois Casualty Company (“ICC”). Prouty Decl., Ex. 2, ICC Policy. The 
Horseshoe Club was covered as an additional named insured – “building owner” – for 
certain losses associated with the building itself under the Policy. Id. at BP AI 04 09 14 
(“The building owner identified in this endorsement is a Named Insured, but only with 
respect to the coverage provided under this Coverage Form for direct physical loss or 

damage to the building(s) designated in the Schedule of this endorsement.”). Andrew 
submitted  the  application  for  insurance  to  ICC  on  behalf  of  Timeless  Bar  and  the 
Horseshoe Club. Prouty Decl., Ex. 9; J. Welsh Dep. 188–89. Following the execution of 
the  Policy,  Andrew  called  and  communicated  with  the  companies’  insurance  agent 
whenever there was a claim. J. Welsh Dep. 190.                            




    2 Jessie was also listed as Horseshoe Club’s “president, secretary, and treasurer.” Prouty 
Decl., Ex. 3 at HC00031–32.                                               
II.  The Welshes’ Divorce                                                 
    Andrew and Jessie divorced in November 2019. J. Welsh Dep. 10; Alton Decl., 
Ex. 8. Andrew retained all of the bank accounts for Horseshoe Club and Timeless Bar in 

the divorce. J. Welsh Dep. 71–72; Alton Decl., Ex. 8 at 19. The businesses had originally 
banked with US Bank, but prior to the divorce Andrew had moved the banking accounts 
to MidCountry Bank. J. Welsh Dep. 127–28. Jessie was removed as a signatory on the 
MidCountry accounts by the end of 2019. J. Welsh Dep. 64–65, 135. In February 2020, at 
the time of the fire, Jessie had no electronic access to the MidCountry accounts. J. Welsh 

Dep. 64, 129.                                                             
    Leading up to the divorce, Jessie had become less involved in the operation of the 
bar and the Horseshoe Club. J. Welsh Dep. 49–50. Although Jessie had originally been 
responsible for making payments to the former owners of the building, Andrew had taken 
over those duties near the end of 2018. J. Welsh Dep. 138–40. He also took over payroll-

related responsibilities by March 2019. J. Welsh Dep. 143–47. Andrew verified inventory 
for the bar, tracked sales, reported sales to the outside accountant every month, made 
bank deposits except when he asked Jessie to do that for him, and placed orders and took 
deliveries for the bar. J. Welsh Dep. 148, 158; Prouty Dep., Ex. 16 at 9. At the time of the 
fire, Jessie did not have a key to the bar and Andrew had changed the locks. J. Welsh 

Dep. 187–88.                                                              
    However, it is clear that after the bar was purchased in 2016, Jessie had some 
responsibilities for operating the bar at various times throughout its existence. Though 
she didn’t specify the precise dates, Jessie indicated that she did the following tasks: 
calculating inventory; addressing payroll issues; garnishing payroll; processing workers’ 
compensation claims; handling a variety of tax-related issues; making bank deposits; 
paying  bills;  obtaining  office  supplies;  maintaining  paperwork  and  handling  other 

administrative  matters;  seeking  legal  representation  when  necessary;  and  reviewing 
contracts. She also maintained a food manager certification, which had to be renewed 
every three years, and was required to renew a food license annually. Prouty Decl., 
Ex. 21. It is also undisputed that the bar and restaurant needed Jessie to maintain the food 
license and certification to continue operating.                          

III.  The Arson and Plaintiffs’ Insurance Claims                          
    On February 17, 2020, Andrew Welsh burned down the bar. See Prouty Decl., 
Ex. 1, Plea Agreement. The following day, Andrew executed a Non-Waiver Agreement 
with ICC as the authorized representative of Timeless Bar as a named insured under the 
Policy.3 Prouty Decl., Ex. 10. On February 26, 2020, Timeless Bar and the Horseshoe 

Club  submitted  the  initial  insurance  claim  to  ICC  via  a  “Proof  of  Loss”  seeking 
approximately $1.4M  in proceeds.  Prouty  Decl., Ex. 11,  2/26/20  Proof of Loss. The 
initial claim sought the policy limits for the building and other amounts. Id. at 1. The 
claim states that the fire was of “unknown origin.” Id. at 3 ¶ 1. Further, the sworn proof 
of loss states:                                                           

         That  said  loss  did  not  originate  by  any  act,  design  or 
         procurement on the part of your insured, or as affiant; nothing 

    3 The Non-Waiver Agreement provided that no action of ICC would be deemed a waiver 
of its right to deny liability under any policy and clearly referred to the “Named Insured” as 
“Timeless Bar Incorporated dba The Press Bar and Parlor,” with Andrew signing as “Authorized 
representative of Named Insured.” Prouty Decl., Ex. 10.                   
         has  been  done  by  or  with  the  privity  or  consent  of  your 
         insured or this affiant, to violate the conditions of the policy, 
         or render it void. . . .                                        

Id. at 4. Andrew and Jessie both signed that proof of loss on behalf of the businesses. Id.; 
J. Welsh Dep. 196–97. There is no dispute that in the proof of loss, Andrew falsely stated 
that the fire was of unknown origin and that the loss did not originate by any act, design, 
or procurement of his own. Nor is there any dispute that his submission of the false claim 
as an affiant on behalf of the insured was an effort to defraud ICC.      
    On May 15, 2020, the Plaintiffs submitted an updated Proof of Loss, increasing 
the amount of the claim to just over $1.6M. Prouty Decl., Ex. 12. On June 1, 2020, the 
Plaintiffs  submitted  another  amended  Proof  of  Loss  seeking  more  than  $1.9M,  an 
increase based on claimed damages to business personal property (“BPP”) of more than 
$300,000. Prouty Decl., Ex. 13, 6/1/20 Proof of Loss. Jessie signed the June 1st amended 
claim, but the BPP amount was based on an inventory list that Andrew provided. Prouty 

Decl., Ex. 14; J. Welsh Dep. 201. Like the original Proof of Loss, the June 1st Proof of 
Loss states that the fire was of unknown origin and that the loss did not originate by any 
act of the insured or the affiant. 6/1/20 Proof of Loss at 1–2.           
    On November 17, 2020, Andrew was indicted on charges of arson, use of a fire to 
commit  a  federal  felony,  and  wire  fraud.  United  States  v.  Welsh,  No.  20-cr-270 

(ECT/LIB), Doc. 1 (D. Minn. Nov. 17, 2020) (Indict.). On May 4, 2022, eleven days 
before his case was set to go to trial, Andrew pled guilty in federal court to arson and 
admitted  to  doing  so  as  part  of  a  scheme  to  defraud  ICC  to  enrich  himself.  Plea 
Agreement ¶ 2 (admitting, among other things, that “he carried out a scheme to defraud 
and obtain insurance money and property from Illinois Casualty Company” by filing “one 
or more fraudulent insurance claims with [ICC] seeking payment of money to [Andrew], 
through his company, Timeless Bar, Inc.”). On September 30, 2022, he received a 71-

month sentence. United States v. Welsh, No. 20-cr-270 (ECT/LIB), Doc. 109 (D. Minn. 
Sept. 30, 2022) (Sentencing Judgment).                                    
    After  Andrew  pled  guilty,  ICC  denied  the  Plaintiffs’  insurance  claims.  ICC 
essentially relied on three separate exclusions in the Policy based on Andrew’s conduct. 
Alton Decl., Exs. 15, 16. The first two exclusions—(1) Concealment, Misrepresentation, 

or  Fraud  (“Misrepresentation  Exclusion”)  and  (2) Dishonest  Acts  (“Dishonesty 
Exclusion”)—were  based  on  Andrew’s  submission  of  fraudulent  claims.  The 
Misrepresentation Exclusion precludes coverage when a Named Insured has “[a]fter a 
loss, willfully and with intent to defraud . . . concealed or misrepresented any material 
fact or circumstances concerning . . . [a] claim under this Policy.” ICC Policy, Minnesota 

Changes, § A.4.C. The Dishonesty Exclusion provides that ICC “will not pay for loss or 
damage caused by or resulting from . . . dishonest or criminal acts by you, . . . or any of 
your  . . .  ‘members’,  executive  officers,  ‘managers’,  ‘employees’,  directors,  [or]  an 
‘authorized representative’ of . . . you.” Policy, Businessowners Property Coverage Form 
§ C.3.b(4).  The  Policy  defines  “you”  as  the  Named  Insureds—Timeless  Bar  and 

Horseshoe Club. Id. at 1 of 52. An authorized representative of the insured includes any 
member or manager of an LLC and an officer of a corporation. Id., § H.1.c(3), H.1.c(5). 
Essentially, ICC treats these two exclusions synonymously and contends that Andrew’s 
submission of the fraudulent claims on behalf of the Plaintiffs were the acts of the two 
business entities.                                                        
    The third exclusion at issue is the Intentional Act exclusion, which provides that 

ICC “will not pay for loss or damage arising out of any act committed . . . [b]y or at the 
direction  of  any  insured;  and  . . .  with  the  intent  to  cause  a  loss.”  ICC  Policy, 
Businessowners Property Coverage Form § C.3.b(17). According to ICC, this exclusion 
applies to Andrew’s act of arson. ICC asserts that his conduct, as the person who was 
solely in charge of the day-to-day operations of the two businesses, is imputed to the 

Plaintiffs for purposes of determining the application of the Intentional Act exclusion—
i.e., Andrew’s intent to cause a loss is the Plaintiffs’ intent to cause a loss. 
    Through the corporation in which she holds an ownership interest and the LLC of 
which  she  is  a  member,  Jessie  Welsh  disagrees  with  ICC’s  application  of  the  three 
exclusions  discussed  above.  There  is  no  evidence  before  the  Court  that  Jessie  was 

involved in the arson. Nor is there evidence in the record indicating that she was aware, at 
the time the relevant proofs of loss were filed, that Andrew had started the fire. In other 
words, there is no suggestion that Jessie knew the insurance claims provided to ICC 
contained Andrew’s fraudulent statements about the fire being of “unknown origin.” See 
Alton Decl., Ex. 14, Galbraith Decl. 52–54.                               

                          DISCUSSION                                     
    Both sides seek summary judgment. At bottom, the crux of the dispute in this case 
is whether Andrew Welsh’s conduct—burning down the bar and later lying about it in the 
insurance claims—allows ICC to deny coverage to Timeless Bar and Horseshoe Club. 
ICC argues that Andrew’s conduct is imputable to the Plaintiffs for purposes of all three 
exclusions at issue: his submission of fraudulent insurance claims precludes coverage for 
the  Plaintiffs  under  the  Misrepresentation  and  Dishonesty  Exclusions,  and  his  arson 

precludes coverage under the Intentional Acts Exclusion. Plaintiffs argue that they are 
innocent business entities who are the named insureds, and if ICC is allowed to deny 
coverage based on those exclusions, the protections for innocent insureds recognized 
under Minnesota law and the standard fire insurance policy would be eliminated. In 
relevant part, the Minnesota standard fire insurance policy states:       

         This entire policy shall be void if, whether before a loss, the 
         insured has willfully, or after a loss, the insured has willfully 
         and with intent to defraud, concealed or misrepresented any     
         material fact or circumstance concerning this insurance or the  
         subject thereof, or the interests of the insured therein.       

Minn. Stat. § 65A.01, subd. 3.4 Plaintiffs assert that ICC’s denial of coverage causes the 
Policy to provide less than the minimum coverage required by this provision, so the 
Policy must be reformed so that it conforms                               
    As explained below, the Court finds that there is no genuine dispute that Andrew 
filed fraudulent claims on behalf of both Timeless Bar and Horseshoe Club. Because he 
did so, no reasonable jury could find that ICC breached the Policy by denying coverage 
under either the Misrepresentation Exclusion or the Dishonesty Exclusion. Neither the 
Minnesota standard fire policy, nor the Minnesota case law relied upon by the Plaintiffs 
precludes  application  of these exclusions under the circumstances presented. ICC is, 

    4  The  Misrepresentation  Exclusion  essentially  tracks  the  language  in  Minn.  Stat. 
§ 65A.01, subd. 3. See Hackbarth v. State Farm Fire & Cas. Co., No. 11-cv-690 (DSD/FLN), 

, at *3 (D. Minn. Jan. 31, 2013).                           
therefore, entitled to summary judgment. Because it is unnecessary to address whether 
coverage could properly be denied under the Intentional Acts Exclusion, the Court does 
not decide that issue.                                                    

I.   Legal Standards                                                      
    Summary judgment is appropriate when there is no genuine issue of material fact 
and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a); 
Celotex Corp. v. Catrett, 

, 322–23 (1986); Dowden v. Cornerstone Nat’l Ins. 
Co., 

 (8th Cir. 2021). The moving party must demonstrate that the 

material facts are undisputed. Celotex, 

. A fact is “material” only if its 
resolution could affect the outcome of the suit under the governing substantive law. 
Anderson v. Liberty Lobby, Inc., 

 (1986). When the moving party 
properly  supports  a  motion  for  summary  judgment,  the  party  opposing  summary 
judgment  may  not  rest  on  mere  allegations  or  denials,  but  must  show,  through  the 

presentation of admissible evidence, that specific facts exist creating a genuine issue for 
trial. 

