Principal Life Insurance Company v. Doctors Vision Center I, PLLC et al
Filing
87
MEMORANDUM OPINION & ORDER: Principal Lifes Motion for Partial Summary Judgment DN 48 is GRANTED and DVCs Motion for Additional Discovery DN 56 is DENIED. IT IS FURTHER ORDERED that Principal Lifes Second Motion for Partial Summary Judgment DN 66 , DVCs Second Motion for Additional Discovery DN 69 , and DVCs Motion to Exclude Expert Witness DN 70 are DENIED as moot. DVCs bad faith claims against Principal Life are DISMISSED with prejudice and DVCs crossclaims against Dr. Grogan are DISMISSED without prejudice. Signed by Chief Judge Joseph H. McKinley, Jr on 12/1/2014. cc: Counsel(JBM)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
PADUCAH DIVISION
CIVIL ACTION NO. 5:12-CV-00125-JHM
PRINCIPAL LIFE INSURANCE COMPANY
PLAINTIFF
V.
DOCTORS VISION CENTER I, PLLC and
KENNETH B. GROGAN
DEFENDANTS
and
DOCTORS VISION CENTER I, PLLC
CROSS-CLAIMANT
V.
KENNETH B. GROGAN
CROSS-DEFENDANT
MEMORANDUM OPINION AND ORDER
This matter is before the Court on Principal Life Insurance Company’s (“Principal Life”)
Motion for Partial Summary Judgment [DN 48], Doctors Vision Center I, PLLC’s (“DVC”)
Motion for Additional Discovery [DN 56], Principal Life’s Second Motion for Partial Summary
Judgment [DN 66], DVC’s Second Motion for Additional Discovery [DN 69], and DVC’s
Motion to Exclude Expert Witness [DN 70]. Fully briefed, this matter is ripe for decision. For
the following reasons, Principal Life’s Motion for Partial Summary Judgment is GRANTED,
DVC’s Motion for Additional Discovery is DENIED, and the remaining motions are DENIED
as moot. Additionally, DVC’s bad faith claims against Principal Life are DISMISSED with
prejudice and DVC’s crossclaims against Dr. Grogan are DISMISSED without prejudice.
I. BACKGROUND
This case arises from the denial of Defendant Kenneth B. Grogan’s (“Dr. Grogan”) claim
for disability insurance benefits under a Key Person Replacement Policy (“the Policy”) issued by
Plaintiff Principal Life and owned by Defendant DVC. On December 11, 2009, Dr. Grogan, an
owner and employee of DVC, and DVC submitted an application for the subject policy. (See
Application [DN 48-3] 2.) Under the Policy’s terms, Principal Life was to pay benefits to DVC,
the owner, if Dr. Grogan, the insured, became disabled. The Policy was subject to various
conditions, exclusions, and definitions, including the Mental/Nervous Exclusion Rider (“the
Policy Rider” or “the Rider”) at issue here. The Mental/Nervous Exclusion Rider states:
This rider is part of the policy and all terms, limitations and exclusions of the
policy remain in effect. This rider is effective on the Effective Date shown above
and remains a part of the policy unless removed by Principal Life Insurance
Company.
It is agreed that the above numbered policy is amended according to the following
limitations:
We will not pay policy benefits for:
Any mood or anxiety disorder; or any mental, emotional, adjustment disorder,
stress reaction, or post-traumatic stress disorder as defined in the Diagnostic and
Statistical Manual of Mental Disorders – Fourth Edition (DSM-IV), or its
previous or subsequent editions or replacement, or any other DSM-IV diagnosis;
or any somatic complaints arising from or attributed to any of the preceding
diagnoses, including any treatment therefor, or complication thereof.
(Grogan Policy [DN 48-2] 28 (emphasis added).) The Rider, as well as the rest of the Policy
documents, was signed by Dr. Grogan and DVC on March 25, 2010. (Id. at 25–29.)
On April 5, 2010, Dr. Grogan was admitted to a rehabilitation facility, Metro Atlanta
Recovery Residence (“MARR”), for alcohol and opiates, as well as secondary issues. (See Apr.
9, 2012 Letter [DN 48-13] 8–9; MARR Diagnosis Report [DN 66-4] 9.) He was discharged July
3, 2010. His discharge diagnoses included alcohol dependence and opioid dependence. (Apr. 9,
2012 Letter [DN 48-13] 9; MARR Diagnosis Report [DN 66-4] 9.) On September 16, 2011, Dr.
Grogan was diagnosed by his physician Dr. Troy Nelson with alcohol dependence and alcohol
abuse. (Apr. 9, 2012 Letter [DN 48-13] 7–8; Dr. Nelson Medical Records [DN 48-6] 1.)
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Thereafter, two claims were filed for disability benefits to Principal Life on the Policy. The first
on October 24, 2011, signed by “Jerry Grogan POA,” stated that Dr. Grogan claimed disability
beginning in September 2011 for “Alcohol & Substance Abuse.” (Oct. 24, 2011 Claim [DN 487] 1, 4.) However, the Power of Attorney that accompanied the claim form was not notarized.
(See Grogan Power of Attorney [DN 48-8] 5.)
Thus, on December 7, 2011, Dr. Grogan
submitted a second claim form to Principal Life that he had signed, claiming “Total Disability”
beginning in April 2010 for “CD – Chemical Dependency.” (Dec. 7, 2011 Claim [DN 48-9] 1.)
Principal Life denied the claim in a March 1, 2012 letter, stating in pertinent part, “Dr.
Grogan is not Disabled under the terms of the policy” because “he is claiming Disability for a
medical condition that is specifically excluded by the policy.” (Mar. 1, 2012 Letter [DN 48-12]
3.) In the letter, Principal Life also stated that it had “yet to make a determination regarding the
validity of the policy” and that it was “reviewing Dr. Grogan’s claim to determine if there were
misrepresentations or omissions in the application” that might affect his eligibility for coverage.
(Id. at 1.)
Thereafter, DVC sought an additional explanation for the denial of the claim. After
receiving Dr. Grogan’s signed authorization allowing Principal Life to release his medical
information, Principal Life sent DVC a letter further explaining the denial. (Apr. 9, 2012 Letter
[DN 48-13].) In the letter, Principal Life noted a number of specific misrepresentations or
omissions in the application for the Policy. (Id. at 9.) The letter also reviewed the information
Principal Life had received pursuant to its investigation of Dr. Grogan’s claim. Then, noting that
the “Mental/Nervous Exclusion Rider” of the Policy stated that Principal Life would not pay
policy benefits for “any other DSM-IV diagnosis,” Principal Life stated, “All Substance Abuse
disorders are listed as DSM-IV diagnoses and can be found on page 191 of the latest edition of
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this manual: Diagnostic and Statistical Manual of Mental Disorders-Fourth Edition-Text
Revision DSM-IV-TR.” (Id. at 10.)
