United States District Court, E.D. Kentucky, Northern Division, Covington
JESSICA ARNOLD et al. PLAINTIFFS
LIBERTY MUTUAL INSURANCE COMPANY, et al. DEFENDANTS
MEMORANDUM OPINION AND ORDER
L. BUNNING UNITED STATES DISTRICT JUDGE
putative class-action lawsuit, Plaintiffs Jessica and Michael
Arnold claim that when they purchased an automobile-insurance
policy from Safeco Insurance Company of Illinois, they
expected that the policy would cover the full amount of their
auto loan in the event of a total loss of the vehicle.
Specifically, they expected the policy to include coverage
for the “gap” between the actual value of the
vehicle and the amount of Plaintiffs' indebtedness under
their auto loan. Defendants assert that a policy exclusion
precludes coverage for a portion of the auto loan amount
called “negative equity rollover, ” which is
caused when a remaining balance on the insureds' old
vehicle is “rolled over” onto the loan for their
new vehicle. Plaintiffs do not dispute the fact that the
policy exclusion exists, but take issue with the timing in
which it was disclosed by the insurer. Plaintiffs argue that
because the insurer waited to disclose the exclusion until
after the policy had been purchased, Plaintiffs were not sold
the policy they expected and were foreclosed from purchasing
exclusion-free “gap” insurance from the
dealership. Plaintiffs assert twelve (12) causes of action
arising from this central dispute.
matter is now before the Court on three pending motions:
Defendants' joint Motion to Dismiss and for Judgment on
the Pleadings (Doc. # 49); Plaintiffs' Cross-Motion to
Stay (Doc. # 51); and Defendants' Motion for Sanctions
(Doc. # 52). All three motions have been fully briefed and
are now ripe for review. See (Docs. # 50, 53, 54,
55, and 56). For the reasons set forth herein,
Defendants' joint Motion to Dismiss and for Judgment on
the Pleadings (Doc. # 49) is granted;
Plaintiffs' Cross-Motion to Stay (Doc. # 51) is
denied; and Defendant Liberty Mutual's
Motion for Sanctions (Doc. # 52) is denied.
FACTUAL AND PROCEDURAL BACKGROUND
October 30, 2017, Plaintiffs Jessica Arnold and Michael
Arnold (the “Arnolds”), both individually and on
behalf of a class of similarly-situated persons
(“Plaintiffs”), filed a Class Action Complaint in
the Circuit Court of Boone County, Kentucky, against
Defendants Liberty Mutual Insurance Company (“Liberty
Mutual”) and Safeco Insurance Company of America
(“Safeco-America”). (Doc. # 1-4) (noting
Complaint filed in Boone Circuit Court, No. 17-CI-01433).
Plaintiffs filed a First Amended Class Action Complaint on
November 9, 2017. (Doc. # 1-2). On December 4, 2017,
Defendants removed the action to this Court pursuant to the
Class Action Fairness Act of 2005 (“CAFA”),
codified in relevant part at 28 U.S.C. §§ 1332(d)
and 1453. (Doc. # 1).
First Amended Class Action Complaint alleges that, in 2014,
the Arnolds entered into an agreement to trade their 2013
Mazda sedan for a 2014 Toyota Camry at a dealership in
Florence, Kentucky. (Doc. # 1-2 at ¶¶ 27-28). The
dealership determined that the Arnolds' Mazda had $3, 700
in “negative equity, ” but it agreed to subtract
$1, 500 when calculating the amount to be “rolled
over” into the auto loan for the Toyota Camry; the
Arnolds claim this reduced the “negative equity
roll-over” onto the financing for the Toyota Camry to
$2, 200. Id. ¶¶ 29, 31.
the trade-in, the Arnolds purchased an insurance policy from
the Defendants for the Toyota Camry and added guaranteed auto
protection (“GAP”) coverage to the
policy. Id. ¶¶ 27, 34.
Plaintiff Jessica Arnold alleges that she “worked as a
licensed, independent insurance agent for 13 years with Jack
Lillie Insurance Agency” and that “[t]he Agency
had appointments to sell insurance on behalf of several
carriers to include, but not limited to the Defendants,
Safeco and Liberty Mutual.” Id. ¶ 25.
