Curry v. Vanguard Ins. Co., s. 89-5259

• Decision Date: 22 January 1991
• Docket Number: Nos. 89-5259,89-5398,s. 89-5259
• Citation: 923 F.2d 484
• Parties: Roger D. CURRY, Plaintiff-Appellant (89-5259), Plaintiff (89-5398), United States of America, Intervening Plaintiff-Appellant (89-5398), v. VANGUARD INSURANCE COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 484

923 F.2d 484

Roger D. CURRY, Plaintiff-Appellant (89-5259), Plaintiff (89-5398) United States of America, Intervening Plaintiff-Appellant (89-5398), v. VANGUARD INSURANCE COMPANY, Defendant-Appellee.

Nos. 89-5259, 89-5398.

United States Court of Appeals Sixth Circuit.

Argued Oct. 12, 1990.

Decided Jan. 22, 1991.

Bart Adams, Paula Ann Bierley (argued), Louisville, Ky., for plaintiff-appellant, plaintiff.

Bernard D. Leachman, Jr. (argued), Louisville, Ky., for defendant-appellee.

Joseph M. Whittle, U.S. Atty., Suzanne M. Warner, Asst. U.S. Atty. (argued), Office of the U.S. Atty., Louisville, Ky., for intervening plaintiff-appellant.

Before JONES and RYAN, Circuit Judges, and WISEMAN, Chief District Judge. ^*

RYAN, Circuit Judge.

Plaintiff Roger Dale Curry and intervening plaintiff United States appeal an adverse summary judgment with respect to a claim against defendant Vanguard Insurance Company for insurance proceeds. The only issue on appeal is whether pursuant to Ky.Rev.Stat.Ann. Sec. 413.310 (Baldwin 1979), Curry's incarceration tolled the running of a one-year limitations period created by an insurance contract. We conclude that it did not.

I.

Plaintiff Curry pleaded guilty to federal drug trafficking charges. He had used his house in Kentucky to further the drug trafficking activities, and the government seized the house under proper warrant. In an agreement with the government, Curry acknowledged that the house was under government control "pending completion of forfeiture proceedings under 21 U.S.C. Sec. 881(a)(7)." The government allowed Curry to remain in the house until forfeiture and/or the beginning of his incarceration, and Curry in turn agreed to maintain insurance on the property and fulfill other obligations.

On October 3, 1986, a fire severely damaged the house and its contents. The government took Curry into custody the next day, and he remains incarcerated. Curry in fact had continued to maintain insurance on the house and its contents with Vanguard Insurance Company. On October 4, 1986, his sister informed Vanguard of the loss. Vanguard suspected arson and advised the Currys that it had turned the matter over to its legal department. However, when Curry's brother attempted to tender an inventory of destroyed personal property to the legal department, the legal department indicated that it would deal only with Roger Dale Curry, then incarcerated. Five months after the fire, the government initiated its forfeiture action with respect to the real property.

In January 1988, Curry brought an action against Vanguard in Kentucky state court to recover proceeds for the fire loss. Claiming it was entitled to the insurance proceeds from the real property, the government intervened in the action and had it removed to the federal district court. There the action was consolidated with the government's forfeiture action. The government prevailed on the forfeiture action in June 1988.

All parties moved for summary judgment with respect to the insurance claim. Vanguard moved for summary judgment against Curry and the government on various grounds, including a clause in the insurance contract requiring the insured to bring any action on the insurance policy within one year of the date of loss. The clause reads:

No suit or action on this policy for the recovery of any claim shall be sustainable in any court of law or equity unless all the requirements of this policy shall have been complied with, and unless commenced within twelve months next after inception of the loss.

The district court granted summary judgment for Vanguard on the grounds that Curry's action, filed fifteen months after the loss, was time-barred by the policy provision. Curry appeals the adverse summary judgment and asks this court to enter summary judgment in his favor. The government appeals for the limited purpose of protecting its derivative interest in the insurance proceeds.

II.

Summary judgment is appropriate where no genuine issue of material fact exists so that the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). The court determines whether "there are any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986). Of course, "inferences to be drawn from the underlying facts must be viewed in the light most favorable to the party opposing the motion." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587-88, 106 S.Ct. 1348, 1356-57, 89 L.Ed.2d 538 (1986) (quoting United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962)). The movant meets its initial burden "by 'showing'--that is, pointing out to the district court--that there is an absence of evidence to support the nonmoving party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 324-25, 106 S.Ct. 2548, 2553-54, 91 L.Ed.2d 265 (1986). At that point, the non-movant "must set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(c); Anderson, 477 U.S. at 250, 106 S.Ct. at 2511.

Ky.Rev.Stat. Sec. 413.310, a tolling provision, provides: "The time of the confinement of the plaintiff in the penitentiary shall not be counted as part of the period limited for the commencement of an action." Curry argues that this tolling provision applies to private limitations periods created by insurance contracts as well as to legislatively mandated statutes of limitations. If this proposition were valid, Curry might prevail because he has been more or less continuously incarcerated since the day after the fire loss. Thus, in this diversity action, our task as a federal court is to infer whether if faced with the question, the Kentucky Supreme Court would hold that section 413.310 applies to a nonlegislative limitations period created by an insurance contract. See Erie Railroad Co. v. Tompkins, 304 U.S. 64, 78-80, 58 S.Ct. 817, 822-23, 82 L.Ed. 1188 (1938).

Curry attempts to bolster his argument that the tolling provision applies by pointing to a separate provision of the insurance policy. Under this provision, "The terms of [the] policy which are in conflict with the statutes of the state wherein this policy is issued are amended to conform to such statutes." Curry believes this provision makes section 413.310 controlling here, but as a matter of logic, section 413.310 is not "in conflict with" the insurance policy provision unless section 413.310 does in fact apply to a private, contractually based limitations period created by an insurance agreement.

In Webb, the Court of Appeals of Kentucky addressed the issue of "whether the provision in [an insurance] policy containing the one-year limitation on the commencement of actions is in conflict with the general [fifteen-year] statute of limitations on actions on written contracts...." Webb v. Kentucky Farm Bureau Ins. Co., 577 S.W.2d 17 (Ky.App.1978). The insurance policy had provided that terms "in conflict" with statutes were amended to conform with such statutes. Id. at 18. The court of appeals found that there was no conflict between the statute and the contractual provision. Id. The fifteen-year statute of limitations simply does not apply to a case where parties have contractually limited a shorter period for the commencement of an action. Similarly, section 413.310 does not necessarily apply to toll the running of a limitations period created by an insurance contract where the insurance contract itself allows for no tolling contingencies.

In evaluating Curry's contentions, we are mindful of the Kentucky legislature's policy favoring the relatively short limitation periods typically contained in insurance contracts. See Webb, 577 S.W.2d at 18. Kentucky courts as well have consistently viewed any reasonable shortening of the period for commencing an action under an insurance policy as being in the public interest. See id. at 19. As a judicious counterweight to these policies, the Kentucky legislature has provided explicitly that no insurance contract provision may limit the time for commencing action against the insurer to less than one year. Ky.Rev.Stat.Ann. Sec. 304.14-370 (Baldwin 1987). Had the legislature...