In a letter dated June 26, 2012, DVC, through counsel, requested reconsideration of the
denial. (June 26, 2012 Letter [DN 48-14] 1.) Initially, Principal Life promised a response within
thirty days. It then asked for an extension through August 24, 2012. After receiving the
extension, Principal Life affirmed its denial on August 23, 2012, reiterating that Dr. Grogan was
not disabled under the terms of the Policy because he claimed disability for a medical condition
that was specifically excluded by a rider. (Aug. 23, 2012 Letter [DN 48-15] 4.) Principal Life
also advised DVC that it “would not have issued the policy on Grogan if it had known . . . that
[he] was disabled and not actively working when he and DVC signed and submitted the
Disability Insurance Application Part D . . . on or about March 25, 2010.” (Id.) Principal Life
stated that DVC’s and Dr. Grogan’s material and/or fraudulent misrepresentations, omissions,
and incorrect statements in the Policy application entitled Principal Life to rescission of the
Policy or a declaration that it is void ab initio. (Id. at 4–5.)
Principal Life also advised DVC of its decision to file a civil action for the rescission of
the subject policy and, alternatively, for a declination of Dr. Grogan’s claim for benefits. (Id. at
5.) Principal Life filed this action for a declaratory judgment [DN 1] against DVC and Dr.
Grogan the next day, on August 24, 2012. In count I of its Complaint (the “rescission” claim),
Principal Life seeks to either rescind the Policy or obtain a declaration that the Policy was void
ab initio due to fraudulent or material misrepresentations by DVC and Grogan in the Policy
application. (Pl.’s Compl. [DN 1] ¶ 25.) In the alternative, in count II of its Complaint (the
“coverage” claim), Principal Life seeks a declaration that Dr. Grogan was not disabled under the
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terms of the Policy because he claimed a disability for a medical condition that was specifically
excluded by a Policy rider, and that there is therefore no coverage under the Policy. (Id. ¶ 28.)
On September 18, 2012, DVC filed its Answer to the complaint along with a
Counterclaim and Crossclaim [DN 7]. In its Counterclaim against Principal Life, DVC brought a
claim for breach of contract based on Principal Life’s refusal to pay benefits under the Policy and
claims for common law and statutory bad faith. (Def. DVC’s Countercl. [DN 7] ¶¶ 17–26.) In
its Crossclaim against Dr. Grogan, DVC asserts claims for breach of fiduciary duty, fraud and
fraudulent misrepresentation, negligent misrepresentation, and tortious interference with a
contractual relationship. (Def. DVC’s Crosscl. [DN 7] ¶¶ 5–19.)
On December 11, 2012, DVC moved to dismiss this action on the basis of two
McCracken Circuit Court actions that had been filed over three months after this action, neither
of which named Principal Life as a party [DN 19].1 In a Memorandum Opinion and Order dated
April 15, 2013, this Court denied DVC’s Motion to Dismiss [DN 25].
Principal Life then moved to bifurcate Principal Life’s rescission and coverage claims
and the corresponding breach of contract counterclaim from DVC’s bad faith claims and to stay
discovery on the bad faith claims pending the resolution of the rescission and coverage claims
[DN 35]. This Court granted the Motion to Bifurcate and the Motion to Stay Discovery by Order
dated December 3, 2013 [DN 41].
On March 7, 2014, counsel for DVC sent a letter to counsel for Principal Life requesting
a deposition date for Principal Life’s corporate representative. (Mar. 7, 2014 Letter [DN 56-2].)
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On November 30, 2012, Dr. Grogan filed suit in the McCracken Circuit Court against DVC and its other two
members. (Compl. [DN 19-2].) That complaint asserted claims relating to DVC’s internal affairs. (Id. ¶¶ 34–56.)
In its Counterclaim, DVC asserted, among other things, the same four claims it asserted in its Crossclaims in the
federal action: breach of fiduciary duty, fraudulent misrepresentation, negligent misrepresentation, and tortious
interference with a contractual relationship. (See DVC’s Answer & Countercl. [DN 19-3] ¶¶ 1–4, 19–28, 42–46.)
Later, on December 11, 2012, DVC filed an action in the McCracken Circuit Court against its insurance agency and
agent, which were affiliated with Principal Life. In that complaint, DVC asserted various claims related to their
roles in procuring the Principal Life policy. (Compl. [DN 19-4] ¶¶ 24–61.)
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Principal Life’s counsel responded via letter, on March 12, 2014, noting that he had conveyed
DVC’s request to Principal Life. (Mar. 12, 2014 Letter [DN 56-3].)
On March 26, 2014, Principal Life filed a Motion for Partial Summary Judgment (the
“Coverage Summary Judgment Motion”) [DN 48], seeking summary judgment as to its coverage
claim and DVC’s counterclaim for breach of contract. On April 2, 2014, counsel for Principal
Life sent a letter to counsel for DVC seeking DVC’s agreement to stay discovery pending
resolution of that summary judgment motion on the basis that the motion involved pure questions
of law (contract interpretation) that could effectively end the case as to Principal Life. (Apr. 2,
2014 Letter [DN 78-6] 1). When counsel for DVC had not responded by April 8, 2014, counsel
for Principal Life followed up by e-mail, (Apr. 8, 2014 E-mail [DN 78-7]), and then, after
receiving no response, filed a Motion to Stay Discovery [DN 50].
On April 15, 2014, the deadline to complete all discovery, DVC requested a 21-day
extension of time to respond to the pending motions. (Apr. 15, 2014 Letter [DN 78-8] 1.)
Although DVC indicated that it believed discovery should not be stayed, (id.), it neither
requested any extension of the discovery deadline, nor served any notice of deposition. Principal
Life consented to an extension until May 5, 2014 for DVC to respond to the pending motions.
On April 30, 2014, the deadline to file any discovery related motions passed without DVC filing
any such motions, including no motions seeking an extension of the discovery deadline. On May
5, 2014, almost three weeks after the discovery deadline, DVC filed a Response to the Coverage
Summary Judgment Motion [DN 58], a Motion for Additional Discovery [DN 56], and a
Response to the Motion to Stay Discovery [DN 57].