Further, Plaintiff Jessica Arnold alleges that during the
course of her time as an agent, she “routinely sold GAP
insurance to her customers with the understanding that GAP
insurance offered by the Defendants would pay the difference
between the remaining debt on the customer's financing
and the actual cash value of the motor vehicle after being
declared a ‘total loss.'” Id. ¶
26. The Arnolds allege that the dealership offered GAP
insurance, but Plaintiffs declined and decided to buy GAP
coverage through the Defendants “[d]ue to Mrs.
Arnold's experience as an agent and her familiarity with
GAP insurance through Defendants.” Id.
¶¶ 32, 33.
allege that, after purchasing the GAP coverage from
Defendants, an endorsement was mailed to them on September 2,
2015, and received three days later. Id.
¶¶ 64-65. The endorsement contained terms regarding
the GAP insurance coverage and exclusions. Id.
¶¶ 63-66. Regardless of the endorsement's
terms, however, the Arnolds allege that they purchased this
coverage “with the understanding that the Defendants
would cover the difference between the remaining debt on
their financing and the actual cash value [of the Toyota
Camry] if it was ever declared a ‘total loss' due
to damage received in an accident or otherwise.”
Id. ¶ 33.
Arnolds claim that they hit a deer while driving the Toyota
Camry on November 29, 2015. Id. ¶ 35. After
reporting the accident the following day, an adjuster
allegedly inspected the vehicle and declared it a
“total loss.” Id. ¶¶ 36-38.
Plaintiffs allege that Defendants were obligated under the
GAP insurance policy to cover “the difference between
the actual cash value of the automobile and the amount
Plaintiffs owed through a financing agreement when the total
loss occurred because the amount Plaintiffs owed exceeded the
actual cash value.” (Doc. # 1-2 at ¶¶ 150,
159). The Arnolds allege that, at the time of the accident,
the actual cash value of their vehicle was $14, 329.00 and
the amount they owed on the vehicle was $19, 686.04-leaving a
$5, 357.04 “gap” between these two values.
Id. ¶ 57. The Arnolds allege that, after
depreciation, the amount Defendants were obligated to pay
under the GAP policy was $4, 700. Id. ¶¶
Arnolds allege that, in response to their claim, Defendants
asserted the Arnolds were only entitled to $747.04 under the
GAP policy. Id. Defendants allegedly would not pay
for the negative equity that Plaintiffs rolled over from the
Mazda trade-in because the endorsement mailed to Defendants
concerning their GAP coverage under the policy specifically
excluded carry-over balances from previous loans or leases.
Id. ¶¶ 56, 60. The language of the
endorsement provides that:
respect to this coverage, the provisions of the policy apply
unless modified below:
Auto Loan/Lease Coverage
In the event of a total loss to a vehicle shown in the
Declarations for which a specific premium charge indicates
that Auto Loan/Lease Coverage applies, we will pay any unpaid
amount due on the lease or loan for your covered auto less:
1. The amount paid under Part D of the policy; and 2. Any:
a. overdue loan/lease payments at the time of loss;
b. financial penalties imposed under a lease for excessive
use, abnormal wear and tear or high mileage;
c. security deposits not refunded by a lessor;
d. cost for extended warranties, Credit Life Insurance,
Health, Accident or Disability insurance purchased with the
loan or lease; or
e. carry-over balances from previous loans or
(Docs. # 47-1 at 75; 48-1 at 75) (emphasis added).
their pleadings, the Arnolds take issue with the fact that
the endorsement containing the exclusion language for
carry-over balances from a previous loan was not provided to
them at the time that they purchased the policy, but rather
was mailed to them three days later on September 2, 2015.
(Doc. # 1-2 at ¶¶ 65-66). They allege that by
offering GAP insurance to consumers purchasing a vehicle, but
waiting to disclose the exclusions to consumers until after
the purchase of the vehicle and insurance, Defendants
foreclosed the purchasers' opportunity to obtain GAP
insurance elsewhere without such an exclusion. Id.
¶ 10-11 (alleging that “this type of coverage is
only available through the dealership at the time of purchase
and delivery of a motor vehicle.”).
assert that they would not have purchased this GAP insurance
but for the alleged “fraudulent representations and
omissions” by the Defendants. Id. ¶¶
124-25, 193-94. Consequently, Plaintiffs allege that
Defendants' conduct “constitute[s] fraud and runs
contrary to Kentucky Consumer Protection Act, ” Ky.
Rev. Stat. § 367.120, et seq., “and the
Kentucky Unfair and Deceptive Trade Practices Act, ”
Ky. Rev. Stat. § 367.170. Id. ¶ 10.