; McGowen, Hurst, Clark & Smith, P.C. v. Com. Bank, 

 
(8th Cir. 2021). A dispute of fact is “genuine” only if “the evidence is such that a 
reasonable jury could return a verdict for the nonmoving party.” Anderson, 

.  Courts  must  view  the  inferences  to  be  drawn  from  the  facts  in  the  light  most 

favorable to the nonmoving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio 
Corp., 

, 587–88 (1986); Irvin v. Richardson, 

 (8th Cir. 2021). 
“Credibility determinations, the weighing of the evidence, and the drawing of legitimate 
inferences from the facts are jury functions, not those of a judge. . . .” Nunn v. Noodles & 
Co., 

 (8th Cir. 2012) (quoting Anderson, 

). 
    Because the parties have filed cross-motions for summary judgment, when the 

Court considers the Plaintiffs’ motion, it views the record in the light most favorable to 
ICC, and when considering ICC’s motion, it views the record in the light most favorable 
to Plaintiffs. Durand v. Fairview Health Servs., 

 (D. Minn. 
2017), aff’d, 

 (8th Cir. 2018).                               
    The parties agree that the substantive law of Minnesota applies in this diversity 

dispute. See Netherlands Ins. Co. v. Main Street Ingredients, LLC, 

, 912–
913 (8th Cir. 2014) (applying substantive law of Minnesota to insurance dispute where 
the parties did not disagree as to choice of law). The Court’s task is to “predict how the 
Supreme Court of Minnesota would rule if the issue came before it.” Jerry’s Enterprises, 
Inc. v. U.S. Specialty Ins. Co., 

 (8th Cir. 2017) (quotation marks 

omitted). Initially, the insured has the burden to show that coverage exists, and then the 
burden shifts to the insurer to demonstrate that a policy exclusion applies. 

 (citing 
Friedberg v. Chubb & Sons, Inc., 

 (8th Cir. 2012)).      
II.  Misrepresentation and Dishonesty Exclusions                          
    A. The Facts and the Policy Language                                 

    Applying  the  undisputed  material  facts  of  this  case  to  the  language  of  the 
Misrepresentation Exclusion and the Dishonesty Exclusion is a straightforward exercise 
that results in a straightforward outcome: ICC is entitled to judgment as a matter of law 
because the Policy provides no coverage. Start with the language of these exclusions. 
Under the plain language of the Misrepresentation Exclusion, ICC does not provide 
coverage if, after a loss, an insured or its authorized representative willfully and with 
intent to defraud, concealed, or misrepresented any material fact concerning a claim 

under the Policy. Similarly, the Dishonesty Exclusion provides that ICC will not pay for 
loss caused by or resulting from the insured’s dishonest acts, or those of its members, 
officers, or authorized representatives. And the Policy plainly provides that authorized 
representatives include members of an LLC and officers of a corporation.5 
    It is also straightforward how the undisputed facts of this case fit neatly within 

those exclusions. There is no genuine dispute that the named insureds are Timeless Bar 
and Horseshoe Club and that Andrew was an officer of one and a member of the other. A 
reasonable jury could only find that when Andrew acted on behalf of Timeless Bar and 
Horseshoe Club, his  conduct  fell within the plain language  of the Misrepresentation 
Exclusion and the Dishonesty Exclusion.                                   

    Moreover, there is no genuine dispute that, after the fire, Andrew willfully and 
with intent to defraud ICC, concealed and misrepresented material facts concerning the 
Plaintiffs’ insurance claim. He filed a fraudulent claim when he signed the original Proof 
of  Loss  on  February  26,  2020,  and  the  May  15,  2020  amended  Proof  of  Loss.  No 
reasonable jury could conclude otherwise based on this record.            



    5 Plaintiffs concede that the language of these exclusions are not ambiguous and that their 
terms apply on their face, but as discussed in greater detail below, they argue that the exclusions 
must be reformed to be consistent with the standard Minnesota fire policy. See Pls.’ Mem. in 
Supp. of Mot. for Summ. J. (“Pls.’ SJ Mem.”) at 17, 27–28 (Doc. 57).      
    Further, it is undisputed that Andrew was responsible for obtaining insurance and 
filing insurance claims on behalf of the businesses. He applied for the Policy at issue in 
this case on behalf of both Timeless Bar and Horseshoe Club. He signed the original 

fraudulent Proof of Loss on behalf of the businesses to submit the insurance claims on 
their behalf, and again prepared an inventory list in connection with an increased BPP 
claim that dishonestly indicated that the insured and the affiants had no idea what caused 
the fire. Even Jessie Welsh, the only other member of Horseshoe Club and the only other 
officer of Timeless Bar, admitted that Andrew was submitting the claim on behalf of the 

businesses. Jessie acknowledged that Andrew was responsible for handling applications 
for insurance for the businesses and the submission of any insurance claims. Viewing the 
evidence favorably to Plaintiffs, a reasonable jury could not find that Andrew did not 
submit these claims on behalf of Timeless Bar and Horseshoe Club.         
    Based  on  these  undisputed  facts,  no  reasonable  jury  could  find  that  the 

Misrepresentation and Dishonesty Exclusions do not apply on their face to the facts of 
this  case.  Indeed,  Timeless  Bar  and  Horseshoe  Club  do  not  seriously  dispute  that 
(1) Andrew was an authorized representative of the corporation and the LLC, (2) he filed 
a fraudulent claim for insurance benefits, and (3) in doing so, he engaged in conduct that 
falls within the language of these two exclusions. Based on a careful review of the record, 

the Court finds that the Misrepresentation and Dishonesty Exclusions apply. But the 
Plaintiffs argue that, although the exclusions both appear to apply to the facts of the case, 
the Court should nonetheless conclude that coverage exists because the businesses are 
“innocent insureds.”6 As explored below, none of Plaintiffs’ efforts to avoid the plainly 
applicable exclusions succeed.                                            
    B. Hogs Unlimited, Watson, and “Innocent Insureds”                   

    Plaintiffs argue that, under Minnesota law, Andrew’s conduct cannot be imputed 
to Timeless Bar and Horseshoe Club because they are “innocent insureds,” and he is a 
stranger  to  the  Policy.  Plaintiffs  argue  that  applying  the  Misrepresentation  and 
Dishonesty Exclusions would mean that ICC’s Policy provides less than the minimum 
coverage required by the statutory Minnesota standard fire insurance policy. Therefore, 

they contend ICC’s Policy must be reformed to provide coverage for Timeless Bar and 
Horseshoe Club. Plaintiffs’ innocent-insured theory is based on the Minnesota Supreme 
Court’s decisions in Hogs Unlimited v. Farm Bureau Mut. Ins. Co., 

 
(Minn. 1987) and Watson v. United Servs. Auto Ass’n, 

 (Minn. 1997). 
But neither case supports Plaintiffs’ position.                           

    In Hogs Unlimited, three partners engaged in the business of raising hogs. All 
three partners (in addition to the partnership itself) were named insureds under a casualty 
policy providing coverage for the business’s property. 401 N.W.2d at 382–83. One of the 
partners, Mr. Cerise, placed a hose in the hog barn and released a gas into the structure, 
resulting in the deaths of all 243 of the partnership’s animals. Id. at 383. The three 

partners, Cerise included, then submitted a proof of loss to the insurer claiming that the 
insured property had been destroyed by an event of unknown origin. Id. While Cerise 

    6 When Plaintiffs filed this case, Jessie was a named Plaintiff and Plaintiffs argued she 
was an “innocent insured.” The Court rejected that argument and granted ICC’s motion to 
dismiss Jessie as a named plaintiff. Order (Doc. 36).                     
engaged in a fraudulent scheme by destroying the hogs and filing the claim, the other two 
partners were unaware of his actions and committed no fraud. Id. The insurer denied their 
claim because of Cerise’s fraud, and the other partners brought suit under the policy. Id. 

The trial court and appellate court found that the innocent partners could recover their 
proportionate  share  of  the  insurance  proceeds,  and  when  the  insurer  appealed,  the 
Minnesota Supreme Court agreed.                                           
    The insurer argued that the coverage was voided by the policy’s fraud exclusion, 
which, tracking language in Minn. Stat. § 65A.01, subd. 3, provided that the entire policy 

was void if, either before or after a loss, “the insured has willfully and with intent to 
defraud, concealed or misrepresented any material fact or circumstance concerning this 
insurance  or  the  subject  thereof  or  the  interests  of  the  insured  therein.”  Id.  at  384 
(emphasis in original). The Hogs Unlimited court considered what the legislature meant 
“by the phrase ‘the insured,’” and reasoned that it did not intend “to visit the blame of the 

errant insured on coinsureds who, having no control over the unauthorized conduct, are 
themselves blameless; nor do we think the legislature intended to make insureds their 
brother’s keeper under penalty of losing their own insurance protection.” Id. Accordingly, 
the court held “that the phrase ‘the insured’ refers to those persons responsible for the 
fraud, not to guilty and innocent insureds alike,” so the policy was not voidable as to the 

two innocent partners who were also named insureds. Id. at 384–85. Further, the court 
held  that  Minnesota’s  public  policy  did  not  deny  recovery  of  insurance  proceeds  to 
innocent partners. Id. at 385–86. Specifically, it held:                  
         [I]nnocent insured partners may recover their proportionate     
         interest under the insurance policy for intentional destruction 
         of  their  partnership  property  interest  by  another  partner; 
         provided, however, that (1) the destruction of the property     
         was not within the scope of the wrongdoer’s authority nor in    
         furtherance of the partnership’s business, and (2) payment of   
         the  insurance  proceeds  to  the  innocent  partners  can  be  
         accomplished to deny, in a practical manner, any appreciable    
         benefit to the guilty partner.                                  

Id. at 386.                                                               
    In Watson, a named insured similarly destroyed property in an intent to defraud 
the insurer, and an innocent co-insured filed a claim. Elizabeth Watson and her estranged 
husband,  Keith  Watson,  were  both  named  insureds  under  an  insurance  policy  that 
covered a mobile home that the couple owned until Keith intentionally burned it down. 

. Although Elizabeth was an innocent co-insured, the insurer denied 
her claim because the policy’s plain language excluded coverage for intentional acts 
committed by “an insured,” 

 at 685–86 (emphasis added), policy language that differed 
from the “the insured” term found in the standard fire insurance policy and discussed in 
Hogs Unlimited. In Watson, the Minnesota Supreme Court first found that this policy 
language was unambiguous—it plainly precluded coverage to all insureds for intentional 
acts committed by any insured, including denying coverage to an innocent co-insured 
spouse for her estranged husband’s arson. 

 at 688–89.                  
    Next,  the  Watson  court  considered  whether  the  unambiguous  exclusion  of 
coverage  to  an  innocent  co-insured  spouse  would  provide  less  coverage  than  the 
minimum  coverage  required  under  the  standard  fire  insurance  policy  in  Minn.  Stat. 
§ 65A.01, subd. 3. Id. at 689–90. In light of the decision in Hogs Unlimited, the Watson 
court concluded “that the legislature’s use of ‘the insured’ in the Minnesota standard fire 
insurance policy evinces a general intent to compensate an innocent co-insured spouse 
despite the intentional acts of the other insured spouse.”7 Id. at 691. Accordingly, the 

court held that, “to the extent [the insurer’s] policy purports to exclude innocent co-
insured  spouses  from  coverage,  it  must  be  reformed  to  comply  with  the  Minnesota 
standard fire insurance policy.” Id. at 692.                              
    Although these cases could be read to require coverage in certain cases when one 
person acting alone commits a fraud or a tortious act, they do not require coverage in this 

case. Both Hogs Unlimited and Watson are concerned entirely with the situation where 
there  are  multiple  named  insureds  on  a  policy,  and  one  named  insured  engages  in 
wrongful conduct that, absent some protection, would exclude coverage to an innocent 
co-insured. Hogs Unlimited, 401 N.W.2d 384–85 (“We hold that the phrase ‘the insured’ 
refers to those persons responsible for the fraud, not to guilty and innocent insureds 

alike.”) (emphasis added); Watson, 

 (“We hold that, to the extent that 
USAA’s policy purports to exclude innocent co-insured spouses from coverage, it must 
be reformed to comply with the Minnesota standard fire insurance policy.”) (emphasis 
added). Hogs Unlimited interprets the phrase “the insured” in Minn. Stat. § 65A.01, subd. 
3,  and  arrives  at  the  conclusion  that  the  legislature  intended  protection  for  named 


