United States District Court, E.D. Kentucky, Southern Division
THOMAS W. HILL, Plaintiff,
STATE FARM MUTUAL AUTOMOBILE INSURANCE CO., Defendant
For Thomas W. Hill, Plaintiff: Graham C. Trimble, LEAD ATTORNEY, Law Offices of Howard O. Mann, Corbin, KY; Howard O. Mann, Corbin, KY.
For State Farm Mutual Automobile Insurance Company, Defendant: Darrin Winn Banks, LEAD ATTORNEY, Porter, Schmitt, Banks & Baldwin, Paintsville, KY.
Gregory F. Van Tatenhove, United States District Judge.
MEMORANDUM OPINION & ORDER
In November of 2007, Thomas W. Hill and Tiffany Farmer were involved in an automobile accident on Kentucky Highway 3041 in Knox County, Kentucky. State Farm Mutual Automobile Insurance Company insures both. State Farm and Hill agree that the insurance policy puts a time limit on bringing certain legal claims. Since that time expired before the Complaint was filed in this case, State Farm believes that Summary Judgment is in order. It is correct, and for the reasons that follow, State Farm's Motion for Summary Judgment [R. 31] will be GRANTED.
This matter was trifurcated into three distinct actions consisting of a declaratory judgment action concerning the application of the contractual limitation period contained in the underinsured motorist policy; an underinsured motorist policy claim (UIM claim); and a bad faith claim. [R. 10, at 1.] State Farm's pending motion pertains only to the declaratory judgment action and the UIM claim. [R. 31-1, at 2.]
After the accident, Hill filed a bodily liability injury claim against Farmer under her insurance policy. [ Id. ] State Farm Claim Representative Travis Millsaps managed that claim. [ Id. ] Hill also opened a personal injury claim (PIP claim) under his own State Farm policy. [R. 31-1, at 3.] He received payments from this claim through January 30, 2008.
On August 31, 2009, Hill filed a civil suit against Farmer in Whitley County Circuit Court, [R. 1-1] and on September 10, 2009, Dwight Dunn, who had taken over management of the liability claim from Millsaps, requested a 90-day extension to answer the Complaint against Farmer. [R. 31-1, at 4; R. 31-10.] Graham Trimble, counsel for Hill, agreed to Dunn's request. [R. 31-11.] During the discussions leading up to the granting of the extension agreement, it was contemplated that Hill would be allowed to submit a joint demand package on both the liability and UIM claim within the same 90-day period. [R. 30, at 13-20; R. 34, at 4.]
On December 15, 2009, another 90-day extension was agreed to by both parties allowing Hill more time to submit his joint demand package and allowing State Farm more time to answer the Complaint. [R. 31-1, at 6; R. 33, at 15-16.] Significantly, it is this extension that exceeds the deadline presently in dispute. On February 18, 2010, the demand package was submitted and Hill sought the full amount of liability
coverage ($25,000) provided under Farmer's policy and the full amount of UIM coverage ($50,000.00) provided under his own policy. [R. 33, at 4.] On March 3, 2010, State Farm offered the full $25,000.00 available under Farmer's policy, [R. 33, at 4] but a month later, Mark Blasingim, who was assigned management of the UIM claim, informed Hill that his UIM demand had been denied. [R. 31-1, at 3, 8; R. 33, at 4.] According to State Farm, the claim was denied because of the expiration of the limitations period that ended on January 30, 2010. [R. 31-1, at 3.] Two days later, Hill filed an Amended Complaint in Knox Circuit Court adding State Farm as a party because of the denial of UIM benefits. [ Id.; R. 1-1, at 4.]
On April 7, Hill filed his First Amended Complaint, and under Count II states that he is entitled to a declaratory judgment pursuant to K.R.S. § 418.040 et seq. He requests a declaration " that the subject policy was in effect on the date at the time of the subject accident and that the Plaintiff's entitled to uninsured motorists coverage, underinsured, and other applicable coverages under said policy." [R. 1-1, at 8.] After the $25,000.00 available under Farmer's police was paid to Hill, Farmer was dismissed and in August of 2010, this case was remanded to federal court. Upon Farmer's dismissal, there was complete diversity between the remaining parties, State Farm and Hill. State Farm now wants the Court to find that Hill's UIM claim is time barred based on the limitations provision within the policy it issued to him.
Hill requests declaratory judgment pursuant to KRS § 418.040 as to the extent of coverage he receives under the UIM policy. KRS § 418.040 provides that " [i]n any action in a court of record of this Commonwealth having general jurisdiction wherein it is made to appear that an actual controversy exists, the plaintiff may ask for a declaration of rights ... and the court may make a binding declaration of rights." A similar procedural rule exists in federal court and is referred to as the Declaratory Judgment Act, 28 U.S.C. § 2201(a). It states, in relevant part, that upon the filing of an appropriate pleading, a district court " may declare rights and other legal relations of any interested party." 28 U.S.C. § 2201(a). Under this rubric, district courts should consider five factors in deciding whether to exercise jurisdiction over a declaratory judgment action. Nationwide Mut.Fire Ins. Co. v. Creech, 431 F.Supp.2d 710, 712-13 (E.D. Ky. 2006).
This analysis, however, need not be undertaken if State Farm is entitled to summary judgment. To state it more plainly, if the Court finds that the limitations deadline within the insurance policy does apply and precludes Hill from asserting his UIM claim, then there is no reason to entertain declaratory judgment under state or federal law. Thus, summary judgment is appropriate where " the pleadings, 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. 56(c)(2); Celotex Corp. v. Catrett, 477 U.S. 317, 323-25, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). " A genuine dispute exists on a material fact, and thus summary judgment is improper, if the evidence shows 'that a reasonable jury could return a verdict for the nonmoving party.'" Olinger v. Corp. of the President of the Church, 521 F.Supp.2d 577, 582 (E.D. Ky. 2007) (quoting Anderson ...