Plaintiffs “bring this action on behalf of a class of
persons who purchased the GAP insurance policy from the
Defendants.” Id. at ¶ 11. Plaintiffs
propose a national class composed of “[a]ll persons in
the United States who have purchased GAP insurance from
Defendants and have suffered a loss as a result of the
Defendants' unfair, fraudulent, and deceptive practices
and who have fallen victim to the Defendants' unfair
exclusion policy.” Id. ¶ 102.
First Amended Class Action Complaint alleges twelve (12)
causes of action. First, Plaintiffs assert a negligence claim
(Count I) for “fail[ing] to use reasonable care in
communicating the exceptions under the GAP insurance
coverage.” Id. ¶ 114. Second, Plaintiffs
assert a claim for “fraud and misrepresentation”
(Count II) for “willfully fail[ing] to disclose the
exclusions under the GAP insurance policy” until after
the policy had been purchased. Id. ¶ 122.
Third, Plaintiffs assert a violation of the Kentucky Consumer
Protection Act (“KCPA”), Ky. Rev. Stat. §
367.110 et seq. (Count III). Id. ¶
132. Fourth, Plaintiffs assert a civil-conspiracy claim
(Count IV), alleging that Defendants marketed and sold GAP
insurance policies to the Plaintiffs “in furtherance of
the conspiracy to entice their agents to continue selling GAP
insurance, without providing any agent resources advising the
agent of the exclusions, in order for the Defendants to
retain the purchase price and premiums associated with GAP
insurance.” Id. ¶ 138. Fifth, Plaintiffs
assert an unjust-enrichment claim (Count V), asserting that
Defendants “have been unjustly enriched in retaining
the revenues derived from Plaintiffs' and the proposed
class' purchase of the GAP insurance.” Id.
¶ 143. Sixth, Plaintiffs assert a claim of “bait
advertising” (Count VI), asserting that Defendants
offered “GAP insurance coverage through advertising,
but had no intent of ever providing the actual, true coverage
under a GAP insurance policy or endorsement in the case of a
valid claim.” Id. ¶ 153. Seventh,
Plaintiffs assert a claim of breach of contract (Count VII)
for failing to cover Plaintiffs “for the difference
between the actual cash value of the automobile and the
amount Plaintiffs owed through a financing agreement when the
total loss occurred because the amount Plaintiffs owed
exceeded the actual cash value.” Id. ¶
159. Eighth, Plaintiffs assert a breach-of-fiduciary-duty
claim (Count VIII). Ninth, Plaintiffs assert a
common-law-bad-faith claim (Count IX). Id. ¶
183. Tenth, Plaintiffs assert a claim of fraud by omission
and concealment (Count X). Id. ¶¶ 185-197.
Eleventh, Plaintiffs assert a promissory-estoppel claim
(Count XI), alleging that “Defendants induced the
Plaintiffs and the proposed class to purchase the GAP
insurance coverage” which Plaintiffs purchased
“[i]n reasonable and justifiable reliance upon
Defendants['] representations and promises.”
Id. ¶¶ 201-02. Twelfth and finally,
Plaintiffs assert a violation of the Kentucky Unfair Claims
Settlement Practices Act, Ky. Rev. Stat. § 304.12 (Count
XII), and further allege that “[t]hese actions rise to
a level that permits the imposition of punitive
damages.” Id. ¶¶ 207-214.
August 17, 2018, the Court held a telephonic conference to
discuss four pending motions in this matter: Defendants'
(First) Motion for Judgment on the Pleadings (Doc. # 23),
Plaintiffs' (First) Motion to Stay (Doc. # 37),
Plaintiffs' Motion for Leave to Amend the First Amended
Complaint (Doc. # 38), and Defendants' Motion to Strike
(Doc. # 41). Following the conference, the Court entered an
Order granting leave for Plaintiffs to amend the complaint
“to the extent that Plaintiffs seek to name the proper
party and amend the allegations of Count Two.” (Doc. #
45). The Court denied the other pending motions, and provided
that Defendants may renew their Motion for Judgment on the
Pleadings after the filing of Plaintiffs' Second Amended
Class Action Complaint. Id.
filed their Second Amended Class Action Complaint on August
31, 2018. (Doc. # 46). This pleading substituted Safeco
Insurance Company of Illinois (“Safeco-Illinois”)
for the previously-named Safeco Insurance Company of America
(“Safeco-America”), and added more specific
allegations to the “Fraud and Misrepresentation”
claim (Count II). See Id. (highlighting changes and
amendments in bold typeface). Otherwise, the
allegations were identical to the First Amended Class Action
Complaint. Compare (Doc. # 1-2), with (Doc.
