Chill v. Farmers Ins. Co.
| Decision Date | 18 February 2021 |
| Docket Number | Case No. 3:20-cv-00191 |
| Citation | 520 F.Supp.3d 1004 |
| Court | U.S. District Court — Middle District of Tennessee |
| Parties | Michael CHILL and Denise Chill, Plaintiffs, v. FARMERS INSURANCE COMPANY and Jerry Shipp, Defendants. |
Danny R. Ellis, Morgan G. Adams, Truck Wreck Justice, PLLC, Chattanooga, TN, Shaun M. Falvey, Goldblatt Singer, St. Louis, MO, for Plaintiffs.
Gary M. Kellar, Spicer Rudstrom, PLLC, Nashville, TN, for Defendants.
Before the court are the Amended Motion to Dismiss (Doc. No. 30) and, somewhat paradoxically, the Motion to Intervene (Doc. No. 27), both filed by defendant Farmers Insurance Company ("Farmers").1 For the reasons set forth herein, both motions will be granted.
Plaintiffs Michael Chill and Denise Chill, Missouri residents, were involved in a car accident in Nashville, Tennessee on March 7, 2019, on Interstate 24, when a vehicle driven by defendant Jerry Shipp, an Oklahoma resident, collided with the rear end of a vehicle driven by Michael Chill and in which Denise Chill was a passenger. The plaintiffs allege that Shipp's negligence or recklessness caused the accident, that both Michael and Denise suffered injuries and incurred medical expenses in excess of $147,000 and $42,000, respectively, and that Shipp was underinsured for the injuries he caused, having automobile insurance with liability limits of $100,000. The plaintiffs also allege that, at the time of the accident, the plaintiffs were insured through an insurance policy with Farmers, Policy Number 18671-06-70 ("Policy"), which provided underinsured and uninsured motorist coverage.
As relevant here, the plaintiffs assert two causes of action against Farmers: (1) breach of contract, based on Farmers’ alleged "fail[ure] to pay Plaintiff[s] in accordance with the terms of [their] Underinsured Motorist coverage" (Doc. No. 1 ¶¶ 34, 60); and (2) "vexatious refusal to pay" the plaintiffs’ claims for underinsured motorist benefits under their policy, without reasonable cause or excuse (id. ¶¶ 39–40, 65–66), in violation of Mo. Rev. Stat. § 375.420.
Farmers filed an Amended Motion to Dismiss and supporting Memorandum of Law on October 26, 2020. (Doc. Nos. 30, 31.) It had previously filed a Motion to Intervene (Doc. No. 27), which anticipates that its Motion to Dismiss will be granted.2 The plaintiffs have filed a Response in opposition to both motions (Doc. Nos. 34, 36), and Farmers filed a Reply in support of each motion (Doc. Nos. 37, 38).
In deciding a motion to dismiss for failure to state a claim under Rule 12(b)(6), the court will "construe the complaint in the light most favorable to the plaintiff, accept its allegations as true, and draw all reasonable inferences in favor of the plaintiff." Directv, Inc. v. Treesh , 487 F.3d 471, 476 (6th Cir. 2007) ; Inge v. Rock Fin. Corp. , 281 F.3d 613, 619 (6th Cir. 2002). " Federal Rule of Civil Procedure 8(a)(2) requires only ‘a short and plain statement of the claim showing that the pleader is entitled to relief,’ in order to ‘give the defendant fair notice of what the ... claim is and the grounds upon which it rests." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (quoting Conley v. Gibson , 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957) ). The court must determine only whether "the claimant is entitled to offer evidence to support the claims," not whether the plaintiff can ultimately prove the facts alleged. Swierkiewicz v. Sorema N.A. , 534 U.S. 506, 511, 122 S.Ct. 992, 152 L.Ed.2d 1 (2002) (quoting Scheuer v. Rhodes , 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974) ).
