Gibson v. American Bankers Ins. Co., Civ.A. 99-232.

• Decision Date: 23 March 2000
• Docket Number: No. Civ.A. 99-232.,Civ.A. 99-232.
• Citation: 91 F.Supp.2d 1037
• Parties: Edgar Allen GIBSON, et. al., Plaintiffs, v. AMERICAN BANKERS INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Eastern District of Kentucky

91 F.Supp.2d 1037

Edgar Allen GIBSON, et. al., Plaintiffs, v. AMERICAN BANKERS INSURANCE COMPANY, Defendant.

No. Civ.A. 99-232.

United States District Court, E.D. Kentucky at Pikeville.

March 23, 2000.

COPYRIGHT MATERIAL OMITTED

Timothy D. Belcher, of Timothy D. Belcher, P.S.C., Elkhorn City, KY, for plaintiffs.

Roger L. Massengale, a sole practitioner, Paintsville, KY, and Gerald J. Nielsen, of the Nielsen Law Firm, Metairie, LA, for defendant.

MEMORANDUM OPINION AND ORDER

PATTERSON, District Judge.

I. INTRODUCTION

This case is presently before the court for decision upon the motion of Defendant, American Bankers Insurance Company, to dismiss for failure to state a claim, pursuant to Fed.R.Civ.P. 12(b)(6), on the asserted basis of expiration of the applicable federal statute of limitations. (Record No. 11.) Plaintiffs, Edgar Allen Gibson and Leslie Gibson, assert claims for alleged violations of the Kentucky Unfair Claims Settlement Statute and the fiduciary duties of good faith and fair dealing. (Record No. 1, Attachment, Complaint, pp. 2-3.) Plaintiffs' complaint was originally filed in the Pike Circuit Court on June 9, 1999, but Defendant subsequently removed this action on June 29, 1999, pursuant to 28 U.S.C. § 1441(a)-(c), to this court on the basis of federal question jurisdiction, 28 U.S.C. § 1331, asserting that Plaintiffs' claims can only be pursued under the National Flood Insurance Act ("NFIA"), 42 U.S.C. §§ 4001-4127. (Record No. 1, pp. 1-2.) Now ripe for decision and for the reasons set forth below, Defendant's motion to dismiss shall be sustained.

II. RELEVANT FACTS AND PROCEDURAL HISTORY

A. Relevant Facts

Plaintiffs purchased a Standard Flood Insurance Policy ("SFIP") from Defendant, effective from June 21, 1997 to June 21, 1998, for their residence at 280 Russell Street, Elkhorn City, Kentucky. (Record No. 1, Attachment, Complaint, p. 1; Record No. 11, Memorandum, p. 2.) According to Plaintiffs, on April 19, 1998, said residence and certain contents therein were damaged by flooding. (Record No. 1, Attachment, Complaint, p. 1.) After Plaintiffs presented a SFIP claim to the Defendant for the alleged flood damage sustained, Defendant denied the claim on June 10, 1998. (Id., p. 2.)

B. Procedural History

After Defendant's denial of Plaintiffs' claim on June 10, 1998, Plaintiffs filed their complaint in the Pike Circuit Court on June 9, 1999. (Record No. 1, Attachment, Complaint, pp. 1-2.) In that complaint, Plaintiffs allege that Defendant "failed to indemnify Plaintiffs for its loss and as a result, has breached the terms of the Policy," in violation of the Kentucky Unfair Claims Settlement Statute and the fiduciary duties of good faith and fair dealing. (Record No. 1, Attachment, Complaint, pp. 2-3.) Plaintiffs seek "actual monetary damages according to the proof at trial, plus pre-judgment interest; punitive damages in the amount of $500,000.00; reasonable attorney's fees and costs of this suit; and such other and future relief as this Court may deem just and proper." (Id., pp. 3-4.) Defendant filed a notice of removal with this court on June 29, 1999, pursuant to 28 U.S.C. § 1441(a)-(c), on the basis of original jurisdiction involving a federal question arising under a law of the United States. 28 U.S.C. § 1331. (Record No. 1, p. 2.)

Upon the consent of the parties, pursuant to 28 U.S.C. § 636(c)(1), on September 3, 1999, this case was assigned to the undersigned for further proceedings and final disposition. (Record No. 8.) In accordance with the parties' Joint Status Report filed on August 25, 1999 (Record No. 7), this case was placed upon a pretrial and trial schedule by order dated September 14, 1999 (Record No. 9). That order directed that all discovery be completed by May 22, 2000, and dispositive motions be filed by June 21, 2000 (Record No. 9, p. 2, ¶ (1)(e) and (f)).

Defendant's "Motion to Dismiss Under Rule 12(b)(6)" and Memorandum in Support (Record No. 11) were filed on October 12, 1999. In said motion, Defendant asserts that it is entitled to dismissal of this case because Plaintiffs' lawsuit is untimely. (Id., p. 1.) Defendant asserts that the Plaintiffs were "required to file [their] lawsuit with this Court no later than twelve months after the denial of all `or any part' of [their] flood insurance claim." (Id., Memorandum, p. 2 (citing 42 U.S.C. § 4072).) Defendant points out that Plaintiffs' claim was denied by Defendant on June 10, 1998, and Plaintiffs subsequently filed their complaint in the Pike Circuit Court on June 9, 1999. (Id.) However, because the case was not removed from state court to this court until June 29, 1999, Defendant asserts that "Plaintiffs' failure to file their lawsuit in federal court within one year from the date of denial of their claim is fatal." (Id.) (emphasis added).

