Faith v. Great W. Cas. Co.

JEANELLE FAITH Plaintiff v. GREAT WEST CASUALTY COMPANY Defendant

Civil Action No. 3:20-cv-458-RGJ

United States District Court, W.D. Kentucky, Louisville Division

January 3, 2022

MEMORANDUM OPINION AND ORDER

Rebecca Grady Jennings, District Judge United States District Court

Defendant Great West Casualty Company (“Great West”) moves for summary judgment on Plaintiff Jeanelle Faith's (“Faith's”) claims. [DE 17]. Faith responded [DE 19], and Great West replied. [DE 23]. Great West also moves to Exclude Faith's Designated Expert. [DE 18]. Faith responded [DE 20] and Great West replied. [DE 22]. These matters are ripe. For the reasons below, Great West's Motion for Summary Judgment [DE 17] is GRANTED and Faith's Complaint [DE 1-2] is DISMISSED. Great West's Motion to Exclude [DE 18], Motion in Limine [DE 33], and Motion to Exclude Non-Specified Exhibits [DE 41], and Faith's Motion in Limine [DE 29] and Motion for Leave to Conduct Attorney Voir Dire Examination [DE 30], are DENIED AS MOOT.

I. BACKGROUND

Faith was injured in a May 10, 2017 car accident by a Great West insured motorist. [DE 17-1 at 55; DE 19 at 507]. Great West settled the full amount of property damage with Faith on June 9, 2017. [DE 17-1 at 56; DE 19 at 509]. Faith then sued Great West on June 18, 2017 for medical expenses and related damages. [DE 17-1 at 55-66; DE 19 at 505-10]. Faith initially claimed “$15, 188.75 in past medical expenses and unspecified future medicals, lost wages, and permanent impairment.” [DE 17-1 at 60, 64]. The parties engaged in settlement negotiations.

[DE 17-1 at 57-66; DE 19 at 506-10]. Faith's made her first demand of $750, 000 on May 24, 2018. [DE 17-1 at 62; 19-5 at 632]. Great West deposed Faith on October 2, 2018 and made its first settlement offer of $30, 000 on October 4 2018. [DE 17-1 at 60, 64; DE 19-5 at 635-36]. Faith updated her medical expenses at mediation on January 7, 2019 to include “$23, 000 in new medical expenses, ” and Great West increased its offer to $75, 000 on January 8, 2019. [DE 17-1 at 64; DE 19-5 at 637-38]. During the time before trial, Great West was investigating Faith's claim, requesting records, and communicating with Faith's attorney. [DE 17-1 at 55-73; DE 19-5 at 618-48]. Great West's largest offer was $170, 000, “the Friday before trial in October, 2019.” [DE 17-1 at 76; DE 19 at 506]. The jury returned a verdict against Great West for $646, 000. [DE 17-1 at 76; DE 19 at 506].

Faith filed this action, a claim for bad faith under the Kentucky Unfair Claims Settlement Practices Act (“KUCSPA”), against Great West in state court. [DE 1-2 at 7-10]. Great West removed on diversity jurisdiction. [DE 1 at 2].

II. SUMMARY JUDGMENT STANDARD

Summary judgment is required when “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The moving party bears the burden of specifying the basis for its motion and showing the lack 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 must produce specific facts showing a material issue of fact for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). “Factual differences are not considered material unless the differences are such that a reasonable jury could find for the party contesting the summary judgment motion.” Bell v. City of E. Cleveland, 125 F.3d 855 (6th Cir. 1997) (citing Liberty Lobby, 477 U.S. at 252).

A district court considering a motion for summary judgment may not weigh evidence or make credibility determinations but must view the evidence and draw all reasonable inferences in a light most favorable to the non-moving party. Daugherty v. Sajar Plastics, Inc., 544 F.3d 696, 702 (6th Cir. 2008); Williams v. Int'l Paper Co., 227 F.3d 706, 710 (6th Cir. 2000). The non-moving party must do more than show some “metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). Instead, the non-moving party must show 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. Pro. 56(c)(1)(A)-(B); see also Shreve v. Franklin Cty., Ohio, 743 F.3d 126, 132 (6th Cir. 2014). “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].” Liberty Lobby, 477 U.S. at 252.

III. DISCUSSION

Great West argues that Faith's bad faith claim fails on summary judgment because she cannot establish the necessary element of her claim, that Great West's conduct was outrageous. Faith argues that there is sufficient evidence to present her bad faith claim to a jury.

