United States District Court, W.D. Kentucky, Bowling Green Division
MEMORANDUM OPINION AND ORDER
N. Stivers, Judge United States District Court
matter is before the Court on Plaintiff's Renewed Motion
for Summary Judgment (DN 45), Defendant's Cross-Motion
for Summary Judgment (DN 56), and Defendant's Motion to
Strike Plaintiff's Renewed Motion for Summary Judgment
(DN 57). For the reasons outlined below, Plaintiff's
motion is GRANTED, and Defendant's
motions are DENIED.
STATEMENT OF FACTS AND CLAIMS
23, 2008, Plaintiff Christopher Boling (“Boling”)
suffered severe burns when vapors escaping from a gas can
ignited upon coming into contact with a hot metal eye bolt.
(Am. Compl. ¶¶ 9-11, DN 7). As a result of his
injuries, Boling and his then-wife filed suit against the gas
can manufacturer, Blitz USA (“Blitz”), in this
Court (Boling v. Blitz USA, Inc., Civil Action No.
1:09-CV-00067-JHM-ERG). During the course of their litigation
against Blitz, the Bolings entered into a series of
agreements (collectively “Agreements”) with
Prospect Funding Holdings, LLC (“Prospect”) and
Cambridge Management Group, LLC
(“CMG”) to borrow monies secured by Boling's
prospective recovery from Blitz. (Compl. Exs. A-D, DN 1-1 to
1-4). The terms of the Agreements are summarized as follows:
Amount & Fees
$10, 000.00 plus fees of $1, 275.00 plus additional
$5, 000.00 plus fees of $825.00 plus additional costs
$5, 000.00 plus fees of $1, 025.00 plus additional
$10, 000.00 plus fees of $1, 800.00 plus additional
(Am. Compl. ¶¶ 14-31; Compl. Exs. A-D, DN 1 to
1-4). By their terms, the loans were to accrue interest at a rate of 4.99%
(Compl. Exs. A-D, DN 1 to 1-4).
19, 2014, Boling filed this lawsuit against Prospect seeking
a declaratory judgment that the Agreements are to be
interpreted by and deemed unenforceable under Kentucky law.
(Compl. ¶¶ 43, 45, DN 1). Subsequently, on
September 4, 2014, Prospect filed suit against the Bolings in
the Superior Court of New Jersey, Chancery Division, which
Boling removed to the U.S. District Court for the District of
New Jersey. Both cases have since been consolidated in this
Court. (Order, DN 35).
September 25, 2015, the Court granted Boling's motion for
partial summary judgment, and denied Prospect's motion to
dismiss. (Mem. Op. & Order, DN 31). In granting
Boling's motion, the Court held that this Court was a
proper forum to hear the dispute and that Kentucky law would
apply in addressing the enforceability of the Agreements.
(Mem. Op. & Order 10-14). Following some discovery, both
parties have filed the present motions.
Court has subject-matter jurisdiction of this matter based
upon diversity jurisdiction. See 28 U.S.C. §
STANDARD OF REVIEW
ruling on a motion for summary judgment, the Court must
determine whether there is any genuine issue of material fact
that would preclude entry of judgment for the moving party as
a matter of law. See Fed. R. Civ. P. 56(a). The
moving party bears the initial burden of stating the basis
for the motion and identifying evidence in the record that
demonstrates an absence of a genuine issue of material fact.
See Celotex Corp. v. Catrett, 477 U.S. 317, 322
(1986). If the moving party satisfies its burden, the
non-moving party must then produce specific evidence proving
the existence of a genuine issue of fact for trial. See
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48
the Court must view the evidence in the light most favorable
to the non-moving party, the non-moving party must do more
than merely show the existence of some “metaphysical
doubt as to the material facts.” Matsushita Elec.
Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586
(1986) (citation omitted). Rather, the non-moving party must
present specific facts proving that a genuine factual issue
exists by “citing to particular parts of the materials
in the record” or by “showing that the materials
cited do not establish the absence . . . of a genuine
dispute.” Fed.R.Civ.P. 56(c)(1). “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].” Anderson , 477 U.S.
Plaintiff's Renewed Motion for Partial Summary
renewed motion, Boling seeks partial summary judgment
challenging the validity of the Agreements on two bases. He
argues that the Agreements: (i) violate Kentucky's
prohibition on champerty and are void; and (ii) contain an
interest rate that is usurious. (Pl.'s Mem. Supp. Mot.
Summ. J. 2-17, DN 45-1).
diversity actions, federal courts generally must apply state
law in accordance with the decisions of the state's
highest court. See Ziegler v. IBP Hog Market, Inc.,
249 F.3d 509, 517 (6th Cir. 2003) (internal citations
omitted). In the present case, neither party has identified
any specific pronouncement by Kentucky's highest court
addressing whether agreements granting security interests in
prospective tort claims would be enforceable under Kentucky
evaluating an undecided question of Kentucky law, a federal
court sitting in diversity must make “the best
prediction, even in the absence of direct state precedent, of
what the Kentucky Supreme Court would do if it were
confronted with [the] question.” Combs v. Int'l
Ins. Co., 354 F.3d 568, 577 (6th Cir. 2004) (quoting
Managed Healthcare Assocs., Inc., v. Kethan, 209
F.3d 923, 927 (6th Cir. 2000)). In doing so, the Court looks
to “the decisions (or dicta) of the Kentucky Supreme
Court in analogous cases, pronouncements from other Kentucky
courts, restatements of law, commentaries, and decisions from
other jurisdictions.” State Auto Prop.
& Cas. Ins. Co. v. Hargis, 785 F.3d 189, 195 (6th
Cir. 2015) (internal citations omitted). Federal courts
“must proceed with caution” when making such
predictions. Combs, 354 F.3d at 577 (internal
courts have long recognized the common law doctrine of
champerty. See Roberts v. Yancey, 21 S.W.
1047, 1047 (Ky. 1893). As Kentucky's highest court has
At common law champerty is defined to be a bargain by the
terms of which a person having otherwise no interest in the
subject matter of an action undertakes to carry on the suit
at his own expense or to aid in so doing in consideration of
receiving, in the event of success, some part of the ...