United States District Court, W.D. Kentucky, Louisville Division
MATTHEW HAYDEN and KENTUCKY PROSTHETICS, INC. PLAINTIFFS
BENCHMARK INSURANCE COMPANY and VGM INSURANCE SERVICES, INC. DEFENDANTS
MEMORANDUM OPINION AND ORDER
H. MCKINLEY JR., SENIOR JUDGE UNITED STATES DISTRICT COURT.
matter is before the Court on Defendants' Motion to
Dismiss Plaintiffs' Complaint. [DN 9]. Fully briefed,
this matter is ripe for decision. For the following reasons,
the Defendants' Motion is GRANTED.
Matthew Hayden and Kentucky Prosthetics, Inc., assert that
Defendants, Benchmark Insurance Company and VGM Insurance
Services, Inc., issued a liability insurance policy to
Kentucky Prosthetics for the policy period of March 12, 2014
to March 12, 2015 (the “Benchmark Policy”). [DN
1-2 ¶ 9]. In September 2016, Edward Hawkins filed a
lawsuit against Plaintiffs concerning events that occurred
during the policy period. [Id. ¶ 10].
Plaintiffs claim they promptly notified Defendants of the
lawsuit and complied with efforts taken by Defendants to
investigate the matter. [Id. ¶ 11]. In November
2016, Defendants sent a letter to Plaintiffs informing them
that they had reviewed the insurance policy and the
underlying complaint and determined that no allegations
triggered their duty to defend or indemnify the Plaintiffs.
[DN 9 at 4]. The Defendants explained that because Mr.
Hawkins' complaint did not allege any facts that met the
definition of “bodily injury, ” “property
damage, ” or “occurrence, ” there would be
no coverage. [Id.].
to the underlying lawsuit, Plaintiffs allege that on
September 19, 2016, they were sued in the Hardin County
Circuit Court by Mr. Hawkins. [DN 1-2 ¶ 10]. Mr. Hawkins
alleged that on April 15, 2014, he began the process of
obtaining a prosthetic leg from Plaintiffs. [DN 9-1 ¶
4]. Mr. Hawkins claimed he paid Plaintiffs the purchase price
of $13, 525.00 for the prosthetic leg and its component
parts. [Id. ¶ 5]. Despite full payment, Mr.
Hawkins stated he did not receive the type of prosthetic leg
or the accompanying parts represented by Plaintiffs.
[Id. ¶ 6].
Hawkins brought the underlying lawsuit as a breach of
contract case against Plaintiffs. [Id. ¶¶
8-18]. In Count I, he alleged that the foot and ankle he
received from Plaintiffs were not the prosthetic contracted
for and that the provided components did not fit properly.
[Id. ¶ 10]. Mr. Hawkins alleged that he
notified the Plaintiffs of the problems with the prosthetic
in December 2014 and took remedial action over the next
several months-phone calls and visits to the Plaintiffs-to
try to mitigate the problems with the leg. [Id.
¶ 12]. The specific language of Count I states:
“[Plaintiffs] breached the contract by not supplying
[Mr. Hawkins] with a suitable prosthetic leg despite being
compensated for said leg.” [Id. ¶ 14]. As
such, Mr. Hawkins had to obtain a prosthetic leg from a
different provider. [Id. ¶ 7]. In Count II of
Mr. Hawkins' complaint, he alleged that Plaintiffs
violated the Kentucky Consumer Protection Act
(“KCPA”) because the Plaintiffs' failure to
provide “the prosthetic leg contracted for, or any
suitable prosthetic leg, amounted to unfair, false,
misleading and/or deceptive acts and/or practices.”
[Id. ¶ 17]. In the demand for relief, Mr.
Hawkins sought damages for the “malicious, fraudulent,
oppressive and/or recklessly committed breach of
contract.” [Id. at Prayer for Relief].
Plaintiffs defended against Mr. Hawkins' lawsuit, they
repeatedly requested that Defendants provide coverage-the
Defendants refused. [Id. ¶¶ 23-27].
Despite Defendants' coverage denial, Plaintiffs allege
the Defendants issued a check for the settlement amount in
Mr. Hawkins' lawsuit and paid a portion of
Plaintiffs' defense costs. [Id. ¶¶
29-30]. Plaintiffs claim that, prior to making these
payments, Defendants attempted to settle all claims in
exchange for a signed release of the Plaintiffs' claims
against the Defendants. [Id. ¶ 33]. Plaintiffs
state that although they refused to sign the release and
Defendants continued to deny coverage for Mr. Hawkins'
lawsuit, Defendants still made the payments. [Id.
¶¶ 31, 37].
Standard of Review
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 plaintiffs, ”
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 its 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 it “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 679.
Instead, “a complaint must contain a ‘short and
plain statement of the claim showing that the pleader is
entitled to relief.'” Id. at 663 (quoting
Fed.R.Civ.P. 8(a)(2)). “But where the well-pleaded
facts do not permit the court to infer more than the mere
possibility of misconduct, the complaint has alleged-but it
has not ‘show[n]'-‘that the pleader is
entitled to relief.'” Id. at 679 (quoting
“matters outside the pleadings are presented to and not
excluded by the court” when ruling upon a motion under
Rule 12(b)(6), the Federal Rules require that “the
motion must be treated as one for summary judgment under Rule
56.” Fed.R.Civ.P. 12(d). This Rule does not require the
Court to convert a motion to dismiss into a motion for
summary judgment every time the Court reviews documents that
are not attached to the complaint. Greenberg v. Life Ins.
Co. of Va., 177 F.3d 507, 514 (6th Cir. 1999).
“[W]hen a document is referred to in the complaint and
is central to the plaintiff's claim . . . [, ] the
defendant may submit an authentic copy [of the document] to
the court to be considered on a motion to dismiss, and the
court's consideration of the document does not require
conversion of the motion to one for summary judgment.”
Id. (quotation omitted).
Breach of Contract Claim
assert that they are entitled to a judgment in their favor on
the Motion to Dismiss because the insurance policy issued to
Plaintiffs does not provide coverage as a matter of law in
the underlying lawsuit. [DN 9 at 1]. Specifically, Defendants
maintain that Mr. Hawkins' breach of contract and KCPA
claims do not arise from an “occurrence” as
required by the insurance policy to trigger coverage, nor
does Mr. Hawkins' lawsuit allege that he suffered
“bodily injury” or “property damage”
as defined by the insurance policy. [Id. at 6-11].
respond that Defendants breached the insurance contract by
failing “to defend and agree to indemnify the Hawkins
Case as required by the terms of the Policy.” [DN 1-2
¶ 65]. As the basis for this position, Plaintiffs
advance two arguments: (1) the Incidental Medical
Professional Services Endorsement-referred to as the
“Prosthetics Endorsement” by Plaintiffs-makes
clear that an occurrence exists in this case and (2)
liberally construing Mr. Hawkins' ...