Liberty Mutual and Safeco-Illinois filed their joint Motion
to Dismiss for Lack of Jurisdiction and (Renewed) Motion for
Judgment on the Pleadings on September II, 2018. (Doc. # 49).
Plaintiffs filed a joint Response in Opposition and
Cross-Motion to Stay on October 2, 2018. (Doc. # 51).
Defendant Liberty Mutual then filed a related Motion for
Sanctions on October 3, 2018. (Doc. # 52). The parties having
subsequently filed the attendant response and reply briefs to
these pending motions, see (Docs. # 53, 54, 55, and
56), the matter is now ripe for review.
Defendants' Joint Motion to Dismiss and for Judgment on
Liberty Mutual and Safeco-Illinois assert in their joint
Motion to Dismiss for Lack of Jurisdiction and Motion for
Judgment on the Pleadings that “both Defendants are
entitled to judgment as a matter of law as to each
claim.” (Doc. # 49 at 1) (emphasis added). In their
accompanying Memorandum in Support, Defendants first argue
that, as to Defendant Liberty Mutual, all of Plaintiffs'
claims should be dismissed pursuant to Rule 12(b)(1) of the
Federal Rules of Civil Procedure for lack of subject-matter
jurisdiction. Specifically, Defendants argue that, because
“Plaintiffs purchased the Auto Loan/Lease Coverage at
issue from Safeco[-Illinois], ” not Liberty Mutual,
Plaintiffs therefore have no standing to assert claims
against Liberty Mutual. (Doc. # 49 at 3, 7-8). Alternatively,
Liberty Mutual next moves for judgment on the pleadings
pursuant to Rule 12(c) for the same reason-that it is not the
corporate entity who sold the policy at issue. Id.
at 9. The remaining arguments assert that Defendants are
entitled to judgment on the pleadings as to all of
Plaintiffs' claims against both Liberty Mutual and
Safeco-Illinois pursuant to Rule 12(c) of the Federal Rules
of Civil Procedure.
opposing Defendants' Motion, Plaintiffs assert the
following: the Motion should be converted to a motion for
summary judgment because the Defendants cited to evidence
(the policy); the converted motion should then be stayed;
Plaintiffs should be allowed to engage in discovery regarding
the corporate relationship between Defendants Safeco-Illinois
and Liberty Mutual prior to the Court's adjudication of
Defendants' subject-matter jurisdiction argument; three
of Defendants' statute-of-limitations arguments fail
because different limitations periods apply to the claims;
and that Plaintiffs state plausible claims for relief.
See (Doc. # 50). The Court will address each of
Defendants' arguments and Plaintiffs' attendant
counter-arguments in turn.
Liberty Mutual's Motion to Dismiss for Lack of
Subject-Matter Jurisdiction pursuant to Fed.R.Civ.P.
Liberty Mutual first moves to dismiss pursuant to Rule
12(b)(1) of the Federal Rules of Civil Procedure for lack of
subject-matter jurisdiction. (Doc. # 49 at 7-8).
Specifically, Liberty Mutual asserts that Plaintiff lacks
Article III standing to assert a claim because
Safeco-Illinois, not Liberty Mutual, issued the subject
insurance policy. Id. Therefore, Liberty Mutual
argues that Plaintiffs cannot demonstrate the second and
third elements of standing-that “the challenged conduct
of the defendant [Liberty Mutual] caused the injury, ”
and that “a favorable decision will redress
[Plaintiffs'] injuries.” Id. (citing
Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61
Standard of Review
III of the Constitution limits the jurisdiction of federal
courts to hear only actual cases and controversies. U.S.
Const. art. 3 § 2. Accordingly, Plaintiffs bear the
burden to establish standing. Lyshe v. Levy, 854
F.3d 855, 856 (6th Cir. 2017) (citing Summers v. Earth
Island Inst., 555 U.S. 488, 493 (2009)). To establish
the “irreducible constitutional minimum of standing,
” Plaintiffs must establish: (1) they suffered an
injury in fact that is (a) concrete and particularized and
(b) actual or imminent rather than conjectural or
hypothetical; (2) that there is a causal connection between
the injury and each defendant's alleged wrongdoing; and
(3) that the injury can likely be redressed. Lujan,
504 U.S. at 560-61. “Whether a party has standing is an
issue of the court's subject matter jurisdiction under
Federal Rule of Civil Procedure 12(b)(1).” Allstate
Ins. Co. v. Global Med. Billing, Inc., 520 Fed.Appx.
