Minter v. Liberty Mutual Fire Insurance Company
Filing
126
MEMORANDUM OPINION by Senior Judge Charles R. Simpson, III on 9/30/2014; re 81 MOTION for Summary Judgment filed by Liberty Mutual Fire Insurance Company ; A separate order and judgment will be entered this date in accordance with this Memorandum Opinion dismissing this action with prejudicecc:counsel (TLB)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
AT LOUISVILLE
PLAINTIFF
TIA MINTER
v.
NO. 3:11-CV-00249-S
LIBERT MUTUAL FIRE INSURANCE
COMPANY
DEFENDANT
MEMORANDUM OPINION
This matter is before the court on the motion of the Defendant, Liberty Mutual Fire
Insurance Company (“Liberty Mutual”), for summary judgment as to all counts of the First
Amended Complaint of the Plaintiff, Tia Minter (“Minter”). DN 81-13. Fully briefed, the matter
is now ripe for adjudication. Having considered the parties’ respective positions, the court
concludes that there are no material issues of fact in dispute. For the reasons set forth below, the
court will grant Defendants’ motion for summary judgment. DN 81-13.
I.
This case arose from events that followed a motor vehicle accident involving Plaintiff,
Minter, and a third-party tortfeasor, Debra Floeter (“Floeter”), in Jefferson County, Kentucky.
The Defendant, Liberty Mutual, is Minter’s insurer and became involved in the underlying
controversy when Minter claimed underinsured motorists (“UIM”) benefits under the insurance
policy she maintained with Liberty Mutual. The parties do not dispute the following facts.
On August 29, 2007, a third-party tortfeasor, Floeter, rear-ended the vehicle Minter was
operating as it was stopped in traffic. The impact caused Minter’s vehicle to collide with the
vehicle stopped in front of her, damaging both the rear and front of her vehicle. DN 12-3. Minter
did not report any injuries to the officer whom responded to the accident. Id. But she does
allege that, on her way home, she experienced pain in her left arm and hand – and that within
three to five days, she began experiencing constant pain in her neck that radiated to her left
shoulder, arm, and hand. She did not, however, seek medical treatment for these ailments until
January 22, 2008, over four months later.
On January 22, Minter underwent an MRI examination that revealed a “very large
extruded disc at C5-6 [vertrebrae] to the left causing C6 compression and lateral recess.” DN 813, p. 1. She, accordingly, sought treatment at River City Orthopedics, and eventually underwent
disc replacement surgery – specifically, an anterior cervical decompression at C5-C6 and
insertion of an artificial cervical disk. Id. She reports that the surgery relieved some, but not all,
of her sympto DN 88. So on April 1, 2008, Minter made a reparations claim on her Liberty
Mutual policy for costs associated with the accident and surgery. Liberty Mutual did not oblige
but did note a potential UIM claim in Minter’s file and established a reserve of $50,000 on her
$100,000 UIM policy limit.
On May 14, 2009, Minter’s counsel sent State Farm Mutual Automobile Insurance
Company (“State Farm”), Floeter’s insurer, an offer to settle Minter’s claim against Floeter for
State Farm’s policy limit of $100,000.
When Minter’s counsel recognized that Floeter’s
coverage was less than his anticipated value of Minter’s claim, rendering her “underinsured”, he
also sent a letter to Liberty Mutual indicating that he would be making a demand for Minter’s
UIM policy limit.
Shortly thereafter, State Farm refused to pay the Floeter’s policy limit, so Minter filed a
complaint against her for negligence in Jefferson Circuit Court on June 25, 2009. DN 81-4. On
February 2, 2010, over seven months later, State Farm offered its full policy limit to settle
Minter’s claim against Floeter. Then Minter’s counsel provided Liberty Mutual a Coots letter,
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informing Liberty Mutual, among other things, of State Farm’s offer to settle and that Floeter’s
policy limit was “grossly inadequate” in light of the damages that Minter could recover;
therefore, he demanded that Liberty Mutual pay her UIM policy limit of $100,000. And on
March 30, when Liberty Mutual had still not responded to the Coots letter and demand, Minter
amended her complaint to add Liberty Mutual as a defendant and assert an underinsured
motorist’s claim against it. DN 88-5.
