Byrd et al v. Progressive Direct Insurance Company et al
Filing
31
MEMORANDUM OPINION AND ORDER Signed by Judge David J. Hale on 3/31/2021: Defendants' #26 motion to dismiss is GRANTED as to Plaintiffs' breach-of-contract and declaratory-judgment claims (Counts I and III), Byrd's MVRA claim (Count II), and Vance and Hicks's MVRA claims for 18% interest and attorney fees for damages accrued prior to the Sanders decision (Count II). Those claims are DISMISSED. Defendants' motion is DENIED as to Vance and Hicks's MVRA claims for 18% interest and attorney fees for damages accrued post-Sanders and Hicks's remaining MVRA claim (Count II). This matter is referred back to Magistrate Judge Colin H. Lindsay, to conduct a status conference. The final schedule shall include a settlement conference. cc: Counsel, CHL-CM (DLW)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
LOUISVILLE DIVISION
BETHANY BYRD et al.,
Plaintiffs,
v.
Civil Action No. 3:20-cv-119-DJH-CHL
PROGRESSIVE DIRECT INSURANCE CO.
et al.,
Defendants.
* * * * *
MEMORANDUM OPINION AND ORDER
Plaintiffs Bethany Byrd, Sandra Vance, and Destiny Hicks assert that Defendants
Progressive Direct Insurance Company, Progressive Casualty Insurance Company, and
Progressive Paloverde Insurance Company improperly denied them personal injury protection
(PIP) benefits. (Docket No. 20) Plaintiffs, both individually and as a putative class, filed this
action against Defendants for breach of contract and failure to pay PIP benefits in violation of the
Kentucky Motor Vehicle Reparations Act (MVRA); they also seek a declaratory judgment. (Id.,
PageID # 474–76) Defendants have filed a partial motion to dismiss Plaintiffs’ first amended
complaint. (D.N. 26) Specifically, Progressive Direct moves to dismiss all claims asserted by
Byrd; Progressive Casualty and Progressive Paloverde move to dismiss Vance and Hicks’s claims
for breach of contract, declaratory judgment, and 18% statutory interest and attorney fees under
the MVRA; and Progressive Casualty additionally moves to dismiss Hicks’s MVRA claim in its
entirety. (Id., PageID # 699–700) For the reasons set forth below, the Court will grant Defendants’
motion in part.
1
I.
The Court “take[s] the facts only from the complaint, accepting them as true as [it] must
do in reviewing a 12(b)(6) motion.” Siefert v. Hamilton Cnty., 951 F.3d 753, 757 (6th Cir. 2020)
(citing Fed R. Civ. P. 12(b)(6)). Byrd, Vance, and Hicks were all insured for PIP benefits: Byrd
by Progressive Direct (D.N. 20, PageID # 467), Vance by Progressive Paloverde (id., PageID #
468), and Hicks by Progressive Casualty. (Id., PageID # 469) Each was injured in an auto accident
and required subsequent medical treatment: Byrd in 2014 (id., PageID # 467), Vance in 2016 (id.,
PageID # 468), and Hicks in 2017. (Id.) Upon receiving Plaintiffs’ claims, Defendants submitted
each of their materials to a chiropractor for a paper review—no personal examination of the
Plaintiffs was conducted. (Id., PageID # 467–69) These reviewers “were biased.” (Id., PageID #
470) Although the reviewers “confirm[ed] the need” for “an independent medical examination,”
Defendants “would skip this step and instead simply withhold payment of the benefits.” (Id.,
PageID # 464–65) Based solely on these paper reviews, Defendants denied, in full or in part,
Plaintiffs’ PIP benefits.1 (Id., PageID # 467–69)
Plaintiffs assert that in failing to pay their PIP benefits in full, Defendants breached their
contracts with Plaintiffs and violated the MVRA. (Id., PageID # 474–75) Plaintiffs also seek a
declaratory judgment that Defendants have waived the right to dispute Plaintiffs’ claims; that
Plaintiffs’ claims are timely; that the Defendants’ contracts with Plaintiffs are reformed; and that
1
The amended complaint does not clarify how much of or to what extent each Plaintiff’s claim
was denied. (See D.N. 20, PageID # 467 (“Progressive Direct . . . has still not paid the benefits
which were denied because of the paper review.”); id., PageID # 468 (“Progressive
Paloverde . . . has still not paid [Vance’s] benefits which were denied because of the paper
review.”); id., PageID # 469 (“Progressive Casualty . . . did not timely pay the full amount of
benefits owed on Hicks’[s] behalf.”))
