The Cincinnati Specialty Underwriters Insurance Company v. C.F.L.P. 1, LLC

Filing 123

MEMORANDUM AND OPINION & ORDER by Magistrate Judge Dave Whalin on 9/21/2017; IT IS HEREBY ORDERED that Arcadias Motion for Scheduling Order (DN 112) isDENIED without prejudice in light of CSUs pending Motion for Summary Judgment. IT IS FURTHER ORDERED that Arcadias Motion for Extension of Time to FileResponse/Reply to CSUs Motion for Summary Judgment (DN 117) is DENIED.cc:counsel (ARM)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
LOUISVILLE DIVISION
CIVIL ACTION NO. 3:14CV-00040-DJH
THE CINCINNATI SPECIALTY
UNDERWRITERS INSURANCE COMPANY

PETITIONER

VS.
C.F.L.P. 1, LLC d/b/a/
ARCADIA APARTMENTS

RESPONDENT

MEMORANDUM OPINION
AND ORDER
Two motions are presently before the Court. First is Respondent C.F.L.P. 1, LLC’s, d/b/a
Arcadia Apartments (“Arcadia”), Motion for Scheduling Order/Hearing on Bifurcated Claims.
(DN 112). Second is Arcadia’s Motion for Extension of Time to Respond to Petitioner The
Cincinnati Specialty Underwriters Insurance Company’s (“CSU”) Motion for Summary
Judgment. (DN 117). CSU has responded in opposition (DN 113; DN 118), and Arcadia has filed a
reply (DN 120). For the following reasons, the Court denies both Arcadia’s Motion for Scheduling
Order and Arcadia’s Motion for Extension of Time.

Background
This case arises from a commercial property insurance policy issued by Petitioner CSU
covering Respondent Arcadia’s apartment complex in Louisville, Kentucky. In April of 2012,
Arcadia reported a claim to CSU alleging that the roofs and siding of its apartment buildings were
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damaged in a hail storm. CSU inspected the siding and issued a payment of $24,522.25 to cover
the damage. Arcadia, however, disagreed with CSU’s assessment and alleged the siding damage
exceeded $1,000,000. As a result, CSU invoked the “appraisal” process from the insurance policy
and appointed Marty Refka (“Mr. Refka”) as an appraiser, who assessed the loss at $29,000.
Arcadia eventually appointed Richard Michelson (“Mr. Michelson”) as its appraiser, and he
appraised the loss in excess of $1,000,000. Because the two appraisers could not agree on an
umpire, CSU followed the insurance policy and petitioned this Court to appoint an umpire. (DN 1).
On February 21, 2014, Arcadia responded to CSU’s petition and asserted four
counterclaims, including (1) a request for reimbursement for damage to Arcadia’s property caused
by the April 2012 hailstorm; (2) CSU’s violation of the Kentucky Unfair Settlement Claims
Practices Act by nominating an improperly biased umpire; (3) a claim of common law bad faith;
and (4) a request for a binding declaration that Arcadia was entitled to “cosmetic matching.” (DN
8). Four months later, Arcadia filed a motion to rescind the appraisal clause of the insurance policy
(DN 40), which the Court denied (DN 77).
After a year-and-a-half of contentious litigation, the Court granted CSU’s motion to
appoint an umpire and selected Jeff Turley (“Mr. Turley”) to serve as the umpire in the case. (DN
78). The Court’s Opinion also denied Arcadia’s request for “cosmetic matching.” (Id.). The parties
then agreed to bifurcate Counts 2 and 3 of Arcadia’s Counterclaim (“bad faith claims”) until
resolution of the umpire process. (DN 81). Arcadia, however, continued to object to Mr. Turley’s
appointment as umpire by filing both a motion to disqualify Mr. Turley (DN 82; DN 83) and a
motion for reconsideration on the issue of rescinding the appraisal process (DN 85). Following
these motions, the Court held a telephonic conference, in which Mr. Turley participated. (DN 98).
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The Court questioned Mr. Turley regarding his ability to serve as an impartial umpire in resolving
Arcadia’s claim. (Id.). The Court ultimately determined that Arcadia failed to present a valid
reason for altering its earlier decisions and denied both the motion to disqualify and motion for
reconsideration. (DN 101).
By early 2017, Mr. Turley completed his inspection and issued an Appraisal Award
valuing Arcadia’s actual cash loss at $94,326.05. (DN 106-1). Mr. Turley and Mr. Refka expressed
agreement with the Award and signed it. The Award became binding through their execution,
pursuant to the policy’s language. CSU has now issued payment to Arcadia for the Award amount.
Only Arcadia’s bad faith claims (Counterclaims 2 and 3) remain at issue. Following a
telephonic status conference on April 17, 2017, the Court directed the parties to file an agreed
order of dismissal within fifteen days or, if the parties could not agree on a resolution, the parties
would have twenty days to file dispositive motions. (DN 110). CSU filed a motion for summary
judgment on Arcadia’s remaining claims on May 22, 2017. (DN 111). In response, Arcadia
requested the Court hold a conference and issue a scheduling order for the surviving
counterclaims. (DN 112). CSU objected to Arcadia’s requests, explaining that no conference or
scheduling order is necessary because Arcadia’s counterclaims fail as a matter of law. (DN 113).
Arcadia has also filed a motion for extension of time to respond to CSU’s motion for
summary judgment. (DN 117). Arcadia urges the Court to enter the earlier-requested scheduling
order or, alternatively, grant Arcadia an extension of 120 days to take discovery pertaining to
CSU’s summary judgment motion. (Id.). Attached to Arcadia’s motion is an affidavit from its
counsel explaining that discovery in the form of interrogatories and document requests is
necessary to obtain evidence of an “undue and improper relationship between CSU and its Umpire
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nominees both before and after the litigation was filed[.]” (DN 117-1). CSU again opposes
Arcadia’s requests, explaining that the issue of whether Mr. Turley was a proper umpire has
already been decided by this Court and Arcadia does not present compelling reason to reopen it.
Arcadia replies that it should be allowed some discovery “beyond the questions asked by the Court
in connection with its decision to appoint Mr. Turley as Umpire.” (DN 120, at p. 3).