409, 410-11 (6th Cir. 2013). Thus, Liberty Mutual's
argument that Plaintiffs lack standing raises the issue of
whether the Court has subject-matter jurisdiction.
lack of subject-matter jurisdiction is raised in a motion to
dismiss, the plaintiff “bears the burden of proving
jurisdiction in order to survive the motion.” Merck
Sharp & Dohme Corp. v. Conway, No. 3:11-cv-51-DCR,
2012 WL 1029427, at *2 (E.D. Ky. Mar. 26, 2012) (citing
Mich. S. R.R. Co. v. Branch & St. Joseph Counties
Rail Users Ass'n, 287 F.3d 568, 573 (6th Cir.
2002)). However, plaintiffs “survive the motion to
dismiss by showing ‘any arguable basis in law' for
the claims set forth in the complaint.” Id.
(quoting Musson Theatrical, Inc. v. Fed. Express
Corp., 89 F.3d 1244, 1248 (6th Cir. 1996)).
evaluating a motion to dismiss under 12(b)(1), courts must
first consider whether the challenge to subject-matter
jurisdiction is a facial attack or a factual attack.
Cartwright v. Garner, 751 F.3d 752, 759-60
(6th Cir. 2014). A factual attack challenges “the
factual existence of subject-matter jurisdiction, ” and
a court has “broad discretion with respect to what
evidence to consider in deciding whether subject matter
jurisdiction exists, including evidence outside of the
pleadings, and has the power to weigh the evidence and
determine the effect of that evidence on the court's
authority to hear the case.” Id. “When
considering a factual attack, there is no presumption of
truthfulness applied to the allegations.”
Merck, 2012 WL 1029427, at *2. Instead, the Court
“must weigh the conflicting evidence to arrive at the
factual predicate that subject-matter [jurisdiction] does or
does not exist.” Id. (citing Gentek Bldg.
Prods., Inc. v. Sherwin-Williams Co., 491 F.3d 320, 330
(6th Cir. 2007)). In contrast, a facial attack goes to the
question of whether the plaintiff has alleged a basis for
subject-matter jurisdiction. Id. When reviewing a
facial attack, the Court must accept all the allegations in
the complaint as true, and “[i]f those allegations
establish federal claims, jurisdiction exists.”
Id. (citing Gentek, 491 F.3d at 330).
“A challenge to the plaintiff[s'] standing is a
facial attack.” Id.
Whether Plaintiffs lack standing to assert a claim against
Liberty Mutual pursuant to Rule 12(b)(1)
in evaluating Liberty Mutual's challenge to
Plaintiffs' standing under Rule 12(b)(1), it is clear
that Liberty Mutual brings a facial attack. See
Merck, 2012 WL 1029427, at *2 (“A challenge to the
plaintiff[s'] standing is a facial attack.”). This
is true regardless of the fact that Liberty Mutual attached
the insurance policy to its Answer and relies on this
document in support of its argument. (Doc. # 48-1).
“[D]ocuments that a defendant attaches to a motion to
dismiss are considered part of the pleadings if they are
referred to in the [Plaintiffs'] complaint and are
central to [their] claim.” Weiner, D.P.M. v. Klais
& Co., 108 F.3d 86, 88 n.3 (6th Cir. 1997),
overruled on other grounds by Swierkiwica v. Sorema,
N.A., 534 U.S. 506 (2002). Plaintiffs refer to the
policy-and Defendants' respective duties under the
policy-extensively in their pleadings, and the policy is
central to Plaintiffs' action. See generally
(Doc. # 46).
