United States District Court, W.D. Kentucky, Louisville Division
JAMES H. POGUE, Plaintiff,
PRINCIPAL LIFE INSURANCE COMPANY, Defendant.
MEMORANDUM OPINION AND ORDER GRANTING DEFENDANT'S
MOTION FOR SUMMARY JUDGMENT AND DENYING PLAINTIFF'S
MOTION FOR RULE 54(b) JUDGMENT
HORN BOOM UNITED STATES DISTRICT JUDGE,
matter is before the Court on Plaintiff's Brief on
Remaining Claims and Motion for Entry of Fed.R.Civ.P. 54(b)
Judgment [R. 140] and Defendant's Brief regarding
Plaintiff's Bifurcated Claims in Accordance with This
Court's March 29, 2019 Order and Motion for Summary
Judgment on Same [R. 141]. The Court's previous Order
granting Defendants' Motion for Summary Judgment [R. 139]
as to the breach of contract claim left remaining only bad
faith claims against Principal Life Insurance Company
(“Principal”). Defendant argues that precedent
clearly mandates that the bad faith claims must fail, since
Principal has no obligation to pay Plaintiff under the terms
of the relevant insurance policy. Plaintiff argues that this
is wrong. For the reasons explained below, the Court will
grant Defendant's Motion for Summary Judgment on the
remaining claims in this case, and will deny Plaintiff's
Motion for Rule 54(b) Judgment as moot.
judgment is proper where “the movant shows that there
is no genuine dispute as to any material fact and the movant
is entitled to judgment as a matter of law.”
Fed.R.Civ.P. 56(a). When determining a motion for summary
judgment, a court must construe the evidence and draw all
reasonable inferences from the underlying facts in favor of
the nonmoving party. Matsushita Elec. Indus. Co., Ltd. v.
Zenith Radio Corp., 475 U.S. 574, 587 (1986);
Lindsay v. Yates, 578 F.3d 407, 414 (6th Cir. 2009).
The court may not “weigh the evidence and determine the
truth of the matter” at the summary judgment stage.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 265
(1986). When, as here, the defendant moves for summary
judgment, “[t]he mere existence of a scintilla of
evidence in support of the plaintiff's position will be
insufficient; there must be evidence on which the jury could
reasonably find for the plaintiff.” Id. at
252. The initial burden of establishing no genuine dispute of
material fact rests with the moving party. Celotex Corp.
v. Catrett, 477 U.S. 317, 323 (1986). The Court
“need consider only the cited materials, but it may
consider other materials in the record.” Fed.R.Civ.P.
56(c)(3). If the moving party satisfies this burden, the
burden then shifts to the nonmoving party to produce
“specific facts” showing a “genuine
issue” for trial. Id. at 324. Where “a
party fails to properly support an assertion of fact or fails
to properly address another party's assertion of fact,
” the Court may treat that fact as undisputed.
is “material” if the underlying substantive law
identifies the fact as critical. Anderson, 477 U.S.
at 248. Thus, “[o]nly disputes over facts that might
affect the outcome of the suit under the governing law will
properly preclude the entry of summary judgment. Factual
disputes that are irrelevant or unnecessary will not be
counted.” Id. A “genuine” issue
exists if “there is sufficient evidence favoring the
nonmoving party for a jury to return a verdict for that
party.” Id. at 249.
Sixth Circuit's opinion affirming the district
court's decision in the companion case to this matter,
Pogue v. Nw. Mutual Life Ins. Co., 2019 WL 1376032
(6th Cir. Feb. 7, 2019) (“Pogue I”), the court
the very cases that Pogue cited in support of his motion to
bifurcate make clear that this type of case “lends
itself to bifurcation under Rule 42(b) because if a bad-faith
claimant cannot prevail on the coverage issue, [his] claim of
bad-faith necessarily fails.” Nationwide Mut. Fire
Ins. v. Jahic, No. 3:11-CV-00155, 2013 WL 98059, at *2
(W.D. Ky. Jan. 7, 2013) (citing Brantley v. Safeco Ins.