Standard
Federal Rule of Civil Procedure 56 governs motions for summary judgment. Subsection
(d) states that “[i]f a nonmovant shows by affidavit or declaration that, for specified reasons, it
cannot present facts essential to justify its opposition, the court may: (1) defer considering the
motion or deny it; (2) allow time to obtain affidavits or declarations or to take discovery; or (3)
issue any other appropriate order.” Fed.R.Civ.P. 56(d). This Rule is intended to provide a
mechanism for the parties and the Court “to give effect to the well-established principle that ‘the
plaintiff must receive ‘a full opportunity to conduct discovery’ to be able to successfully defeat a
motion for summary judgment.’” Cardinal v. Metrish, 564 F.3d 794, 797 (6th Cir. 2009) (quoting
Short v. Oaks Corr. Facility, 129 F. App’x 278, 281 (6th Cir. 2005) (additional citation omitted));
see also Plott v. Gen Motors Corp., 71 F.3d 1190, 1195 (6th Cir. 1995) (“Before ruling on
summary judgment motions, a district judge must afford the parties adequate time for discovery, in
light of the circumstances of the case.”).
The affidavit required by Rule 56(d) must “indicate to the district court [the party’s] need
for discovery, what material facts it hopes to uncover, and why it has not previously discovered the
information.” Cacevic v. City of Hazel Park, 226 F.3d 483, 488 (6th Cir. 2000) (citing Radich v.
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Goode, 866 F.2d 1391, 1393-94 (3d Cir. 1989)); Price v. AgriLogic Ins. Servs., LLC, 37 F. Supp.
3d 885, 891 (E.D. Ky. 2014). The Sixth Circuit has clarified that a motion under Rule 56(d) may be
properly denied where the requesting party “makes only general and conclusory statements []
regarding the need for more discovery,” Ball v. Union Carbide Corp., 385 F.3d 713, 720 (6th Cir.
2004) (citation omitted) (quoting Ironside v. Simi Valley Hosp., 188 F.3d 350, 354 (6th Cir.
1999)), or where the affidavit or declaration “lacks ‘any details’ or ‘specificity.’” Id. (quoting
Emmons v. McLaughlin, 874 F.2d 351, 357 (6th Cir. 1989)).