asserts that, because the policy was issued by
Safeco-Illinois, not Liberty Mutual, Plaintiffs'
pleadings fail on their face to demonstrate standing because
“a parent corporation or owner is not liable for the
acts of its subsidiaries” without piercing the
corporate veil-which has not been alleged here. (Doc. # 53 at
3) (citing Oliver v. St. Luke's Dialysis, LLC,
No. 1:10-cv-2667, 2011 WL 1326251, at *18 (N.D. Ohio Apr. 5,
2011); Derby City Capital, LLC v. Trinity HR Servs.,
949 F.Supp.2d 712, 721 n.7 (W.D. Ky. 2013)); (Doc. # 56)
(“The Arnolds do not seek to pierce the corporate
Mutual's argument, however, sidesteps Plaintiffs'
claims that Liberty Mutual itself-not vicariously or merely
through Safeco-Illinois-had a hand in developing the policy
exclusions and marketing materials regarding the GAP coverage
at issue; Plaintiffs also claim that Liberty Mutual
participated in the claims-handling process. See,
e.g., (Doc. # 46 at ¶¶ 37, 62, 68, 76, 93(a),
127, 150-51). Accepting Plaintiffs' allegations as true
as the Court must, see Gentek, 491 F.3d at 330,
Plaintiffs have set forth an arguable basis in law that there
is “a causal connection between the injury and each
defendant's alleged wrongdoing” and “that the
injury can likely be redressed.” Lujan, 504
U.S. at 560-61. As the Court finds Plaintiffs have met the
constitutionally-minimum requirements to establish standing,
the Court has subject-matter jurisdiction and dismissal is
not required under Rule 12(b)(1). Consequently, Liberty
Mutual's Motion to Dismiss on the ground of
subject-matter jurisdiction fails. However, Defendants'
joint Motion (Doc. # 49) will be granted on
other grounds, as both Defendants are entitled to judgment on
the pleadings under Rule 12(c). See infra Section
Defendants' Motion for Judgment on the Pleadings pursuant
to Fed.R.Civ.P. 12(c)
next move for judgment on the pleadings on each of
Plaintiffs' twelve causes of action pursuant to Rule
12(c) of the Federal Rules of Civil Procedure.
Standard of Review
standard of review for a Rule 12(c) motion for judgment on
the pleadings is the same as a motion to dismiss under Rule
12(b)(6) for failure to state a claim upon which relief may
be granted. Roth v. Guzman, 650 F.3d 603, 605 (6th
Cir. 2011); Mixon v. Ohio, 193 F.3d 389, 399 (6th
Cir. 1999). A motion to dismiss pursuant to Rule 12(b)(6)
tests the legal sufficiency of the complaint. RMI
Titanium Co. v. Westinghouse Elec. Corp., 78 F.3d 1125,
1134 (6th Cir. 1996). As the Supreme Court explained,
“[t]o survive a 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 Bell Atl. Corp. v. Twombly, 550
U.S. 544, 570 (2007)).
to this standard, relief should be granted “when no
material issue of fact exists and the party making the motion
is entitled to judgment as a matter of law.” D
& S Remodelers, Inc. v. Wright Nat'l Flood Ins.
Servs., LLC, 725 Fed.Appx. 350, 354 (6th Cir. 2018)
(citing JPMorgan Chase Bank, N.A. v. Winget, 510
F.3d 577, 582 (6th Cir. 2007)). In deciding whether the
plaintiff has set forth a “plausible” claim, the
court must accept “all well-pleaded material
allegations of the [Plaintiffs'] pleadings” as
true, “and the motion may be granted only if the moving
party is nevertheless clearly entitled to judgment.”
Tucker v. Middleburg-Legacy Place, 539 F.3d 545, 549
(6th Cir. 2008) (citing JPMorgan, 510 F.3d at 581).
However, as with a 12(b)(6) motion, this assumption of truth
does not extend to “legal conclusions or unwarranted
factual inferences.” JPMorgan, 510 F.3d at
581-82 (citation and internal quotation marks omitted).
Accord Iqbal, 556 U.S. at 668 (explaining that this
presumption does not apply to legal conclusions).
argue that the 12(c) motion should be converted to a motion
for summary judgment because “[i]n their motion,
Defendants present matters outside the pleadings, namely the
exhibit to their Answers.” (Doc. # 50 at 8).
