Geico Marine Ins. Co. v. Monette
| Decision Date | 06 February 2020 |
| Docket Number | Civil Case No. 5:19-cv-44-JMH |
| Citation | 438 F.Supp.3d 763 |
| Parties | GEICO MARINE INSURANCE COMPANY, Plaintiff, v. Charles MONETTE, Defendant. |
| Court | U.S. District Court — Eastern District of Kentucky |
James K. Mondl, Pro Hac Vice, Shannon M. Oberkrom, Pro Hac Vice, Tonkin & Mondl, L.C., St. Louis, MO, for Plaintiff.
William W. Allen, Gess Mattingly & Atchison, P.S.C., Lexington, KY, for Defendant.
Joseph M. Hood, Senior U.S. District Judge This matter comes before the Court on Plaintiff GEICO Marine Insurance Company's ("GEICO") Motion for Judgment on the Pleadings [DE 14] and Defendant Charles Monette's Motion for Summary Judgment [DE 16]. Having considered the matter fully, and being otherwise sufficiently advised, GEICO's Motion for Judgment on the Pleadings [DE 14] will be denied and Monette's Motion for Partial Summary Judgment [DE 16] will be granted in part and denied in part.
On May 23, 2018, GEICO issued Monette a marine insurance policy ("the Policy") for a 1986 Creekmore Monohull Sailboat ("the boat"). [DE 1-1]. The policy period began on June 30, 2018 and ended on June 30, 2019. Id. On or about August 22, 2018, Monette filed an insurance claim for water damage to the boat, and a GEICO-hired surveyor reported the damage was caused by deterioration and found the boat was in poor condition and over insured at $90,000.00. [DE 1, at 3-4; DE 14, at 1; DE 17-1, at 1-4]. On September 20, 2018, GEICO issued an endorsement, which became effective on October 5, 2018, amending the cruising limits of the boat from "Coastal and Inland waters of the U.S. and Canada" to "Port Risk Ashore." [DE 1-1, at 1-4]. The endorsement clarified, "This restriction provides no coverage for navigation, and coverage will only apply to the insured vessel while the boat is out of the water." Id. at 2.
On October 10, 2018, the boat was damaged by Hurricane Michael, and GEICO declared the boat to be a "constructive total loss." [DE 1, at 4-5]. In Monette's Answer [DE 6], he admits that at the time of the loss, "[T]he boat was afloat in its slip at Sun Harbor Marina in Panama City, Florida...." [DE 6, at 2]. Following the storm, the Coast Guard demanded the boat be removed from the water immediately, and GEICO paid $9,000.00 to do so. [DE 1, at 5]. Since the boat was in the water at the time of the loss, GEICO found that the loss occurred outside the cruising limits and denied coverage for Monette's claim for property damage to the boat. Id.
On February 12, 2019, GEICO filed its Complaint [DE 1] seeking a declaration that the Policy provides no coverage for Monette's loss and a return of the $9,000.00 for salvaging the boat. Id. at 5-6. On March 27, 2019, Monette filed his Answer and Counterclaim [DE 6] requesting a declaration that GEICO's endorsement is void and the loss of the boat was covered under the Policy and a judgment finding GEICO breached the insurance contract and Policy, violated Kentucky's Unfair Claims Settlement Practices Act, KRS 304.12-230, and acted in bad faith. Additionally, Monette claims he is entitled to punitive damages. Id.
On June 11, 2019, GEICO filed the present Motion for Judgment on the Pleadings [DE 14] seeking judgment only on the issue of coverage. Whether GEICO is entitled to recover the $9,000.00 GEICO paid to salvage the boat is not before the Court at this time. [DE 14-1, at 2 n.1]. The Court must also consider Monette's July 2, 2019, Motion for Partial Summary Judgment [DE 16], which asks the Court to find the endorsement GEICO relied on to deny coverage is void, and the damage to the boat is covered under the Policy. [DE 16, at 1].
GEICO moves for judgment on the pleadings under Fed. R. Civ. P. 12(c). [DE 14]. A motion for judgment on the pleadings requires the same " ‘standard of review employed for a motion to dismiss under Rule 12(b)(6).’ " Florida Power Corp. v. FirstEnergy Corp. , 810 F.3d 996, 999 (6th Cir. 2015) (quoting Tucker v. Middleburg-Legacy Place , 539 F.3d 545, 549 (6th Cir. 2008) ). "After the pleadings are closed ... a party may move for judgment on the pleadings." Fed. R. Civ. P. 12(c). Under such a motion, " ‘all well-pleaded material allegations of the opposing party must be taken as true, and the motion may be granted only if the moving party is nevertheless clearly entitled to judgment.’ " Tucker , 539 F.3d at 549 (quoting JPMorgan Chase Bank, N.A. v. Winget , 510 F.3d 577, 581 (6th Cir. 2007) ). However, the Court " ‘need not accept as true legal conclusions or unwarranted factual inferences.’ " Winget , 510 F.3d at 581-82 (quoting Mixon v. Ohio , 193 F.3d 389, 400 (6th Cir. 1999) ). "A motion brought pursuant to Rule 12(c) is appropriately granted ‘when no material issue of fact exists and the party making the motion is entitled to judgment as a matter of law.’ " Tucker , 539 F.3d at 549 (quoting Winget , 510 F.3d at 582 ). "[W]hen determining whether a plaintiff is entitled to a Judgment on the Pleadings, such a judgment may be based on admissions by the Defendant under Fed. R. Civ. P. 8(b)." Finisar Corp. v. Cheetah Omni, LLC , No. 11-CV-15625, 2012 WL 6949236, at *1 (E.D. Mich. Dec. 10, 2012) (citing Encompass Ins., Inc. v. Hagerty Ins. Agency, Inc. , No. 08-337, 2009 WL 160776, at *6 (W.D. Mich. Jan. 22, 2009) ).
