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Hill v. Peoples, Inc.

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

March 8, 2018



          Joseph H. McKinley, Jr., Chief Judge

         This matter is before the Court on a motion by Defendants, Peoples, Inc. and Peoples Home Lending Co., d/b/a Banking Unusual (hereinafter “Peoples”) to dismiss [DN 6]. Fully briefed, this matter is ripe for decision.

         I. BACKGROUND

         Plaintiff, Aaron Hill, received and accepted an offer of employment from Peoples on January 15, 2012. The Employment Agreement between Hill and Peoples contained an indemnification clause which provided:

Indemnification. As long as Hill is engaged by Company, Company will hold harmless and indemnify Hill from any and all claims, administrative proceedings, actions or causes of action arising from the proper performance of Hill's duties as described herein; provided, however, that this indemnification shall not apply to claims and proceedings arising from Hill's intentional violation of applicable Company procedures or policies, laws or regulations. In the event that Company has borne the costs of defense, incurred attorney's fees and other expenses, settlement costs or Judgments incident to its obligation hereunder, (“Employment Litigation Expenses”) and . . . (2) such Employment Litigation Expenses are related to claims against Company or any affiliate of Company by any prior employer or affiliate of a prior employer of Hill, Hill shall reimburse Company for all Employment Litigation Expenses incurred by Company in the defense of such claims or proceedings.

(Employment Agreement ¶9.)

         Prior to his employment with Peoples, Hill worked at CMCO Mortgage, LLC. In February of 2012, CMCO filed suit in Jefferson Circuit Court against Peoples, Hill, and two former CMCO employees working at Peoples. CMCO alleged the following claims against Hill and Peoples: interference with business advantage, unfair competition, usurpation of business opportunities, unjust enrichment, trade secret misappropriation, and conversion of confidential information. (Complaint at ¶ 30.) Additionally, CMCO asserted claims for breach of contract and breach of fiduciary duties against Hill individually. Hill asserted counterclaims against CMCO for breach of contract, breach of fiduciary duty, negligent misrepresentation, fraudulent misrepresentation, promissory estoppel, abuse of process, common law and contractual indemnity, tortious interference, unjust enrichment, conversion, usurpation of business opportunities, breach of duty of good faith and fair dealing, disgorgement of profits, and punitive damages. (Id. at ¶ 31.)

         In March of 2013, Peoples terminated Hill. In July 2013, CMCO settled the litigation with Peoples and all other defendants except Hill and another former CMCO employee. After Peoples' settlement, Peoples informed Hill that it would no longer pay for his representation. Hill opted to continue the litigation pro se. (Id. at ¶¶33, 34.) Hill failed to appear at the pretrial conference or trial. On October 2, 2014, a judgment was entered against Hill in the amount of $ 3.4 million dollars.

         On August 14, 2017, Hill filed the current lawsuit seeking indemnity for the judgment rendered against him in favor of CMCO. Hill also asserts claims for implied indemnity, comparative indemnity, equitable indemnity, and contribution. Defendants filed this motion to dismiss arguing that Plaintiff failed to state a claim upon which relief can be granted. Specifically, Defendants argue that (1) the Employment Agreement between Hill and Peoples limited any obligation to indemnify Hill to the period that Peoples employed Hill; (2) under Kentucky law, implied indemnity, comparative indemnity, and equitable indemnity do not exist; (3) Hill's claim of contribution is prohibited under Kentucky law; and (4) the bankruptcy trustee has exclusive authority to commence actions related to the bankruptcy estate.


         Upon a motion to dismiss for failure to state a claim pursuant to Fed.R.Civ.P. 12(b)(6), a court “must construe the complaint in the light most favorable to plaintiff, ” League of United Latin Am. Citizens v. Bredesen, 500 F.3d 523, 527 (6th Cir. 2007) (citation omitted), “accept all well-pled factual allegations as true[, ]” id., and determine whether the “complaint states a plausible claim for relief[, ]” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). Under this standard, the plaintiff must provide the grounds for his or her entitlement to relief which “requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). A plaintiff satisfies this standard only when he or she “pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. A complaint falls short if it pleads facts “merely consistent with a defendant's liability” or if the alleged facts do not “permit the court to infer more than the mere possibility of misconduct.” Id. at 678, 679. Instead, the allegations must “‘show[ ] that the pleader is entitled to relief.'” Id. at 679 (quoting Fed.R.Civ.P. 8(a)(2)).


         A. Contractual Indemnity

         Hill alleges that pursuant to the Employment Agreement, Peoples is obligated to indemnify him “in the full amount of the judgment, including post-judgment interest, costs, fees and expenses incurred in defending CMCO's Complaint . . . .” (Complaint ¶ 53.) The issues raised by the Defendants' motion to dismiss with ...

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