    7 The Watson court was focused only on an “intentional loss” provision of the policy at 
issue in that case. However, it noted that subdivision 3 of the standard fire policy provided that 
intentional misrepresentations of “the insured” would defeat coverage, and observed that the 
Hogs Unlimited court had interpreted that language to bar recovery only as to the guilty insured, 
not innocent co-insureds. Id. at 691. In other words, it found the fact that it was addressing a 
different exclusion did not undermine its assessment of legislative intent concerning the required 
minimum coverage.                                                         
insureds. And Watson teaches that if an insurer replaces such “the insured” language with 
the phrase “an insured,” that new phrase would unambiguously preclude recovery by an 
innocent co-insured, requiring reformation of the policy. Although Plaintiffs argue that in 

this case, “just like Hogs Unlimited and Watson, ICC is attempting to remove coverage 
from  innocent  insureds  based  on  the  acts  of  others”  because  “Mr. Welsh  is  not  an 
insured” under the Policy,8 neither case supports that argument. Neither Watson nor Hogs 
Unlimited holds that when an officer of a corporation or a member of an LLC engages in 
insurance fraud, his acts can never be imputed to the corporation or the LLC because 

doing so would deprive coverage to an innocent co-insured—the very business entity on 
whose behalf the individual has acted. In fact, neither case even considers the issue of 
when or under what circumstances the fraudulent submission of an insurance claim by a 
corporate officer or member of an LLC can be imputed to the business when applying a 
policy exclusion.                                                         

    Just as that issue is absent from Hogs Unlimited and Watson, Plaintiffs point to no 
language in the Minnesota standard fire policy that precludes imputation of an agent’s 
tortious  acts  to  the  agent’s  principal  for  purposes  of  determining  whether  a  policy 
exclusion  provides  the  minimum  level  of  coverage  required  by  Minnesota  law.  In 
relevant part, the provision of the standard fire policy analyzed in Hogs Unlimited and 

applied  in  Watson  provides  that  a  policy  is  voidable  based  on  the  fraudulent 
misrepresentations of “the insured.” Minn. Stat. § 65A.01, subd. 3. This provision does 


    8 Pls.’ SJ Mem. at 21.                                               
not state, or even imply that in the case of an insured corporation or LLC, the conduct of 
an agent authorized to act on behalf of the business cannot be imputed to the corporation. 
    Accordingly, the Court rejects Plaintiffs’ argument that Hogs Unlimited, Watson, 

or Minn. Stat. § 65A.01, subd. 3 foreclose application of the Misrepresentation Exclusion 
or the Dishonesty Exclusion in this case.                                 
    C. Imputation                                                        
    Plaintiffs  next  argue  that  under  Minnesota  agency  law  principles,  Andrew’s 
fraudulent  submission  of  insurance  claims  cannot  be  imputed  to  Timeless  Bar  and 

Horseshoe Club. Although neither party cites a Minnesota Supreme Court or Court of 
Appeals decision that is directly on point,9 the Court disagrees with Plaintiffs’ position 
for the reasons discussed below.                                          
    Minnesota  recognizes  that  corporations  and  limited  liability  companies  are 
“artificial entit[ies] which can only act through agents.” Nicollet Restoration, Inc. v. 

Turnham, 

 (Minn. 1992) (corporation); see also 301 Clifton Place 
LLC v. 301 Clifton Place Condo. Ass’n, 

, 560–61 (Minn. Ct. App. 2010) 
(finding that the rule from Nicollet applies to LLCs). The general rule is that the principal 
is bound by the agent’s authorized actions, and the agent’s knowledge is imputed to the 
principal. St. Paul Fire & Marine Ins. Co. v. F.D.I.C., 

 (8th Cir. 1992). 

“In determining the corporation’s tort liability, the intent of an agent or employee of the 

    9 The Court’s own research has not uncovered a case from Minnesota’s appellate courts 
analyzing when an agent’s submission of a fraudulent insurance claim can be imputed to the 
company  for  purposes  of  applying  a  policy’s  exclusions  that  are  applicable  to  an  insured 
corporation or other business entity.                                     
corporation will be imputed to the corporation when the agent or employee ‘acted on 
behalf of the corporation.’” Travelers Indem. Co. v. Bloomington Steel & Supply Co., 

,  896–97  (Minn.  2006)  (quoting  10  William  Meade  Fletcher,  Fletcher 

Cyclopedia of the Law of Private Corps., § 4877 (2002)); St. Paul Fire & Marine Ins. 
Co., 

 (“The same is true of a corporate officer acting within the scope of 
his or her duty—the corporate officer’s knowledge may be imputed to the corporation.”) 
(citing Brooks Upholstering Co. v. Aetna Ins. Co., 

 (Minn. 1967)). 
However, if an agent acts “adversely to the interest of the principal,” then the agent’s 

knowledge is not imputed to the principal. Nat’l Credit Union Admin. Bd. v. CUMIS Ins. 
Soc’y, Inc., 

, 939–40 (D. Minn. 2017) (citing Sussel Co. v. First Fed. 
Sav. & Loan Ass’n of St. Paul, 

 (Minn. 1976)). This exception 
“applies only where the agent acts “solely for her own benefit,” so it is not applicable 
“when an agent commits fraud that benefits the company at the expense of others.” 

 

(citing Kirschner v. KPMG LLP, 

 (N.Y. 2010) and Restatement 
(Second) of Agency § 282).                                                
    Applying these principles, the Court disagrees that the business entities in this case 
should somehow be exempt from the application of the exclusions simply because only 
one  of  their  two  officers  or  members  took  the  actions  that  triggered  that  exclusion. 

Indeed, the consequence of the Plaintiffs’ position would be that exclusions like those at 
issue could almost never be applied to corporate entities despite appearing to apply on 
their face—such a conclusion would rewrite all such policies and make little sense. 
      1.  Pioneer Industries                                             
    First,  the  Court  finds  support  in  the  Eighth  Circuit’s  decision  in  Pioneer 
Industries, Inc. v. Hartford Fire Insurance Co., 

 (8th Cir. 2011) although it 

concerns a corporate officer’s fraud in applying for insurance on behalf of his employer 
rather than submitting a fraudulent insurance claim. In Pioneer Industries, the CFO of the 
plaintiff corporation made misrepresentations to the insurer about the company’s internal 
safeguards and auditing procedures when he applied for insurance coverage on behalf of 
the  business.  Applying  Minnesota  law,  the  Pioneer  Industries  court  rejected  the 

corporation’s argument that the CFO was not acting on behalf of the business when he 
made the false statements. 

. The court found that the insurer could properly 
rescind or “avoid” the policy due to this misconduct. 

 (“Harlander was specifically 
authorized to purchase Pioneer’s insurance, and thus any misrepresentations he made 
were attributable to Pioneer.”); 

 (citing Myzel v. Fields, 

 (8th Cir. 

1967) (“[A] principal is liable for the deceit of his agent committed in the very business 
he was appointed to carry out. This is true even though the latter’s specific conduct was 
carried on without knowledge of the principal.”)).                        
    Plaintiffs  suggest  that  Pioneer  Industries  is  distinguishable  from  this  case  for 
several reasons, none of them convincing. First, Plaintiffs assert that this case is different 

because the CFO in Pioneer Industries was authorized to purchase insurance for the 
corporation, so his misrepresentations were made in the course of his duties and were 
attributable to the corporation. Pls.’ Opp’n at 17. But the same is true here—there is no 
dispute  that  Andrew  was  responsible  for  obtaining  insurance  coverage  for  the  two 
businesses and for filing claims on behalf of Timeless Bar and Horseshoe Club. Plaintiffs 
point to no evidence to suggest otherwise.                                
    Second, Plaintiffs suggest that Pioneer Industries does not apply here because 

Andrew “was not specifically authorized by Plaintiffs to commit arson and lie about it to 
ICC.” Pls.’ Opp’n at 17. But the Pioneer Industries court’s conclusion did not hinge on 
whether CFO’s authorized conduct extended to the lies that he told in the insurance 
application.  The  court  looked  only  to  whether  the  general  act  of  applying  for  and 
purchasing insurance on the company’s behalf was within the course and scope of the 

CFO’s duties. Here, it is undisputed that Andrew was authorized to file insurance claims 
for Timeless Bar and Horseshoe Club. No evidence suggests that Andrew was acting 
outside  the  course  and  scope  of  his  duties  to  the  corporation  or  the  LLC  when  he 
submitted those claims.10                                                 
    Third, Plaintiffs assert that there is no indication the Pioneer Industries court was 

asked to consider the Minnesota Supreme Court’s decision in Hogs Unlimited. As a 
result, they suggest that Pioneer Industries fails to account for the protection afforded to 
innocent  co-insureds  and  does  not  represent  a  fair  prediction  of  how  the  Minnesota 
Supreme Court would rule in this case. See Pls.’ Opp’n at 17–18. As discussed above, 


    10 Plaintiffs contend that “Andrew Welsh’s actions were not authorized by Plaintiffs and 
no facts suggest otherwise.” Pls.’ Opp’n at 18. The Court understands this to mean that Jessie 
Welsh—who was the only other officer, director, member, or authorized representative of either 
named Plaintiff—did not know about or authorize Andrew’s arson or his decision to submit 
fraudulent claims on behalf of the businesses. Jessie acknowledged that Andrew was responsible 
for applying for insurance and filing claims for the businesses, and he was, at the time of the fire, 
if not exclusively responsible for the day-to-day operation of the businesses, then certainly their 
primary agent.                                                            
however,  Hogs  Unlimited  did  not  hold  that  the  actions  of  a  corporate  officer  or  an 
executive of an LLC cannot be imputed to the corporation for purposes of applying the 
misrepresentation exclusion under the Minnesota standard fire policy.     

    In addition, there is no evidence in the record from which a reasonable jury could 
conclude that Andrew was acting solely for his own benefit. Indeed, the undisputed facts 
show  that  he  was  attempting  to  obtain  insurance  proceeds  for  Timeless  Bar  and 
Horseshoe Club, not acting adversely to their interests.11 Accordingly, no reasonable jury 
could  conclude  that  Andrew  Welsh  was  acting  outside  the  course  and  scope  of  his 

employment  when  he  made  misrepresentations  to  ICC  in  submitting  the  fraudulent 
insurance claims. His misrepresentations are, therefore, imputed to Timeless Bar and the 
Horseshoe Club, and the Misrepresentation and Dishonesty Exclusions preclude coverage 
as a matter of law.                                                       


    11 This case differs from CUMIS Ins., where the court found that there was a sufficient 
dispute of fact to send the issue of whether an exclusion applied to a jury. 

. 
In CUMIS Ins., a manager applied for a fidelity bond for her company, and in the application, 
she  stated  that  she  was  unaware  of  any  act  giving  rise  to  a  claim.  However,  this  was  a 
misrepresentation because she had embezzled $3 million from the corporation. Even though she 
was acting within the scope of her authority when she made the application for the fidelity bond, 
the court held that summary judgment for the insurer was not appropriate because her interests in 
not disclosing her theft were directly adverse to the interests of her employer, and she concealed 
the truth of her embezzlement for her own benefit. 

 (“But the Court reiterates the 
narrowness of its holding: it is only when an employee who acting adversely to her employer by 
embezzling  from  the  company  misrepresents  her  knowledge  of  that  embezzlement  on  an 
application for fidelity insurance that the employee’s knowledge will not be imputed to the 
company to allow the insurer to rescind the fidelity insurance”). The circumstances here are 
dissimilar—there are no facts in our record that would allow a reasonable jury to conclude that 
Andrew was acting solely for his own benefit when he filed the fraudulent claims on behalf of 
Timeless Bar and Horseshoe Club. Had he gotten away with the fraud, Plaintiffs would have 
benefited by being paid insurance benefits. See 

 (“The exception does not apply when 
an agent commits fraud that benefits the company at the expense of others.”). 
      2.  Bloomington Steel                                              
    Plaintiffs  next  argue  that  coverage  can  only  be  denied  to  Timeless  Bar  and 
Horseshoe Club if ICC can show that Andrew’s business partner (Jessie) approved his 

filing of fraudulent claims or that his actions were foreseeable from the perspective of the 
corporation or the LLC. Pls.’ Mem. in Opp’n to Def.’s Summ. J. Mot. (“Pls.’ Opp’n”) at 
13–16.  In  support  of  this  argument,  Plaintiffs  rely  on  Travelers  Indemnity  Co.  v. 
Bloomington Steel & Supply Co., 

 (Minn. 2006). Plaintiffs’ reliance on 
Bloomington Steel is misplaced.                                           

    Bloomington Steel addressed the issue of when “the intent or knowledge of an 
agent of a corporation may be imputed to the corporation for purposes of determining 
whether bodily injury inflicted by the agent upon a third party was expected or intended 
from the standpoint of the corporate insured.” 

. In that case, Cecil Reiners 
started working for Bloomington Steel Corporation in 1968 and eventually became its 

sole shareholder, officer, and director in the early 1990s. 

 at 891–92. Bloomington 
Steel was insured by Travelers Insurance. 