In the present case, GEICO argues the pleadings show no factual dispute exists, so GEICO is entitled to judgment as a matter of law. [DE 14-1, at 3-4]. In support, GEICO cites to the Policy's "Cancellation" provision, which states the following:
[DE 14-1, at 3 (quoting [DE 1-1, at 17] ) ]. GEICO correctly asserts, "Kentucky law provides for cancellation of insurance policies upon strict compliance with the provisions of the insurance contract." Id. at 3 (citing Goodin v. Gen. Acc. Fire & Life Assur. Corp. , 450 S.W.2d 252, 255 (Ky. 1970) ).
In Goodin , the Court of Appeals of Kentucky, the highest state court at that time, held the following:
[I]f the contract contains the standard provision here present that upon a ‘notice of cancellation mailed to the address of the insured stated in this contract, proof of mailing from the office of the insurer shall be sufficient notice,’ proof of mailing from the office of the insurer is sufficient to sustain a finding that the notice was effective without proof that such notice was received by the insured and even though the insured denies receipt of the communication.
450 S.W.2d at 255-56 (). Like cancellations, an amendatory endorsement prevails over any conflicting provisions of the policy because the endorsement is later in time. See Goodin , 450 S.W.2d at 256 ; Hodgin v. Allstate Ins. Co. , 935 S.W.2d 614, 615 (Ky. Ct. App. 1996).
Here, GEICO argues, "Under Kentucky law, Monette's Policy was validly modified when GEICO sent the Endorsement in compliance with the Policy provisions," and "Monette admits he received notice of the change in coverage and that the boat was outside the cruising limits at the time of the loss." [DE 14-1, at 4 (citing [DE 6] ) ]. Monette disagrees, contending GEICO had no right under Kentucky law to unilaterally modify a material term of the Policy—specifically, the cruising limits—without Monette's authorization and consent, so the endorsement is void. [DE 15, at 4-8]. Monette does not dispute the fact that the terms of the Policy permit GEICO to unilaterally cancel the Policy upon notice to Monette. [DE 15, at 6 (citing [DE 1-1, at 17] ) ]. However, Monette contends the Policy does not include a similar provision that would have allowed "GEICO to unilaterally modify the coverages or make other material changes to the Policy." Id.
In GEICO's Reply [DE 17], it argues, "[The cases cited by Monette] stand for nothing more than the proposition that parties may make modifications by mutual assent and, if they do, those modifications are enforceable." [DE 17, at 2 (citing Continental Ins. Co. v. Simpson , 220 Ky. 167, 294 S.W. 1048, 1049 (1927) ; Kentucky Farm Bureau Mut. Ins. Co. v. McMullin , 280 S.W.2d 882, 883 (1955) ) ]. Additionally, GEICO asserts, "Kentucky law makes clear that GEICO could unilaterally terminate coverage for the boat as long as it complied with the notice provision in the Policy." Id. at 3 (citing Hodgin , 935 S.W.2d at 615 (citing Goodin , 450 S.W.2d 252 )). Accordingly, the issue presently before the Court is whether GEICO could unilaterally modify the Policy without Monette's consent. To answer this question, the Court looks to Kentucky contract law for guidance.
While Goodin established that an endorsement, which is later in time than an original policy, prevails over conflicting provisions of the earlier policy, Goodin is distinguishable from the present case. In Goodin , the insured did not merely receive notification of the endorsement. Instead, following a divorce, the insured requested two endorsements transferring policies from his former wife to him as the named insured and accepted the policies as endorsed, so there was mutual assent between the parties. 450 S.W.2d at 254-56. Furthermore, based on the Court of Appeals of Kentucky's opinion in Goodin , whether there...
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...to be valid.'Id. (quoting Vinaird v. Bodkin's Adm'x, 72 S.W.2d 707, 711 (Ky. Ct. App. 1934)); see also GEICO Marine Ins. Co. v. Monette, 438 F. Supp. 3d 763, 768 (E.D. Ky. 2020) (noting that contract modifications require mutual assent just like contract formation). Thus, for the guidelines......