Auto-Owners Insurance Company v. Wethington Insurance, LLC
MEMORANDUM OPINION & ORDER: 1) Plaintiff's motion for summary judgment 49 be, and is hereby, GRANTED, and defendant's motion for partial summary judgment 48 be, and is hereby DENIED; and 2) On or before January 15, 2021, defendant shall tender to the Court a proposed Judgment in accord with the above opinion. Signed by Judge William O. Bertelsman on 1/6/2021.(ECO)cc: COR
Case: 2:18-cv-00123-WOB-CJS Doc #: 58 Filed: 01/06/21 Page: 1 of 7 - Page ID#: 581
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF KENTUCKY
NORTHERN DIVISION AT COVINGTON
CIVIL ACTION NO. 2:18cv123 (WOB-CJS)
AUTO-OWNERS INS. CO.,
MEMORANDUM OPINION AND ORDER
WETHINGTON INS., LLC
This matter is before the Court on the parties’ motions for
summary judgment (Docs. 48, 49).
The Court previously heard oral argument on these motions and
took the matter under submission so that the parties could attempt
to resolve this case.
Having been notified that those efforts
were unsuccessful (Doc. 57), the Court now issues the following
Memorandum Opinion and Order.
Factual and Procedural Background
Defendant Wethington Insurance, LLC (“Wethington”) is an
Affordable Chimney Sweep, Inc. (“the Insured”) asked Wethington to
acquire “All-Risk” insurance for its business equipment. (Am.
Compl. ¶ 11, Doc. 7).
Wethington applied to obtain coverage for the Insured from
Plaintiff Auto-Owners Insurance, Co. (“Auto-Owners”). Wethington
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and Auto-Owners entered into an Agency Agreement, which provided
that Wethington would indemnify and hold harmless Auto-Owners “for
all expenses associated with the investigation, defense, including
attorney’s fees, penalties, fines, judgments, interests and costs
for claims” against Wethington. (Doc. 14-1 at 3).
coverage, rather than “All-Risk” coverage. (Doc 49-1 at 1). When
the Insured incurred damage to a bulldozer, it was thus not covered
under the policy. (Id.). Nonetheless, Auto-Owners indemnified the
Insured for its $67,697.67 in damages. (Doc 48 at 3). It now seeks
to recover that amount, plus other amounts provided under the
Agency Agreement, from Wethington.
In the current motions, Wethington states that the Court may
assume that Wethington was negligent, but it disputes the correct
measure of damages.
A. Legal Standard
Under FED. R. CIV. P. 56(a), a movant is entitled to summary
judgment if the movant shows “that there is no genuine dispute as
to any material fact and the movant is entitled to judgment as a
matter of law.” A material fact is one that may “affect the outcome
of the suit under governing law.” Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248 (1986).
Likewise, a genuine dispute of a
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material fact exists if a reasonable jury “could return a verdict
for the non-moving party.” Jackson v. VHS Detroit Receiving Hosp.,
Inc., 814 F.3d 769, 775 (6th Cir. 2016). The movant bears the
burden of showing an absence of a genuine dispute of material fact,
Celotex v. Catrett, 477 U.S. 317, 323 (1986), and the Court must
view the evidence in light most favorable to the nonmovant.
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,
B. Undisputed Facts
The Agency Contract between Auto-Owners and Wethington is
valid and enforceable. (Doc. 52 at 1); (Doc. 50). The Agency
“misrepresentation, act, error, or omission.” (Doc. 52 at 1); (Doc.
49-3). Wethington had a duty to accurately request insurance
coverage from Auto-Owners for the Insured. (Doc. 52 at 1).
Wethington erroneously requested Named-Perils coverage from
Auto-Owners, (Doc. 49 at 2), and Auto-Owners issued that coverage.
(Doc. 48 at 2). Thus, it is undisputed that Wethington breached
its Agency Agreement with Auto-Owners.
Wethington argues that Auto-Owners would have issued an AllRisk policy had it been requested, but it cites no evidence that
this is the case. (Doc. 48 at 4). Wethington points to William
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coverage. (Doc. 52 at 4). However, Wethington also acknowledged in
his testimony that it is the written application alone which
determines the type of coverage issued. (Id.); (Doc. 49-2 at 2021); (Doc. 50-2 at 52).