Co. of Am., No. 1:11-CV-00054-R, 2011 WL 6012554, at *2
(W.D. Ky. Dec. 1, 2011)). . . . Moreover, in granting
Pogue's motion to bifurcate, the magistrate judge
explicitly noted that “if [Pogue's] contract claim
is resolved in [Northwestern Mutual's] favor,
[Pogue's] bad-faith claims will necessarily fail.”
The magistrate judge thus concluded that “[a] trial on
Counts B, C, and D will be conducted only if [Pogue] prevails
on Count A, his breach of contract claim.” Based on the
foregoing, the district court did not abuse its discretion in
sua sponte disposing of Pogue's bifurcated claims after
entering summary judgment in favor of Northwestern Mutual on
Pogue's breach-of-contract claim.
Pogue v. Nw. Mut. Life Ins. Co., No. 18-5291, 2019
WL 1376032, at *5 (6th Cir. Feb. 7, 2019).
to ensure that both parties received a full and fair chance
to brief the issues, rather than exercise its discretion to
dispose of the bifurcated claims in this case sua
sponte, the Court directed the parties to file briefs
addressing whether the bad faith claims necessarily fail
given the earlier ruling on insurance coverage. Defendant
argues that under Kentucky precedent, they do, meaning that
there is no genuine dispute of material fact and it is
entitled to judgment as a matter of law. Plaintiff repeatedly
cites the same four cases for his argument that the bad faith
claims do not necessarily fail: PBI Bank, Inc. v.
Signature Point Condominiums LLC, 535 S.W.3d 700 (Ky.
Ct. App. 2016); State Auto Prop. & Cas. Ins. Co. v.
Hargis, 785 F.3d 189 (6th Cir. 2015); James T.
Scatuorchio Racing Stable, LLC v. Walmac Stud Mgmt.,
LLC, 941 F.Supp.2d 807 (E.D. Ky. 2013); and Knotts
v. Zurich Ins. Co., 197 S.W.3d 512 (Ky. 2006). But none
of these authorities supports Plaintiff's position.
while the Kentucky Court of Appeals in PBI Bank did
state as a general rule that “[i]n order to show a
violation of the implied covenant of good faith and fair
dealing, a showing of breach of contract is ordinarily not
required, ” it went on to explain that “the party
asserting the violation must provide evidence sufficient to
support a conclusion that the party alleged to have acted in
bad faith has engaged in some conduct that denied the benefit
of the bargain originally intended by the parties.”
PBI Bank, 535 S.W.3d at 718 (internal quotation
marks omitted). Further, PBI Bank did not involve
the insurance context and neither cited to nor overruled any
authority specifically addressing the requirements of bad
faith claims against insurers. PBI Bank, 535 S.W.3d
the Hargis case which Plaintiff cites clearly shows
that under binding Kentucky precedent, an insurer must be
obligated to pay the claim under the terms of the policy
before a bad faith claim of any kind will lie:
In all, Kentucky recognizes four categories of bad faith
claims that may be brought against an insurance company: two
common law tort theories for an insurer's breach of the
duty of good faith (first-party and assignment to a
third-party); and two statutory causes of action premised on
an insurer's violation of either the Kentucky Consumer
Protection Act (KCPA) or the Kentucky Unfair Claims
Settlement Practices Act (KUCSPA). See Rawe, 462
F.3d at 526-27; Motorist Mut. Ins. Co. v. Glass, 996
S.W.2d 437, 451-52 (Ky.1997) (discussing development of bad
faith law in Kentucky). A single standard applies to all four
categories of bad faith claims, which requires that the
insured prove three elements:
“(1) the insurer must be obligated to pay the claim
under the terms of the policy; (2) the insurer must lack a
reasonable basis in law or fact for denying the claim; and
(3) it must be shown that the insurer either knew there was
no reasonable basis for denying the claim or acted with
reckless disregard for whether such a basis existed[.]”
Wittmer v. Jones,864 S.W.2d 885, 890 (Ky.1993)