Hickman et al v. State Farm Property & Casualty Ins. Co.

Filing 30

MEMORANDUM OPINION signed by Senior Judge Charles R. Simpson, III on 11/28/2017, re Plaintiff's 24 MOTION for Leave to File an Amended Complaint. cc: Counsel (RLK)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
AT LOUISVILLE
RODERICK AND AMELIA HICKMAN

PLAINTIFFS

CIVIL ACTION NO. 3:17-CV-00184-CRS

v.

STATE FARM PROPERTY &
CASUALTY INS. CO.

DEFENDANT

MEMORANDUM OPINION
This matter is before the court on motion of Plaintiffs Roderick and Amelia Hickman for
leave to file an amended complaint pursuant to Fed.R.Civ.P. 15(a)(2). (DN 24.) The court will
GRANT IN PART and DENY IN PART the motion.
I.

BACKGROUND
At all times relevant to their claim, Plaintiffs Roderick and Amelia Hickman (“the

Hickmans”), husband and wife, were insured under a renter’s policy issued by Defendant State
Farm Fire and Casualty Company (“State Farm”) that provided, in part, coverage for property
loss or damage caused by both fire and theft. (Compl., DN 1-1, ¶ 7.) Plaintiffs allege that in
March of 2016, a theft was committed at the location subject to this policy. (Id., ¶ 10.) Plaintiffs
further allege that Roderick Hickman made a timely claim under the policy in the amount of
approximately $56,340.00. (Id., ¶ 11.)
State Farm denied the Hickmans’s claim, stating that the Hickmans had violated the
“Concealment or Fraud” conditions of their insurance contract. (DN 26, Exh. 1.) State Farm
explained, by letter to the Hickmans’s attorney, that coverage was denied because an
investigation into the Plaintiffs’ claim “revealed they intentionally made material

misrepresentations, gave false statements and/or fraudulent statements, all with the intent to
conceal or misrepresent material facts and circumstances with this loss.” (Id.)
In response, the Hickmans filed a Complaint in Jefferson Circuit Court claiming breach
of contract, bad faith and unfair claims practices. (Compl., DN 1-1.) State Farm removed the
action to this court on the basis of diversity jurisdiction. (DN 1.) Plaintiffs now seek leave to
file an amended complaint to add counts for a Kentucky Consumer Protection Act (KCPA)
violation, declaratory judgment, defamation, and punitive damages. (Pl.’s Mot. Am. Compl.,
DN 24.)
II.

DISCUSSION
A court should freely grant leave to amend a pleading when justice so requires.

Fed.R.Civ.P. 15(a)(2). A district court may deny a motion to amend where there is “undue
delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies
by amendments previously allowed, undue prejudice to the opposing party by virtue of
allowance of the amendment, futility of amendment, etc.” Foman v. Davis, 371 U.S. 178, 182
(1962).
Defendant State Farm has no objection to Plaintiffs filing an amended complaint
containing KCPA, declaratory judgment, and punitive damages counts. Furthermore, the court is
not aware of any basis for denial, considering the abovementioned factors articulated in Foman,
or for any other reason. Therefore, the court will grant Plaintiffs’ motion to amend the complaint
to add counts for the KCPA claim, declaratory judgment, and punitive damages.
State Farm does, however, object to Plaintiffs adding a claim for defamation on the
grounds that this amendment would be futile. A proposed amendment is deemed to be futile if
the amendment could not withstand a Rule 12(b)(6) motion to dismiss.

-2-

Thiokol Corp. v.

Department of Treasury, State of Mich., Revenue Div., 987 F.2d 376, 382 (6th Cir. 1993). To
survive a motion to dismiss, “a complaint must contain sufficient factual matter, accepted as true,
to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (quoting Bell At. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). While a complaint need
not contain detailed factual allegations, it “requires more than labels and conclusions, and a
formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555.
Even accepting Plaintiffs’ factual allegations as true, the court finds that a defamation
claim could not survive a 12(b)(6) motion to dismiss and therefore adding the count of
defamation would be futile. Defendant argues, and the court agrees, that Plaintiffs have failed to
allege facts sufficient to meet the elements of a common law defamation claim. In Kentucky,
defamation consists of four elements:
(a) a false and defamatory statement concerning another; (b) an unprivileged
publication to a third party; (c) fault amounting at least to negligence on the part
of the publisher; and (d) either actionability of the statement irrespective of
special harm or the existence of special harm caused by the publication.
Toler v. Süd-Chemie, Inc., 458 S.W.3d 276, 282 (Ky. 2014) (citing Restatement (Second)
of Torts § 558 (1977)). State Farm argues that the Hickmans’s tendered amended complaint,
attached to their motion for leave to file an amended complaint, does not sufficiently allege the
second element of defamation, that of an unprivileged publication to a third party.
The Plaintiffs’ proposed amended complaint states the following:
That by letter dated March 7, 2017, and not in relation to a proceeding that was
contemplated in good faith or serious consideration, State Farm published
correspondence accusing Amelia Hickman of fraud and of making statements
with the intent to deceive in her examination under oath which it specifically
knew were false.1