On May 23, 2014, Magistrate Judge King denied Principal Life’s Motion to Stay
Discovery [DN 64], but did not rule on DVC’s Motion for Additional Discovery.
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On June 13, 2014, Principal Life filed a Second Motion for Partial Summary Judgment
(the “Rescission Summary Judgment Motion”) [DN 66], seeking summary judgment as to its
rescission claim and DVC’s counterclaim for breach of contract. DVC filed a Response to the
Rescission Summary Judgment Motion [DN 71]2 on July 25, 2014, as well as a Second Motion
for Additional Discovery [DN 69] and a Motion to Exclude Shawn Bailey and Strike Affidavit of
Shawn Bailey [DN 70]. Additionally, on August 29, 2014, DVC filed a Notice of Filing [DN
81] the Affidavit of L. Miller Grumley (DVC’s counsel) in connection with DVC’s Response to
the Coverage Summary Judgment Motion [DN 58] and DVC’s Motion for Additional Discovery
[DN 56].
II. PRINCIPAL LIFE’S COVERAGE SUMMARY JUDGMENT MOTION
A. Summary Judgment Standard
Before the Court may grant a motion for summary judgment, it must find that there is no
genuine dispute as to any material fact and that 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 that 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 non-moving 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).
Although the Court must review the evidence in the light most favorable to the nonmoving party, the non-moving party must do more than merely show that there is some
“metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio
2
Dr. Grogan adopted DVC’s Response in full. (See Def. Grogan’s Resp. to Pl.’s Second Mot. Summ. J. [DN 72]
1.).
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Corp., 475 U.S. 574, 586 (1986). Instead, the Federal Rules of Civil Procedure require the nonmoving party to present specific facts showing that a genuine factual 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 [non-moving party’s] position will be insufficient; there
must be evidence on which the jury could reasonably find for the [non-moving party].”
Anderson, 477 U.S. at 252.
While Kentucky substantive law is applicable to this case pursuant to Erie Railroad v.
Tompkins, 304 U.S. 64 (1938), a federal court in a diversity action applies the standards of
Federal Rule of Civil Procedure 56, not Kentucky’s summary judgment standard as expressed in
Steelvest, Inc. v. Scansteel Service Center, Inc., 807 S.W.2d 476 (Ky. 1991). Gafford v. General
Elec. Co., 997 F.2d 150 (6th Cir. 1993) abrogated on other grounds by Hertz Corp. v. Friend,
559 U.S. 77 (2010).
B. Discussion
Principal Life seeks summary judgment on count II of its Complaint, in which it seeks a
declaration that Defendant Dr. Grogan’s claimed disability is not covered under the Policy, as
well as count I of DVC’s Counterclaim, in which DVC asserts that Principal Life breached its
obligation to pay benefits to DVC under the Policy. Principal Life asserts that Dr. Grogan’s
claimed disability is based on his diagnosed alcohol and opioid abuse and dependence. Alcohol
and opioid abuse and dependence are DSM-IV diagnoses. Thus, Dr. Grogan’s claimed disability
is for DSM-IV diagnoses. Principal Life further contends that all DSM-IV diagnoses are validly
and unambiguously excluded by the Policy Rider. Therefore, according to Principal Life, the
Policy Rider validly and unambiguously excludes Dr. Grogan’s claimed disability. There being
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no coverage under the Policy, Principal Life asserts that it did not breach the Policy in refusing to
pay the claim.
DVC contends that the proper interpretation of the Policy Rider is that it excludes only
those disorders that are listed by individual name. DVC asserts that this renders the Rider
ambiguous and, as such, that all ambiguity should be resolved in its favor. Further, DVC argues
that the Policy Rider is unenforceable under Kentucky law because it does not meet the clear
expression requirement of insurance policy exclusions and because it attempts to incorporate by
reference the entire DSM-IV, which it asserts is prohibited under Kentucky law. There being
coverage under the Policy, DVC asserts that Principal Life’s failure to pay the claim constitutes a
breach of the Policy.
Principal Life’s Coverage Summary Judgment Motion thus presents two issues that must
be resolved: first, whether Dr. Grogan’s claimed disability for alcohol and substance abuse and
chemical dependency is an “other DSM-IV diagnosis” as that phrase is used in the Policy’s
Mental/Nervous Exclusion Rider, and, second, whether the Mental/Nervous Exclusion Rider is
enforceable under Kentucky law. The Court will address each in turn.
1. Dr. Grogan’s Claimed Disability Is an Other DSM-IV Diagnosis
Under the Unambiguous Plain Meaning of the Policy
The parties do not dispute that Dr. Grogan was diagnosed with alcohol dependence and
abuse and opioid dependence, that those diagnoses are DSM-IV diagnoses, that Dr. Grogan
claimed disability for “Alcohol & Substance Abuse” and “CD – Chemical Dependency,” or that
Dr. Grogan’s claimed disability for DSM-IV diagnoses. However, the parties disagree as to
whether the claimed disability is an “other DSM-IV diagnosis” within the meaning of the Policy.
Thus, the resolution of the first issue turns on the interpretation of the terms and language in the
Policy.
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It is well settled that “[t]he construction and interpretation of a contract, including
questions regarding ambiguity, are questions of law to be decided by the court.” Hazard Coal
Corp. v. Knight, 325 S.W.3d 290, 298 (Ky. 2010) (quoting First Commonwealth Bank of
Prestonsburg v. West, 55 S.W.3d 829, 835 (Ky. Ct. App. 2000)) (internal quotation marks
omitted); see also Caudill Seed & Warehouse Co. v. Houston Cas. Co., 835 F. Supp. 2d 329,
332–33 (W.D. Ky. 2011) (interpretation of insurance policy to determine coverage is legal
question). When interpreting an insurance policy, a court must first determine whether the
policy is ambiguous, as the resolution of the ambiguity question dictates how the interpretative
analysis will proceed. See Frear v. P.T.A. Indus., Inc., 103 S.W.3d 99, 105–06 (Ky. 2003).
If an ambiguity exists, the court may look to extrinsic evidence to determine the intent of
the parties. Id. at 106 & n.14. Where an insurance policy is ambiguous, Kentucky law is clear
that all questions are to be resolved in favor of the insured, St. Paul Fire & Marine Insurance Co.
v. Powell-Walton-Milward, Inc., 870 S.W.2d 223, 227 (Ky. 1994), and exceptions and
exclusions are to be strictly construed so as to render the insurance effective, Eyler v.
