Outdoor Venture Corporation et al v. Philadelphia Indemnity Insurance Company et al

Filing 91

MEMORANDUM OPINION & ORDER : 1) Grange's motion for summary judgment (DE 89 ) on the bad-faith claims asserted against it is GRANTED; 2) Scottsdale's motion for summary judgment (DE 90 ) on the bad-faith claims asserted against it is GRANTED; and 3) The counterclaims by Grange and Scottsdale are DISMISSED as moot. Signed by Judge Karen K. Caldwell on 2/24/20.(SYD)cc: COR

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
SOUTHERN DIVISION
LONDON
OUTDOOR VENTURE CORPORATION,
STEARNS MANUFACTURING,
KENTUCKY HIGHLANDS INVESTMENT
CORPORATION,
J.C. EGNEW, and
L. RAY MONCRIEF

CIVIL ACTION NO. 6:16-cv-182-KKC

Plaintiffs,
V.

OPINION AND ORDER

PHILADELPHIA INDEMNITY
INSURANCE COMPANY,
GRANGE MUTUAL CASUALTY CO.,
SCOTTSDALE INDEMNITY COMPANY,
AUTO-OWNERS INSURANCE
COMPANY, and
OWNERS INSURANCE COMPANY
Defendants.

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This matter is before the Court on the motions for summary judgment on the
remaining claims in this action filed by Grange Mutual Casualty Insurance Company (DE
89) and Scottsdale Indemnity Company (DE 90). For the following reasons, both motions
will be granted, and judgment will be entered.
The plaintiffs in this matter are three corporations and two individuals who were
officers of the corporations. The three corporations are Stearns Manufacturing and its
successor Outdoor Venture Corporation (together, “OVC”) and Kentucky Highlands
Investment Corporation. (DE 1, Complaint, ¶ 11.) The two individual plaintiffs are J.C.
Egnew and L. Ray Moncrief. During at least the relevant time, Egnew was the president of

OVC. (DE 1, Complaint, ¶4.) Moncrief was a director of OVC and an officer of Kentucky
Highlands (DE 1, Complaint, ¶3.)
The defendants in this matter are all insurance companies: 1) Philadelphia Indemnity
Insurance Company, 2) Grange Mutual Casualty Co., 3) Scottsdale Indemnity Company,
and 4) Auto-Owners Insurance Company and Owners Insurance Company (together,
“Owners). The plaintiffs were insured by one or more of the insurance companies. With this
action, the insureds primarily seek reimbursement from their insurance companies for the
costs they incurred in defending three lawsuits filed against them. The plaintiffs asked for
a declaration that the defendant insurance companies had a duty to defend them in the
underlying actions. They also asserted breach-of-contract and bad-faith claims against the
defendants.
The Court bifurcated and stayed any action on the bad-faith claims and ordered the
parties to brief the threshold issue of whether the insurance companies had a duty to
defend the insureds in the three underlying lawsuits. The parties filed motions for
summary judgment on that issue, and the Court determined that there was only one breach
of the duty to defend: Scottsdale breached its duty to defend plaintiff Moncrief in two of the
underlying actions.
The Court determined that neither Grange nor Owners had any duty to defend the
plaintiffs in the underlying action. The Court also determined that Scottsdale either had no
duty to defend the plaintiffs or had complied with that duty with regard to all plaintiffs,
except its duty to defend Moncrief in two of the underlying actions.
Prior to that opinion, the plaintiffs had already voluntarily dismissed all claims against
defendant Philadelphia Insurance Company. (DE 39, Order.) After the summary judgment
opinion, the Court entered two agreed orders. One of those orders (DE 87) dismissed all
claims by all plaintiffs against Owners. It also dismissed all of Owners’ counterclaims
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against all plaintiffs. The second of the agreed orders (DE 86) dismissed all of the claims by
Moncrief against Scottsdale and also dismissed Scottsdale’s counterclaim against Moncrief.
Thus, the following claims are the only claims in this action that had not been resolved:
1) all of the plaintiffs’ bad-faith claims against Grange and Grange’s counterclaim against
all plaintiffs; and 2) the bad-faith claim by plaintiffs Egnew, Kentucky Highlands, and OVC
against Scottsdale and Scottsdale’s counterclaim against those plaintiffs.
Grange and Scottsdale have now filed unopposed motions for summary judgment on
these remaining claims. Under Kentucky law, common law and statutory bad-faith claim
are analyzed the same. See Rawe v. Liberty Mut. Fire Ins. Co., 462 F.3d 521, 526-27 (6th
Cir. 2006). To prevail on either, the plaintiff must establish:
(1) that the insurer is obligated to pay the claim under the
terms of the policy;
(2) that the insurer lacked a reasonable basis in law or fact for
denying the claim; and
(3) that the insurer either knew there was no reasonable basis
for denying the claim or acted with reckless disregard for
whether such a basis existed.
See Wittmer v. Jones, 864 S.W.2d 885, 890 (Ky. 1993).
Accordingly, because Grange had no duty to defend any of the plaintiffs, the bad-faith
claims against it must be dismissed. If an insurer is not obligated to pay a claim under the
terms of the policy, then any “bad faith claim must fail as a matter of law.” Travelers
Indem. Co. v. Armstrong, 565 S.W.3d 550, 568 (Ky. 2018), reh'g denied (Feb. 14, 2019). As to
Scottsdale, it had no duty to defend Kentucky Highlands. It had a duty to defend OVC and
Egnew, but it did not deny their claim for coverage. Instead, it complied with its duty to
defend. Accordingly, the bad-faith claims against Scottsdale must also be dismissed.

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For these reasons, the Court hereby ORDERS as follows:
1) Grange’s motion for summary judgment (DE 89) on the bad-faith claims asserted
against it is GRANTED;
2) Scottsdale’s motion for summary judgment (DE 90) on the bad-faith claims asserted
against it is GRANTED; and
3) The counterclaims by Grange and Scottsdale are DISMISSED as moot.

Dated February 24, 2020

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