Around this time, Liberty Mutual took several steps in investigating Minter’s claim. It
made discovery requests, deposed Minter and five of her previous co-workers, had Minter
independently medically examined, and subpoenaed all of her medical records.
Then, on
January 6, 2011, Liberty Mutual offered to settle Minter’s UIM claims for $75,000. She rejected
this offer, and, on January 13, Liberty Mutual offered to settle for the $100,000 policy limit.
Minter accepted the offer, signed a Release, DN 81-10, and the court entered an Agreed Order
Dismissing Settled Claims Against Liberty Mutual. DN 81-11.
On March 30, 2011, Minter filed this action against Liberty Mutual alleging that it had
breached its duty to settle her UIM claim in good faith in violation of Kentucky’s Unfair Claim
Settlement Practices Act and the common law tort of bad faith. DN 1-1.
Liberty Mutual
removed the case to this Court based on diversity jurisdiction. With leave of court, Minter then
filed her First Amended Complaint, asserting the following claims against Liberty Mutual: (1)
violation of Kentucky’s Unfair Claim Settlement Practices Act (“UCSPA”), Ky. Rev. Stat. Ann.
§§ 304.12-230, 304.12-235 (Count I); (2) common law bad faith (Count II); and (3) violation of
Kentucky’s Consumer Protection Act (“KCPA”), Ky. Rev. Stat. Ann. § 367.220 et seq. (Count
III). DN 1; DN 42. In her First Amended Complaint, Minter alleges that she suffered financially,
has been embarrassed, inconvenienced, and has suffered financial detriment because of the delay
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in payment of her claims. DN 42. She demands damages for her inconvenience, anxiety, mental
anguish, and other compensatory damages caused by Defendant’s alleged bad faith and she
claims punitive damages to “punish and deter Liberty Mutual and others from engaging in such
conduct.” Id. Minter now admits, however, that she suffered no financial damages as a result of
Liberty Mutual’s conduct. DN 81-12.
Defendant filed a motion for summary judgment on each count of the First Amended
Complaint. We will now address the merits of the motion.
II.
A court may grant a motion for summary judgment if it finds that there is no genuine
dispute as to any material fact and the moving party is entitled to judgment as a matter of law.
Fed. R. Civ. P. 56(a). The moving party bears the initial burden of specifying the basis for its
motion and identifying that portion of the record which demonstrates the absence of a genuine
issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). Once the moving
party satisfies this burden, the nonmoving party thereafter must produce specific facts
demonstrating a genuine issue of fact for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
247–48 (1986).
The evidence must be construed in a light most favorable to the party opposing the
motion. Bohn Aluminum & Brass Corp. v. Storm King Corp., 303 F.2d 425 (6th Cir. 1962).
However, the nonmoving party is required to do more than simply show there is some
“metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
475 U.S. 574, 586 (1986). The nonmoving party cannot rely upon the assertions in its pleadings;
rather that party must come forward with probative evidence, such as sworn affidavits, to support
its clai Celotex, 477 U.S. at 324. It must present specific facts showing that a genuine factual
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issue exists by “citing to particular parts of materials in the record” or by “showing that the
materials cited do not establish the absence . . . of a genuine dispute[.]” Fed. R. Civ. P. 56(c)(1).
“The mere existence of a scintilla of evidence in support of the [nonmoving party’s] position will
be insufficient; there must be evidence on which the jury could reasonably find for the
[nonmoving party].” Anderson, 477 U.S. at 252.
III.
Defendants contend that they are entitled to summary judgment on each count of the First
Amended Complaint. We address these claims below.