Analysis
As an initial matter, Arcadia’s affidavit offers only a vague explanation of what it hopes to
uncover if additional discovery is permitted. Arcadia’s affidavit states:
[P]laintiff will attempt to obtain the discovery outlined in its herein response of
CSU for summary judgment including and without limitation the discovery
voluntarily requested to be recused at DN 82 pages 11-12 and the interrogatories
and document requests propounded by Arcadia to CSU (DN 87-1) to obtain
evidence that there was an undue and improper relationship between CSU and its
Umpire nominees both before and after this litigation was filed, of such a nature
that Arcadia can establish its extra-contractual counter claims. Arcadia does not
hereby limit itself from obtaining other discovery.
(DN 117-1). Arcadia’s references to prior pleadings and broad statement that it wants to obtain
evidence “of an undue and improper relationship between CSU and its Umpire nominees” are
conclusory and, therefore, insufficient to satisfy Arcadia’s burden under Rule 56(d).
Even after reviewing the pleadings that Arcadia’s affidavit cites, its motion to disqualify
Mr. Turley as umpire (DN 82) and Exhibit 1 to its reply to such motion (DN 87-1), the Court is still
not persuaded that Arcadia is entitled to additional discovery in this case. Arcadia’s motion to
disqualify Mr. Turley stated that:
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The issues on discovery would include amongst others how many claims the parent
NCA Group process [sic] for CSU, whether after all of this Mr. Turley himself has
ever processed a CSU claim, how much money is involved, how committed Mr.
Turley’s TURCO company and NHI are to CSU, how many claims have been
processed for CSU by NHI and TURCO, whether Mr. Turley really has represented
insureds to their satisfaction in past disputes and really has been fair on the number
of occasions when Mr. Turley has been the Umpire in dispute, whether the parties
thereto really do feel that it is fair, what relationship Mr. Turley has with CSU
Appraiser Martin Refka, and on and on.
(DN 82, at pp. 11-12).
Similarly, the previous interrogatories propounded by Arcadia focus on the claims CSU
processed from 2011 to 2015, the interests of Mr. Turley in CSU and NCA Group, the amount of
money CSU paid to TURCO since 2011, Mr. Turley’s qualifications, CSU’s knowledge about Mr.
Turley’s appraisals since 2011, CSU’s knowledge of plaintiffs’ satisfaction with Mr. Turley as an
umpire, and etc. (DN 87-1). Arcadia’s prior requests for production broadly sought all documents
reviewed in connection with providing answers to the aforementioned interrogatories. (Id. at pp.
8-9).
These topics have already been addressed by the Court in its rulings on whether Mr. Turley
should serve as umpire. For instance, the Court’s Memorandum Opinion and Order at DN 78
explained that Arcadia’s objections to CSU’s three candidates for umpire, including Mr. Turley,
were “largely without substance.” (DN 78, at p. 13). The Court explained that even though the first
candidate, Gilbert Arnold, should be disqualified based on his company’s current engagement by
CSU in another matter, none of the three nominees were “obviously biased in favor of insurance
companies[.]” (Id. at pp. 13-14). Regarding Mr. Turley specifically, the Court noted that neither an
appraiser’s past association with insurance companies nor general objections of bias were
sufficient grounds for disqualification. (Id. at p. 14).
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Additionally, on March 16, 2016, after Arcadia sought disqualification of Mr. Turley and
reconsideration of whether to rescind the appraisal process, the Court held a telephonic conference
and questioned Mr. Turley regarding his ability to serve as an impartial umpire in the matter. (DN
98). After the parties briefed their positions as to Mr. Turley’s appointment, the Court again ruled
that Mr. Turley could serve as an impartial umpire in this matter. The Court noted, among other
things, that NCA Group, which handles claims for CSU, is not Mr. Turley’s employer, that Mr.
Turley plays no role in selecting his appraisal assignments, that Mr. Turley’s compensation is not
tied to NCA Group, and that Mr. Turley would suffer no adverse consequences if he ruled against
CSU in the matter. (DN 101).
Because the information that Arcadia presently seeks to support its “bad faith”
counterclaims has already been discovered through the Court’s questioning of Mr. Turley and
discussed in the Court’s prior rulings as to whether Mr. Turley was a biased umpire and whether he
should be disqualified, the Court finds Arcadia has put forth no compelling justification for an
extension of discovery. Arcadia is merely rehashing questions and topics that have been addressed
ad nauseam in the Court’s previous rulings. Arcadia’s failure to demonstrate the need for
discovery coupled with its conclusory affidavit compels the Court to deny Arcadia’s requested
extension to take additional discovery pertaining to CSU’s summary judgment motion.
For these same reasons, the Court finds it is not necessary at this time to conduct a
scheduling conference or issue a scheduling order on Arcadia’s remaining counterclaims. If
Arcadia’s counterclaims survive the Court’s ruling on summary judgment, Arcadia will then be
permitted to seek a scheduling conference.

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ORDER
IT IS HEREBY ORDERED that Arcadia’s Motion for Scheduling Order (DN 112) is
DENIED without prejudice in light of CSU’s pending Motion for Summary Judgment.
IT IS FURTHER ORDERED that Arcadia’s Motion for Extension of Time to File
Response/Reply to CSU’s Motion for Summary Judgment (DN 117) is DENIED.

Copies:

September 21, 2017

Counsel of Record

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