Thus, for the purposes of summary judgment, there is no
Wethington acknowledges that its failure to request the proper
insurance constituted the first material breach under the Agency
Agreement. (Doc. 54 at 4). At issue is merely the measure of
C. Reasonably Certain Compensatory Damages
In Kentucky, the purpose of breach of contract damages is to
put the nonbreaching party in the position it “would have been in
had the contract been fully performed” as a measure of expectancy
damages. Perkins Motors, Inc. v. Autotruck Fed. Credit Union, 607
S.W.2d 429, 430 (Ky. Ct. App. 1980) (citing Olive Hill Limestone
Co. v. Gay-Coleman Const. Co., 51 S.W.2d 465 (1932)). Likewise,
Pauline’s Chicken Villa, Inc. v. KFC Corp., 701 S.W.2d 399, 401
(Ky. 1985) (citing Restatement (Second) of Contracts § 352 (1981)).
Here, the undisputed breach occurred when Wethington failed
to properly request All-Risk insurance on behalf of the Insured.
“reasonable certainty,” Pauline’s Chicken, 701 S.W.2d at 401,
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Auto-Owners is seeking, in part, the actual sum of money paid to
the Insured of $67,697.67. (Doc. 14-1 at 7). This calculation is
sufficiently concrete to constitute “reasonable certainty.”
Wethington cites cases from other jurisdictions in support of
its causation theory that Auto-Owners is entitled merely to the
difference in the All-Risk premiums and the Named-Perils premiums.
(Doc. 48 at 7-13). Even if those cases had persuasive authority in
Kentucky, Wethington fails to show that Auto-Owners would have, in
fact, issued All-Risk insurance. (Doc. 48 at 8).
Wethington, William Wethington, in his deposition, testified that
underwriters at Auto-Owners. (Doc. 49-2 at 20-21); (Doc. 50-2 at
52). However, Mr. Wethington then testified that it is the written
application submitted to Auto-Owners that determines what policy
is issued. (Doc. 49-2 at 21); (Doc. 50-2 at 52).
Therefore, even assuming that an underwriter at Auto-Owners
was aware of the Insured’s references to all-risk insurance, it is
irrelevant. Likewise, Wethington has simply asserted that AutoOwners “would have” issued All-Risk insurance, but it points to no
record evidence to support such speculation. (Doc. 48 at 4).
Moreover, the plain terms of the Agency Contract entitle AutoOwners to indemnity from Wethington for the latter’s errors or
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Thus, construing the evidence in the light most favorable to
Wethington, Auto-Owners is entitled to damages of $67,697.67.
D. Liquidated Damages
Auto-Owners also seeks prejudgment interest on the $67,697.67
on the basis that its damages are liquidated. (Doc. 49-1 at 20).
In Kentucky, “‘liquidated damages’ are those ‘the amount of
which has been made certain and fixed either by the act and
agreement of the parties or by the operation of law to a sum which
cannot be changed by the proof.” Hazel Enterprises, LLC v. Ray,
510 S.W.3d 840, 843-844 (Ky. Ct. App. 2017). On the other hand,
“‘unliquidated damages’ are ‘damages that have been established by
a verdict or award but cannot be determined by a fixed formula so
they are left to the discretion of the judge or jury.’” Id.
Here, the breach of the Agency Agreement and resulting damages
to the Insured’s machinery was $67,697.67. (Doc. 48 at 3). This
amount is sufficiently definite to constitute a liquidated amount.
Thus, Auto-Owners is entitled to prejudgment interest on the sum
of $67,697.67 pursuant to Kentucky law.
E. Post-Judgment Interest
Auto-Owners also seeks post-judgment interest under 28 U.S.C.
§ 1961(a). Under 28 U.S.C. § 1961(a), interest “shall be allowed
on any money judgment in a civil case recovered in a district
court.” The purpose of allowing post judgment interest is to
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ascertainment of the damage and payment. Kaiser Aluminum & Chem.
Corp. v. Bonjorno, 494 U.S. 827, 835-836 (1990). Thus, under
interest on the sum of $67,697.67.
Therefore, having reviewed this matter, and the Court being
IT IS ORDERED that:
Plaintiff’s motion for summary judgment (Doc. 49) be,
partial summary judgment (Doc. 48) be, and is hereby,
On or before January 15, 2021, defendant shall tender to
the Court a proposed Judgment in accord with the above
This 6th day of January 2021.
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