Nationwide Mutual Fire Insurance Co., 824 S.W.2d 855, 859 (Ky. 1992). Under the “reasonable
expectations doctrine,” an insured is entitled to have an ambiguous policy interpreted so as to
provide all the coverage the insured may reasonably expect to have under the policy. Phila.
Indem. Ins. Co. v. Morris, 990 S.W.2d 621, 625–26 (Ky. 1999); see also True v. Raines, 99
S.W.3d 439, 443 (Ky. 2003) (footnotes and internal quotation marks omitted) (noting that “[t]he
reasonable expectation doctrine is based on the premise that policy language will be construed as
laymen would understand it and applies only to policies with ambiguous terms”).
However, in the absence of ambiguity, “a written instrument will be enforced strictly
according to its terms, and a court will interpret the contract’s terms by assigning language its
10
ordinary meaning and without resort to extrinsic evidence.” Hazard Coal Corp., 325 S.W.3d at
298 (quoting Frear, 103 S.W.3d at 106); see also Pierce v. W. Am. Ins. Co., 655 S.W.2d 34, 36
(Ky. Ct. App. 1983) (“Terms in an insurance policy are to be given their plain meanings, and
courts should not make a different insurance contract for the parties by enlarging the risk
contrary to the natural and obvious meaning of the existing contract.”). “If there is no ambiguity,
the court’s analysis extends only to the four corners of the contract to determine the parties’
intention.”
Journey Acquisition-II, L.P. v. EQT Prod. Co., --- F. Supp. 2d ---, 2014 WL
4104125, at *5 (E.D. Ky. Aug. 18, 2014) (citing Hoheimer v. Hoheimer, 30 S.W.3d 176, 178
(Ky. 2000)); see also Cadleway Props., Inc. v. Bayview Loan Servicing, LLC, 338 S.W.3d 280,
286 (Ky. Ct. App. 2010) (“Even if the contracting parties may have intended a different result, a
contract cannot be interpreted contrary to the plain meaning of its terms.”). “[W]here there is no
ambiguity, the rule of liberal construction in favor of the insured is inapplicable,” Kentucky
Ass’n of Counties All Lines Fund Trust v. McClendon, 157 S.W.3d 626, 633 (Ky. 2005) (citing
Frear, 103 S.W.3d at 106), and “[w]hen the terms of an insurance contract are unambiguous and
not unreasonable, they will be enforced,” id. at 630 (collecting cases). Thus, the initial question
that must be resolved is whether the phrase “any other DSM-IV diagnosis,” as used in the Policy
Rider, is ambiguous.
An insurance policy or provision therein is ambiguous if its meaning is susceptible to two
or more reasonable interpretations. True, 99 S.W.3d at 443. Stated differently, “[a] contract is
ambiguous if a reasonable person would find it susceptible to different or inconsistent
interpretations.” Pedicini v. Life Ins. Co. of Ala., 682 F.3d 522, 526 (6th Cir. 2012) (quoting
Cantrell Supply, Inc. v. Liberty Mut. Ins. Co., 94 S.W.3d 381, 385 (Ky. Ct. App. 2002)). An
ambiguity may appear either on the face of the policy or when a provision is applied to a
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particular claim, Powell-Walton-Milward, 870 S.W.2d at 227, but extrinsic evidence cannot be
used to create an ambiguity, Cantrell Supply, 94 S.W.3d at 385.
An insurance policy is not rendered ambiguous simply because the parties disagree as to
its construction or urge alternative interpretations. Vencor, Inc. v. Standard Life & Acc. Ins. Co.,
317 F.3d 629, 635 (6th Cir. 2003). The Kentucky Supreme Court has made clear that “[t]he
mere fact that [a party] attempt[s] to muddy the water and create some question of interpretation
does not necessarily create an ambiguity.” True, 99 S.W.3d at 443 (alterations in original)
(quoting Sutton v. Shelter Mut. Ins. Co., 971 S.W.2d 807, 808 (Ky. Ct. App. 1997)) (internal
quotation marks omitted). The Kentucky Court of Appeals likewise has stated, “we are simply
unwilling to ‘torture words to import ambiguity into a contract where the ordinary meaning
leaves no room for ambiguity.’” First Home, LLC v. Crown Commc’ns, Inc., No. 2010–CA–
001701–MR, 2012 WL 95560, at *5 (Ky. Ct. App. Jan. 13, 2012) (quoting McCarthy v.
Chromium Process Co., 13 A.3d 715, 720 (Conn. App. Ct. 2011)).
Thus, “[o]nly actual
ambiguities, not fanciful ones, will trigger application of the [reasonable expectation] doctrine.”
True, 99 S.W.3d at 443. A nonexistent ambiguity will not be utilized to resolve a policy against
an insurer; “courts should not rewrite an insurance contract to enlarge the risk to the insurer.”
Liberty Corpprate Capital Ltd. v. Security Safe Outlet, Inc., 937 F. Supp. 2d 891, 898 (E.D. Ky.
2013) (quoting Powell-Walton-Milward, 870 S.W.2d at 226–27).
The Court finds as a matter of law that the Policy’s use of the phrase “any other DSM-IV
diagnosis” is unambiguous. See also Locke v. Standard Ins. Co., No. 8:12CV2, 2014 WL
4594202, at *1, *7 (D. Neb. Sept. 12, 2014) (finding that terms of policy and endorsement,
which defined mental disorder exclusion as “any diagnosis or condition listed in the most current
publication of the [DSM],” were unambiguous). Although DVC presents a thoughtful argument
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how the phrase could be construed in a way contrary to the construction urged by Principal Life,
the fact that the parties present competing interpretations of the term does not render it
ambiguous. See, e.g., Vencor, 317 F.3d at 635; True, 99 S.W.3d at 443. The Court finds no
ambiguity on the face of the Policy Rider and no ambiguity appears when the provision is
applied to Dr. Grogan’s particular claim. As such, neither the reasonable expectations doctrine
nor the rule of liberal construction in favor of the insured is applicable here. See McClendon,
157 S.W.3d at 633. Furthermore, the unambiguous provision will be “enforced according to the
plain meaning of its express terms and without resort to extrinsic evidence.” Cadleway, 338
S.W.3d at 286.