On October 25, 1999, the parties filed a joint stipulation granting Plaintiffs an additional thirty (30) days to file a response to Defendant's motion to dismiss. (Record No. 13.) Plaintiffs timely filed their Response (Record No. 14) on November 18, 1999. In said response, Plaintiffs' first argument asserts that "Defendant has not been prejudiced in any way because this action was commenced with a one year period in a state court of competent jurisdiction." (Record No. 14, p. 3.) Plaintiffs' second argument asserts that, under 28 U.S.C. § 1441(e), "[T]his Court is not precluded from hearing this claim even if the State Court did not have jurisdiction over the claim ... any Statute of Limitation should be tolled and the removal should relate back to the date of the original filing in State Court." (Id., p. 5.) Finally, Plaintiffs' third argument declares that "[their] state law claims are clearly filed with the proper time period and Plaintiffs should be able to proceed on those state law claims whether in Federal Court or on remand to state court." (Id., p. 7.)

III. ANALYSIS

A. Rule 12(b)(6) Motions to Dismiss Based Upon Statute of Limitations

Defendant moves to dismiss Plaintiffs' complaint pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief can be granted, on the grounds that Plaintiffs' complaint was filed in this court beyond the time permitted by the applicable statute of limitations. Fed. R.Civ.P. 12(b)(6). (Record No. 11, p. 1.) The purpose of a motion under Rule 12(b)(6) is to test the sufficiency of the complaint. Ashiegbu v. Purviance, 76 F.Supp.2d 824, 827 (S.D.Ohio 1998.) When considering a motion to dismiss pursuant to Rule 12(b)(6), a court must construe the complaint in the light most favorable to the plaintiff and accept all wellpleaded allegations in the complaint as true. Id. at 827-828 (citing Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974)). The court will grant a motion for dismissal under Rule 12(b)(6) only if there is an absence of law to support a claim of the type made, or of facts sufficient to make a valid claim, or if on the face of the complaint there is an insurmountable bar to relief indicating that the plaintiff does not have a claim. Ashiegbu, 76 F.Supp.2d at 828 (citing Rauch v. Day & Night Mfg. Corp., 576 F.2d 697, 702 (6th Cir.1978) (citations omitted)).

While Rule 12(b) does not specifically address motions to dismiss based upon the alleged expiration of the applicable statute of limitations, the prevailing rule is that a complaint which shows on its face that relief is barred by the affirmative defense of statute of limitations is properly subject to a Rule 12(b)(6) motion to dismiss for failure to state a claim upon which relief can be granted. City of Painesville Ohio v. First Montauk Financial Corp., 178 F.R.D. 180, 193 (N.D.Ohio 1998) (citing Rauch, 576 F.2d at 702). In cases involving the affirmative defense of limitations, where "the claim is adequately stated, but in addition to the claim the complaint includes matters of avoidance that effectively vitiate the pleader's ability to recover on the claim ... the complaint is said to have a built-in defense and is essentially self-defeating." Id. (citations omitted). A statute of limitations defense signifies, in essence, that on the face of the complaint there is an insurmountable bar to relief indicating that the plaintiff does not have a claim. See Ashiegbu, 76 F.Supp.2d at 828 (citing Rauch, 576 F.2d at 702).

The affirmative defense of statute of limitations may be raised by a Rule 12(b)(6) motion to dismiss when the time alleged in the complaint shows that the plaintiff did not commence the action within the statutory period. City of Painesville, 178 F.R.D. at 193 (citing Rauch, 576 F.2d at 702). Dismissal of a complaint because it is barred by the applicable statute of limitations is proper only "when the statement of the claim affirmatively shows that the plaintiff can prove no set of facts that would entitle him to relief." Id. (quoting Duncan v. Leeds, 742 F.2d 989, 991 (6th Cir.1984) (citations omitted)). In this regard, the complaint must be liberally construed in determining whether the action is time-barred. Id. (citing Ott v. Midland-Ross Corp., 523 F.2d 1367, 1369 (6th Cir.1975)).

B. National Flood Insurance Act of 1968 ("NFIA")

Defendant, American Bankers Insurance Company, is a "Write-Your-Own" ("WYO") private insurance company which issues Standard Flood Insurance Policies ("SFIPs") pursuant to the National Flood Insurance Program ("NFIP"), established by the National Flood Insurance Act ("NFIA") of 1968. 42 U.S.C. §§ 4001-4127; 44 C.F.R. § 61.13(f) (1993). See also Berger v. Pierce, 933 F.2d 393, 394 (6th Cir.1991). The NFIP is a federally subsidized program which provides flood insurance at affordable, "below actuarial rates." Berger, 933 F.2d at 394. Primary managerial responsibility for the operation of the NFIP and the promulgation of SFIPs lies with the Federal Emergency Management Agency ("FEMA"). Id. at 395. See also 42 U.S.C. § 4003(a)(6); 42 U.S.C. § 4071. While FEMA has complete...