A court presented with a Rule 12(b)(6) motion "may consider the Complaint and any exhibits attached thereto, public records, items appearing in the record of the case and exhibits attached to defendant's motion to dismiss so long as they are referred to in the Complaint and are central to the claims contained therein." Bassett v. Nat'l Collegiate Athletic Ass'n , 528 F.3d 426, 430 (6th Cir. 2008) (citing Amini v. Oberlin Coll. , 259 F.3d 493, 502 (6th Cir. 2001) ). "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." Arnold v. Liberty Mut. Ins. Co. , 392 F. Supp. 3d 747, 764 (E.D. Ky. 2019) (). In Weiner , 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.
In this case, the plaintiffs’ two causes of action against Farmers are premised upon the assertion that Farmers breached its obligations to the plaintiffs under the underinsured clause of the Policy issued to them by Farmers. The Policy is referred to in the Complaint, and there is no question that its terms are central to the plaintiffs’ claims. See Bassett , 528 F.3d at 430. Accordingly, the court finds that it may consider the Policy submitted by the defendant with its Motion to Dismiss, without converting the motion into one for summary judgment.
The Policy ensures that Farmers will "pay damages an insured person is legally entitled to recover from the owner or operator of an underinsured motor vehicle because of bodily injury sustained by an insured person, caused by an accident and arising out of the ownership, maintenance or use of an underinsured motor vehicle." (Doc. No. 31-1, at 14, 46.) However, Farmers becomes obligated to "pay under this coverage only after the limits of liability of all bodily injury liability bonds or policies applicable to an underinsured motor vehicle have been exhausted by payment of judgments or settlements. " (Id. at 14, 46 (emphasis added).)
Based on the Policy language, Farmers argues that the plaintiffs’ claims fail under clearly established Missouri law, because Farmers’ obligations under the Policy have not yet been triggered and the claims are premature. That is, in the absence of a settlement with the underinsured motorist for the policy limits or a judgment against the underinsured motorist in excess of the policy limits, Farmers has no contractual obligation to pay damages under the underinsured motorist clause of the Policy. Without addressing either the language of their own Policy or Missouri law, the plaintiffs argue only that they have alleged on the face of the Complaint sufficient facts to support their claims against Farmers, and they cite to an opinion by the Idaho Supreme Court in support of their assertion that disallowing claims such as theirs would unfairly punish injured victims and cause drastic delays in victims’ ability to obtain full coverage for their injuries. (Doc. No. 34, at 3 (citing Hill v. Am. Family Mut. Ins. Co. , 150 Idaho 619, 249 P.3d 812 (2010) ).) They also argue that the cases cited by the defendant are distinguishable.
Although neither party addresses this question, the court must first determine which jurisdiction's law to apply. The basis for jurisdiction in this court is diversity, under 28 U.S.C. § 1332. A federal court sitting in diversity applies the choice of law rules of the forum state. Stone Surgical, LLC v. Stryker Corp. , 858 F.3d 383, 389 (6th Cir. 2017) (citing Klaxon Co. v. Stentor Elec. Mfg. , 313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941) ). The court must therefore apply Tennessee law to determine which state's laws govern the plaintiffs’ claims.
The first cause of action against Farmers is breach of contract. Generally, Tennessee follows the rule of lex loci contractus , which means that "a contract is presumed to be governed by the law of the jurisdiction in which it was executed absent a contrary intent." Se. Texas Inns, Inc. v. Prime Hosp. Corp. , 462 F.3d 666, 672 n.8 (6th Cir. 2006) (quoting Vantage Tech., LLC v. Cross , 17 S.W.3d 637, 650 (Tenn. Ct. App. 1999) ). More specifically, "the liability of an insurance company under a policy of insurance is determined by the law of the state where the contract for insurance was made." Stakem v. Randolph , 431 F. Supp. 2d 782, 785 (E.D. Tenn. 2006) (citing Carr v. Am. Universal Ins. Co. , 341 F.2d 220, 222 (6th Cir. 1965) ); aff'd , 228 F. App'x 600 (6th Cir. 2007). Where, as here, the plaintiffs were residents of Missouri, and the subject Policy was issued and delivered to them in Missouri, Missouri law governs the interpretation of the Policy. Accord id. ().
The second cause of action, for "vexatious refusal to pay," is a tort created by Missouri statute, which permits plaintiffs to recover attorney's fees and additional damages against an insurance...
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