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Defendants “past and continued non-payment of PIP benefits on the basis of paper reviews” lacked
reasonable foundation and violated the MVRA. (See id., PageID # 476–77)
II.
To survive a motion to dismiss for failure to state a claim, “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 Atl. Corp. v. Twombly, 550 U.S. 544,
570 (2007)). A claim is plausible on its face “when the plaintiff pleads factual content that allows
the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”
Id. Factual allegations are essential; “[t]hreadbare recitals of the elements of a cause of action,
supported by mere conclusory statements, do not suffice,” and the Court need not accept such
statements as true. Id. A complaint whose “well-pleaded facts do not permit the court to infer
more than the mere possibility of misconduct” does not satisfy the pleading requirements of
Federal Rule of Civil Procedure Rule 8 and will not withstand a motion to dismiss. Id. at 679; see
Fed. R. Civ. P. 8.
At the motion-to-dismiss stage, “the Court looks to the pleadings . . . the documents
attached to them . . . documents referenced in the pleadings that are ‘integral to the claims’ . . . and
documents that are not mentioned specifically but which govern the plaintiff’s rights and are
necessarily incorporated by reference.” Atlas Techs., LLC v. Levine, 268 F. Supp. 3d 950, 958
(E.D. Mich. 2017) (internal citations omitted). Defendants have attached payment logs detailing
partial payment of Byrd and Hicks’s benefits (D.N. 26-2; D.N. 26-3), and Plaintiffs have not
disputed the validity of the logs or the Court’s consideration of them. (See D.N. 28, PageID # 764
(acknowledging that Progressive’s last PIP payment to Hicks “was made on March 15, 2018” as
reported in the log)) Since Byrd and Hicks’s claims rest entirely on Defendants’ alleged failure to
3
pay their PIP benefits, the logs govern their rights to recovery, “are necessarily incorporated by
reference,” and will be considered for purposes of the present motion. See Atlas, 268 F. Supp. 3d
at 958.
A.
Claims preempted by MVRA
Defendants argue that the MVRA bars Plaintiffs’ claims for breach of contract and
declaratory judgment. (D.N. 26, PageID # 705–07) The Kentucky Supreme Court has held that
the MVRA “provides an exclusive remedy where an insurance company wrongfully delays or
denies payment of no-fault [i.e., PIP] benefits.” Foster v. Ky. Farm Bureau Mut. Ins. Co., 189
S.W.3d 553, 557 (Ky. 2006). “[The] MVRA is a comprehensive act which not only relates to
certain tort remedies, but also establishes the terms under which insurers pay no-fault benefits, and
provides for the penalties to which insurers are subjected if they fail to properly pay no-fault
benefits.” Id. The principle set forth in Foster—that the MVRA provides the exclusive remedy
when an insurance company denies payment of no-fault benefits—has “been followed in
subsequent federal and state [cases].” Sackos v. Geico Ins. Agency, Inc., No. 1:11CV-00072-JHM,
2011 WL 5975293, at *2 (W.D. Ky. Sept. 21, 2011) (collecting cases); see also Risner v. State
Farm Mut. Auto. Ins. Co., No. CIV.A. 14-41-HRW, 2014 WL 5431284, at *2 (E.D. Ky. Oct. 23,
2014) (collecting cases) (“This principle is well established in Kentucky and this district.”).
