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Jones v. Sedgwick Claims Management Services, Inc.

United States District Court, E.D. Kentucky, Northern Division, Covington

June 27, 2017



          David L. Banning United States District Judge.


         Defendant Family Dollar, Inc. (“Family Dollar”) moves to dismiss Plaintiff Katherine Jones's Complaint, arguing that she has failed to state claims upon which relief can be granted. (Doc. # 6). Specifically, Family Dollar contends that Plaintiff's tort claim is barred by the statute of limitations and that Kentucky law does not support Plaintiff's bad-faith claim. The Motion to Dismiss is fully briefed (Docs. # 8 and 9) and ripe for review. The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1332.


         On June 15, 2015, Plaintiff slipped and fell at Family Dollar in Florence, Kentucky. (Doc # 1-1 at 2). Plaintiff alleges that her fall was caused by Family Dollar's failure to clean up or caution customers about the wet floor. Id. Plaintiff claims that on the day of the fall, a Family Dollar employee took her information and that the manager on duty filed a claim regarding the incident with Sedgwick, who Plaintiff alleges insures Family Dollar. Id. at 3. Since June 15, 2015, Plaintiff claims that she has made diligent efforts to follow up on the claim, including multiple attempts to reach Sedgwick by phone, mail, and email. Id. Plaintiff alleges that her matter was passed to at least three different claims agents, that her messages went unreturned, and that her requests for supervisor contact information were disregarded. Id. Plaintiff claims that she injured both her wrist and back during the fall, and that she incurred and is still incurring medical bills due to complications from her injuries. Id.

         On March 2, 2017, Plaintiff filed the instant action in Boone County Circuit Court, asserting claims for premises liability and bad faith against Family Dollar and Sedgwick (collectively “Defendants”). (Doc. # 1-1 at 2-3). Specifically, Plaintiff claims that Family Dollar had a duty to exercise reasonable care to protect Plaintiff when she was on Family Dollar's premises, and that Family Dollar breached that duty. Id. at 4. Plaintiff's bad-faith claim arises out of the Unfair Claims Settlement Practices Act (“UCSPA”). Ky. Rev. Stat. Ann. § 304.12-230.[1] Plaintiff claims that both Family Dollar and Sedgwick had an obligation “to investigate and resolve Plaintiff's claim in a timely and thorough manner” and that “Defendants have failed to meet this obligation through delay, obfuscation, and failure to communicate with the Plaintiff in a timely manner regarding her claim.”[2] (Doc. 1-1 at 4).

         On March 24, 2017, Sedgwick, with the consent of Family Dollar, removed this action to federal court pursuant to 28 U.S.C. § 1441(a). (Doc. # 1). On March 25, 2017, Family Dollar moved to dismiss Plaintiff's Complaint. (Doc. # 6). Family Dollar claims that Plaintiff has failed to state a claim upon which relief can be granted for two reasons: (1) the statute of limitations bars Plaintiff's premises-liability claim, and (2) Kentucky law prohibits bad-faith claims under the UCSPA against an entity, like Family Dollar, who is not engaging in the business of entering into contracts of insurance. (Doc. # 6-1 at 4-6).

         III. ANALYSIS

         A. Standard of Review

         To survive a Rule 12(b)(6) Motion to Dismiss, “a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly v. Bell Atl. Corp., 550 U.S. 544, 570 (2007)). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. “[A] formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 55. While the court must accept all allegations contained in the complaint as true, the court need not accept “as true unwarranted factual inferences, or legal conclusions unsupported by well-pleaded facts.” Terry v. Tyson Farms, Inc., 604 F.3d 272, 276 (6th Cir. 2010).

         B. Choice of Law

         Before considering the issues raised in Family Dollar's Motion to Dismiss, the Court must determine which State's law governs. As a federal court sitting in diversity, this Court must apply the choice-of-law rules of the forum state. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941). Therefore, Kentucky choice-of-law rules govern. Kentucky courts strongly favor Kentucky law and apply “Kentucky substantive law whenever possible.” Harris Corp. v. Comair, Inc., 712 F.2d 1069, 1071 (6th Cir. 1983). The first step in the choice-of-law analysis is to identify the substantive area of law from which the instant claim arises. See Petro v. Jones, No. 6:11-CV-00151-GFVT, 2013 WL 756756, at *7 (E.D. Ky. Feb. 27, 2013) (citing Miller Truck Lines, LLC v. Cent. Refrigerated Serv., Inc., 781 F.Supp.2d 488, 491 (W.D. Ky. 2011)). If the claim sounds in tort, the Court applies the significant contact test, which requires a court to apply Kentucky law “if there are significant contacts-not necessarily the most significant contacts-with Kentucky.” Foster v. Leggett, 484 S.W.2d 827, 829 (Ky. 1972); see also Saleba v. Schrand, 300 S.W.3d 177, 181 (Ky. 2009).

         Although the parties do not address the choice-of-law issue in their briefs, they apparently all believe that Kentucky law applies, and the Court agrees.[3] In tort actions, “the occurrence of an accident in Kentucky is, by itself, sufficient” to meet the significant contact test and justify the application of Kentucky law. Harris, 712 F.2d at 1071. Here, the significant contact test is satisfied. Plaintiff's accident, which gave rise to the instant action, occurred in Florence, Kentucky, and the Complaint states that all events mentioned occurred in Kentucky. (Doc # 1-1 at 2). Accordingly, the strong preference for applying Kentucky law and the existence of significant contacts with Kentucky, dictate that Kentucky law governs this dispute.

         C. ...

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