The plain meaning of the Rider’s express terms is that all DSM-IV diagnoses—those
disorders specifically listed and any other DSM-IV diagnosis—are excluded from coverage. In
essence, the Policy Rider uses the DSM-IV as the yardstick to determine whether a condition is
excluded from coverage. Thus, under the Rider, if a claimed disability is for a diagnosis that is a
DSM-IV diagnosis, that claim is not covered under the Policy. Dr. Grogan claimed disability for
alcohol and substance abuse and chemical dependency.
Dr. Grogan’s physician, Dr. Troy
Nelson, diagnosed Grogan with “alcohol dependence” and “alcohol abuse.” Additionally, Dr.
Grogan’s rehabilitation facility, MARR, diagnosed Grogan with opioid dependence. Alcohol
abuse and dependence are found on pages 195 to 196 of the DSM-IV; opioid abuse and
dependence are found on pages 248 to 249.
See Am. Psychiatric Ass’n, Diagnostic and
Statistical Manual of Mental Disorders 195–96, 248–49 (4th ed. 1994).
Thus, the Court
concludes that Dr. Grogan’s claimed disability for alcohol and substance abuse and chemical
dependency are clearly and expressly “other DSM-IV diagnos[es]” under the plain language of
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the Rider. Therefore, under the plain meaning of the text, Dr. Grogan’s claimed disability is not
covered under the Policy.
DVC complains that the plain language of the Rider permits it to exclude coverage for
disorders “even though they were not specifically listed and were never discussed among the
parties or Principal’s underwriting documents (which expressly provide that the exclusion rider
was included because of Dr. Grogan’s history of stress and Xanax prescription).” (Def. DVC’s
Resp. to Pl.’s Mot. Summ. J. [DN 58] 15.) Where, as here, the contract is unambiguous, the text
controls and extrinsic evidence such as prior oral discussions and Principal’s underwriting
documents is irrelevant. See Journey Acquisition-II, 2014 WL 4104125, at *5 (citing Hoheimer,
30 S.W.3d at 178) (“If there is no ambiguity, the court’s analysis extends only to the four corners
of the contract to determine the parties’ intention.”); see also Cadleway, 338 S.W.3d at 286
(“Even if the contracting parties may have intended a different result, a[n unambiguous] contract
cannot be interpreted contrary to the plain meaning of its terms.”). Principal Life was free to
write a contract that excluded more than merely Dr. Grogan’s Xanax prescription. Dr. Grogan
and DVC signed the contract after acknowledging that they understood and agreed to be bound
by its terms. Its terms clearly and expressly state that any DSM-IV diagnosis will be excluded
by the Rider. This Court will “not rewrite [the] insurance contract to enlarge the risk to the
insurer.” Medical Protective Co. v. Duma, 478 F. App’x 977, 979 (6th Cir. 2012) (quoting
Powell-Walton-Milward, 870 S.W.2d at 226–27).
2. Mental/Nervous Exclusion Rider Is Enforceable Under Kentucky Law
The second issue that must be resolved is whether the Mental/Nervous Exclusion Rider is
enforceable under Kentucky law. DVC contends the Rider is unenforceable on three separate
grounds, which the Court will address in turn.
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i. Clear Expression Requirement of Insurance Policy Exclusions
DVC contends that the plain meaning of the Rider is unenforceable because it does not
meet the clear expression requirement of Kentucky law. Under Kentucky law, “[a]ny limitation
on coverage or an exclusion in a policy must be clearly stated in order to apprise the insured of
such limitations. Stated otherwise, not only is the exclusion to be carefully expressed, but, as in
this case, the operative terms clearly defined.” Powell-Walton-Milward, 870 S.W.2d at 227.
DVC argues that the phrase “any other DSM-IV diagnosis” does not specifically identify which
“other” DSM-IV diagnoses are excluded. Thus, according to DVC, the Rider does not exclude
coverage for alcohol and substance abuse and chemical dependency because those disorders
were not specifically listed by individual name so as to apprise DVC of their exclusion. The
Court finds this argument unavailing.
The operative terms of the Mental/Nervous Exclusion Rider are clearly defined: the
disorders that are excluded from coverage are any and all DSM-IV diagnoses. DVC cites to no
authority that prohibits an insurance policy from containing broad exclusions. It has long been
recognized that exclusions can be “broad” so long as they are “sufficiently clear.” See Penn.
Cas. Co. v. Elkins, 70 F. Supp. 155, 159 (E.D. Ky. 1947); see also Mansoob v. Liberty Mut., No.
09-13191, 2010 WL 4867409, at *1, *7 (E.D. Mich. Nov. 23, 2010) (finding that provisions of
LTD benefit plan, which defined mental illness exclusion as any psychiatric or psychological
condition classified in DSM, were “clearly stated”). In Elkins, the insurance policy expressly
excluded from its coverage “bodily injury to or death of any employee of the insured while
engaged in the employment, other than domestic, of the insured.” 70 F. Supp. at 156 (emphasis
added). The court explained that
The adjective “any,” in effect, is equivalent to every. It serves to enlarge the
scope of the phrase “any employee,” as used in the exclusion clause of the policy,
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so as to clearly negative the idea that it was used in a restrictive sense. It
precludes limiting the application of the phrase to a particular kind of employee.
All ambiguity as to the breadth of the meaning of exclusion clause is removed by
this characterizing adjective extending its application to every employee of the
insured while engaged in employment . . . . That such is the significance of
“any,” as ordinarily used and popularly understood, is attested by all standard
dictionaries. There is no need for resort to technical rules of construction. The
rule that an ambiguity in an insurance policy will be given the interpretation most
favorable to the insured, has no application where the terms are clear and
unambiguous.
Id. at 158. The court concluded that “[t]he words used make the broad indiscriminate exclusion
sufficiently clear.”
Id. at 159.
This Court likewise concludes that the language of the
Mental/Nervous Exclusion Rider makes the broad exclusion sufficiently clear. Thus, the Court
finds that the plain, clear, and unambiguous language of the Rider put DVC on notice that any
disability that is a DSM-IV diagnosis is excluded from coverage.3
ii. Incorporation by Reference
Having found that the Rider unambiguously and clearly excludes from coverage all
DSM-IV diagnoses, the Court must now determine whether Dr. Grogan’s claimed disability for a
DSM-IV diagnosis is nonetheless covered because Principal Life did not attach the DSM-IV to
the Policy or provide it to DVC and Dr. Grogan prior to execution of the Policy.