Plaintiffs argue that the MVRA “provides the ‘exclusive remedy’ for extracontractual
damages” but that it does not preempt their claims for breach of contract because “[a] breach of
contract claim is proper when the contract contains benefits, terms and conditions which are in
addition to those required by the MVRA.” (D.N. 28, PageID # 752–53) But none of the case law
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cited by Plaintiffs supports this contention.2 And current case law contradicts it. See Risner, 2014
WL 5431284 at *2–3 (breach-of-contract claim that was “directly dependent on [defendant’s]
failure to pay basic reparation benefits” failed “as a matter of law because [the MVRA] provide[d]
[p]laintiff’s exclusive remedy”). Here, as in Risner, Plaintiffs’ breach-of-contract claims rest on
Defendants’ denial of Plaintiffs’ PIP benefits.
(See D.N. 20, PageID # 475 (“The
Defendants . . . breached contractual obligations owed to the Plaintiffs and the class when failing
to timely and fully pay PIP benefits which were owed under policy contracts.”)) Plaintiffs’ breachof-contract claims are therefore preempted by the MVRA and must be dismissed. See Risner,
2014 WL 5431284 at *2–3.
As for their declaratory-judgment claim, Plaintiffs argue that “the MVRA does not
preclude actions for declaratory judgments” and that “[c]ourts within Kentucky, both state and
federal, have been declaring the existence of justiciable controversies and the rights of parties
under insurance contracts and the MVRA for decades.” (D.N. 28, PageID # 755) But nearly all
Plaintiffs first cite Riggs in support of their contention that “[t]he Kentucky Supreme Court has
confirmed that actions for first-party insurance benefits are grounded in contract and that the
insured’s action against the insurer for first-party coverage is properly labeled a breach-of-contract
action.” (D.N. 28, PageID # 753 (citing State Farm Mut. Auto. Ins. Co. v. Riggs, 484 S.W.3d 724
(Ky. 2016))) Riggs—which addressed only the reasonableness of a limitation provision in the
plaintiff’s underinsured-motorist policy–does not support this broad statement. See Riggs, 484
S.W.3d at 725–27 (“[A]n insured’s action against the UIM carrier is appropriately labeled a
breach-of-contract action.”). And even if it did, Riggs does not address MVRA preemption of nofault benefit claims, the relevant issue here. Next, Plaintiffs cite Couch in support of their
contention that “[t]he MVRA . . . provides the ‘exclusive remedy’ for extracontractual damages.”
(D.N. 28, PageID # 753 (citing Couch v. Northland Ins. Co., No. CIV 06-330-REW, 2007 WL
1610185, at *1 (E.D. Ky. May 31, 2007)). But Couch held only that the MVRA bars claims for
punitive damages under the Kentucky Unfair Claims Settlement Practice Act and did not address
MVRA preemption of breach-of-contract claims. See Couch, 2007 WL 1610185 at *5. Finally,
Plaintiffs cite Sackos as an example of a court in this district “permitting the breach of contract
claim while dismissing the ‘bad faith’ claim.” (D.N. 28, PageID # 753 (citing Sackos, 2011 WL
5975293) But in Sackos, the plaintiff’s bad-faith claim was the only claim at issue, and the court
thus had no opportunity to consider the breach-of-contract claim. Sackos, 2011 WL 5975293, at
*1.
2
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the cases cited by Plaintiffs predate Foster. (See D.N. 28, PageID # 755) And the one post-Foster
case Plaintiffs cite—which appears to be the only case to have discussed declaratory judgments
since Foster was decided—is inapposite because there, as Defendants point out (see D.N. 26,
PageID # 711), the insurer brought the declaratory-judgment claim. (D.N. 28, PageID # 755 (citing
State Farm Mut. Auto. Ins. Co. v. Adams, 526 S.W.3d 63, 65 (Ky. 2017)) Because Plaintiffs’
“lawsuit is directly dependent on [Defendants’] failure to pay [no-fault] benefits . . . there is no
cause of action for damages beyond a violation of [the MVRA],” and Plaintiffs’ claims for
declaratory judgment will be dismissed.3 Risner, 2014 WL 5431284, at *2.
B.
MVRA Claims
1.
