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Powell v. Cherokee Ins. Co.

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

January 24, 2013

Ramona POWELL, Plaintiff

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M. Austin Mehr, Philip G. Fairbanks, Mehr Trial Lawyers, PLLC, Lexington, KY, for Plaintiff.

Elizabeth J. Winchell, Michael E. Hammond, Landrum & Shouse, LLP, Lexington, KY, for Defendant.


THOMAS B. RUSSELL, Senior District Judge.

This matter is before the Court upon Defendant Cherokee Insurance Company's (Cherokee) " Supplemental Brief in Support of Summary Judgment." (Docket No. 99.) In its previous Memorandum Opinion and contemporaneous Order entered on June 1, 2011, the Court granted summary judgment in favor of Defendants Cherokee and Durarock Reinsurance, Ltd.[1] (Docket Nos. 83; 84.) Plaintiff Ramona Powell moved the Court to reconsider that ruling, and the Court subsequently denied her motion in a written Order entered December 2, 2011. (Docket No. 91.) Powell then appealed. ( See Docket No. 92.) But after the parties had fully briefed

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the issues on appeal, the Sixth Circuit decided Phelps v. State Farm Mutual Auto. Ins. Co., 680 F.3d 725 (6th Cir.) (2-1 decision), rehearing and rehearing en banc denied, (2012). Finding Phelps may be instructive, the Sixth Circuit vacated this Court's prior judgment and remanded this action for reconsideration in light of Phelps. ( See Docket Nos. 95; 96.) The Court accordingly ordered the parties to brief their respective arguments in light of Phelps to assist its reconsideration. (Docket No. 97.) Cherokee then filed the instant " Supplemental Brief in Support of Summary Judgment," to which Powell responded, (Docket No. 102), and Cherokee then replied, (Docket No. 103). Fully briefed, this matter is now ripe for reconsideration. For the reasons that follow, the Court again will GRANT Cherokee summary judgment.


The facts surrounding this matter are largely undisputed and are set forth more fully in the Court's prior Memorandum Opinion at Docket No. 83. Still, a brief recitation of the pertinent facts is in order.

This is a third-party bad faith claim brought under the Kentucky Unfair Claims Settlement Practices Act (UCSPA), Ky.Rev.Stat. ยง 304.12-230. Underlying this case is an automobile accident between Powell and Doid Young on November 27, 2004. At the time of the accident, Young was employed by Morristown Drivers Services, Inc. (Morristown), which was insured by Cherokee. After the accident, Cherokee hired a local, independent claims adjuster, Denis Clement, to handle a portion of Powell's claim. Christopher Henness, another adjuster, was also assigned to her claim.

Cherokee paid Powell's property damage claim within three weeks of the accident. By February 2005, Powell had hired attorney Gary Schaaf, who had begun corresponding with Clement and attorney Mike Moore, counsel for Morristown and Young. On February 28, 2005, Clement sent the first of several letters requesting copies of the medical files and reports documenting Powell's injuries. Schaaf responded that these items would be forthcoming once Powell reached " maximum medical improvement," and stated he would forward the requested information to Cherokee when it became available along with a settlement demand. (Docket No. 34-3; see also Docket No. 39-2.) Between then and September 18, 2006, back-and-forth correspondence continued between Clement and Schaaf, during which Powell provided minimal information on her injuries. ( See Docket No. 34-3, at 2.)

On November 17, 2006, Powell filed suit against Morristown and Young. Cherokee propounded its first set of interrogatories on Powell on December 14, 2006, requesting a variety of information, including the names of medical providers, medical bills, tax returns, and other information pertaining to Powell's alleged damages. Powell did not answer these interrogatories until May 2008, some seventeen months later. Her completed interrogatories alleged damages exceeding $1,200,000. As the Court previously noted, although Powell claimed $190,000 in lost wages and future impairment of income, the only evidence offered in support of this claim was a sole W-2 from 2003,[2] Powell's own assertion that her weekly salary was $156 per week, and notes from doctors that she temporarily could not work. At that time, Powell

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also supplied over 1300 pages of medical reports, which primarily detailed the injuries she sustained from the accident.

After receiving Powell's responses, correspondence between attorney Moore and Cherokee reflects Moore's position that Powell needed to be deposed to better assess her damages claim, specifically writing he " need[ed] to see and speak with the Plaintiff before [he could] get a feel for the value of the case." (Docket No. 34-4.) Moore's correspondence also reflects difficulties with tracking down and obtaining information from Young, the other driver. ( See Docket No. 34-4.) According to the " Hot Print" case notes kept by attorney Schaaf, he and Moore were in contact throughout the remainder of 2008 on a regular, if not weekly, basis. ( See Docket No. 99-1, at 1-4.) Schaaf's notes reflect that as of June 2008, Moore wanted to take Powell's deposition, " but is not in a position to aske [sic] [to take her deposition] yet," because he could not locate Young and reciprocate on Schaaf's desire to depose Young. (Docket No. 99-1, at 2.) Schaaf's notes then show one month later that Moore had " located and obtained answers from Doid Young and is in the process of getting those to us." (Docket No. 99-1, at 2.) And as of August 11, 2008, Schaaf's notes indicate that he and Moore had begun discussing dates to depose Powell. (Docket No. 99-1, at 2.) This back and forth continued through February 2009 with Schaaf and Moore working to schedule Powell's deposition, which eventually took place on March 11, 2009. ( See Docket No. 99-1, at 2-6.)

Powell thereafter tendered her first settlement offer to Moore on May 19, 2009, stating " the time is ripe to either set this for trial or settle it." (Docket No. 34-5.) In her May 19 letter, Powell offered to settle her claim for $475,000, advising that the offer would remain open through June 19, 2009. (Docket No. 34-5.) Schaaf next spoke to Moore on or about June 15. [3] (Docket No. 34-6.) According to his notes, Schaaf was agreeable to mediation and told Moore: " [I]t might be beneficial to receive a good faith offer sometime [before] the mediation. I told him it is not necessary, but is sometimes helpful." (Docket No. 34-6.) Mediation was scheduled for September 16, 2009, and the claim settled at that time for $325,000.

This bad faith claim followed on November 13, 2009. In essence, Powell alleges Cherokee's refusal to settle after she returned the interrogatories in May 2008 constituted bad faith because Cherokee possessed the necessary information at that time to evaluate her claim. Specifically, she posits that the sixteen months between her disclosures and settlement amounts to an unreasonable delay. Powell also criticizes Cherokee's practices with regard to claims handling and educating, training, and evaluating its adjusters. In furtherance of her position, Powell hired an expert, Kevin Quinley, who offered an expert report and testimony in support of her bad faith claims.

In accordance with the Sixth Circuit's mandate, the Court now revisits Cherokee's Motion for Summary Judgment in light of Phelps.


Summary judgment is appropriate where " the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. ...

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