DVC contends that the exclusion is unenforceable because it attempts to incorporate by
reference extrinsic materials (the DSM-IV) that were not attached to the policy or provided to
DVC and Dr. Grogan.4 DVC relies on Twin City Fire Ins. Co. v. Terry, 472 S.W.2d 248 (Ky.
1971), and proposes that it broadly prohibits incorporation by reference in insurance contracts.
(Def. DVC’s Resp. to Pl.’s Mot. Summ. J. [DN 58] 9 (“The practice of incorporating extrinsic
materials into an insurance policy is expressly prohibited by KRS 304.14-180 and was
3
DVC additionally argues that Rider language not at issue here renders the provision not sufficiently clear. As the
relevant language here is “any other DSM-IV diagnosis,” the Court declines to address this argument.
4
Principal Life admits that it did not provide the DSM-IV to either Dr. Grogan or DVC. (Pl.’s Resps. to Def.
DVC’s Req. Admis. [DN 58-1] ¶ 1.)
16
disavowed by the Kentucky Court of Appeals in Twin City Fire.”).) DVC argues that just as in
Twin City, “Principal [Life] cannot avoid coverage by mere reference to ‘any other DSM-IV
diagnosis.’” (Id. at 11.)
Upon examination of the authorities cited and upon its own research, the Court finds that
DVC’s interpretation of Kentucky law is without support and that Kentucky law recognizes the
doctrine of incorporation by reference as it applies to insurance contracts. See, e.g., Bachelor
Land Holdings, LLC v. Chubb Customs Ins. Co., No. 3:11-CV-00152, 2011 WL 5389197, at *7
(W.D. Ky. Nov. 4, 2011) (citing Twin City, 472 S.W.2d 248); see also Brown v. Ind. Ins. Co.,
184 S.W.3d 528, 542 (Ky. 2005) (Wintersheimer, J., dissenting) (citing Twin City, 472 S.W.2d
248) (explaining that Kentucky courts require “an insurance policy expressly and clearly
incorporate any extrinsic document, statutory or otherwise”). Kentucky law requires that all
terms of an insurance contract be “plainly expressed” in the policy itself. See KRS 304.14180(2) (“No insurer or its representative shall make any insurance contract or agreement relative
thereto other than as is plainly expressed in the policy.”); see also Twin City, 472 S.W.2d at 250.
Kentucky’s highest court explained that the legislative purpose behind that requirement was that
the insured “might know from his policy what his contract was, and that contracts not contained
in the policy, or written upon the back of it or attached to it, should not be considered.”
Provident Sav. Life Assurance Soc’y v. Puryear’s Adm’r, 59 S.W. 15, 16 (Ky. 1900). To that
end, Kentucky law permits insurance contracts to incorporate by reference extrinsic material
only where that reference is clear, so as “to indicate that the parties intended to make [the
extrinsic material] part of [the] contract.” Twin City, 472 S.W.2d at 249.
The factual background in Twin City reveals the distinctions between defining the scope
of an exclusion by reference to an authoritative medical reference text and attempting to
17
incorporate by reference ancillary documents that are unavailable to the public and contain
additional contractual terms. In Twin City, under the guise of the incorporation by reference
doctrine, the insurance company attempted to bind the insured to a printed form that was
accidentally omitted from the policy given to the insured, which contained a term of the
insurance contract requiring suit to be filed within twelve months from the date of loss. Twin
City, 472 S.W.2d at 248. Significantly, there was no “clear reference” in the policy to the
contents of the omitted form and nothing to put the insured on notice or inquiry as to its contents.
Id. at 249–50. Under the circumstances, the court rejected the insurance company’s attempt to
incorporate the omitted form by reference. Id. at 250.
In the present case, by contrast, the Policy Rider expressly and clearly references the
DSM-IV and its contents such as would put DVC on notice or inquiry,5 unlike the “mere
reference” to the omitted form the court found insufficient in Twin City. Moreover, the court in
Twin City was concerned that the insurer was attempting to enforce a provision that was never
provided to the insured. Here, there is no dispute that DVC and Dr. Grogan received the Rider
excluding the DSM-IV diagnoses from coverage.6
The case here is analogous to Auto Club Property-Casualty Insurance Co. v. B.T. ex rel.
Thomas, 997 F. Supp. 2d 702 (W.D. Ky. 2014), where this Court used Kentucky’s penal statutes
to interpret whether an exclusion for injury or damage resulting from a “criminal act” was
applicable. The DSM-IV, like the penal statutes, provides the definitions by which to apply the
terms of the exclusion. Further, unlike the omitted ancillary form in Twin City, and like the
5
DVC’s argument that the Rider did not clearly indicate which diagnoses were excluded from coverage by the Rider
is again unavailing. The Rider’s use of “any other” clearly indicated which diagnoses were to be included—all
diagnoses not previously listed.
6
Not only did DVC and Dr. Grogan receive the Rider, they both acknowledged through their signatures that they
understood and agreed to the terms of the Rider.
18
penal statutes in B.T. ex rel Thomas, the DSM-IV is published and readily available to the
public.
Thus, the Court rejects DVC’s contention that the Rider is unenforceable merely because
it defines its scope broadly by clear reference to all DSM-IV diagnoses. Such a decision is
consistent with the well-reasoned authorities from other jurisdictions that have considered
similar questions. See Simonia v. Glendale Nissan/Infinity Disability Plan, 378 F. App’x 725,
727 (9th Cir. 2010) (finding that “mental disorder” defined by DSM under plan was
unambiguous, clear, and exclusion enforceable); Lee v. Kaiser Found. Health Plan Long Term
Disability Plan, 812 F. Supp. 2d 1027, 1040 (N.D. Cal. 2011) (finding that plan provided
“precise definition” of what was excluded under mental disease exclusion: any “condition
sufficient to meet the diagnostic criteria in the DSM”).
iii. Double Incorporation by Reference
DVC also argues that the Policy’s exclusion of DSM-IV diagnoses is a “double
incorporation by reference,” that is invalid pursuant to Emery Worldwide, a Subsidiary of CNF,
Inc. v. AAF-McQuay, Inc., No. 2003-CA-001446-MR, 2005 WL 2402544 (Ky. Ct. App. Sept.