Interest and Attorney Fees
Defendants argue that Plaintiffs’ MVRA claims for 18% interest on their unpaid benefits
and attorney fees should be dismissed because Defendants “had a ‘reasonable basis’ to not pay PIP
benefits.” (D.N. 26, PageID # 715) The MVRA provides that injured parties may recover attorney
fees and an 18% interest rate on their overdue payments if the insurer’s “denial was made ‘without
reasonable foundation.’” Risner v. State Farm Mut. Auto. Ins. Co., No. CIV.A. 14-41-HRW, 2015
WL 3857092, at *3 (E.D. Ky. June 22, 2015); see Ky. Rev. Stat. §§ 304.39-210, 304.39-220. “A
reasonable foundation for [denial] is defined as either the ‘assertion of a legitimate and bona fide
defense by the reparation obligor’ or . . . failure of the claimant to supply the obligor with
Defendants alternatively moved to dismiss Plaintiffs’ declaratory-judgment claims for lack of
standing. (See D.N. 26, PageID 718–20) “A federal court has leeway ‘to choose among threshold
grounds for denying audience to a case on the merits.’” Sinochem Int’l Co. Ltd. v. Malaysia Int’l
Shipping Corp., 549 U.S. 422, 431 (2007) (citing Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574,
585 (1999)); see LaSala v. UBS, AG, 510 F. Supp. 2d 213, 221 (S.D.N.Y. 2007) (citing Sinochem,
549 U.S. at 431) (holding that “a preemption defense . . . [is] one of a number of preliminary
grounds for dismissal, among which a judge has discretion to choose when deciding whether to
dismiss a case”). Having found Plaintiffs’ declaratory-judgment claims preempted by the MVRA,
the Court need not consider the issue of standing.
3
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reasonable proof of loss in a timely fashion.” Risner, 2015 WL 3857092, at *3 (quoting Auto.
Club Ins. Co. v. Lainhart, 609 S.W.2d 692, 695 (Ky. Ct. App. 1980)).
In 2018, the Kentucky Supreme Court held for the first time that insurers could not deny
PIP benefits based solely on paper reviews. Gov’t Emps. Ins. Co. v. Sanders, 569 S.W.3d 923,
931 (Ky. 2018). Defendants argue that they had a reasonable foundation to deny Plaintiffs’ claims
because “[a]t the time Defendants initially denied all of Plaintiffs’ PIP benefits, the Sanders ruling
had not yet been issued.” (D.N. 26, PageID # 717) In support, Defendants cite a recent case from
this district in which the Court dismissed MVRA claims for 18% interest and attorney fees against
an insurer who denied the plaintiffs’ benefits based on paper reviews, pre-Sanders. (D.N. 26,
PageID # 715 (citing Irvin v. State Farm Mut. Auto Ins. Co., 2020 WL 4004808, at *8 (W.D. Ky.
2020)))4 In Irvin, the Court noted that prior to Sanders, “neither the Kentucky Court of Appeals
nor the Kentucky Supreme Court had addressed whether paper review denials were allowable
under the MVRA,” and in at least two instances, “courts [had] held that a paper review was a
legitimate bona fide defense for denying benefits.” Irvin, 2020 WL 4004808, at *7. Moreover,
“numerous Kentucky Court of Appeals and Kentucky Supreme Court cases involved insurers
utilizing paper reviews with no indication that the practice violated the MVRA.” Id. The Irvin
decision also noted that “the Kentucky Supreme Court’s reasoning in Sanders support[ed] finding
that [the insurer] had a reasonable foundation for its paper review practice.” Id. at *8. For these
reasons, the Court held that the insurer had a “reasonable foundation to deny claims” based on
paper reviews before the Sanders decision. Id.
The Court finds the thorough reasoning in Irvin persuasive and applicable here. See also
Hack v. State Farm Fire & Cas. Ins. Co., No. 3:20-CV-134-CRS, 2020 WL 4803284, at *4 (W.D.
4
The decision is currently on appeal to the Sixth Circuit.