. In October 2000, Jose Padilla was 
working for a different company in a workspace shared with Bloomington Steel, and 
Reiners assaulted him because he heard Padilla speaking Spanish instead of English. 

 
Padilla sued Bloomington Steel for Reiners’ assault after Padilla suffered a fractured 

skull and a severe brain injury. 

 Travelers brought an action seeking a declaratory 
judgment that it had no duty to defend Bloomington Steel for Reiners’ tortious conduct 
under the relevant insurance policies. 

. The exclusions that Travelers argued 
applied required Padilla’s injuries to be “unexpected and unintended by the insured” for 
there to be coverage. 

 Because “[b]oth policies exclude coverage for bodily injury 
‘expected or intended from the standpoint of the insured,’” the Bloomington Steel court 
found that the issue was “whether Padilla’s injuries were expected or intended from the 

standpoint of Bloomington Steel.” 

.                             
    In considering how to properly answer that question, the court first concluded that 
“the language of the . . . policies does not require that Reiners’ intent be automatically 
imputed to Bloomington Steel” merely because he was the company’s sole shareholder, 
director, and officer.12 

 at 894–95. Next, the court explained that “[a] corporation can 

be held liable for a tort just as a natural person can” and that a corporate agent’s intent 
can “be imputed to the corporation when the agent or employee acted on behalf of the 
corporation.” 

 at 896–97 (internal quotation marks omitted). The court looked to its 
prior cases, interpreting what it means for damage to be “expected” from the standpoint 
of an insured and explained that “[w]hether Bloomington Steel expected Reiners’ assault 

of Padilla based on its actual or imputed knowledge of other incidents of violence will be 
a fact-specific determination” that would be judged by a standard of recklessness as 


    12 The court found the language of the policy did not require imputation of Reiners’ intent 
to the corporation based solely on his role in and control of the corporation, reasoning that the 
insurer  “could  have  excluded  coverage  for  bodily  injury  expected  or  intended  from  the 
standpoint of ‘an’ insured or ‘any’ insured.” 

. It noted that the policies at issue 
“also insured Bloomington Steel’s stockholders, executive officers, directors, and employees,” 
meaning that, at least under “certain conditions,” Reiners was, himself, a named insured. 

 at 
895  n.4.  The  court  explained  that  in  Watson,  it  held  that  such  policy  language  would 
unambiguously prevent recovery by the corporation based on the acts of another insured, and 
unlike the provisions of Minn. Stat. § 65A.01 that rendered such a phrase unenforceable in 
Watson, “[t]here is no comparable standard [commercial general liability] policy language under 
Minnesota law and therefore such a clause in the policies issued . . . to Bloomington Steel would 
have been enforceable. . . .” Id. at 895.                                 
opposed to negligence. Id. at 897 (discussing Domtar, Inc. v. Niagara Fire Ins. Co., 

 (Minn. 1997)).                                            
    Although  Plaintiffs  argue  that  under  Bloomington  Steel,  ICC  must  show  that 

Andrew’s actions (such as setting the fire or filing the fraudulent insurance claims) were 
foreseeable from the perspective of Timeless Bar and Horseshoe Club, they elide the 
specific context in which that foreseeability discussion arose. The Bloomington Steel 
court  did  not  hold  that  an  insurer’s  demonstration  of  foreseeability  is  always  a 
prerequisite to imputing the intent of an agent to a principal for purposes of applying any 

policy  exclusion—the  court  discussed  foreseeability  specifically  because  the  policy 
exclusions  at  issue  in  Bloomington  Steel  required  a  determination  of  whether 
Bloomington Steel “expected or intended” Reiners’ assault of Padilla. See id. at 894 
(stating that “the question is whether Padilla’s injuries were expected or intended from 
the standpoint of Bloomington Steel”). Neither the Misrepresentation Exclusion nor the 

Dishonesty Exclusion refer to injuries or losses that are “expected or intended” from the 
standpoint of the insured, so the Court need not consider whether any action taken by 
Andrew was “expected or intended” from the standpoint of Timeless Bar or Horseshoe 
Club. The language of the exclusions at issue in this case asks only whether the insured 
(through  the  acts  of  officers,  shareholders,  members,  and  authorized  representatives) 

made  material  misrepresentations  and  engaged  in  dishonest  acts.  The  foreseeability 
analysis undertaken in Bloomington Steel never enters the picture.        
    Otherwise,  Bloomington  Steel  reinforces  ordinary  principles  of  agency  law—
including (1) that a corporation can be held liable for a tort just as a natural person can, 
(2) that an agent’s intent will be imputed to the corporation when the agent acted on the 
corporation’s behalf, and (3) that the agent’s knowledge and intent can be imputed to the 
corporation  for  the  agent’s  acts  that  are  committed  in  the  course  of  the  agent’s 

employment and within the scope of the agent’s authority. Id. at 896–97. As discussed 
above, there is no dispute that Andrew intended to file false claims with ICC to defraud 
the insurer, that he did so on behalf of Timeless Bar and Horseshoe Club, and that filing 
insurance  claims  for  the  corporation  and  the  LLC  was  within  the  course  of  his 
employment and the scope of his authority.                                

    Next, Plaintiffs argue that even if the Court were to apply “the ‘dominant actor’ 
theory pushed by ICC,” questions of fact would preclude entry of summary judgment in 
ICC’s favor because they have shown that Jessie Welsh had substantial duties for both 
companies.13 They point out, for example, that Jessie was responsible for holding a food 
license without which the bar could not have operated, and they note that she provided a 

long list of the tasks she performed for the bar at various times after the businesses were 
formed in 2016. Pls.’ Opp’n at 18–19; Pls.’ SJ Mem. at 3–4. But this argument does not 
preclude summary judgment in favor of ICC. For one thing, the Court is not relying on 

    13 Plaintiffs derive the so-called “dominant actor theory” (also referred to in their briefing 
as the “dominate actor theory”) from Bloomington Steel. Pls.’ Opp’n 13, 18. As noted above, the 
Bloomington Steel court rejected the insurer’s argument that “Reiners’ intent and expectations 
must  be  imputed  to  Bloomington  Steel  simply  because  Reiners  was  the  sole  shareholder, 
director, and officer of the company.” 

. The court explicitly disagreed with the 
insurer’s suggestion that when the control over the corporate entity is so complete by one agent 
of the entity, the intent and expectation must be imputed to the corporation.”  

 (internal 
quotation omitted). Plaintiffs suggest that ICC has attempted to argue in this proceeding that 
because Andrew was solely in control of the corporation and LLC at the time of the fire, his 
intent and expectation must be imputed to the corporation, but such a position is foreclosed by 
Bloomington Steel. See Pls.’ Opp’n 13–16.                                 
any “dominant actor theory,” whether it was actually advanced by ICC or not. And the 
Court does not find that Timeless Bar and Horseshoe Club are unable to obtain coverage 
because Andrew was exclusively in control of the bar. Instead, the Court finds that the 

undisputed facts show that Andrew made fraudulent claims to ICC on behalf of the 
Plaintiffs; filing insurance claims for the companies was within the course and scope of 
his employment and within his authority; and by filing the fraudulent claims on the 
companies’  behalf,  the  Misrepresentation  and  Dishonesty  Exclusions  plainly  prohibit 
coverage.                                                                 

    Moreover, Plaintiffs’ arguments concerning Jessie’s ongoing roles with the two 
businesses  fail  to  identify  a  genuine  dispute  as  to  any  material  fact.  Even  if  Jessie 
continued to be a part owner of the bar, a stakeholder and member of the real estate 
holding company, and maintained a food license that the bar needed to operate, these 
facts would not allow a reasonable juror to conclude that Andrew lacked the authority to 

file insurance claims on behalf of Timeless Bar and Horseshoe Club.       
    Accordingly, the Court finds that, even viewed in the light most favorable to 
Plaintiffs,  Andrew’s  false  statements  in  the  proofs  of  loss  submitted  to  ICC  were 
dishonest acts and were made with intent to defraud ICC, and his actions are properly 
imputed  to  Timeless  Bar  and  Horseshoe  Club  for  purposes  of  applying  the 

Misrepresentation and Dishonesty Exclusions.                              
    D. Conclusion                                                        
    For the reasons discussed above, the Court finds that ICC is entitled to summary 
judgment. ICC’s motion is granted and Plaintiffs’ motion is denied. It is not lost on the 
Court that this outcome works a certain unfairness to Jessie Welsh, who was by all 
accounts uninvolved in the arson and unaware of Andrew’s fraudulent scheme. Even 
though the record demonstrates Jessie had become increasingly less involved in the day-

to-day business and other affairs of the bar, she still held a significant interest in the 
corporation (490 shares out of 1,000) and was a 50% member in the LLC. Although the 
record is not entirely clear on this point, it seems that the fire destroyed the building and 
virtually  all  the  bar’s  significant  assets.  Consequently,  in  addition  to  voiding  the 
insurance coverage the businesses purchased to protect against losses, Andrew’s conduct 

may have eliminated any business assets that Jessie could potentially have liquidated to 
satisfy the companies’ remaining creditors or recoup her investment.      
III.  Intentional Acts Exclusion                                          
    The  parties  spill  considerable  ink  arguing  over  whether  the  Intentional  Acts 
exclusion can be applied in this case and whether (or to what extent) the Minnesota 

courts have adopted a so-called “corporate arson doctrine.” Because the Court concludes 
above  that  ICC  is  entitled  to  summary  judgment  based  on  the  Misrepresentation 
Exclusion and the Dishonesty Exclusion due to Andrew Welsh’s undisputed submission 
of fraudulent insurance claims on behalf of Timeless Bar and Horseshoe Club, the Court 
expresses no opinion on these issues.                                     

                    CONCLUSION AND ORDER                                 
    The undisputed material facts show that after he intentionally burned down the 
bar, Andrew Welsh filed fraudulent insurance claims with ICC on behalf of Timeless Bar 
and Horseshoe Club. He was authorized to file insurance claims on behalf of both of 
those businesses and was acting within the course and scope of his employment when he 
did  so.  Accordingly,  Andrew’s  actions  are  imputed  to  the  Plaintiffs,  the 
Misrepresentation Exclusion and the Dishonesty Exclusion preclude coverage as a matter 

of law, and ICC is entitled to summary judgment.                          
    For the reasons set forth above, IT IS HEREBY ORDERED THAT:          
    1.   Plaintiff’s Summary Judgment Motion (Doc. 55) is denied.        
    2.   Defendant’s Summary Judgment Motion (Doc. 60) is granted.       
    3.   This matter is dismissed with prejudice.                        

    Let Judgment be entered accordingly.                                 

Date: May 21, 2024               s/Katherine Menendez                     
                                Katherine Menendez                       
                                United States District Judge             

                UNITED STATES DISTRICT COURT                             
                    DISTRICT OF MINNESOTA                                


Timeless Bar, Inc., doing business as The   No. 22-cv-1685 (KMM/LIB)      
Press Bar and Parlor, and Horseshoe Club,                                 
LLC,                                                                      

         Plaintiffs,                                                     

v.                                                                        

Illinois Casualty Company,                                                

         Defendant.                                                      


    Plaintiffs Timeless Bar, Inc. and Horseshoe Club, LLC brought this action against 
their  insurer,  Defendant  Illinois  Casualty  Company,  claiming  the  latter  breached  the 
parties’ insurance agreement. Specifically, the Plaintiffs allege that even though the fire 
that destroyed their property was intentionally set by an officer of the corporation and a 
member of the LLC, the insurer was obligated under the policy and Minnesota law to pay 
for the loss. This matter is before the Court on the parties’ cross-motions for summary 
judgment. For the reasons that follow, the Defendant’s motion is granted, the Plaintiffs’ 
motion is denied, and this matter is dismissed with prejudice.            
                         BACKGROUND                                      
I.   The Plaintiffs’ Businesses                                           
    In April 2016, while  still a married  couple, Andrew Welsh and Jessie Welsh 
purchased a bar in St. Cloud, Minnesota. They bought it from the previous owners on a 
contract for deed for $500,000. Prouty Decl., Ex. 7 (Doc. 63). The couple opened the 
business as The Press Bar and Parlor and operated it through a corporation, Timeless Bar, 
Inc. (“Timeless Bar”). They also set up a real estate holding company, Horseshoe Club, 
LLC (“Horseshoe Club”), and arranged the building purchase through that company. This 

case arises out of a February 17, 2020 fire that destroyed the bar. The Defendant and law 
enforcement later discovered that Andrew intentionally set the fire.      
    Andrew and Jessie incorporated Timeless Bar on February 18, 2016. Prouty Decl., 
Ex. 5. The company’s articles of incorporation provide that the Chief Executive Officer 
would                                                                     

         control all of the business and affairs of the Corporation [and] 
         have authority to sign, execute, and acknowledge, on behalf     
         of  the  Corporation,  all  deeds,  mortgages,  bonds,  stock   
         certificates, contracts, leases, reports, and all other documents 
         or  instruments  necessary  or  proper  to  be  executed  in  the 
         course of the Corporation’s regular business.                   