A. Counts I and II: Liberty Mutual’s Violation of the Unfair Claims Settlement
Practices Act and Common Law Bad Faith
Plaintiff alleges that Liberty Mutual violated the Unfair Claims Settlement Practices Act
(“UCSPA”), Ky. Rev. Stat. Ann. § 3054.12-320, and committed the common law tort of bad
faith by engaging in various bad faith conduct aimed at delaying or denying settlement of her
underinsured motorist claim. DN 42. Because “[a] single test under Kentucky law exists for the
merits of bad-faith claims, whether . . . brought under common law or statute,” Rawe v. Liberty
Mut. Fire Ins. Co., 462 F.3d 521, 527 (6th Cir. 2006), the Court will analyze Plaintiff’s UCSPA
and common law bad faith claims together. Cobb King v. Liberty Mut. Inc. Co., 54 F. App'x 833,
836 (6th Cir. 2003).
In Wittmer v. Jones, the “leading case on ‘bad faith’ in Kentucky,” the Supreme Court of
Kentucky established three base-level requirements that an insured must prove in order to prevail
against an insurance company for bad faith refusal to pay the insured’s claim:
(1) the insurer must be obligated to pay the claim under the terms of the
policy; (2) the insurer must lack a reasonable basis in law or fact for denying
the claim; and (3) it must be shown that the insurer either knew there was no
reasonable basis for denying the claim or acted with reckless disregard for
whether such basis existed.
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Wittmer v. Jones, 864 S.W.2d 885, 890 (Ky. 1993). The parties do not dispute that these are the
elements of a bad-faith claim; rather, they dispute the effect that other language in Wittmer has
on Minter’s burden of production under these claims – specifically, the language indicating that
“there can be no such thing as a ‘technical violation’ of the USCPA.” Id; DN 81, p. 12; DN 88,
p. 18. That this language requires that Minter to prove compensable damages is the foundation
of the Liberty Mutual’s motion. Thus, we must determine the impact of this language; then, if
we determine that it does mandate that a plaintiff allege compensable damages before he or she
can recover for bad faith, we must assess whether Minter has met this condition.
Liberty Mutual argues that Wittmer’s “technical violation” language and, especially,
those cases interpreting it make clear that “a condition precedent to bringing a statutory bad faith
action is that the claimant was damaged by reason of the violation of the statute.” Motorists Mut.
Ins. Co. v. Glass, 996 S.W.2d 437, 454 (Ky. 1997). Minter, it contends, cannot show, and does
not even allege, any such damages. DN 81-13. Minter, on the other hand, argues that case law
and the UCSPA do not require that she show actual, compensable damages in order be entitled to
punitive damages for Liberty Mutual’s bad faith. DN 88. But the Court finds that Minter is
mistaken as to the current state of Kentucky law.
The general rule in Kentucky is that, absent an assertion of actual damages, a plaintiff
may not submit the issue of punitive damages to a jury. Dill v. Greyhound Corp., 435 F.2d 231,
239 (6th Cir. 1970) (explaining that, under Kentucky law, “[a]n award of punitive damages
where no actual damage is found, is not authorized); Estep v. Werner, 780 S.W.2d 604, 607 (Ky.
1989) (finding punitive damages unrecoverable because the movant failed to demonstrate an
injury for which compensatory damages might be awarded); Lawrence v. Risen, 598 S.W.2d 474,
476 (Ky. Ct. App. 1980) (holding that absent “a factual allegation of actual compensatory
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damages, punitive recoveries cannot be sustained.”).
This is in harmony with the Supreme
Court of the United States’ view that “[a] defendant should be punished for the conduct that
harmed the plaintiff, not for being an unsavory individual or business.” State Farm Mut. Auto.
Ins. v. Campbell, 538 U.S. 408, 432 (2003). Thus, absent some indication to the contrary –
whether in a cause of action’s statutory scheme, the precedent examining it, or otherwise – a
plaintiff seeking punitive damages under Kentucky law must first demonstrate some
compensable injury. See Estep, 780 S.W.2d at 607. Minter points to no such exception for badfaith claims; nor could she, as Kentucky’s jurisprudence on this issue is well-settled.