7
Ky. Aug. 18, 2020) (finding Irvin’s “reasoning compelling and applicable to the identical claims
and arguments presented here”). Although Plaintiffs attempt to distinguish Irvin based on the fact
that the insurer in Irvin made remedial efforts for its post-Sanders denials whereas Defendants
here have “made no such remedial efforts” (D.N. 28, PageID # 768), this distinction has no impact
on Irvin’s holding. But the Court agrees with Plaintiffs that Irvin’s holding “does not affect the
remedies due following Sanders.” (Id.) Accordingly, for the reasons set forth in Irvin, the Court
will grant Defendants’ motion to dismiss Plaintiffs’ claim for 18% interest and attorney fees, but
only as to those damages accrued prior to Sanders.
2.
Statute of Limitations
Defendants argue that Byrd and Hicks’s MVRA claims are barred by the statute of
limitations. (D.N. 26, PageID # 711) Under the MVRA, “if reparation benefits, such as PIP
payments, have been paid, an action for further benefits ‘may be commenced not later than two
(2) years after the last payment of benefits.” Wilder v. Noonchester, 113 S.W.3d 189, 190 (Ky.
Ct. App. 2003) (quoting Ky. Rev. Stat. § 304.39-230). Defendants have submitted pay logs
showing that the last payment Progressive Direct made on Byrd’s claim was issued August 13,
2015 (see D.N. 26-1, PageID # 724); and the last payment that Progressive Casualty made on
Hicks’s claim was issued March 15, 2018. (See D.N. 26-2, PageID # 732) Since Byrd filed her
complaint on February 12, 2020 (see D.N. 1), and Hicks was added as a party in the amended
complaint filed June 3, 2020 (see D.N. 20), Defendants argue that both Byrd and Hicks missed
their respective two-year filing windows. (See D.N. 26, PageID # 714)
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a.
2019 Accrual
Plaintiffs raise a number of arguments as to why the two-year limitations period has not
run.5 Plaintiffs assert that “at the earliest, the claims accrued in April 2019” because Plaintiffs did
not have “any way to know [that Defendants’ conduct in denying benefits was unlawful] until
Sanders was published.” (D.N. 28, PageID # 759–60) But “[l]ack of knowledge of one’s rights
is insufficient to prevent operation of statutes of limitation.” Wilson v. Paine, 288 S.W.3d 284,
286 (Ky. 2009) (citing Wilcox v. Sams, 281 S.W. 832 (1926)). The “discovery rule,” a limited
exception, applies “only in cases where the fact of injury or offending instrumentality is not
immediately evident or discoverable with the exercise of reasonable diligence.” Hack, 2020 WL
4803284, at *3 (citing Fluke Corp. v. LeMaster, 306 S.W.3d 55, 61 (Ky. 2010)). Here, “none of
those circumstances are present” because “[t]he alleged injury in this case occurred when
[Defendants] partially denied Plaintiffs’ benefits.” Id. (rejecting plaintiffs’ contention “that they
only discovered the breach of contract once the Kentucky Supreme Court published Sanders”).
b.
Equitable Estoppel
Plaintiffs also argue that Defendants are “equitably estopped from asserting a limitations
defense” because they “engag[ed] in false representations or concealment.” (Id., PageID # 761)
“[E]stoppel may arise to prevent a party from relying on a statute of limitations by virtue of a false
representation or fraudulent concealment.” Williams v. Hawkins, 594 S.W.3d 189, 196 (Ky. 2020)
(quoting Munday v. Mayfair Diagnostic Lab., 831 S.W.2d 912, 914 (Ky. 1992)).
“Under
Kentucky law, equitable estoppel requires both a material misrepresentation by one party and
reliance by the other party,” and its “essential elements” are “(1) conduct which amounts to a false
Since the Court will dismiss Plaintiffs’ breach-of-contract and declaratory-judgment claims, the
Court considers only those of Plaintiffs’ arguments that apply to their MVRA claims.
5
9
representation or concealment of material facts . . . (2) the intention, or at least the expectation,
that such conduct shall be acted upon by, or influence, the other party or other persons; and (3)
knowledge, actual or constructive, of the real facts.” Id. (quoting Fluke Corp., 306 S.W.3d at 62).
“[A]s related to the party claiming the estoppel, the essential elements are (1) lack of knowledge
and of the means of knowledge of the truth as to the facts in question; (2) reliance, in good faith,
upon the conduct or statements . . . and (3) action or inaction based thereon . . . to [the party’s]
injury, detriment, or prejudice.” Id.
