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Arnold v. Liberty Mutual Insurance Co.

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

May 28, 2019

JESSICA ARNOLD et al. PLAINTIFFS
v.
LIBERTY MUTUAL INSURANCE COMPANY, et al. DEFENDANTS

          MEMORANDUM OPINION AND ORDER

          DAVID L. BUNNING UNITED STATES DISTRICT JUDGE

         I. INTRODUCTION

         In this 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.

         This 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.

         II. FACTUAL AND PROCEDURAL BACKGROUND

         On 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).

         Plaintiffs' 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.

         After 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.[1] 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.

         Plaintiffs 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.

         The 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. ¶¶ 57, 84(b).

         The 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:

         With 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 leases.

(Docs. # 47-1 at 75; 48-1 at 75) (emphasis added).

         In 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.”).

         Plaintiffs 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.

         The 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.

         On 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.

         Plaintiffs 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. # 46).

         Defendants 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.

         III. ANALYSIS

         A. Defendants' Joint Motion to Dismiss and for Judgment on the Pleadings

         Defendants 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.

         In 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.

         1. Liberty Mutual's Motion to Dismiss for Lack of Subject-Matter Jurisdiction pursuant to Fed.R.Civ.P. 12(b)(1)

         Defendant 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 (1992)).

         a. Standard of Review

         Article 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.

         “If 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)).

         In 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.

         b. Whether Plaintiffs lack standing to assert a claim against Liberty Mutual pursuant to Rule 12(b)(1)

         First, 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).

         Defendant 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 veil.”).

         Liberty 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 III.A.2.

         2. Defendants' Motion for Judgment on the Pleadings pursuant to Fed.R.Civ.P. 12(c)

         Defendants 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.

         a. Standard of Review

         The 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)).

         Pursuant 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).

         Plaintiffs 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).

         Plaintiffs' 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).

         Pursuant 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 relied.” Id.

         Here, it is clear that the policy terms and exclusions “are referred to in the [c]omplaint and are central to the claims contained therein.”[2] 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.

         Moreover, 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 ...


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