United States District Court, E.D. Kentucky, Northern Division, Ashland
MEMORANDUM OPINION AND ORDER
DAVID L. BUNNING, District Judge.
Defendant State Farm Automobile Insurance Company ("State Farm") moves for a ruling on the issue of choice of law with respect to Plaintiff Philippe Georgel's ("Georgel") claim for underinsured motorist ("UIM") benefits. For purposes of Kentucky's choice of law rules, State Farm categorizes Georgel's claim as a contract dispute, and therefore argues that West Virginia law should control pursuant to a choice of law provision contained within the policy itself. If this provision is found not to apply, State Farm argues in the alternative that the most significant relationship test should be used, and that West Virginia law should also govern on that basis. The Court has diversity jurisdiction over this matter pursuant to 28 U.S.C. § 1332.
II. Factual and Procedural Background
The relevant facts of this case are straightforward and undisputed. On August 12, 2012, Georgel was riding his motorcycle along Kentucky Route 32, near Louisa, Kentucky, when he was involved in an accident with former Defendant Waynwright Preece ("Preece"). (Doc. # 1 at 2, ¶ 5-8). Preece, a citizen of Kentucky, allegedly turned left from the shoulder lane and "failed to yield the right-of-way" just as Georgel was attempting to pass Preece's pickup truck from behind. ( Id. ) As a result, Georgel "was forced to lay his bike down thereby sustaining severe and permanent physical injuries." ( Id. )
Prior to the accident, Georgel's motorcycle was garaged and maintained in West Virginia (Doc. # 84 at 2), where Georgel resided (Doc # 1 at 1, ¶1). The motorcycle was insured by a policy from State Farm, which Georgel also purchased in West Virginia. (Doc. # 84 at 2). The State Farm policy offers UIM benefits, providing specifically that "[State Farm] will pay compensatory damages for bodily injury and property damage an insured is legally entitled to collect from the owner or driver of an underinsured motor vehicle." (Doc. # 83-1 at 10) (emphasis added).
Georgel filed this lawsuit on May 2, 2013, alleging Preece was at fault and seeking damages for the injuries he sustained during the accident. (Doc. # 1 at 2-4, ¶ 8-14). Georgel and Preece eventually resolved their claim, and Preece was dismissed from the action on February 6, 2014. (Doc. # 58). However, because Preece's pickup truck was underinsured, Georgel also named State Farm as a defendant, claiming that "[State Farm] is contractually obligated to compensate the Plaintiff for all damages he is legally entitled to recover under the underinsured provisions set forth in the policy of insurance." (Doc. # 1 at 3, ¶ 12).
Among its numerous defenses, State Farm maintains that Georgel cannot recover UIM benefits because his own comparative fault would preclude judgment against Preece. (Doc. # 7 at 4); (Doc. # 84 at 4-5). In other words, if Georgel is not "legally entitled" to recover from the underinsured driver, he is likewise not entitled to receive UIM benefits based on State Farm's policy. Of course, the likely success of this argument is much greater under West Virginia law, which embraces the doctrine of modified comparative negligence, and thus bars recovery for a plaintiff who is fifty (50) percent responsible, or more, for his own damages. Accordingly, State Farm filed the instant motion, seeking a ruling from this Court regarding the issue of choice of law, and requesting specifically that the law of West Virginia be used to decide Georgel's claim. (Doc. # 83 at 1).
1. Applicable Law
"Under the long-standing Erie doctrine, in actions brought in federal court invoking diversity jurisdiction, a court must apply the same substantive law as would have been applied if the action had been brought in a state court of the jurisdiction where the federal court is located." Corrigan v. U.S. Steel Corp., 478 F.3d 718, 723 (6th Cir. 2007). Thus, when choice of law is at issue, "[a] federal court exercising diversity jurisdiction applies the choice of law rules of the state in which it sits." Standard Fire Ins. Co. v. Ford Motor Co., 723 F.3d 690, 692 (6th Cir. 2013) (citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941)). In other words, "a federal court in a diversity action is obligated to apply the law it believes the highest court of the state would apply if it were faced with the [same] issue." Id. (citation omitted). Accordingly, Kentucky's choice of law rules will be applied in resolving this motion.
2. The Conflict of Law
A choice of law analysis is required only when the law of two states would dispose of the same issue differently. See Asher v. Unarco Material Handling, Inc., 737 F.Supp.2d 662, 667 (E.D. Ky. 2010). In this case, the conflict of law arises from a section of the policy entitled "Underinsured Motor Vehicle Coverage." (Doc. # 83-1 at 10). Within that section, in the first sentence of the paragraph immediately below the heading "Insuring Agreement, " the policy states, "[State Farm] will pay compensatory damages for bodily injury and property damage an insured is legally entitled to collect from the owner or driver of an underinsured motor vehicle." ( Id. ) (emphasis added). In effect, the term "legally entitled" acts as a condition to receiving UIM benefits. And, as both parties have recognized, Georgel's ability to satisfy this condition depends largely upon which state's comparative negligence doctrine controls
Comparative negligence differs from the traditional concept of contributory negligence in that, under the former, a plaintiff may recover damages despite having been assigned a percentage of the overall fault. See Kentucky Farm Bureau Mut. Ins. Co. v. Ryan, 177 S.W.3d 797, 802 (Ky. 2005). West Virginia applies the doctrine of "modified" comparative negligence. Everly v. Columbia Gas of West Virginia, Inc., 301 S.E.2d 165, 166 (W.Va. 1982). Under this approach, a plaintiff may recover "so long as his negligence or fault does not equal or exceed the combined negligence or fault of the other parties involved in the accident." Id. (quoting Bradley v. Appalachian Power Co., 256 S.E.2d 879, 885 (W.Va. 1979)). By contrast, Kentucky has adopted a scheme of "pure" comparative negligence, meaning "liability for any particular injury [is determined] in direct proportion to fault." Kentucky Farm Bureau, 177 S.W.3d at 803. Thus, unlike in West Virginia, a Kentucky ...