1

The March 7 letter does not specify that Amelia Hickman was the party that made fraudulent statements. The
letter states: “Mr. and Mrs. Hickman gave inconsistent testimony… This was done with the intent to deceive State
Farm…” (Pl.’s Reply, DN 26, Ex. 1.)

-3-

(Pl.’s Mot. Am. Compl., DN 24-2, ¶ 31.) While this letter was not attached as an exhibit
to the Complaint, both parties produced this letter in subsequent briefing on the matter. (Def.’s
Resp., DN 25-1.; Pl.’s Reply, DN 26.) The court will therefore conclude that the March 7 letter
provided by the parties is the letter cited in the proposed Amended Complaint. Further, the court
properly may consider this letter when determining whether Plaintiffs failed to state a claim
under 12(b)(6). Commercial Money Center, Inc. v. Illinois Union Ins. Co., 508 F.3d 327, 335-36
(6th Cir. 2007) (“when a document is referred to in the pleadings and is integral to the claims, it
may be considered without converting a motion to dismiss into one for summary judgment.”).
The March 7 letter is addressed to Charles C. Hagan, Jr., (“Hagan”), Plaintiffs’ attorney
at the time this letter was sent. (DN 26.) Plaintiffs’ proposed amended complaint does not
allege that this letter was sent to any other person than Hagan or any location other than the
address printed on the letter, presumably the address of Hagan’s law office. Therefore, because
the proposed amended complaint states “[t]hat by letter dated March 7, 2017… State Farm
published correspondence,” and because nowhere do the pleadings state otherwise, the court
finds that the Plaintiffs allege that defamatory statements were published to Plaintiffs’ attorney.
Plaintiffs do not dispute this.
Defendant State Farm directs this court to the holding in Snyder v. AG Trucking, which
found that statements made to a party’s attorney are not considered publication for purposes of
defamation. 57 F.3d 484, 489-90 (6th Cir. 1995) (“[P]ublication to plaintiff’s attorney is not
publication to a third party, at least when the communication pertains to the matter for which the
attorney was retained.”). The Sixth Circuit reached this conclusion by examining Ohio agency
law, particularly a case from the Supreme Court of Ohio which held that “notice to an attorney of
facts affecting his or her client’s rights will be considered notice to the client.” Id. at 489.

-4-

(summarizing American Expert & Inland Coal Corp. v. Matthew Addy Co., 147 N.E. 89, 91
(Ohio 1925)).
The Snyder Court further held that this interpretation of notice to an attorney under Ohio
agency law is consistent with the absolute privilege Ohio affords to statements made during a
judicial proceeding. See Hecht v. Levin, 613 N.E.2d 585, 587 (Ohio 1993) (“A statement made
in a judicial proceeding enjoys an absolute privilege against a defamation action as long as the
allegedly defamatory statement is reasonably related to the proceeding in which it appears.”). In
fact, the Sixth Circuit recognized that strictly confining absolute privilege to judicial proceedings
is unreasonable: “It would not make sense for [ ] statements to be absolutely privileged if given
in a deposition or interrogatory, but actionable when given voluntarily to plaintiff’s attorney
before the initiation of litigation.” Snyder, 57 F.3d at 490.
Plaintiffs object to the holding in Snyder on the basis that it applies Ohio law, but fail to
provide a single case or authority to support their contention that Kentucky courts would reach a
different conclusion. While Kentucky case law on the precise issue before the court is scarce, a
review of Kentucky laws of defamation, agency, and privilege reveals similarities to Ohio laws
on the same, upon which the Snyder Court relied. Specifically, Kentucky and Ohio both apply
the Restatement (Second) of Torts definition of defamation, particularly in the requirement that
publication be unprivileged. See Toler, 458 S.W.3d at 282; see also Akron–Canton Waste Oil,
Inc. v. Safety–Kleen Oil Serv., Inc., 611 N.E.2d 955, 962 (Ohio 1992) (citing Restatement
(Second) of Torts § 558 (1977)).
Next, just as the Ohio court in American Expert, found that notice to an agent is
considered notice to the principal, Kentucky courts have held that same. See Martin v. Provident
Life & Acc. Ins. Co., 47 S.W.2d 524, 526 (Ky. Ct. App. 1932) (“[T]he fiction of legal identity

