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Wright v. State Farm Mutual Automobile Insurance Co.

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

November 15, 2019

LANCE WRIGHT PLAINTIFF
v.
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, AND BOB DOTSON INSURANCE AGENCY, INC. DEFENDANTS

          MEMORANDUM OPINION & ORDER

          Thomas B. Russell, Senior Judge

         This matter is before the Court upon a motion (DN 44) by the Defendant, State Farm Mutual Automobile Insurance Company (“State Farm”), for reconsideration regarding this Court's Memorandum Opinion & Order (DN 43) granting Plaintiff's motion to remand and denying Bob Dotson Insurance Agency's (the “Agency”) motion to dismiss as moot. Plaintiff, Lance Wright, has responded (DN 47) and State Farm has filed its reply (DN 48). Fully briefed, this matter is ripe for review and for the following reasons, State Farm's motion for reconsideration is GRANTED.

         Background

         This action arises from an automobile accident in which Plaintiff suffered a fractured pelvis and several other injuries. (DN 1-2 at 4).[1] Plaintiff filed his Complaint against State Farm and the Bob Dotson Insurance Agency, Inc. (the “Agency”) in Jefferson Circuit Court, alleging violations of the Kentucky Consumer Protection Act, the Kentucky Unfair Claims and Settlement Practices Act, common law bad faith, breach of contract, fraudulent misrepresentation, and civil conspiracy. Plaintiff claims that “State Farm and the Bob Dotson Insurance Agency, and in furtherance of a civil conspiracy, withheld information from Mr. Wright and his counsel that he was actually insured under multiple insurance policies affording him tens, if not hundreds, of thousands of dollars in coverage.” (DN 10 at 2-3).

         On November 21, 2018, State Farm removed this action under diversity jurisdiction. Because the Plaintiff and the Agency are both citizens of Kentucky, there is no diversity on the face of the Complaint. But State Farm argues that “the Kentucky citizenship of Agent Dotson should be ignored under fraudulent joinder because Wright failed to assert a colorable claim against Agent Dotson.” (DN 13 at 4). On September 25, 2019, this Court granted Plaintiff's motion to remand. The Court found that Plaintiff had stated a colorable bad faith claim against the Agency. Now before the Court is Defendant's timely filed motion for reconsideration. Upon careful consideration of the parties' submissions and being otherwise sufficiently advised, State Farm's motion for reconsideration is granted.

         Standard

         Although the Federal Rules of Civil Procedure do not provide expressly for "motions for reconsideration," courts generally construe such motions as motions to alter or amend a judgment under Rule 59(e). E.g., Moody v. Pepsi-Cola Metro. Bottling Co., 915 F.2d 201, 206 (6th Cir. 1990); Taylor v. Colo. State Univ., 2013 U.S. Dist. LEXIS 52872, 2013 WL 1563233, at *8-9 (W.D. Ky. Apr. 12, 2013). The Sixth Circuit has consistently held that a Rule 59 motion should not be used either to reargue a case on the merits or to reargue issues already presented, see Whitehead v. Bowen, 301 Fed.Appx. 484, 489 (6th Cir. 2008) (citing Sault Ste. Marie Tribe of Chippewa Indians v. Engler, 146 F.3d 367, 374 (6th Cir. 1998)), or otherwise to "merely restyle or rehash the initial issues," White v. Hitachi, Ltd., 2008 U.S. Dist. LEXIS 25240, 2008 WL 782565, at *1 (E.D. Tenn. Mar. 20, 2008) (internal quotation marks and citation omitted). "It is not the function of a motion to reconsider arguments already considered and rejected by the court." Id. (citation omitted). As another district court in this Circuit put it, "Where a party views the law in a light contrary to that of this Court, its proper recourse is not by way of a motion for reconsideration but appeal to the Sixth Circuit." Hitachi Med. Sys. Am., Inc. v. Branch, 2010 U.S. Dist. LEXIS 73664, 2010 WL 2836788, at *1 (N.D. Ohio July 20, 2010) (internal quotation marks and citations omitted). Accordingly, the Sixth Circuit instructs that a motion for reconsideration should only be granted on four grounds: "Under Rule 59, a court may alter or amend a judgment based on: '(1) a clear error of law; (2) newly discovered evidence; (3) an intervening change in controlling law; or (4) a need to prevent manifest injustice.'" Leisure Caviar, LLC v. U.S. Fish & Wildlife Serv., 616 F.3d 612, 615 (6th Cir. 2010) (quoting Intera Corp. v. Henderson, 428 F.3d 605, 620 (6th Cir. 2005)). Furthermore, because there is an interest in the finality of a decision, this Court and other district courts have held that "[s]uch motions are extraordinary and sparingly granted." Marshall v. Johnson, 2007 U.S. Dist. LEXIS 29881, 2007 WL 1175046, at *2 (W.D. Ky. Apr. 19, 2007) (citing Plaskon Elec. Materials, Inc. v. Allied-Signal, Inc., 904 F.Supp. 644, 669 (N.D. Ohio 1995)); accord Rottmund v. Cont'l Assurance Co., 813 F.Supp. 1104, 1107 (E.D. Pa. 1992).