In fact, the Supreme Court of Kentucky has specifically held that, contrary to Minter’s
assertion, “[a]bsent resultant damage, there can be no cause of action premised upon [a] violation
of . . . the UCSPA.” Glass, 996 S.W.2d at 454. Another court found that “the UCSPA contains
no provision permitting a claim for punitive damages absent a showing of compensatory
damages, or . . . that the claimant was injured by actions that violated the statute.” Exel, Inc. v.
Liberty Mut. Fire Ins. Co., 2011 WL 1733553, at *3 (Ky. Ct. App. May 6, 2011). Even this
Court has, not coincidentally, steadfastly agreed.
Meador v. Indiana Ins. Co., No.
1:05CV206TBR, 2007 WL 1098208, at *8 (W.D. Ky. Apr. 12, 2007) (noting the resultant
damage requirement under the UCSPA)(citing Glass, 996 S.W.2d at 454) aff'd sub nom. Meador
v. Houchens Indus., Inc., 279 F. App'x 385 (6th Cir. 2008).
Yet, Minter argues that, under Commonwealth Dept. of Agriculture v. Vinson, 30 S.W.3d
162, 165-66 (Ky. 2000), she can recover punitive damages without showing compensable
damages. DN 88, p. 25. In Vinson, the Supreme Court of Kentucky interpreted Ky. Rev. Stat.
Ann. § 31.103(2), a statute that explicitly allows plaintiffs to recover for “injunctive relief or
punitive damages, or both” – language that it found demonstrated the “General Assembly[’s]
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inten[tion] that punitive damages might be awarded in addition to equitable relief or separately”
under that scheme. Vinson, 30 S.W.3d at 165 (emphasis added). The UCSPA, however, contains
no such language, and Vinson is inapplicable. See Exel, 2011 WL 1733553, at *2 (distinguishing
Vinson and bad-faith claims under the UCSPA).
As such, Minter must show a basis for
compensatory damages, or Liberty Mutual is entitled to summary judgment as a matter of law.
See Glass, 996 S.W.2d at 454.
Acknowledging that this is the rule, Liberty Mutual goes on to argue that it is entitled to
summary judgment on Minter’s bad-faith claims because she has not shown any compensable
damages. DN 81-13, p. 7-12. Specifically, it alleges that Minter has put forth inadequate proof
of both emotional and financial damages to survive summary judgment. Id. The Court agrees.
And because Minter does not contest that she did not suffer financial damages as a result of
Liberty Mutual’s alleged bad faith, see DN 88, we limit the following discussion to evidence of
her emotional damages.
Under a UCSPA or common law bad-faith claim, damages for anxiety and mental
anguish are recoverable. Glass, 996 S.W.2d at 454 (citing FB Insurance Co. v. Jones, 864
S.W.2d 926 (Ky. Ct. App. 1993)).1 However, “entitlement to such damages requires either direct
1
Liberty Mutual incorrectly asserts that, in order to recover emotional distress damages, Minter must meet the strict
standard of proof that is required for a Negligent or Intentional Infliction of Emotional Distress claim (“NIED” and
“IIED”). DN 81-13 (citing Osborne v. Keeney, 399 S.W. 3d 1 (Ky. 2012)(discussing the proof required to prevail
on a NIED claim); Powell v. Tosh, 2013 WL 1878934 (W.D. Ky. May 3, 2013) (discussing NIED under Kentucky
law); Farmer v. Dixon Electrical Systems and Contracting, Inc., 2013 WL 2405547, at *9 (E.D. Ky. May 31,
2013)(discussing IIED under Kentucky law). The high standard makes sense in those cases, as the elements of such
a claim specifically require “severe or serious emotional injury.” Osborne, 399 S.W. 3d at 17. Here, bad-faith
conduct in settling a claim is alleged to have caused the Plaintiff emotional harm. This is not a claim sounding in
negligence, NIED, or IIED. Liberty Mutual cites no authority applying Osborne in the context of bad faith. Nor
could it, because plaintiffs claiming statutory violations have recovered for humiliation, embarrassment, or nervous
shock, and the courts allowing those recoveries did not require evidence of serious or severe emotional injury. See,
e.g., Kentucky Comm'n on Human Rights v. Fraser, 625 S.W.2d 852, 856 (Ky. 1981) (allowing the plaintiff to
recover for mere embarrassment and humiliation caused by a violation of the Kentucky Civil Rights Act, Ky. Rev.