-5-

prevails only while the agent is acting for his principal and within the apparent scope of his
authority as agent.”); see also Bramblett v. Henderson, 41 S.W. 575, 576 (Ky. Ct. App. 1896)
(“It may be stated as a general proposition that notice to the agent is, in contemplation of law,
notice to the principal.”). Plaintiffs do not dispute that Hagan was their attorney acting in the
scope of his authority.
Further, Kentucky, like Ohio, has adopted the theory of absolute privilege for
communications made during judicial proceedings. See, e.g., Smith v. Hodges, 199 S.W.3d 185,
189 (Ky. Ct. App. 2005) (“The absolute immunity afforded to defamatory statements made in the
course of a judicial proceeding has a long history in this Commonwealth.”); See also Shmitt v.
Mann, 163 S.W.2d 281, 284 (Ky. Ct. App. 1942) (“A witness is absolutely privileged to publish
false and defamatory matter of another in communications preliminary to a proposed judicial
proceeding and as a part of a judicial proceeding in which he is testifying, if it has some relation
thereto.”) (citing American Law Institute's Restatement of the Law of Torts, volume 3, section
58).
In light of the similarities between Kentucky and Ohio law on defamation, agency, and
absolute privilege, and in the absence of case law to the contrary, this court will interpret
publication of allegedly defamatory statements made to a plaintiff’s attorney consistently with
the Sixth Circuit’s analysis in Snyder. This interpretation therefore leads this court to conclude
that Plaintiffs have not alleged an unprivileged communication such that a defamation claim
could survive a 12(b)(6) motion to dismiss.
In the alternative, Plaintiffs attempt to argue that, since Hagan was the Hickmans’s agent,
and notice to an agent is notice to a principal, then publication to Amelia Hickman constituted
publication to her spouse, a third party, and vice versa. Again, Plaintiffs do not provide any

-6-

authority to guide this court’s analysis. Nevertheless, this argument is not persuasive because
both Hickmans claim to have been defamed by the March 7 letter. “The notion of ‘publication’
is a term of art, and defamatory language is ‘published’ when it is intentionally or negligently
communicated to someone other than the party defamed.” Stringer v. Wal-Mart Stores, Inc., 151
S.W.3d 781, 794 (Ky. 2004) (emphasis added). Other courts have held that jointly accused
parties are not “third parties” for purposes of publication. See, e.g., Starnes v. St. Joseph Ry.,
Light, Heat & Power Co., 52 S.W.2d 852, 854 (Mo. 1932) (“The wife, being thus accused jointly
with her husband, was not a third party within the meaning of the law of publication.”)
Lastly, Plaintiffs’ defamation claim cannot be preserved through the vague, generalized
assertions of potential defamation alleged in the pleadings.

Plaintiffs’ proposed amended

complaint states, “That in connection with the aforesaid claim, State Farm made or may have
made additional defamatory statements concerning one or more plaintiffs, as discovery will
reveal.” (Pl.’s Mot. Am. Compl., DN 24-2, ¶ 39.) This allegation is insufficient to withstand a
motion to dismiss because it is not “plausible on its face.” Twombly, 550 U.S. at 570. “The
plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer
possibility that a defendant has acted unlawfully.” Iqbal, 556 U.S. at 678. This court finds the
allegation that “State Farm made or may have made additional defamatory statements” is merely
a “sheer possibility.”
Under the analysis of the Sixth Circuit in Snyder, as well as the similarities in Kentucky
and Ohio law on issues of defamation, agency, and privilege, the court holds that Plaintiffs’
defamation claim could not survive a Rule 12(b)(6) motion to dismiss and therefore is futile.
Additionally, vague allegations of potential defamatory statements about Plaintiffs made to
unspecified third parties are insufficient to state a claim upon which relief can be granted.

-7-

Therefore, the court will deny Plaintiffs’ motion to amend its complaint to add a defamation
claim.
III.

CONCLUSION
For the reasons set forth above, the court will GRANT IN PART Plaintiffs’ motion for

leave to file an amended complaint in regards to the counts for violation of the KCPA,
declaratory judgment, and punitive damages. The court will DENY IN PART Plaintiffs’ motion
for leave to file an amended complaint in regards to the count of defamation.
An order will be entered in accordance with this opinion.

November 28, 2017

C al R Smpo I , ei J d e
h r s . i sn I Sno u g
e
I
r
U i dSae Ds i C ut
nt tt ir t o r
e
s tc

-8-