Prouty Decl., Ex. 6, Timeless Bar Bylaws, Art. IV, § 5; Alton Decl., Ex. 1.1 Andrew was 
the CEO of Timeless Bar. Timeless Bar Bylaws at TB00013 (signature block “Andrew 
Welsh, CEO”). He was also its majority owner, holding 510 shares, while Jessie owned 
the  other  490  shares.  Id.,  Ex. 4,  J.  Welsh  Dep.  114–116;  id.,  Ex. 7,  Asset  Purchase 
Agreement at 18 (signed by Andrew Welsh as CEO of Timeless Bar). As the CEO, 

    1  The  copies  of  both  the  corporation’s  bylaws  and  the  limited  liability  company’s 
membership operating agreement in the record are unexecuted. The executed versions were 
apparently destroyed in the fire. Aside from the fact that the operating agreement for Horseshoe 
Club contains a few references in its headings to a different, unaffiliated business known as 
“Legacy Place, LLC,”  see  Alton  Decl.,  Ex. 4  at  7–9, the parties do not  dispute that  these 
documents accurately reflect the terms governing operations of both Timeless Bar and Horseshoe 
Club.                                                                     
Andrew was authorized to obtain insurance and submit insurance claims on behalf of the 
company. J. Welsh Dep. 188–90.                                            
    The Welshes formed the Horseshoe Club on April 1, 2016, and Andrew and Jessie 

were  the  LLC’s  only  two  members.  Prouty  Decl.,  Ex. 3,  Horseshoe  Operating 
Agreement. Andrew was the chief executive manager and president of the Horseshoe 
Club. Id. at HC00031–32.2 Andrew had primary responsibility for the LLC’s operations 
and signed all legal documents on the company’s behalf. Id., Art. 4, § 4.4. 
    Timeless Bar obtained insurance under a Businessowners Policy (the “Policy”) 

with Defendant Illinois Casualty Company (“ICC”). Prouty Decl., Ex. 2, ICC Policy. The 
Horseshoe Club was covered as an additional named insured – “building owner” – for 
certain losses associated with the building itself under the Policy. Id. at BP AI 04 09 14 
(“The building owner identified in this endorsement is a Named Insured, but only with 
respect to the coverage provided under this Coverage Form for direct physical loss or 

damage to the building(s) designated in the Schedule of this endorsement.”). Andrew 
submitted  the  application  for  insurance  to  ICC  on  behalf  of  Timeless  Bar  and  the 
Horseshoe Club. Prouty Decl., Ex. 9; J. Welsh Dep. 188–89. Following the execution of 
the  Policy,  Andrew  called  and  communicated  with  the  companies’  insurance  agent 
whenever there was a claim. J. Welsh Dep. 190.                            




    2 Jessie was also listed as Horseshoe Club’s “president, secretary, and treasurer.” Prouty 
Decl., Ex. 3 at HC00031–32.                                               
II.  The Welshes’ Divorce                                                 
    Andrew and Jessie divorced in November 2019. J. Welsh Dep. 10; Alton Decl., 
Ex. 8. Andrew retained all of the bank accounts for Horseshoe Club and Timeless Bar in 

the divorce. J. Welsh Dep. 71–72; Alton Decl., Ex. 8 at 19. The businesses had originally 
banked with US Bank, but prior to the divorce Andrew had moved the banking accounts 
to MidCountry Bank. J. Welsh Dep. 127–28. Jessie was removed as a signatory on the 
MidCountry accounts by the end of 2019. J. Welsh Dep. 64–65, 135. In February 2020, at 
the time of the fire, Jessie had no electronic access to the MidCountry accounts. J. Welsh 

Dep. 64, 129.                                                             
    Leading up to the divorce, Jessie had become less involved in the operation of the 
bar and the Horseshoe Club. J. Welsh Dep. 49–50. Although Jessie had originally been 
responsible for making payments to the former owners of the building, Andrew had taken 
over those duties near the end of 2018. J. Welsh Dep. 138–40. He also took over payroll-

related responsibilities by March 2019. J. Welsh Dep. 143–47. Andrew verified inventory 
for the bar, tracked sales, reported sales to the outside accountant every month, made 
bank deposits except when he asked Jessie to do that for him, and placed orders and took 
deliveries for the bar. J. Welsh Dep. 148, 158; Prouty Dep., Ex. 16 at 9. At the time of the 
fire, Jessie did not have a key to the bar and Andrew had changed the locks. J. Welsh 

Dep. 187–88.                                                              
    However, it is clear that after the bar was purchased in 2016, Jessie had some 
responsibilities for operating the bar at various times throughout its existence. Though 
she didn’t specify the precise dates, Jessie indicated that she did the following tasks: 
calculating inventory; addressing payroll issues; garnishing payroll; processing workers’ 
compensation claims; handling a variety of tax-related issues; making bank deposits; 
paying  bills;  obtaining  office  supplies;  maintaining  paperwork  and  handling  other 

administrative  matters;  seeking  legal  representation  when  necessary;  and  reviewing 
contracts. She also maintained a food manager certification, which had to be renewed 
every three years, and was required to renew a food license annually. Prouty Decl., 
Ex. 21. It is also undisputed that the bar and restaurant needed Jessie to maintain the food 
license and certification to continue operating.                          

III.  The Arson and Plaintiffs’ Insurance Claims                          
    On February 17, 2020, Andrew Welsh burned down the bar. See Prouty Decl., 
Ex. 1, Plea Agreement. The following day, Andrew executed a Non-Waiver Agreement 
with ICC as the authorized representative of Timeless Bar as a named insured under the 
Policy.3 Prouty Decl., Ex. 10. On February 26, 2020, Timeless Bar and the Horseshoe 

Club  submitted  the  initial  insurance  claim  to  ICC  via  a  “Proof  of  Loss”  seeking 
approximately $1.4M  in proceeds.  Prouty  Decl., Ex. 11,  2/26/20  Proof of Loss. The 
initial claim sought the policy limits for the building and other amounts. Id. at 1. The 
claim states that the fire was of “unknown origin.” Id. at 3 ¶ 1. Further, the sworn proof 
of loss states:                                                           

         That  said  loss  did  not  originate  by  any  act,  design  or 
         procurement on the part of your insured, or as affiant; nothing 

    3 The Non-Waiver Agreement provided that no action of ICC would be deemed a waiver 
of its right to deny liability under any policy and clearly referred to the “Named Insured” as 
“Timeless Bar Incorporated dba The Press Bar and Parlor,” with Andrew signing as “Authorized 
representative of Named Insured.” Prouty Decl., Ex. 10.                   
         has  been  done  by  or  with  the  privity  or  consent  of  your 
         insured or this affiant, to violate the conditions of the policy, 
         or render it void. . . .                                        

Id. at 4. Andrew and Jessie both signed that proof of loss on behalf of the businesses. Id.; 
J. Welsh Dep. 196–97. There is no dispute that in the proof of loss, Andrew falsely stated 
that the fire was of unknown origin and that the loss did not originate by any act, design, 
or procurement of his own. Nor is there any dispute that his submission of the false claim 
as an affiant on behalf of the insured was an effort to defraud ICC.      
    On May 15, 2020, the Plaintiffs submitted an updated Proof of Loss, increasing 
the amount of the claim to just over $1.6M. Prouty Decl., Ex. 12. On June 1, 2020, the 
Plaintiffs  submitted  another  amended  Proof  of  Loss  seeking  more  than  $1.9M,  an 
increase based on claimed damages to business personal property (“BPP”) of more than 
$300,000. Prouty Decl., Ex. 13, 6/1/20 Proof of Loss. Jessie signed the June 1st amended 
claim, but the BPP amount was based on an inventory list that Andrew provided. Prouty 

Decl., Ex. 14; J. Welsh Dep. 201. Like the original Proof of Loss, the June 1st Proof of 
Loss states that the fire was of unknown origin and that the loss did not originate by any 
act of the insured or the affiant. 6/1/20 Proof of Loss at 1–2.           
    On November 17, 2020, Andrew was indicted on charges of arson, use of a fire to 
commit  a  federal  felony,  and  wire  fraud.  United  States  v.  Welsh,  No.  20-cr-270 

(ECT/LIB), Doc. 1 (D. Minn. Nov. 17, 2020) (Indict.). On May 4, 2022, eleven days 
before his case was set to go to trial, Andrew pled guilty in federal court to arson and 
admitted  to  doing  so  as  part  of  a  scheme  to  defraud  ICC  to  enrich  himself.  Plea 
Agreement ¶ 2 (admitting, among other things, that “he carried out a scheme to defraud 
and obtain insurance money and property from Illinois Casualty Company” by filing “one 
or more fraudulent insurance claims with [ICC] seeking payment of money to [Andrew], 
through his company, Timeless Bar, Inc.”). On September 30, 2022, he received a 71-

month sentence. United States v. Welsh, No. 20-cr-270 (ECT/LIB), Doc. 109 (D. Minn. 
Sept. 30, 2022) (Sentencing Judgment).                                    
    After  Andrew  pled  guilty,  ICC  denied  the  Plaintiffs’  insurance  claims.  ICC 
essentially relied on three separate exclusions in the Policy based on Andrew’s conduct. 
Alton Decl., Exs. 15, 16. The first two exclusions—(1) Concealment, Misrepresentation, 

or  Fraud  (“Misrepresentation  Exclusion”)  and  (2) Dishonest  Acts  (“Dishonesty 
Exclusion”)—were  based  on  Andrew’s  submission  of  fraudulent  claims.  The 
Misrepresentation Exclusion precludes coverage when a Named Insured has “[a]fter a 
loss, willfully and with intent to defraud . . . concealed or misrepresented any material 
fact or circumstances concerning . . . [a] claim under this Policy.” ICC Policy, Minnesota 

Changes, § A.4.C. The Dishonesty Exclusion provides that ICC “will not pay for loss or 
damage caused by or resulting from . . . dishonest or criminal acts by you, . . . or any of 
your  . . .  ‘members’,  executive  officers,  ‘managers’,  ‘employees’,  directors,  [or]  an 
‘authorized representative’ of . . . you.” Policy, Businessowners Property Coverage Form 
§ C.3.b(4).  The  Policy  defines  “you”  as  the  Named  Insureds—Timeless  Bar  and 

Horseshoe Club. Id. at 1 of 52. An authorized representative of the insured includes any 
member or manager of an LLC and an officer of a corporation. Id., § H.1.c(3), H.1.c(5). 
Essentially, ICC treats these two exclusions synonymously and contends that Andrew’s 
submission of the fraudulent claims on behalf of the Plaintiffs were the acts of the two 
business entities.                                                        
    The third exclusion at issue is the Intentional Act exclusion, which provides that 

ICC “will not pay for loss or damage arising out of any act committed . . . [b]y or at the 
direction  of  any  insured;  and  . . .  with  the  intent  to  cause  a  loss.”  ICC  Policy, 
Businessowners Property Coverage Form § C.3.b(17). According to ICC, this exclusion 
applies to Andrew’s act of arson. ICC asserts that his conduct, as the person who was 
solely in charge of the day-to-day operations of the two businesses, is imputed to the 

Plaintiffs for purposes of determining the application of the Intentional Act exclusion—
i.e., Andrew’s intent to cause a loss is the Plaintiffs’ intent to cause a loss. 
    Through the corporation in which she holds an ownership interest and the LLC of 
which  she  is  a  member,  Jessie  Welsh  disagrees  with  ICC’s  application  of  the  three 
exclusions  discussed  above.  There  is  no  evidence  before  the  Court  that  Jessie  was 

involved in the arson. Nor is there evidence in the record indicating that she was aware, at 
the time the relevant proofs of loss were filed, that Andrew had started the fire. In other 
words, there is no suggestion that Jessie knew the insurance claims provided to ICC 
contained Andrew’s fraudulent statements about the fire being of “unknown origin.” See 
Alton Decl., Ex. 14, Galbraith Decl. 52–54.                               

                          DISCUSSION                                     
    Both sides seek summary judgment. At bottom, the crux of the dispute in this case 
is whether Andrew Welsh’s conduct—burning down the bar and later lying about it in the 
insurance claims—allows ICC to deny coverage to Timeless Bar and Horseshoe Club. 
ICC argues that Andrew’s conduct is imputable to the Plaintiffs for purposes of all three 
exclusions at issue: his submission of fraudulent insurance claims precludes coverage for 
the  Plaintiffs  under  the  Misrepresentation  and  Dishonesty  Exclusions,  and  his  arson 

precludes coverage under the Intentional Acts Exclusion. Plaintiffs argue that they are 
innocent business entities who are the named insureds, and if ICC is allowed to deny 
coverage based on those exclusions, the protections for innocent insureds recognized 
under Minnesota law and the standard fire insurance policy would be eliminated. In 
relevant part, the Minnesota standard fire insurance policy states:       

         This entire policy shall be void if, whether before a loss, the 
         insured has willfully, or after a loss, the insured has willfully 
         and with intent to defraud, concealed or misrepresented any     
         material fact or circumstance concerning this insurance or the  
         subject thereof, or the interests of the insured therein.       

