Willsey v. Shelter Mutual Insurance Company

Filing 49

MEMORANDUM OPINION AND ORDER denying 9 Plaintiff's Motion for Partial Judgment on the Pleadings and denying 18 Motion to Certify. This matter remains set for a jury trial during the week of 11/4/2013. Signed by Honorable Robert T. Dawson on August 16, 2013. (sh)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF ARKANSAS
FORT SMITH DIVISION
CHARLES A. WILLSEY, Individually and
as the Special Administrator of the
Estate of CYNTHIA K. WILLSEY, Deceased
V.

PLAINTIFF

CIVIL NO. 12-2320

SHELTER MUTUAL INSURANCE COMPANY

DEFENDANT

MEMORANDUM OPINION AND ORDER
Currently before the Court are Plaintiff’s Motion to Certify
Question to the Arkansas Supreme Court and supporting brief (docs.
18-19), Defendant’s Response (doc. 20) and Plaintiff’s Reply (doc.
22).

Also before the Court are Defendant’s Motion for Partial

Judgment

on

the

Pleadings

and

supporting

brief

(docs.

9-10),

Plaintiff’s Response (doc. 13) and Defendant’s Reply (doc. 15).
A.

Background

Plaintiff filed his Complaint on November 9, 2012, in the
Circuit Court of Crawford County contending Defendant exhibited bad
faith in connection with his and his wife’s insurance claim for hail
damage to their home.

Plaintiff alleges that Defendant’s bad faith

and delayed payment of their claim resulted in mold growth in their
home culminating in Cynthia Willsey’s lung failure due to fungal
pneumonia and resulting death.

Plaintiff alleges claims for breach

of contract, bad faith, deceptive trade practices and wrongful death.

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Defendant removed the case to this Court on December 19, 2012,
based upon diversity jurisdiction.

On January 10, 2013, Defendant

filed a Motion for Partial Judgment on the Pleadings (doc. 9) as to
Plaintiff’s deceptive trade practices claim contending that the Trade
Practices Act of the Arkansas Insurance Code, Arkansas Code Annotated
§ 23-66-201, et seq. does not provide a private right of action
against an insurer.

In his response (doc. 13), Plaintiff clarifies

his cause of action is pursuant to the Arkansas Deceptive Trade
Practices Act, Arkansas Code Annotated § 4-88-101, et seq. (ADTPA).
In its reply (doc. 15), Defendant contends Plaintiff’s ADTPA claim
still fails as Section 4-88-101(3) excludes all insurance business
activities from the purview of the ADTPA.

It is this contention for

which Plaintiff seeks certification to the Arkansas Supreme Court.
B.

Standard of Review

Federal courts sitting in diversity must apply the substantive
law of the forum state as declared by the state’s legislature in a
statute or by its highest court in a decided case.
v. Tompkins, 304 U.S. 64, 78 (1938).

Erie Railroad Co.

Assuming a federal court is

confronted with an unresolved issue of state law, the federal court
may determine how the state’s highest court would rule on the issue
or

certify

the

question

to

the

state’s

highest

court

for

a

resolution.

Blankenship v. USA Truck, Inc., 601 F.3d 852, 856 (8th

Cir. 2010).

This decision is within the sound discretion of the
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federal court.

Allstate Ins. Co. v. Steele, 74 F.3d 878, 881 (8th

Cir. 1996).
The Arkansas Supreme Court has the power to “answer questions of
law certified to it” by a federal court if the federal court
proceeding

involves

“questions

of

Arkansas

law

which

may

be

determinative of the cause...and as to which it appears to the
certifying court there is no controlling precedent in the decisions
of the Supreme Court.”

Ark. Sup. Ct. & Ct. App. R. 6-8(a)(1).

Acceptance of certification by the Arkansas Supreme Court will occur
only where all facts material to the question of law to be determined
are undisputed, and there are special and important reasons to accept
the certification.
(2003).

Longview Prod. Co. v. Dubberly, 99 S.W.3d 427

Certification may be accepted if “[t]he question of law is

one of first impression and is of such substantial public importance
as to require a prompt and definitive resolution by the court.”

Id.

Absent a close question of state law or a lack of state guidance, a
federal court should determine all the issues before it.

Perkins v.

Clark Equip. Co., 823 F.2d 207, 209 (8th Cir. 1987).
Judgment on the pleadings under Federal Rule of Civil Procedure
12(c) is appropriate “where no material issue of fact remains to be
resolved and the movant is entitled to judgment as a matter of law.”
Minch Family LLLP v. Buffalo-Red River Watershed Dist., 628 F.3d 960,
965 (8th Cir. 2010).

“The facts pleaded by the non-moving party must
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be accepted as true and all reasonable inferences from the pleadings
should be taken in favor of the non-moving party.”

Mills v. City of

Grand Forks, 614 F.3d 495, 498 (8th Cir. 2010).

