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Auto Club Property-Casualty Insurance Co. v. Denton

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

July 22, 2015

AUTO CLUB PROPERTY-CASUALTY INSURANCE COMPANY, PLAINTIFF,
v.
RICHARD DENTON, REBECCA HUTSELL, PATSY BASHAM, and E.B., a minor, DEFENDANTS

MEMORANDUM OPINION AND ORDER

JOSEPH H. McKINLEY, Jr., District Judge.

This matter is before the Court on a motion to dismiss this declaratory judgment action for lack of subject matter jurisdiction by Defendants Patsy Basham and E.B., a minor child [DN 8]. Fully briefed, this matter is ripe for decision. For the following reasons, the Motion to Dismiss is GRANTED.

I. BACKGROUND

On July 9, 2014, Defendants Patsy Basham and E.B., a minor, ("the Bashams") filed a complaint against Defendants Richard Denton ("Denton") and Rebecca Hutsell ("Hutsell") in Webster Circuit Court, alleging various state-law claims. All of the claims arose from an incident on July 10, 2013. According to the state court complaint, Hutsell had been visiting Basham at Basham's apartment on July 10, 2013. (State Compl. [DN 1-3] ¶ 6.) The complaint alleges that Hutsell, upon leaving the apartment and entering the parking lot, "became engaged in a verbal altercation with [E.B.], " Basham's autistic minor daughter. (Id. ¶ 7.) At some point during the altercation, Hutsell entered and started the pick-up truck she had driven to the apartment. The truck was owned by Denton, Hutsell's father. (Id. ¶ 8.) Thereafter the altercation between Hutsell and E.B. escalated, and "Hutsell leaned her head and torso from the pick-up truck's window, grabbed up [E.B.] and began choking and pulling the hair of [E.B.]." (Id. ¶ 9.) Upon witnessing the incident from a window of her apartment, Basham "fled to the parking lot to rescue [E.B.] from" Hutsell. (Id. ¶ 10.) The complaint alleges that "Hutsell accelerated the pick-up truck while holding on to [E.B.] and while [Basham] attempted to free her daughter from [Hutsell]'s grasp" and that, in so accelerating, Hutsell ran over Basham's foot. (Id. ¶ 11.) According to the complaint, Hutsell then fled the scene, running over Basham's foot a second time, and left Basham and E.B. injured. (Id. ¶ 12.) The complaint also alleged that "[o]n information and belief, Defendant Hutsell was under the influence of prescribed and/or illicit drugs at the time [of the alleged events], which affected her ability to safely and properly operate the Dodge Ram vehicle." (Id. ¶ 13.)

Based on this incident of July 10, 2013, the Bashams asserted five state-law tort claims in the state court action. Against Hutsell, Basham asserted a claim for negligence (Count I) and E.B. asserted claims for battery (Count II), negligent infliction of emotional distress (Count III), and loss of consortium and services (Count IV). Against Denton, the Bashams asserted a claim for negligent entrustment (Count V). Count II, E.B.'s claim against Hutsell for battery, additionally asserts a claim for punitive damages. (State Compl. [DN 1-3] ¶ 22 ("The foregoing actions were intentional, willful and wanton and done toward [E.B.] with sufficient malice and oppression to warrant the imposition of punitive damages against... Hutsell.").)

At the time of the alleged incident, Hutsell was an insured under her father's automobile insurance policy provided by Plaintiff Auto Club Property-Casualty Insurance Company ("Auto Club"). Auto Club is defending Denton and Hutsell in the underlying state court action under a reservation of rights.

On March 3, 2015, Plaintiff Auto Club filed a petition in this Court pursuant to 28 U.S.C. §§ 1332 and 2201, [1] seeking a declaration that it has no duty to defend or indemnify its insureds, Hutsell and Denton, for the incident of July 10, 2013, based on two policy exclusions. First, Auto Club asserts that coverage is barred to the extent that the Bashams' damages exceed the minimum limits of liability under the MVRA as they are expected, intended or should have been reasonably expected. The exclusion states:

To the extent the limits of liability under PART I exceed the minimum limits of liability required by the Kentucky Motor Vehicle Reparations Act, we do not cover liability for:... (g) bodily injury... expected, or intended or which should have reasonably been expected by the insured person, even if the bodily injury... is different from, or greater than, that which is expected or intended;

(Auto Club Policy, Edition 5-13, Part I - Bodily Injury and Property Damage Liability Coverages, Exclusion (4)(g) [DN 1-2] 7.) Second, Auto Club asserts that coverage is barred for E.B.'s claim for punitive damages by the punitive damages exclusion. That exclusion states:

Damages Not Covered. The Liability Coverage does not cover: Punitive damages, exemplary damages or statutorily imposed treble or multiplied damages for which an Insured person is legally liable because of bodily injury or property damage arising out of the ownership, maintenance or use of the insured car.

(Auto Club Policy, Edition 5-13, Part I - Bodily Injury and Property Damage Liability Coverages, Exclusion (1) [DN 1-2] 6.)

On April 2, 2015, the Bashams moved to dismiss this action for lack of subject matter jurisdiction arguing that this Court should decline to exercise jurisdiction over Plaintiff's declaratory judgment claim. Additionally, Defendant Patsy Basham objects that there was insufficient process and insufficient service of process because it does not appear that she has been served with a summons in this action in her individual capacity.[2]

II. STANDARD OF REVIEW

This matter is an action for declaratory relief under the Federal Declaratory Judgment Act, ...


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