Defendants' Answers (Docs. # 47 and 48) to
Plaintiffs' Second Amended Class Action Complaint (Doc. #
46) each attach a single, identical exhibit. (Docs. # 47-1
and 48-1). The exhibit consists of the policy declarations,
endorsements, and policy, as well as attendant letters
communicating the changes in coverage (“policy
documents”). See Id. The exhibit also contains
an affidavit from a Safeco-Illinois archivist attesting that
the attached policy and endorsements are a true and exact
copy. (Docs. # 47-1 at 1 and 48-1 at 1). Because
Defendants' 12(c) argument refers to a portion of the
policy documents-namely, the policy endorsement governing
“Auto Loan/Lease Coverage”-Plaintiffs assert that
Defendants' Motion should be converted to one for summary
judgment and Plaintiffs should be provided “an
opportunity to present all material made pertinent to a
motion for summary judgment.” (Doc. # 50 at 8).
argument sidesteps the fact that the Sixth Circuit has
weighed in on the scope of the exclusion rule and expressly
noted that courts may consider not only exhibits attached to
the complaint without converting a 12(c) motion into
a motion for summary judgment, but also “public
records, items appearing in the record of the case and
exhibits attached to [the] defendant's motion to dismiss,
so long as they are referred to in the [c]omplaint and are
central to the claims contained therein.” Bassett
v. Nat'l Collegiate Athletic Ass'n, 528 F.3d
426, 430 (6th Cir. 2008). Accord Weiner, D.P.M. v. Klais
& Co., 108 F.3d 86, 88 n.3 (6th Cir. 1997)
(“[D]ocuments that a defendant attaches to a motion to
dismiss are considered part of the pleadings if they are
referred to in the [Plaintiffs'] complaint and are
central to [their] claim.”), overruled on other
grounds by Swierkiwica v. Sorema, N.A., 534 U.S. 506
(2002). Likewise, supplemental documents attached to a
12(b)(6) or 12(c) motion do not convert the motion into one
for summary judgment where the documents do not “rebut,
challenge, or contradict anything in the plaintiff[s']
complaint.” Song v. City of Elyria, 985 F.2d
840, 842 (6th Cir. 1993) (internal citation omitted).
to this standard, the Sixth Circuit has consistently allowed
district courts to consider affidavits and exhibits submitted
by defendants when documents such as insurance policies,
ERISA plan documents, or other contracts are central to the
plaintiffs' cause of action. See Greenberg v. Life
Ins. Co. of Va., 177 F.3d 507 (6th Cir. 1999) (holding
that insurer's attachment of life-insurance policies to
its 12(b)(6) motion did not require court to convert to a
motion for summary judgment where policies were referred to
throughout complaint and were central to insureds' fraud
claim arising from purchase of policies); Weiner,
108 F.3d at 89 (finding defendant properly attached plan
documents to 12(b)(6) motion in ERISA case). The Sixth
Circuit reasoned that “a defendant may introduce
certain pertinent documents” such as a “written
instrument” that may be attached as an exhibit to a
pleading pursuant to Federal Rule of Civil Procedure 10(c)
“if the plaintiff fails to do so.”
Weiner, 108 F.3d at 89. If defendants were not
permitted to do so, “a plaintiff with a legally
deficient claim could survive a motion to dismiss simply by
failing to attach a dispositive document upon which it
it is clear that the policy terms and exclusions “are
referred to in the [c]omplaint and are central to the claims
contained therein.” Bassett, 528 F.3d at 430.
All of Plaintiffs' twelve causes of action arise from the
fact that their insurer did not provide coverage for
“carry-over balances from previous loans or
leases” pursuant to an exclusion contained in a policy
endorsement. See (Doc. # 46). Thus, the policy is
referred to in the Plaintiffs' pleadings and central to
the claims therein. Therefore, it may be considered without
converting to a motion for summary judgment.
Bassett, 528 F.3d at 430.
the policy documents attached to Defendants' Answers do
not “rebut, challenge, or contradict anything in the
plaintiff[s'] complaint.” Song, 985 F.2d
at 842. Plaintiffs do not dispute the fact that the policy
endorsement at issue exists. See, e.g., (Doc. # 46
at 11) (“After reviewing all relevant documents, Mrs.
Arnold found an endorsement page that was mailed on September
2, 2015, and received on September 5, 2016.”). Rather,
Plaintiffs' causes of action center upon legal questions
regarding the timing of the insurer's
communication of the endorsement, as Plaintiffs allege that
the insurer strategically waited until after the policy was
purchased to mail Plaintiffs a copy of the endorsement.
See, e.g., (Doc. # 46 at 12) (“[B]ecause of
the Defendants' practice of non-disclosure, the
Plaintiffs were unaware of any exclusions under their GAP
insurance policy until it was too late to explore different
options that provided true GAP coverage.”). Nothing
about the exhibit rebuts, challenges, or contradicts