Stat. Ann. § 344.200, et seq); Louisville & N.R. Co. v. Ritchel, 147 S.W. 411, 414 (Ky. 1912) (allowing the plaintiff
to recover nominal damages for her humiliation and nervousness caused by a conductor’s violation of his statutory
duty to assign passengers to the proper coach); Mountain Clay, Inc. v. Com., Comm'n on Human Rights, 830 S.W.2d
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or circumstantial evidence from which the jury could infer that anxiety or mental anguish in fact
occurred. The proof must be clear and satisfactory; and evidence based on conjecture will not
support a recovery for such damages.” Id. (citations omitted).
Here, given Minter’s argument that compensable damages are not a prerequisite to
recovering punitive damages for bad faith, it comes as no surprise that she has not shown enough
emotional damages to survive summary judgment. In her response to Liberty Mutual’s Motion
of Summary Judgment, Minter simply states that:
. . . Liberty mutual seeks to minimize the embarrassment and emotional distress
[she] experienced when, after suffering serious permanent injury, she made a
claim for insurance benefits and her own mutual insurance company responded by
ignoring her, then using its superior economic position to force her to file suit,
then to delay, and then to use deceit in an attempt to extort a more favorable
settlement. Liberty Mutual dismisses the emotional distress and embarrassment
she suffered when her insurance company deposed five of her former co-workers,
seeking evidence that she hid an injury or pre-existing condition and that she was
pursuing a fraudulent claim . . . . It dismisses the emotional distress that she felt
after waiting years for her insurance company to finally respond to her claim for
benefits, and to have it then offer an amount that is patently less that the amount
to which she was contractually entitled with a threat to delay further . . . .
DN 88, p. 25. But Minter cites nothing in the record to support these bare conclusions about her
emotional state. She merely recites Liberty Mutual’s alleged misconduct and suggests that it
caused her some non-specific emotional distress and embarrassment. With neither direct nor
circumstantial evidence, these uncited statements by counsel are nothing more than that which
the Glass court labeled as inadequate: evidence based on conjecture. See Fed. R. Civ. P.
56(1)(mandating that a party asserting that a fact is genuinely disputed must support the assertion
by citing to particular parts of the record for purposes of summary judgment). The Court has no
choice but to find accordingly.
395, 397 (Ky. Ct. App. 1992) (allowing the plaintiff to recover for embarrassment caused by her employer’s
violation of the Kentucky Civil Rights Act, Ky. Rev. Stat. Ann. § 344.200, et seq).
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Because “mere conclusory allegations are not sufficient to withstand a motion for
summary judgment,” McDonald v. Union Camp Corp., 898 F.2d 1155, 1162 (6th Cir. 1990),
Minter has not presented a genuine issue of material fact as to actual, compensable damages.
Therefore, she has not satisfied her burden under Wittmer and its progeny, and Liberty Mutual is
entitled to summary judgment on Counts I and II.
B. Counts III: Liberty Mutual’s Violation of the Kentucky Consumer Protection Act
Plaintiff alleges that Liberty Mutual engaged in conduct that was unfair, false, misleading
and deceptive in violation of the Kentucky Consumer Protection Act (“KCPA”), Ky. Rev. Stat.
Ann. § 367.170. She states that she purchased her insurance policy from Liberty Mutual with the
reasonable expectation that Liberty Mutual would provide her $100,000 in underinsured motorist
coverage and pay her the full amount of benefits if she ever suffered uncompensated injuries that
reached that amount. DN 88, p. 29. This expectation was violated, she argues, when Liberty
Mutual subjected her to misleading and deceitful negotiating tactics that it employed in an
attempt to extort a more favorable settlement from her, which the KCPA prohibits. Id. Critical
here, she also contends that she need not prove “actual damages” under the KCPA, and that
Liberty Mutual’s conduct, coupled with her deprivation, albeit temporary, of the full policy
amount, constituted an “ascertainable loss of money or property” under KCPA § 367.220,
entitling her to punitive damages. Id.