Minn. Stat. § 65A.01, subd. 3.4 Plaintiffs assert that ICC’s denial of coverage causes the 
Policy to provide less than the minimum coverage required by this provision, so the 
Policy must be reformed so that it conforms                               
    As explained below, the Court finds that there is no genuine dispute that Andrew 
filed fraudulent claims on behalf of both Timeless Bar and Horseshoe Club. Because he 
did so, no reasonable jury could find that ICC breached the Policy by denying coverage 
under either the Misrepresentation Exclusion or the Dishonesty Exclusion. Neither the 
Minnesota standard fire policy, nor the Minnesota case law relied upon by the Plaintiffs 
precludes  application  of these exclusions under the circumstances presented. ICC is, 

    4  The  Misrepresentation  Exclusion  essentially  tracks  the  language  in  Minn.  Stat. 
§ 65A.01, subd. 3. See Hackbarth v. State Farm Fire & Cas. Co., No. 11-cv-690 (DSD/FLN), 

, at *3 (D. Minn. Jan. 31, 2013).                           
therefore, entitled to summary judgment. Because it is unnecessary to address whether 
coverage could properly be denied under the Intentional Acts Exclusion, the Court does 
not decide that issue.                                                    

I.   Legal Standards                                                      
    Summary judgment is appropriate when there is no genuine issue of material fact 
and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a); 
Celotex Corp. v. Catrett, 

, 322–23 (1986); Dowden v. Cornerstone Nat’l Ins. 
Co., 

 (8th Cir. 2021). The moving party must demonstrate that the 

material facts are undisputed. Celotex, 

. A fact is “material” only if its 
resolution could affect the outcome of the suit under the governing substantive law. 
Anderson v. Liberty Lobby, Inc., 

 (1986). When the moving party 
properly  supports  a  motion  for  summary  judgment,  the  party  opposing  summary 
judgment  may  not  rest  on  mere  allegations  or  denials,  but  must  show,  through  the 

presentation of admissible evidence, that specific facts exist creating a genuine issue for 
trial. 

; McGowen, Hurst, Clark & Smith, P.C. v. Com. Bank, 

 
(8th Cir. 2021). A dispute of fact is “genuine” only if “the evidence is such that a 
reasonable jury could return a verdict for the nonmoving party.” Anderson, 

.  Courts  must  view  the  inferences  to  be  drawn  from  the  facts  in  the  light  most 

favorable to the nonmoving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio 
Corp., 

, 587–88 (1986); Irvin v. Richardson, 

 (8th Cir. 2021). 
“Credibility determinations, the weighing of the evidence, and the drawing of legitimate 
inferences from the facts are jury functions, not those of a judge. . . .” Nunn v. Noodles & 
Co., 

 (8th Cir. 2012) (quoting Anderson, 

). 
    Because the parties have filed cross-motions for summary judgment, when the 

Court considers the Plaintiffs’ motion, it views the record in the light most favorable to 
ICC, and when considering ICC’s motion, it views the record in the light most favorable 
to Plaintiffs. Durand v. Fairview Health Servs., 

 (D. Minn. 
2017), aff’d, 

 (8th Cir. 2018).                               
    The parties agree that the substantive law of Minnesota applies in this diversity 

dispute. See Netherlands Ins. Co. v. Main Street Ingredients, LLC, 

, 912–
913 (8th Cir. 2014) (applying substantive law of Minnesota to insurance dispute where 
the parties did not disagree as to choice of law). The Court’s task is to “predict how the 
Supreme Court of Minnesota would rule if the issue came before it.” Jerry’s Enterprises, 
Inc. v. U.S. Specialty Ins. Co., 

 (8th Cir. 2017) (quotation marks 

omitted). Initially, the insured has the burden to show that coverage exists, and then the 
burden shifts to the insurer to demonstrate that a policy exclusion applies. 

 (citing 
Friedberg v. Chubb & Sons, Inc., 

 (8th Cir. 2012)).      
II.  Misrepresentation and Dishonesty Exclusions                          
    A. The Facts and the Policy Language                                 

    Applying  the  undisputed  material  facts  of  this  case  to  the  language  of  the 
Misrepresentation Exclusion and the Dishonesty Exclusion is a straightforward exercise 
that results in a straightforward outcome: ICC is entitled to judgment as a matter of law 
because the Policy provides no coverage. Start with the language of these exclusions. 
Under the plain language of the Misrepresentation Exclusion, ICC does not provide 
coverage if, after a loss, an insured or its authorized representative willfully and with 
intent to defraud, concealed, or misrepresented any material fact concerning a claim 

under the Policy. Similarly, the Dishonesty Exclusion provides that ICC will not pay for 
loss caused by or resulting from the insured’s dishonest acts, or those of its members, 
officers, or authorized representatives. And the Policy plainly provides that authorized 
representatives include members of an LLC and officers of a corporation.5 
    It is also straightforward how the undisputed facts of this case fit neatly within 

those exclusions. There is no genuine dispute that the named insureds are Timeless Bar 
and Horseshoe Club and that Andrew was an officer of one and a member of the other. A 
reasonable jury could only find that when Andrew acted on behalf of Timeless Bar and 
Horseshoe Club, his  conduct  fell within the plain language  of the Misrepresentation 
Exclusion and the Dishonesty Exclusion.                                   

    Moreover, there is no genuine dispute that, after the fire, Andrew willfully and 
with intent to defraud ICC, concealed and misrepresented material facts concerning the 
Plaintiffs’ insurance claim. He filed a fraudulent claim when he signed the original Proof 
of  Loss  on  February  26,  2020,  and  the  May  15,  2020  amended  Proof  of  Loss.  No 
reasonable jury could conclude otherwise based on this record.            



    5 Plaintiffs concede that the language of these exclusions are not ambiguous and that their 
terms apply on their face, but as discussed in greater detail below, they argue that the exclusions 
must be reformed to be consistent with the standard Minnesota fire policy. See Pls.’ Mem. in 
Supp. of Mot. for Summ. J. (“Pls.’ SJ Mem.”) at 17, 27–28 (Doc. 57).      
    Further, it is undisputed that Andrew was responsible for obtaining insurance and 
filing insurance claims on behalf of the businesses. He applied for the Policy at issue in 
this case on behalf of both Timeless Bar and Horseshoe Club. He signed the original 

fraudulent Proof of Loss on behalf of the businesses to submit the insurance claims on 
their behalf, and again prepared an inventory list in connection with an increased BPP 
claim that dishonestly indicated that the insured and the affiants had no idea what caused 
the fire. Even Jessie Welsh, the only other member of Horseshoe Club and the only other 
officer of Timeless Bar, admitted that Andrew was submitting the claim on behalf of the 

businesses. Jessie acknowledged that Andrew was responsible for handling applications 
for insurance for the businesses and the submission of any insurance claims. Viewing the 
evidence favorably to Plaintiffs, a reasonable jury could not find that Andrew did not 
submit these claims on behalf of Timeless Bar and Horseshoe Club.         
    Based  on  these  undisputed  facts,  no  reasonable  jury  could  find  that  the 

Misrepresentation and Dishonesty Exclusions do not apply on their face to the facts of 
this  case.  Indeed,  Timeless  Bar  and  Horseshoe  Club  do  not  seriously  dispute  that 
(1) Andrew was an authorized representative of the corporation and the LLC, (2) he filed 
a fraudulent claim for insurance benefits, and (3) in doing so, he engaged in conduct that 
falls within the language of these two exclusions. Based on a careful review of the record, 

the Court finds that the Misrepresentation and Dishonesty Exclusions apply. But the 
Plaintiffs argue that, although the exclusions both appear to apply to the facts of the case, 
the Court should nonetheless conclude that coverage exists because the businesses are 
“innocent insureds.”6 As explored below, none of Plaintiffs’ efforts to avoid the plainly 
applicable exclusions succeed.                                            
    B. Hogs Unlimited, Watson, and “Innocent Insureds”                   

    Plaintiffs argue that, under Minnesota law, Andrew’s conduct cannot be imputed 
to Timeless Bar and Horseshoe Club because they are “innocent insureds,” and he is a 
stranger  to  the  Policy.  Plaintiffs  argue  that  applying  the  Misrepresentation  and 
Dishonesty Exclusions would mean that ICC’s Policy provides less than the minimum 
coverage required by the statutory Minnesota standard fire insurance policy. Therefore, 

they contend ICC’s Policy must be reformed to provide coverage for Timeless Bar and 
Horseshoe Club. Plaintiffs’ innocent-insured theory is based on the Minnesota Supreme 
Court’s decisions in Hogs Unlimited v. Farm Bureau Mut. Ins. Co., 

 
(Minn. 1987) and Watson v. United Servs. Auto Ass’n, 

 (Minn. 1997). 
But neither case supports Plaintiffs’ position.                           

    In Hogs Unlimited, three partners engaged in the business of raising hogs. All 
three partners (in addition to the partnership itself) were named insureds under a casualty 
policy providing coverage for the business’s property. 401 N.W.2d at 382–83. One of the 
partners, Mr. Cerise, placed a hose in the hog barn and released a gas into the structure, 
resulting in the deaths of all 243 of the partnership’s animals. Id. at 383. The three 

partners, Cerise included, then submitted a proof of loss to the insurer claiming that the 
insured property had been destroyed by an event of unknown origin. Id. While Cerise 

    6 When Plaintiffs filed this case, Jessie was a named Plaintiff and Plaintiffs argued she 
was an “innocent insured.” The Court rejected that argument and granted ICC’s motion to 
dismiss Jessie as a named plaintiff. Order (Doc. 36).                     
engaged in a fraudulent scheme by destroying the hogs and filing the claim, the other two 
partners were unaware of his actions and committed no fraud. Id. The insurer denied their 
claim because of Cerise’s fraud, and the other partners brought suit under the policy. Id. 

The trial court and appellate court found that the innocent partners could recover their 
proportionate  share  of  the  insurance  proceeds,  and  when  the  insurer  appealed,  the 
Minnesota Supreme Court agreed.                                           
    The insurer argued that the coverage was voided by the policy’s fraud exclusion, 
which, tracking language in Minn. Stat. § 65A.01, subd. 3, provided that the entire policy 

was void if, either before or after a loss, “the insured has willfully and with intent to 
defraud, concealed or misrepresented any material fact or circumstance concerning this 
insurance  or  the  subject  thereof  or  the  interests  of  the  insured  therein.”  Id.  at  384 
(emphasis in original). The Hogs Unlimited court considered what the legislature meant 
“by the phrase ‘the insured,’” and reasoned that it did not intend “to visit the blame of the 

errant insured on coinsureds who, having no control over the unauthorized conduct, are 
themselves blameless; nor do we think the legislature intended to make insureds their 
brother’s keeper under penalty of losing their own insurance protection.” Id. Accordingly, 
the court held “that the phrase ‘the insured’ refers to those persons responsible for the 
fraud, not to guilty and innocent insureds alike,” so the policy was not voidable as to the 

two innocent partners who were also named insureds. Id. at 384–85. Further, the court 
held  that  Minnesota’s  public  policy  did  not  deny  recovery  of  insurance  proceeds  to 
innocent partners. Id. at 385–86. Specifically, it held:                  
         [I]nnocent insured partners may recover their proportionate     
         interest under the insurance policy for intentional destruction 
         of  their  partnership  property  interest  by  another  partner; 
         provided, however, that (1) the destruction of the property     
         was not within the scope of the wrongdoer’s authority nor in    
         furtherance of the partnership’s business, and (2) payment of   
         the  insurance  proceeds  to  the  innocent  partners  can  be  
         accomplished to deny, in a practical manner, any appreciable    
         benefit to the guilty partner.                                  

Id. at 386.                                                               
    In Watson, a named insured similarly destroyed property in an intent to defraud 
the insurer, and an innocent co-insured filed a claim. Elizabeth Watson and her estranged 
husband,  Keith  Watson,  were  both  named  insureds  under  an  insurance  policy  that 
covered a mobile home that the couple owned until Keith intentionally burned it down. 