In ruling on a

motion for judgment on the pleadings, a court “may consider the
pleadings themselves, materials embraced by the pleadings, exhibits
attached to the pleadings, and matters of public record.
C.

Id.

Analysis

According to Plaintiff, certification is needed as there is a
split in the federal districts in Arkansas as to which test should be
applied to determine the application of the “safe harbor” provision of
the ADTPA.

Plaintiff seeks an order of the Court certifying the

question of whether the safe harbor provision found at § 4-88-101(3)
of the Arkansas Code exempts all conduct by insurers from the purview
of the ADTPA.
The ADTPA prohibits deceptive and unconscionable trade practices
and provides a private cause of action to “[a]ny person who suffers
actual damage or injury as a result of an offense or violation as
defined in this chapter.”

Ark. Code Ann. § 4-88-113(f).

However, the

ADTPA’s so-called “safe harbor” provision provides the ADTPA does not
apply to actions or transactions permitted under laws administered
by...[a] regulatory body or officer acting under statutory authority
of this state or the United States.

Ark. Code Ann. § 4-88-101(3).

The Supreme Court of Arkansas has stated that the ADTPA’s safe
harbor provision specifically exempts conduct that is permitted under

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laws administered by a federal agency.
Pharmaceuticals,
added).

L.P.,

351

S.W.3d

DePriest v. Astrazeneca

168,

176

(Ark.

2009)(emphasis

In DePriest, the Arkansas Supreme Court found Plaintiff’s

action was barred by the safe harbor provision as the drug advertising
challenged by the plaintiff as deceptive was approved by and complied
with the Federal Drug Administration’s rules and regulations.
176-77.

Id. at

Thus, the FDA had already determined the information was not

“false or misleading.”
In this action, Plaintiff alleges Defendant committed “unfair
claims

settlement

Practices

Act,

practices”

Ark.

Code

as

Ann.

defined
§

in

23-66-201,

the
et

Insurance
seq.

Trade

Plaintiff

specifically contends Defendant intentionally delayed paying his claim
and

ultimately

underpaid

his

claim.

Such conduct

is

expressly

prohibited by the Insurance Code.
To resolve this issue, the Court must construe the pertinent
provisions of the ADTPA and the Insurance Trade Practices Act.
construing

a

statute,

no

word

is

left

void,

superfluous,

When
or

insignificant, and the Court must give meaning and effect to every
word in the statute, if possible.
(Ark. 2007).

McMickle v. Griffin, 254 S.W.3d 729

Further, the court shall consider the statutes just as

they read, giving the words their ordinary and usually accepted
meaning.

Nelson v. Timberline Int’l, Inc., 964 S.W.2d 357, 262 (Ark.

1998).
At issue here is the ADTPA’s safe harbor provision excluding
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actions or transactions permitted under the Insurance Trade Practices
Act. Plaintiff’s allegations in this case are generally characterized
as

“unfair

claims

settlement

practices”.

These

practices

are

specifically prohibited by the Arkansas Insurance Trade Practices Act.
See A.C.A. §§ 23-66-205 & 206.

As unfair claims settlement practices

are not permitted by the Trade Practices Act, the Court finds they are
not excluded by the ADTPA’s safe harbor provision.
The Eastern District of Arkansas has stated that the insurance
activity exception of the ADTPA excludes all insurance activity in the
State of Arkansas whether permissible or not.

Williams v. State Farm

Mut. Auto. Ins., 2010 WL 2573196 (E.D. Ark. June 22, 2010) citing
Jones v. Unum Life Ins. Co. of Am., 2006 WL 3462130, at *3 (E.D. Ark.
Nov. 29, 2006) and Kirby v. United Am. Ins. Co., 2010 WL 961723, at *1
(E.D. Ark. Mar. 15, 2010).

With all due respect to these decisions,

this Court does not need to engage in speculation or conjecture
regarding state law.
only

excludes

The plain meaning of the safe harbor provision

activity

permitted

by

the

Insurance

Trade

Act.

Accordingly, Plaintiff’s Motion to Certify Question to the Arkansas
Supreme Court (doc. 18) is DENIED.
D.

Motion for Partial Judgment on the Pleadings

For the reasons reflected above, the Court finds Plaintiff has
stated a claim pursuant to the ADTPA, and Defendant’s Motion for
Partial Judgment on the Pleadings (doc. 9) is DENIED.

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E.

Conclusion

Plaintiff’s Motion to Certify Question to the Arkansas Supreme
Court (doc. 18) is DENIED.

Defendant’s Motion for Partial Judgment on

the Pleadings (doc. 9) is DENIED.

This matter remains set for a jury

trial during the week of November 4, 2013.
IT IS SO ORDERED this 16th day of August 2013.
/s/ Robert T. Dawson
Honorable Robert T. Dawson
United States District Judge

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