         Discussion

         To correct a clear error of law and to prevent manifest injustice, the Court must grant State Farm's motion to reconsider. In its Opinion granting remand, the Court stated that Davidson v. American Freightways, Inc., 25 S.W.3d 94 (Ky.2004) is the most persuasive authority on this matter and that “Davidson sends conflicting signals and creates ambiguity on the issue of which ‘persons' can be sued for bad faith under the UCSPA.” (DN 43 at 10). Davidson is controlling on this matter but the interpretation expressed in the Court's Opinion is incorrect and contrary to the interpretation previously espoused by this Court, uniformly adopted by courts in the Western District of Kentucky, and affirmed by the Sixth circuit Court of Appeals. For this reason, the Court grants State Farm's motion to reconsider.

         In Daugherty v. Am. Express Co., this Court explained:

Plaintiff's response to Defendants' motion argues privity of contract is not the sole basis by which Defendants may be held liable, and that Defendants were engaged in the business of insurance for purposes of his bad faith claims. In support of his claim, Plaintiff cites to two cases: Davidson, 25 S.W.3d at 95, and Western Leasing, Inc. v. Acordia of Ky., Inc., No. 2008-CA-002237-MR, 2010 Ky. App. LEXIS 81, 2010 WL 1814959, at *9 (Ky. Ct. App. May 7, 2010).
The portion to which Plaintiff cites in Davidson states: “We conclude that both the statute and the common law tort apply only to persons or entities engaged in the business of insurance . . . .” 25 S.W.3d at 95. Plaintiff argues that Defendants were engaged in the business of insurance, and can therefore be held liable. However, Plaintiff's narrow interpretation of Davidson is incomplete. The Kentucky Supreme Court stated that “the UCSPA was clearly intended to regulate the conduct of insurance companies.” Id. at 96. Plaintiff ignores the Kentucky Supreme Court's statement that there must be a contractual obligation. Id. at 100 (“The gravamen of the UCSPA is that an insurance company is required to deal in good faith with a claimant, whether an insured or a third party, with respect to a claim which the insurance company is contractually obligated to pay.” (emphasis in original)).
In Western Leasing, the Kentucky Court of Appeals considered a case in which the trial court had determined that insurance brokers were not “engaged in the business of insurance” as that term is applied in the UCSPA. 202 Ky. App. LEXIS 81, 2010 WL 1814959 at *9. The Kentucky Court of Appeals held that an insurance broker is an agent of the insured, and insureds are not subject to the UCSPA. Id. Plaintiff argues that this case supports his argument that Defendants may be held liable because they were engaged in the business of insurance, and were not insureds. The Kentucky Court of Appeals in Western Leasing also noted, however, that “[l]anguage in Davidson, while dicta, further suggests that only persons ‘entering into contracts of insurance' may be considered to be engaged in the ‘business of insurance.'” Id. (citing Davidson, 25 S.W.3d at 98; Accord Ky. Nat. Ins. Co. v. Shaffer, 155 S.W.3d 738, 742 (Ky. Ct. App. 2004 (“[W]e find compelling the Court's unequivocally firm holding [in Davidson] that, in the absence of a contractual obligation to pay, there can be no action for bad faith.”) Accordingly, the Court finds that Western Leasing does not support Plaintiff's claim.
The Sixth Circuit has also acknowledged that privity is necessary for liability under Kentucky common law bad faith claims. See Torres v. Am. Employers Ins. Co., 151 Fed.Appx. 402, 410 (6th Cir. 2005) (“A proper synthesis of these cases produces an undeniable understanding that Kentucky common law bad faith arises in the insurance context only ...

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