. Although Elizabeth was an innocent co-insured, the insurer denied 
her claim because the policy’s plain language excluded coverage for intentional acts 
committed by “an insured,” 

 at 685–86 (emphasis added), policy language that differed 
from the “the insured” term found in the standard fire insurance policy and discussed in 
Hogs Unlimited. In Watson, the Minnesota Supreme Court first found that this policy 
language was unambiguous—it plainly precluded coverage to all insureds for intentional 
acts committed by any insured, including denying coverage to an innocent co-insured 
spouse for her estranged husband’s arson. 

 at 688–89.                  
    Next,  the  Watson  court  considered  whether  the  unambiguous  exclusion  of 
coverage  to  an  innocent  co-insured  spouse  would  provide  less  coverage  than  the 
minimum  coverage  required  under  the  standard  fire  insurance  policy  in  Minn.  Stat. 
§ 65A.01, subd. 3. Id. at 689–90. In light of the decision in Hogs Unlimited, the Watson 
court concluded “that the legislature’s use of ‘the insured’ in the Minnesota standard fire 
insurance policy evinces a general intent to compensate an innocent co-insured spouse 
despite the intentional acts of the other insured spouse.”7 Id. at 691. Accordingly, the 

court held that, “to the extent [the insurer’s] policy purports to exclude innocent co-
insured  spouses  from  coverage,  it  must  be  reformed  to  comply  with  the  Minnesota 
standard fire insurance policy.” Id. at 692.                              
    Although these cases could be read to require coverage in certain cases when one 
person acting alone commits a fraud or a tortious act, they do not require coverage in this 

case. Both Hogs Unlimited and Watson are concerned entirely with the situation where 
there  are  multiple  named  insureds  on  a  policy,  and  one  named  insured  engages  in 
wrongful conduct that, absent some protection, would exclude coverage to an innocent 
co-insured. Hogs Unlimited, 401 N.W.2d 384–85 (“We hold that the phrase ‘the insured’ 
refers to those persons responsible for the fraud, not to guilty and innocent insureds 

alike.”) (emphasis added); Watson, 

 (“We hold that, to the extent that 
USAA’s policy purports to exclude innocent co-insured spouses from coverage, it must 
be reformed to comply with the Minnesota standard fire insurance policy.”) (emphasis 
added). Hogs Unlimited interprets the phrase “the insured” in Minn. Stat. § 65A.01, subd. 
3,  and  arrives  at  the  conclusion  that  the  legislature  intended  protection  for  named 


    7 The Watson court was focused only on an “intentional loss” provision of the policy at 
issue in that case. However, it noted that subdivision 3 of the standard fire policy provided that 
intentional misrepresentations of “the insured” would defeat coverage, and observed that the 
Hogs Unlimited court had interpreted that language to bar recovery only as to the guilty insured, 
not innocent co-insureds. Id. at 691. In other words, it found the fact that it was addressing a 
different exclusion did not undermine its assessment of legislative intent concerning the required 
minimum coverage.                                                         
insureds. And Watson teaches that if an insurer replaces such “the insured” language with 
the phrase “an insured,” that new phrase would unambiguously preclude recovery by an 
innocent co-insured, requiring reformation of the policy. Although Plaintiffs argue that in 

this case, “just like Hogs Unlimited and Watson, ICC is attempting to remove coverage 
from  innocent  insureds  based  on  the  acts  of  others”  because  “Mr. Welsh  is  not  an 
insured” under the Policy,8 neither case supports that argument. Neither Watson nor Hogs 
Unlimited holds that when an officer of a corporation or a member of an LLC engages in 
insurance fraud, his acts can never be imputed to the corporation or the LLC because 

doing so would deprive coverage to an innocent co-insured—the very business entity on 
whose behalf the individual has acted. In fact, neither case even considers the issue of 
when or under what circumstances the fraudulent submission of an insurance claim by a 
corporate officer or member of an LLC can be imputed to the business when applying a 
policy exclusion.                                                         

    Just as that issue is absent from Hogs Unlimited and Watson, Plaintiffs point to no 
language in the Minnesota standard fire policy that precludes imputation of an agent’s 
tortious  acts  to  the  agent’s  principal  for  purposes  of  determining  whether  a  policy 
exclusion  provides  the  minimum  level  of  coverage  required  by  Minnesota  law.  In 
relevant part, the provision of the standard fire policy analyzed in Hogs Unlimited and 

applied  in  Watson  provides  that  a  policy  is  voidable  based  on  the  fraudulent 
misrepresentations of “the insured.” Minn. Stat. § 65A.01, subd. 3. This provision does 


    8 Pls.’ SJ Mem. at 21.                                               
not state, or even imply that in the case of an insured corporation or LLC, the conduct of 
an agent authorized to act on behalf of the business cannot be imputed to the corporation. 
    Accordingly, the Court rejects Plaintiffs’ argument that Hogs Unlimited, Watson, 

or Minn. Stat. § 65A.01, subd. 3 foreclose application of the Misrepresentation Exclusion 
or the Dishonesty Exclusion in this case.                                 
    C. Imputation                                                        
    Plaintiffs  next  argue  that  under  Minnesota  agency  law  principles,  Andrew’s 
fraudulent  submission  of  insurance  claims  cannot  be  imputed  to  Timeless  Bar  and 

Horseshoe Club. Although neither party cites a Minnesota Supreme Court or Court of 
Appeals decision that is directly on point,9 the Court disagrees with Plaintiffs’ position 
for the reasons discussed below.                                          
    Minnesota  recognizes  that  corporations  and  limited  liability  companies  are 
“artificial entit[ies] which can only act through agents.” Nicollet Restoration, Inc. v. 

Turnham, 

 (Minn. 1992) (corporation); see also 301 Clifton Place 
LLC v. 301 Clifton Place Condo. Ass’n, 

, 560–61 (Minn. Ct. App. 2010) 
(finding that the rule from Nicollet applies to LLCs). The general rule is that the principal 
is bound by the agent’s authorized actions, and the agent’s knowledge is imputed to the 
principal. St. Paul Fire & Marine Ins. Co. v. F.D.I.C., 

 (8th Cir. 1992). 

“In determining the corporation’s tort liability, the intent of an agent or employee of the 

    9 The Court’s own research has not uncovered a case from Minnesota’s appellate courts 
analyzing when an agent’s submission of a fraudulent insurance claim can be imputed to the 
company  for  purposes  of  applying  a  policy’s  exclusions  that  are  applicable  to  an  insured 
corporation or other business entity.                                     
corporation will be imputed to the corporation when the agent or employee ‘acted on 
behalf of the corporation.’” Travelers Indem. Co. v. Bloomington Steel & Supply Co., 

,  896–97  (Minn.  2006)  (quoting  10  William  Meade  Fletcher,  Fletcher 

Cyclopedia of the Law of Private Corps., § 4877 (2002)); St. Paul Fire & Marine Ins. 
Co., 

 (“The same is true of a corporate officer acting within the scope of 
his or her duty—the corporate officer’s knowledge may be imputed to the corporation.”) 
(citing Brooks Upholstering Co. v. Aetna Ins. Co., 

 (Minn. 1967)). 
However, if an agent acts “adversely to the interest of the principal,” then the agent’s 

knowledge is not imputed to the principal. Nat’l Credit Union Admin. Bd. v. CUMIS Ins. 
Soc’y, Inc., 

, 939–40 (D. Minn. 2017) (citing Sussel Co. v. First Fed. 
Sav. & Loan Ass’n of St. Paul, 

 (Minn. 1976)). This exception 
“applies only where the agent acts “solely for her own benefit,” so it is not applicable 
“when an agent commits fraud that benefits the company at the expense of others.” 

 

(citing Kirschner v. KPMG LLP, 

 (N.Y. 2010) and Restatement 
(Second) of Agency § 282).                                                
    Applying these principles, the Court disagrees that the business entities in this case 
should somehow be exempt from the application of the exclusions simply because only 
one  of  their  two  officers  or  members  took  the  actions  that  triggered  that  exclusion. 

Indeed, the consequence of the Plaintiffs’ position would be that exclusions like those at 
issue could almost never be applied to corporate entities despite appearing to apply on 
their face—such a conclusion would rewrite all such policies and make little sense. 
      1.  Pioneer Industries                                             
    First,  the  Court  finds  support  in  the  Eighth  Circuit’s  decision  in  Pioneer 
Industries, Inc. v. Hartford Fire Insurance Co., 

 (8th Cir. 2011) although it 

concerns a corporate officer’s fraud in applying for insurance on behalf of his employer 
rather than submitting a fraudulent insurance claim. In Pioneer Industries, the CFO of the 
plaintiff corporation made misrepresentations to the insurer about the company’s internal 
safeguards and auditing procedures when he applied for insurance coverage on behalf of 
the  business.  Applying  Minnesota  law,  the  Pioneer  Industries  court  rejected  the 

corporation’s argument that the CFO was not acting on behalf of the business when he 
made the false statements. 

. The court found that the insurer could properly 
rescind or “avoid” the policy due to this misconduct. 

 (“Harlander was specifically 
authorized to purchase Pioneer’s insurance, and thus any misrepresentations he made 
were attributable to Pioneer.”); 

 (citing Myzel v. Fields, 

 (8th Cir. 

1967) (“[A] principal is liable for the deceit of his agent committed in the very business 
he was appointed to carry out. This is true even though the latter’s specific conduct was 
carried on without knowledge of the principal.”)).                        
    Plaintiffs  suggest  that  Pioneer  Industries  is  distinguishable  from  this  case  for 
several reasons, none of them convincing. First, Plaintiffs assert that this case is different 

because the CFO in Pioneer Industries was authorized to purchase insurance for the 
corporation, so his misrepresentations were made in the course of his duties and were 
attributable to the corporation. Pls.’ Opp’n at 17. But the same is true here—there is no 
dispute  that  Andrew  was  responsible  for  obtaining  insurance  coverage  for  the  two 
businesses and for filing claims on behalf of Timeless Bar and Horseshoe Club. Plaintiffs 
point to no evidence to suggest otherwise.                                
    Second, Plaintiffs suggest that Pioneer Industries does not apply here because 

Andrew “was not specifically authorized by Plaintiffs to commit arson and lie about it to 
ICC.” Pls.’ Opp’n at 17. But the Pioneer Industries court’s conclusion did not hinge on 
whether CFO’s authorized conduct extended to the lies that he told in the insurance 
application.  The  court  looked  only  to  whether  the  general  act  of  applying  for  and 
purchasing insurance on the company’s behalf was within the course and scope of the 

CFO’s duties. Here, it is undisputed that Andrew was authorized to file insurance claims 
for Timeless Bar and Horseshoe Club. No evidence suggests that Andrew was acting 
outside  the  course  and  scope  of  his  duties  to  the  corporation  or  the  LLC  when  he 
submitted those claims.10                                                 
    Third, Plaintiffs assert that there is no indication the Pioneer Industries court was 

asked to consider the Minnesota Supreme Court’s decision in Hogs Unlimited. As a 
result, they suggest that Pioneer Industries fails to account for the protection afforded to 
innocent  co-insureds  and  does  not  represent  a  fair  prediction  of  how  the  Minnesota 
Supreme Court would rule in this case. See Pls.’ Opp’n at 17–18. As discussed above, 


    10 Plaintiffs contend that “Andrew Welsh’s actions were not authorized by Plaintiffs and 
no facts suggest otherwise.” Pls.’ Opp’n at 18. The Court understands this to mean that Jessie 
Welsh—who was the only other officer, director, member, or authorized representative of either 
named Plaintiff—did not know about or authorize Andrew’s arson or his decision to submit 
fraudulent claims on behalf of the businesses. Jessie acknowledged that Andrew was responsible 
for applying for insurance and filing claims for the businesses, and he was, at the time of the fire, 
if not exclusively responsible for the day-to-day operation of the businesses, then certainly their 
primary agent.                                                            
however,  Hogs  Unlimited  did  not  hold  that  the  actions  of  a  corporate  officer  or  an 
executive of an LLC cannot be imputed to the corporation for purposes of applying the 
misrepresentation exclusion under the Minnesota standard fire policy.     

    In addition, there is no evidence in the record from which a reasonable jury could 
conclude that Andrew was acting solely for his own benefit. Indeed, the undisputed facts 
show  that  he  was  attempting  to  obtain  insurance  proceeds  for  Timeless  Bar  and 
Horseshoe Club, not acting adversely to their interests.11 Accordingly, no reasonable jury 
could  conclude  that  Andrew  Welsh  was  acting  outside  the  course  and  scope  of  his 

employment  when  he  made  misrepresentations  to  ICC  in  submitting  the  fraudulent 
insurance claims. His misrepresentations are, therefore, imputed to Timeless Bar and the 
Horseshoe Club, and the Misrepresentation and Dishonesty Exclusions preclude coverage 
as a matter of law.                                                       


    11 This case differs from CUMIS Ins., where the court found that there was a sufficient 
dispute of fact to send the issue of whether an exclusion applied to a jury. 

. 
In CUMIS Ins., a manager applied for a fidelity bond for her company, and in the application, 
she  stated  that  she  was  unaware  of  any  act  giving  rise  to  a  claim.  However,  this  was  a 
misrepresentation because she had embezzled $3 million from the corporation. Even though she 
was acting within the scope of her authority when she made the application for the fidelity bond, 
the court held that summary judgment for the insurer was not appropriate because her interests in 
not disclosing her theft were directly adverse to the interests of her employer, and she concealed 
the truth of her embezzlement for her own benefit. 