Plaintiffs identify the following alleged misrepresentations and concealments: (1)
Defendants “misrepresented to [their] Kentucky insureds that the company was lawfully permitted
to deny PIP benefits on the sole basis of paper reviews;” (2) Defendants “concealed from [their]
insureds” that it disregarded its own reviewers’ recommendations; and (3) Defendants “concealed
from its insureds that [Defendants sought] paper reviews” from an allegedly biased group of
reviewers. (D.N. 28, PageID # 762) Plaintiffs do not explain how the second and third relate to
material facts. As for the first, this was not a misrepresentation until the Sanders decision was
issued, because as previously discussed, prior to that decision the law did not prohibit insurers
from denying claims based on paper reviews. And to the extent that Defendants made this
assertion after Sanders, Plaintiffs did not lack “the means of knowledge of the truth,” as they
acknowledge in other portions of their response. Williams, 594 S.W.3d at 196 (quoting Fluke
Corp., 306 S.W.3d at 62)); (see D.N. 28, PageID # 763 (“[T]he insureds were not made aware of
the misrepresentation until, at the earliest, Sanders was published.”). Moreover, Plaintiffs do not
explain how they relied upon any of the alleged misrepresentations or concealments aside from
claiming that “[t]housands of Progressive insureds detrimentally relied upon all of these
concealments and misrepresentations.” (D.N. 28, PageID # 762; see D.N. 20, PageID # 470
10
(“[Reasonable reliance . . . is readily evidenced by the fact that thousands of affected Progressive
Kentucky insureds did not file lawsuits against Progressive for the benefits.”). These “[t]hreadbare
recitals of the elements of a cause of action, supported by mere conclusory statements, do not
suffice” to adequately allege equitable estoppel. Ashcroft, 556 U.S. at 678.
c.
Equitable Tolling
Plaintiffs further argue that the statute of limitations should be equitably tolled. (D.N. 28,
PageID # 760 (“Tolling of the statute of limitations is the equitable resolution.”) “In order to
establish that equitable tolling is warranted, [Plaintiffs] bear[] the burden of showing that: (1)
[they] ‘had been pursuing [their] rights diligently, and (2) that some extraordinary circumstance
stood in [their] way.’” Williams, 594 S.W.3d at 194 (quoting Pace v. DiGuglielmo, 544 U.S. 408,
418 (2005)). Plaintiffs have not adequately alleged that they diligently pursued their rights, as they
offer no explanation as to why they did not pursue legal remedies when Defendants ceased paying
Byrd and Hicks their benefits in 2015 and 2018, respectively. As for extraordinary circumstances,
Plaintiffs’ equitable-tolling argument seems to rest on the same alleged misrepresentations and
concealments as their equitable-estoppel argument. (See D.N. 28, PageID # 760–62) But
Defendants’ alleged representations that they were “lawfully permitted to deny PIP benefits on the
sole basis of paper reviews” (D.N. 28, PageID # 762) does not constitute an “extraordinary
circumstance” because, again, prior to Sanders the law did not prohibit this, and post-Sanders
Plaintiffs had access to this information.6 Nor do Defendants’ alleged concealments as to their
selection of reviewers or use of the reviewers’ recommendations rise to the level of extraordinary
Plaintiffs also argue that “Progressive’s failure to adhere to fiduciary obligations supports the
case for tolling” (D.N. 28, PageID # 764), asserting that estoppel applies when fiduciaries prevent
plaintiffs “from discovering and asserting a right before the statute had run.” (Id. (quoting Strode
v. Spoden, 284 S.W.2d 663, 665 (Ky. 1955))) But this argument fails for the reason articulated
above—Defendants did not prevent Plaintiffs from discovering the post-Sanders change in law.
6
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circumstances, and even if they did, Plaintiffs have not explained how the alleged concealments
“stood in [the] way” of them pursuing their rights. Williams, 594 S.W.3d at 194 (quoting Pace, 544
U.S. at 418).
d.