Liberty Mutual denies that Minter suffered an “ascertainable loss” under the KCPA. Its
argument is analogous to that which in defeat of Plaintiff’s bad-faith claims above – that Minter
may not proceed on her KCPA claim because she has shown no compensable damages caused by
Liberty Mutual’s alleged violation.
The KCPA’s requirement that a person suffer an
“ascertainable loss of money or property” before filing suit warrants the Court’s dismissal of
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Minter’s claim as a matter of law, it reasons, as she has admittedly suffered no such loss. The
Court agrees.
We turn first to the relevant provision of the KCPA, Ky. Rev. Stat. Ann. § 367.220. It
provides that:
(1) Any person who purchases or leases goods or services primarily for personal,
family or household purposes and thereby suffers any ascertainable loss of money
or property, real or personal, as a result of the use or employment by another
person of a method, act or practice declared unlawful by KRS 367.170, may bring
an action under the rules of Civil Procedure . . . .
Ky. Rev. Stat. Ann. § 367.220 (emphasis added). This Court has twice construed the phrase
“ascertainable loss of money or property” under the KCPA and found that it means “evidence
from which a factfinder could find or infer that the plaintiff suffered an actual loss” or that she
“suffer[ed] harm.” M.T. v. Saum, 1:12-CV-101-TBR, __ F. Supp. 2d__, 2014 WL 971667, at *3
(W.D. Ky. Mar. 12, 2014) (quoting Holmes v. Countrywide Fin. Corp., 2012 WL 2873892, at
*14 (W.D. Ky. July 12, 2012)). Plaintiff’s arguments fail to address jurisprudence.
Nor does the additional language indicating that “[n]othing in th[at] subsection shall be
construed to limit a person’s right to seek punitive damages where appropriate,” Ky. Rev. Stat.
Ann. § 367.220(1), alter this result. As explained in Ford Motor Co. v. Mayes, this phrase “does
not purport to expand the right to claim punitive damages. It only makes clear that the Consumer
Protection Act did not limit a right to punitive damages where one previously existed.” 575
S.W.2d 480, 487 (Ky. Ct. App. 1978). And as discussed in detail above, see III.A., the general
rule in Kentucky is that, absent a showing of actual damages, the Court will not present the issue
of punitive damages to a jury. Estep, 780 S.W.2d at 607. It is clear that the KCPA does require
proof that the plaintiff suffered an actual injury.
Here, Liberty Mutual did, in fact, pay the full amount of Minter’s UIM benefits. The
UIM benefits cannot, then, be the source of her alleged injury. Moreover, Liberty Mutual’s
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alleged denial of Minter’s intangible “right to be dealt with fairly, truthfully, and without being
misled or deceived” is neither capable of redress nor the sort of ascertainable loss that the KCPA
recognizes. See Saum, 2014 WL 971667, at *3 (expanding “ascertainable loss of money or
property” to include personal injuries); Am. Motors Corp. v. Addington, 82-CA-2624-MR, 1984
WL 588048, at *6 (Ky. Ct. App. Apr. 6, 1984) (explaining that the KCPA protects injuries that
are capable of redress). As such, Liberty Mutual is correct that Minter must demonstrate some
compensable injury under Ky. Rev. Stat. Ann. § 367.220(1) and that she has failed to meet this
burden.
Therefore, there is no genuine issue of fact as to whether Minter suffered an
“ascertainable loss” under the KCPA, and Liberty Mutual is entitled to summary judgment on
Count III.
IV.
For the reasons set forth herein, Defendant’s motion for summary judgment, DN 81-13,
will be granted as to all counts of the First Amended Complaint. DN 42. A separate order and
judgment will be entered this date in accordance with this Memorandum Opinion dismissing this
action with prejudice.
September 30, 2014
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