 (“But the Court reiterates the 
narrowness of its holding: it is only when an employee who acting adversely to her employer by 
embezzling  from  the  company  misrepresents  her  knowledge  of  that  embezzlement  on  an 
application for fidelity insurance that the employee’s knowledge will not be imputed to the 
company to allow the insurer to rescind the fidelity insurance”). The circumstances here are 
dissimilar—there are no facts in our record that would allow a reasonable jury to conclude that 
Andrew was acting solely for his own benefit when he filed the fraudulent claims on behalf of 
Timeless Bar and Horseshoe Club. Had he gotten away with the fraud, Plaintiffs would have 
benefited by being paid insurance benefits. See 

 (“The exception does not apply when 
an agent commits fraud that benefits the company at the expense of others.”). 
      2.  Bloomington Steel                                              
    Plaintiffs  next  argue  that  coverage  can  only  be  denied  to  Timeless  Bar  and 
Horseshoe Club if ICC can show that Andrew’s business partner (Jessie) approved his 

filing of fraudulent claims or that his actions were foreseeable from the perspective of the 
corporation or the LLC. Pls.’ Mem. in Opp’n to Def.’s Summ. J. Mot. (“Pls.’ Opp’n”) at 
13–16.  In  support  of  this  argument,  Plaintiffs  rely  on  Travelers  Indemnity  Co.  v. 
Bloomington Steel & Supply Co., 

 (Minn. 2006). Plaintiffs’ reliance on 
Bloomington Steel is misplaced.                                           

    Bloomington Steel addressed the issue of when “the intent or knowledge of an 
agent of a corporation may be imputed to the corporation for purposes of determining 
whether bodily injury inflicted by the agent upon a third party was expected or intended 
from the standpoint of the corporate insured.” 

. In that case, Cecil Reiners 
started working for Bloomington Steel Corporation in 1968 and eventually became its 

sole shareholder, officer, and director in the early 1990s. 

 at 891–92. Bloomington 
Steel was insured by Travelers Insurance. 

. In October 2000, Jose Padilla was 
working for a different company in a workspace shared with Bloomington Steel, and 
Reiners assaulted him because he heard Padilla speaking Spanish instead of English. 

 
Padilla sued Bloomington Steel for Reiners’ assault after Padilla suffered a fractured 

skull and a severe brain injury. 

 Travelers brought an action seeking a declaratory 
judgment that it had no duty to defend Bloomington Steel for Reiners’ tortious conduct 
under the relevant insurance policies. 

. The exclusions that Travelers argued 
applied required Padilla’s injuries to be “unexpected and unintended by the insured” for 
there to be coverage. 

 Because “[b]oth policies exclude coverage for bodily injury 
‘expected or intended from the standpoint of the insured,’” the Bloomington Steel court 
found that the issue was “whether Padilla’s injuries were expected or intended from the 

standpoint of Bloomington Steel.” 

.                             
    In considering how to properly answer that question, the court first concluded that 
“the language of the . . . policies does not require that Reiners’ intent be automatically 
imputed to Bloomington Steel” merely because he was the company’s sole shareholder, 
director, and officer.12 

 at 894–95. Next, the court explained that “[a] corporation can 

be held liable for a tort just as a natural person can” and that a corporate agent’s intent 
can “be imputed to the corporation when the agent or employee acted on behalf of the 
corporation.” 

 at 896–97 (internal quotation marks omitted). The court looked to its 
prior cases, interpreting what it means for damage to be “expected” from the standpoint 
of an insured and explained that “[w]hether Bloomington Steel expected Reiners’ assault 

of Padilla based on its actual or imputed knowledge of other incidents of violence will be 
a fact-specific determination” that would be judged by a standard of recklessness as 


    12 The court found the language of the policy did not require imputation of Reiners’ intent 
to the corporation based solely on his role in and control of the corporation, reasoning that the 
insurer  “could  have  excluded  coverage  for  bodily  injury  expected  or  intended  from  the 
standpoint of ‘an’ insured or ‘any’ insured.” 

. It noted that the policies at issue 
“also insured Bloomington Steel’s stockholders, executive officers, directors, and employees,” 
meaning that, at least under “certain conditions,” Reiners was, himself, a named insured. 

 at 
895  n.4.  The  court  explained  that  in  Watson,  it  held  that  such  policy  language  would 
unambiguously prevent recovery by the corporation based on the acts of another insured, and 
unlike the provisions of Minn. Stat. § 65A.01 that rendered such a phrase unenforceable in 
Watson, “[t]here is no comparable standard [commercial general liability] policy language under 
Minnesota law and therefore such a clause in the policies issued . . . to Bloomington Steel would 
have been enforceable. . . .” Id. at 895.                                 
opposed to negligence. Id. at 897 (discussing Domtar, Inc. v. Niagara Fire Ins. Co., 

 (Minn. 1997)).                                            
    Although  Plaintiffs  argue  that  under  Bloomington  Steel,  ICC  must  show  that 

Andrew’s actions (such as setting the fire or filing the fraudulent insurance claims) were 
foreseeable from the perspective of Timeless Bar and Horseshoe Club, they elide the 
specific context in which that foreseeability discussion arose. The Bloomington Steel 
court  did  not  hold  that  an  insurer’s  demonstration  of  foreseeability  is  always  a 
prerequisite to imputing the intent of an agent to a principal for purposes of applying any 

policy  exclusion—the  court  discussed  foreseeability  specifically  because  the  policy 
exclusions  at  issue  in  Bloomington  Steel  required  a  determination  of  whether 
Bloomington Steel “expected or intended” Reiners’ assault of Padilla. See id. at 894 
(stating that “the question is whether Padilla’s injuries were expected or intended from 
the standpoint of Bloomington Steel”). Neither the Misrepresentation Exclusion nor the 

Dishonesty Exclusion refer to injuries or losses that are “expected or intended” from the 
standpoint of the insured, so the Court need not consider whether any action taken by 
Andrew was “expected or intended” from the standpoint of Timeless Bar or Horseshoe 
Club. The language of the exclusions at issue in this case asks only whether the insured 
(through  the  acts  of  officers,  shareholders,  members,  and  authorized  representatives) 

made  material  misrepresentations  and  engaged  in  dishonest  acts.  The  foreseeability 
analysis undertaken in Bloomington Steel never enters the picture.        
    Otherwise,  Bloomington  Steel  reinforces  ordinary  principles  of  agency  law—
including (1) that a corporation can be held liable for a tort just as a natural person can, 
(2) that an agent’s intent will be imputed to the corporation when the agent acted on the 
corporation’s behalf, and (3) that the agent’s knowledge and intent can be imputed to the 
corporation  for  the  agent’s  acts  that  are  committed  in  the  course  of  the  agent’s 

employment and within the scope of the agent’s authority. Id. at 896–97. As discussed 
above, there is no dispute that Andrew intended to file false claims with ICC to defraud 
the insurer, that he did so on behalf of Timeless Bar and Horseshoe Club, and that filing 
insurance  claims  for  the  corporation  and  the  LLC  was  within  the  course  of  his 
employment and the scope of his authority.                                

    Next, Plaintiffs argue that even if the Court were to apply “the ‘dominant actor’ 
theory pushed by ICC,” questions of fact would preclude entry of summary judgment in 
ICC’s favor because they have shown that Jessie Welsh had substantial duties for both 
companies.13 They point out, for example, that Jessie was responsible for holding a food 
license without which the bar could not have operated, and they note that she provided a 

long list of the tasks she performed for the bar at various times after the businesses were 
formed in 2016. Pls.’ Opp’n at 18–19; Pls.’ SJ Mem. at 3–4. But this argument does not 
preclude summary judgment in favor of ICC. For one thing, the Court is not relying on 

    13 Plaintiffs derive the so-called “dominant actor theory” (also referred to in their briefing 
as the “dominate actor theory”) from Bloomington Steel. Pls.’ Opp’n 13, 18. As noted above, the 
Bloomington Steel court rejected the insurer’s argument that “Reiners’ intent and expectations 
must  be  imputed  to  Bloomington  Steel  simply  because  Reiners  was  the  sole  shareholder, 
director, and officer of the company.” 

. The court explicitly disagreed with the 
insurer’s suggestion that when the control over the corporate entity is so complete by one agent 
of the entity, the intent and expectation must be imputed to the corporation.”  

 (internal 
quotation omitted). Plaintiffs suggest that ICC has attempted to argue in this proceeding that 
because Andrew was solely in control of the corporation and LLC at the time of the fire, his 
intent and expectation must be imputed to the corporation, but such a position is foreclosed by 
Bloomington Steel. See Pls.’ Opp’n 13–16.                                 
any “dominant actor theory,” whether it was actually advanced by ICC or not. And the 
Court does not find that Timeless Bar and Horseshoe Club are unable to obtain coverage 
because Andrew was exclusively in control of the bar. Instead, the Court finds that the 

undisputed facts show that Andrew made fraudulent claims to ICC on behalf of the 
Plaintiffs; filing insurance claims for the companies was within the course and scope of 
his employment and within his authority; and by filing the fraudulent claims on the 
companies’  behalf,  the  Misrepresentation  and  Dishonesty  Exclusions  plainly  prohibit 
coverage.                                                                 

    Moreover, Plaintiffs’ arguments concerning Jessie’s ongoing roles with the two 
businesses  fail  to  identify  a  genuine  dispute  as  to  any  material  fact.  Even  if  Jessie 
continued to be a part owner of the bar, a stakeholder and member of the real estate 
holding company, and maintained a food license that the bar needed to operate, these 
facts would not allow a reasonable juror to conclude that Andrew lacked the authority to 

file insurance claims on behalf of Timeless Bar and Horseshoe Club.       
    Accordingly, the Court finds that, even viewed in the light most favorable to 
Plaintiffs,  Andrew’s  false  statements  in  the  proofs  of  loss  submitted  to  ICC  were 
dishonest acts and were made with intent to defraud ICC, and his actions are properly 
imputed  to  Timeless  Bar  and  Horseshoe  Club  for  purposes  of  applying  the 

Misrepresentation and Dishonesty Exclusions.                              
    D. Conclusion                                                        
    For the reasons discussed above, the Court finds that ICC is entitled to summary 
judgment. ICC’s motion is granted and Plaintiffs’ motion is denied. It is not lost on the 
Court that this outcome works a certain unfairness to Jessie Welsh, who was by all 
accounts uninvolved in the arson and unaware of Andrew’s fraudulent scheme. Even 
though the record demonstrates Jessie had become increasingly less involved in the day-

to-day business and other affairs of the bar, she still held a significant interest in the 
corporation (490 shares out of 1,000) and was a 50% member in the LLC. Although the 
record is not entirely clear on this point, it seems that the fire destroyed the building and 
virtually  all  the  bar’s  significant  assets.  Consequently,  in  addition  to  voiding  the 
insurance coverage the businesses purchased to protect against losses, Andrew’s conduct 

may have eliminated any business assets that Jessie could potentially have liquidated to 
satisfy the companies’ remaining creditors or recoup her investment.      
III.  Intentional Acts Exclusion                                          
    The  parties  spill  considerable  ink  arguing  over  whether  the  Intentional  Acts 
exclusion can be applied in this case and whether (or to what extent) the Minnesota 

courts have adopted a so-called “corporate arson doctrine.” Because the Court concludes 
above  that  ICC  is  entitled  to  summary  judgment  based  on  the  Misrepresentation 
Exclusion and the Dishonesty Exclusion due to Andrew Welsh’s undisputed submission 
of fraudulent insurance claims on behalf of Timeless Bar and Horseshoe Club, the Court 
expresses no opinion on these issues.                                     

                    CONCLUSION AND ORDER                                 
    The undisputed material facts show that after he intentionally burned down the 
bar, Andrew Welsh filed fraudulent insurance claims with ICC on behalf of Timeless Bar 
and Horseshoe Club. He was authorized to file insurance claims on behalf of both of 
those businesses and was acting within the course and scope of his employment when he 
did  so.  Accordingly,  Andrew’s  actions  are  imputed  to  the  Plaintiffs,  the 
Misrepresentation Exclusion and the Dishonesty Exclusion preclude coverage as a matter 

of law, and ICC is entitled to summary judgment.                          
    For the reasons set forth above, IT IS HEREBY ORDERED THAT:          
    1.   Plaintiff’s Summary Judgment Motion (Doc. 55) is denied.        
    2.   Defendant’s Summary Judgment Motion (Doc. 60) is granted.       
    3.   This matter is dismissed with prejudice.                        

    Let Judgment be entered accordingly.                                 

Date: May 21, 2024               s/Katherine Menendez                     
                                Katherine Menendez                       
                                United States District Judge