Remaining Arguments
Plaintiffs additionally argue that Progressive Direct violated a Kentucky regulation
requiring insurers to provide written notifications to unrepresented first-party claimants when it
allegedly did not provide such information to Byrd, who “was unrepresented by counsel following
August of 2015.” (D.N. 28, PageID # 763) But this argument fails because the amended complaint
“is devoid of any factual allegations” regarding Byrd’s representation, and “new dates or facts in
[a] response cannot remedy a pleading deficiency.” Montesi v. Nationwide Mut. Ins. Co., 970 F.
Supp. 2d 784, 792 (W.D. Tenn. 2013) (citing Watson v. Tenn. Dept. of Corr., No. 11–2009–STA,
2012 WL 423427, at *2 (W.D. Tenn. Feb. 8, 2012)).
Finally, Plaintiffs argue that Hicks’s claim is not time-barred because “[t]his is a putative
class action which was filed in February [2020]” and therefore the filing tolled the statute of
limitations “for all persons encompassed by the class complaint.” (D.N. 28, PageID # 765 (citing
Am. Pipe & Constr. Co. v. Utah, 414 U.S. 538 (1974)) “The [Supreme] Court held in American
Pipe that the timely filing of a class action tolls the applicable statute of limitations for all persons
encompassed by the class complaint.” China Agritech, Inc. v. Resh, 138 S. Ct. 1800, 1804 (2018).
Although Defendants argue that American Pipe does not apply here because Hicks did not file a
motion to intervene (D.N. 29, PageID # 784), “[t]he [American Pipe] rule is not dependent on
intervening in or joining an existing suit.” China Agritech, 138 S. Ct. at 1804. Defendants’
argument that a subsequent Supreme Court decision, China Agritech, “specifically
bars . . . [Hicks’s] class tolling arguments here” also falls flat, as China Agritech’s rule applies
12
only in a narrow situation, not present here.7 (D.N. 29, PageID # 784); see China Agritech, 138 S.
Ct. at 1804 (holding that upon denial of class certification, a putative class member may not “in
lieu of promptly joining an existing suit or promptly filing an individual action, commence a class
action anew beyond the time allowed by the applicable statute of limitations”). “American Pipe
tolls the statute of limitations during the pendency of a putative class action, allowing unnamed
class members to join the action individually or file individual claims if the class fails.” China
Agritech, 138 S. Ct. at 1804. The February 2020 filing of this action thus tolled the statute of
limitations on Hicks’s MVRA claim, and that claim will not be dismissed.
III.
For the reasons set forth above, and the Court being otherwise sufficiently advised, it is
hereby ORDERED that Defendants’ motion to dismiss (D.N. 26) is GRANTED as to Plaintiffs’
breach-of-contract and declaratory-judgment claims (Counts I and III), Byrd’s MVRA claim
(Count II), and Vance and Hicks’s MVRA claims for 18% interest and attorney fees for damages
accrued prior to the Sanders decision (Count II). Those claims are DISMISSED. Defendants’
motion is DENIED as to Vance and Hicks’s MVRA claims for 18% interest and attorney fees for
damages accrued post-Sanders and Hicks’s remaining MVRA claim (Count II).
Defendants further argue that the reasoning in China Agritech “applies to reject class tolling on
[Hicks’s] claims” because “she is attempting to join this class action suit as a named class
representative through an amended complaint after the statute of limitations had expired on her
own claims.” (D.N. 29, PageID # 784) Although neither the Sixth Circuit nor any court in this
district has considered China Agritech, the Seventh Circuit recently rejected a similar argument.
See In re Allstate Corp. Sec. Litig., 966 F.3d 595, 615 (7th Cir. 2020) (”[Defendant] would read
China Agritech . . . to prohibit any addition or substitution of a new class representative within the
original class action after the statute of limitations period would have run, but for American Pipe
tolling. We see no hint in the China Agritech opinion or its reasoning that would support this
proposed extension.”).
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This matter is referred back to Magistrate Judge Colin H. Lindsay, to conduct a status
conference to develop a final litigation schedule with respect to the remaining claims. The final
schedule shall include a settlement conference.
March 31, 2021
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