A. Kentucky Unfair Claims Settlement Practices Act

KRS 304.12-230 creates both first-party and third-party obligations to settle insurance claims in good faith. Rawe v. Liberty Mut. Fire Ins. Co., 462 F.3d 521, 532 (6th Cir. 2006). KUCSPA “imposes what is generally known as the duty of good faith and fair dealing owed by an insurer to an insured or to another person bringing a claim under an insurance policy.” Knotts v. Zurich Ins. Co., 197 S.W.3d 512, 515 (Ky. 2006) (citing KRS 304.12-230).

To state a claim under KUCSPA, a plaintiff must “meet a high threshold standard that requires evidence of ‘intentional misconduct or reckless disregard of the rights of an insured or a claimant' by the insurance company that would support an award of punitive damages. Phelps v. State Farm Mut. Auto. Ins. Co., 736 F.3d 697, 703 (6th Cir. 2012) (quoting Wittmer v. Jones, 864 S.W.2d 885, 890 (Ky. 1993) and citing United Servs. Auto. Ass'n v. Bult, 183 S.W.3d 181, 186 (Ky. Ct. App. 2003), as modified (June 27, 2003)). In Wittmer v. Jones, the Kentucky Supreme Court specifically described the standard as “outrageous” conduct by the insurer, “because of the defendant's evil motive or his reckless indifference to the rights of others.” 864 S.W.2d at 890. In United Services Automobile Association v. Bult, the court describes the threshold that a plaintiff needs to show as “high indeed.” 183 S.W.3d 181.

After meeting this initial showing, a plaintiff must then establish three elements to maintain a claim of bad faith under the KUCSPA:

(1) the insurer must be obligated to pay the claim under the terms of the policy; (2) the insurer must lack a reasonable basis in law or fact for denying the claim; and (3) it must be shown that the insurer either knew there was no reasonable basis for denying the claim or acted with reckless disregard for whether such a basis existed.

Wittmer, 864 S.W.2d at 890. “[I]n order to survive a motion for summary judgment, a plaintiff in a bad faith action must come forward with evidence, sufficient to defeat a directed verdict at trial, which reveals some act of conscious wrongdoing or recklessness on the part of the insurer.” Nat'l Sur. Corp. v. Hartford Cas. Ins. Co., 502 Fed.Appx. 425, 428 (6th Cir. 2012) (quoting Matt v. Liberty Mut. Ins. Co., 798 F.Supp. 429, 434 (W.D. Ky. 1991), aff'd, 968 F.2d 1215 (6th Cir. 1992)). Thus, the initial inquiry is whether Plaintiff has met her burden of showing Defendant's conduct was “outrageous.” Wittmer, 864 S.W.2d at 890. See also Phelps, 736 F.3d at 703, and Cobb King v. Liberty Mut. Ins. Co., 54 Fed.Appx. 833, 838 (6th Cir. 2003).

B. Outrageous Conduct

The Sixth Circuit has identified several factors that may support a finding of outrageous conduct that is bad faith: “lowball” offers that are “barely above” the claimant's actual damages; “extensive delay” in settling or requesting the claimant's records; refusing to disclose the insured's policy limits; and “troubling claims-handling practices” such as “switching claims adjustors without explanation, ... refusing to increase an offer without documentation of additional damages, failing to ask [a claimant] to submit to an independent medical examination, and failing to include facts in the claim file that would support a jury verdict in [the claimant's] favor.” Phelps, 736 F.3d at 705-07. “[A]n insurer is entitled to challenge a claim through litigation if the claim is ‘fairly debatable,' on either ‘the law or the facts.' Phelps, 736 F.3d at 704 (citing Empire Fire & Marine Ins. Co. v. Simpsonville Wrecker Serv., Inc., 880 S.W.2d 886, 889-90 (Ky. Ct. App. 1994)) and (Wittmer, 864 S.W.2d at 890).

Great West first argues that Faith's claim fails because there is a high evidentiary standard for outrageous conduct, and discovery has produced no evidence showing Great West acted unreasonably. [DE 17-1 at 70-73]. Faith does not directly respond to this argument but argues that Great West was obligated to pay her claim. [DE 19 at 518]. She contends that a reasonable juror could find that Great West “lacked a reasonable basis for denying offering a fair amount for Ms. Faith's Claim when it chose not to hire any experts even after having the plaintiff's disclosures before its own were due.” [DE 19 at 519]. Finally, Faith argues that a reasonable juror could find that Great West “knew it did not have a reasonable basis or acted with reckless disregard as to whether such a basis existed.” [DE 19 at 519]. Faith states that a juror could find this because of an email where “a claim supervisor purposefully deferred to her boss so she would not be responsible when the trial turned out how it did for their insured, ” and discusses the conclusions her expert has reached. [DE 19 at 519-23].

Faith argues that the standard for KUCSPA claims is “intentional misconduct or reckless disregard of...