30, 2005). In Emery Worldwide, an unpublished, non-insurance case, the Kentucky Court of
Appeals adopted the position of the Jefferson Circuit Court, which stated it found “no precedent
in Kentucky for an extension of the doctrine of incorporation by reference to encompass a
situation involving a double incorporation.” Id. at *4. The Court finds that the Policy Rider at
issue in this case does not pose the sort of “double incorporation” that the courts addressed in
Emery Worldwide.
In Emery Worldwide, the language on the front of a waybill (the parties’ contract)
incorporated the terms on the reverse side, which themselves incorporated a 20-page service
guide. Id. at *2. Only the front of the waybill, and not the reverse side, was signed. Id. In
19
finding that this was a double incorporation that had no precedent in Kentucky law, the Kentucky
Court of Appeals relied on the requirement in KRS 446.060 that a writing signed by a party must
be signed “at the end or close of the writing.” Id. at *3 (quoting circuit court opinion). The court
stated:
[w]when [sic] the signature is in the middle of a writing, it gives no assurance that
the contracting parties intend to be bound by matters which do not appear above
their signatures; however, when a signature is placed after clear language [that]
has expressed the incorporation of other terms and conditions by reference, it is a
logical inference that the signer agrees to be bound by everything incorporated.
Id. at *3 (alteration in original) (quoting circuit court opinion).
In contrast to the situation in Emery Worldwide, both Dr. Grogan and DVC signed the
Mental/Nervous Exclusion Rider issue at its bottom, underneath all of the operative language.
(See Grogan Policy [DN 48-2] 28.) Thus, this is not the sort of “double incorporation” of terms
not appearing above the signature that troubled the Kentucky Court of Appeals in Emery
Worldwide. Additionally, the Court rejects DVC’s argument regarding double incorporation by
reference because the Rider was a part of the Policy itself, unlike the reverse side of the waybill
at issue in Emery Worldwide.
For the above reasons, the Court concludes, as a matter of law, that Dr. Grogan’s claimed
disability is excluded by the Policy Rider and therefore that Principal Life is entitled to summary
judgment on its coverage claim. Because no coverage existed under the Policy, the Court
concludes as a matter of law that Principal Life did not breach the Policy in refusing to pay the
claim. Thus, the Court also concludes that Principal Life is entitled to summary judgment on
DVC’s breach of contract counterclaim. Accordingly, the Court GRANTS Principal Life’s
Coverage Summary Judgment Motion [DN 48].
Because Principal Life sought a declaration as to the coverage claim as an alternative to
its rescission claim, and because the Court is granting Principal Life’s Coverage Summary
20
Judgment Motion, the Court now DENIES Principal Life’s Rescission Summary Judgment
Motion [DN 66] as moot. The Court also DENIES as moot DVC’s corresponding motions—its
Second Motion for Additional Discovery [DN 69] and Motion to Exclude Shawn Bailey and to
Strike the Affidavit of Shawn Bailey [DN 70].
III. DVC’S MOTION FOR ADDITIONAL DISCOVERY
Having concluded that the Rider is unambiguous and construing it according to the plain
meaning of its terms, the Court addresses DVC’s Motion for Additional Discovery [DN 56].
Defendant DVC seeks additional discovery under Rule 56(d) regarding alleged ambiguity issues
prior to consideration and disposition of Principal Life’s Coverage Summary Judgment Motion.
The Court concludes that DVC failed to show that need for discovery precluded grant of partial
summary judgment for Principal Life on its coverage declaratory action, where issues for which
discovery was sought were not relevant to resolution of Principal Life’s claim.
A. Rule 56(d) Standard
After a party files for summary judgment, “the party opposing the motion may, by
affidavit, explain why he is unable to present facts essential to justify the party’s opposition to
the motion.” Summers v. Leis, 368 F.3d 881, 887 (6th Cir. 2004) (citing Fed. R. Civ. P. 56(f)7).
“The burden is on the party seeking additional discovery to demonstrate why such discovery is
necessary.” Id. at 887 (citing Wallin v. Norman, 317 F.3d 558, 564 (6th Cir. 2003)). “Bare
allegations or vague assertions of the need for discovery are not enough.” Id. at 887. “In order
to fulfill the requirements of Fed. R. Civ. P. 56[(d)], [DVC] must state with ‘some precision the
materials [it] hopes to obtain with further discovery, and exactly how [it] expects those materials
would help [it] in opposing summary judgment.’” Id. (quoting Simmons Oil Corp. v. Tesoro
7
The provisions of subdivision (d) appeared in subdivision (f) prior to the December 1, 2010 amendment of Rule
56. Fed. R. Civ. P. 56 advisory committee note.
21
Petroleum Corp., 86 F.3d 1138, 1144 (Fed. Cir. 1996)); Sharkey v. FDA, 250 F. App’x 284, 291
(11th Cir. 2007) (internal quotation marks omitted) (“A Rule 56[(d)] motion must be supported
by an affidavit which sets forth with particularity the facts the moving party expects to discover
and how those facts would create a genuine issue of material fact precluding summary
judgment.”). Rule 56(d) provides:
If 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).
B. Discussion
DVC filed its Motion for Additional Discovery [DN 56] on May 5, 2014, three weeks
after the deadline to complete discovery and a week after the deadline to file all discovery related
motions. DVC did not file an affidavit to support its motion at that time or in its reply brief. As
such, Principal Life states that DVC has failed to meet the threshold standard for continued
discovery. Principal Life contends that because DVC failed to file a Rule 56(d) affidavit or
declaration to demonstrate a specific need to continue discovery for Principal Life’s coverage
claim, DVC’s request for further discovery must be denied. Ford v. Pizza Hut of Se. Kan., Inc.,
No. 4:13-CV-00015, 2013 WL 4500090, at *2 (W.D. Ky. Aug. 20, 2013) (quoting Cacevic v.
City of Hazel Park, 226 F.3d 483, 488 (6th Cir. 2000)) (internal quotation marks omitted) (“The
importance of complying with Rule 56(f) cannot be overemphasized.”).
However, on August 29, 2014, over three months after filing its Motion for Additional
Discovery [DN 56], DVC submitted the affidavit of its counsel [DN 81-1], which ostensibly
states why further discovery is needed. The affidavit states that it incorporates the reasons
specified in DVC’s Memorandum in Support of its Motion for Additional Discovery [DN 56]
22
and Reply in Support of Motion for Additional Discovery [DN 63] as support for its conclusory
allegation that “DVC cannot present facts essential to its opposition to Principal’s Motion for
Partial Summary Judgment [DN 48].” (Grumley Aff. [DN 81-1] ¶ 4.)
According to its briefs, DVC seeks additional discovery regarding the issue of the proper
interpretation of the Rider. DVC alleges the exclusion is unenforceable because, among other
reasons, it contains both patent and latent ambiguities. Asserting that latent ambiguities require
reference to extrinsic materials to detect and resolve, DVC contends that it “is entitled to a full
opportunity to conduct needed and necessary discovery on the ambiguities inherent in the rider”
and that “[i]n order to establish and explore these ambiguities, [it] has requested and will
propound additional discovery requests.” (Def. DVC’s Mot. Additional Disc. [DN 56-1] 4.)
DVC seeks the additional discovery
to discover how Principal has applied and interpreted the Mental/Nervous Rider
in other circumstances, the specifics of Principal’s underwriting process, the
information Principal considered when issuing this specific policy, and Principal’s
own procedures and guidelines for interpreting its policies.
(Id. at 5.)
Even overlooking any procedural issue with DVC’s original failure to file an affidavit or
declaration pursuant to Rule 56(d), the Court finds that DVC has not met the standard required
under the Rule for further discovery. DVC does state what facts it hopes to obtain and purports
to state with particularity how those facts will help it in opposing summary judgment. However,
DVC’s request and alleged need for further discovery rest on the false premise that the Rider is
ambiguous.
Essentially, DVC seeks additional discovery on two issues: to establish the existence of
an ambiguity in the Rider and to discern the scope of the allegedly ambiguous Rider. While
extrinsic evidence would be relevant to discerning the scope of an ambiguous provision, extrinsic
23
evidence cannot be used to create an ambiguity.8 Cantrell Supply, 94 S.W.3d at 385. Thus,
additional discovery could not assist DVC regarding the issue of whether the Rider is
ambiguous. The Court having found as a matter of law that the Rider is unambiguous, only the
text of the insurance policy is relevant to the issue of interpretation. Thus, additional discovery
also could not assist DVC regarding the interpretation issue. As the issues for which discovery is
sought are not relevant to the resolution of Principal Life’s Coverage Summary Judgment
Motion, the Court therefore DENIES Defendant DVC’s Motion for Additional Discovery [DN
56].
IV. DVC’S STATE LAW CLAIMS
Having concluded that Dr. Grogan’s claim is not covered under the Policy, the Court
must now determine what to do with the remaining state law claims—DVC’s bad faith
counterclaims against Principal Life and DVC’s various crossclaims against Dr. Grogan.
Because an essential element of any bad faith claim is that the insurer is obligated to pay the
claim under the terms of the policy, Wittmer v. Jones, 864 S.W.2d 885, 890 (Ky. 1993), and
because the Court has concluded that Principal Life was not obligated to pay as no coverage
existed for the claimed disability, the Court DISMISSES with prejudice DVC’s bad faith
counterclaims.
Further, the Court finds that it will decline to exercise supplemental jurisdiction over—
and dismiss without prejudice—DVC’s state-law crossclaims against Dr. Grogan.
Section
1367(c) of Title 28 of the United States Code permits a district court to decline to exercise
8
The assertion by DVC that the Rider contains a latent ambiguity does not circumvent this rule that extrinsic
evidence cannot be used to create an ambiguity. As mentioned, “[a]n ambiguity may either appear on the face of the
policy or . . . when a provision is applied to a particular claim.” St. Paul Fire & Marine Ins. Co. v. Powell-WaltonMilward, Inc., 870 S.W.2d 223, 227 (Ky. 1994). The Court found that there is no ambiguity on the face of the Rider
or as applied to Dr. Grogan’s claim, thus no amount of further factual discovery could affect the resolution of this
question of law.
24
supplemental jurisdiction over a claim if it raises a novel or complex issue of state law; it
substantially predominates over the claims over which the court had original jurisdiction; the
court has dismissed all claims over which it had original jurisdiction; or in exceptional
circumstances in which there are other compelling reasons to decline jurisdiction. 28 U.S.C. §
1367(c); see also United Mine Workers v. Gibbs, 383 U.S. 715, 726 (1966). In Carnegie-Mellon
University v. Cohill, 484 U.S. 343 (1988), the Supreme Court discussed the propriety of
exercising supplemental jurisdiction over pendent state-law claims following its decision in
United Mine Workers v. Gibbs, 383 U.S. 715 (1966).
The Gibbs Court recognized that a federal court's determination of state-law
claims could conflict with the principle of comity to the States and with the
promotion of justice between the litigating parties. For this reason, Gibbs
emphasized that “pendent jurisdiction is a doctrine of discretion, not of plaintiff's
right.” [Id.] Under Gibbs, a federal court should consider and weigh in each
case, and at every stage of the litigation, the values of judicial economy,
convenience, fairness, and comity in order to decide whether to exercise
jurisdiction over a case brought in that court involving pendent state-law claims.
When the balance of these factors indicates that a case properly belongs in state
court, as when the federal-law claims have dropped out of the lawsuit in its early
stages and only state-law claims remain, the federal court should decline the
exercise of jurisdiction by dismissing the case without prejudice. [Gibbs, at 726–
27.]
Carnegie-Mellon, 484 U.S. at 349–50 (footnote omitted).
Given that the Court has disposed of all the claims over which it had original jurisdiction,
the remaining claims are state-law claims, and there is a pending state suit filed in McCracken
Circuit Court, the Court finds that the balance of judicial economy, convenience, fairness, and
comity all point toward declining supplemental jurisdiction. Therefore, the Court declines to
exercise supplemental jurisdiction over DVC’s state-law crossclaims. Accordingly, the Court
DISMISSES without prejudice DVC’s state-law crossclaims against Dr. Grogan.
25
V. CONCLUSION
For the reasons set forth above, IT IS HEREBY ORDERED that Principal Life’s
Motion for Partial Summary Judgment [DN 48] is GRANTED and DVC’s Motion for
Additional Discovery [DN 56] is DENIED.
IT IS FURTHER ORDERED that Principal Life’s Second Motion for Partial Summary
Judgment [DN 66], DVC’s Second Motion for Additional Discovery [DN 69], and DVC’s
Motion to Exclude Expert Witness [DN 70] are DENIED as moot. DVC’s bad faith claims
against Principal Life are DISMISSED with prejudice and DVC’s crossclaims against Dr.
Grogan are DISMISSED without prejudice.
December 1, 2014
cc: counsel of record
26
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