Court Opinion

ID: 9497891
Source: CourtListenerOpinion
Date Created: 2023-08-05 17:02:39.514459+00
Date Added: 2024-06-11T17:58:28.872718
License: Public Domain

ROSEN, District Judge,
dissenting, in part.
I agree with the majority that the district court did not abuse its discretion in deciding to bifurcate the breach of contract and bad faith claims and in staying discovery on the bad faith claim pending disposition of the contract claim. However, I respectfully dissent from the majority’s opinion affirming the district court’s deter*408mination that the provisions in the insurance policies which required suit to be brought within one year after the loss were valid under Kentucky law and barred Plaintiffs’ breach of contract claim.
Under Kentucky law, parties to an insurance contract may limit the time period within which to bring suit against an insurer so long as the limitation is reasonable and not otherwise prohibited by statute. See Brown v. State Auto, 189 F.Supp.2d 665, 668 (W.D.Ky.2001) (citing Webb v. Kentucky Farm Bureau of Ins. Co., 577 S.W.2d at 18-19 (Ky.App.1978)). The majority here acknowledges that Ky.Rev.Stat. § 304.14-370 provides that a contractual limitation period limiting the time within which an insured may bring suit against a foreign insurer may not be “less than one (1) year from the time when the cause of action accrues.” KRS § 304.14-370. The majority further acknowledges that there is a long line of Kentucky cases holding that a cause of action does not “accrue” until the plaintiff has the right to institute and maintain a suit. See e.g., Philpot v. Stacy, 371 S.W.2d 11, 13 (Ky.1963); Forwood v. City of Louisville, 283 Ky. 208, 140 S.W.2d 1048, 1051 (1940); Carter v. Harlan Hospital Association, 265 Ky. 452, 97 S.W.2d 9, 10 (1936).
Despite this acknowledgment, the majority finds that the contractual limitations provision requiring the Smiths to sue Allstate “within one year of their loss,” as opposed to within one year from the time when their cause of action accrued, as is seemingly required by the statute, to be valid and enforceable under Kentucky law. In reaching this conclusion, the majority relies upon Kentucky decisions which predate KRS § 304.14-370 and/or neither discuss, nor even refer to, the statute. In my view, the plain language of the statute should control, and since the Smiths could not have sued Allstate for breach of contract until their insurance claim was denied by the insurer, their suit — which was filed within four months of Allstate’s denial of their claim — should not have been deemed time-barred by Allstate’s contractual provision which, by its terms, would deem Plaintiffs’ action barred five months before they could have brought suit. In my view, this result runs afoul of the obvious legislative intent of KRS § 304.14r-370.
The first rule of statutory construction is that there is no more persuasive evidence of the purpose of a statute than the words by which the legislature undertook to give expression to its wishes. Baum v. Madigan, 979 F.2d 438, 441 (6th Cir.1992) (citing United States v. American Trucking Ass’ns, Inc., 310 U.S. 534, 543, 60 S.Ct. 1059, 84 L.Ed. 1345 (1940). Statutory words are uniformly presumed to be used in their ordinary and usual sense and with the meaning commonly attributed to them. See Caminetti v. United States, 242 U.S. 470, 485-86, 37 S.Ct. 192, 194, 61 L.Ed. 442 (1917)). As this Court has held, “[i]t is an elementary rule of statutory construction that we initially look to the plain language of the statute to determine the meaning of legislation.” McBarron v. S & T Indus., Inc., 771 F.2d 94, 97 (6th Cir.1985); accord Bradley v. Austin, 841 F.2d 1288, 1293 (6th Cir.1988).
Here, the intent of the Kentucky legislature in using the language “from the time when a cause of action accrues,” is clear. The phrase has a plain and ordinary meaning. Both the Kentucky Court of Appeals and the Kentucky Supreme Court have stated that “the accrual of a cause of action means the right to institute and maintain a suit.” City of Covington v. Patterson, 191 Ky. 370, 230 S.W. 542, 543 (1921).1 In law *409or in equity, a cause of action arises when — and only when- — the aggrieved party has a right to apply to the proper tribunal for relief. Patterson, 230 S.W. at 543. “A true test, therefore, to determine when a cause of action accrues, is to ascertain the time and place when the person could have first maintained an action to a successful result.” Id. Plaintiffs here could not have filed suit until Allstate rendered an adverse decision on their insurance claim. Had Plaintiffs filed suit before Allstate denied their claim, Allstate surely would have quickly moved for dismissal of the suit as premature.2
The majority cites Ashland Finance Co. v. Hartford Accident & Indemnity Co., 474 S.W.2d 364, 365-66 (Ky.1971), as support for its determination of validity of the contractual “within one year of the loss” limitation. Although the Kentucky Court of Appeals rendered its decision in Ashland in 1971, the trial court’s order dismissing the plaintiffs action as time-barred pursuant to a one-year contractual limitations period running from discovery of the insured’s loss, which was the subject of the appeal, was rendered in 1967, i.e., more than three years prior to the enactment of KRS § 304.14-370. Furthermore, nowhere in Ashland does the Kentucky court construe or even reference the statute. Similarly, KRS § 304.14-370 was neither discussed nor mentioned in Edmondson v. Pennsylvania National Mutual Casualty Ins. Co., 781 S.W.2d 753 (Ky.1989). Nor was the statute discussed in Hale v. Blue Cross & Blue Shield of Kentucky, 862 S.W.2d 905 (Ky.Ct.App.1993). And, Webb v. Kentucky Farm Bureau Ins. Co., 577 S.W.2d 17 (Ky.Ct.App.1978), which is also cited by the majority, did not involve a “foreign” insurer and, thus, as the court there noted, KRS § 304.14.370 was not applicable to the question presented in that case. See Webb, 577 S.W.2d at 18.
Clearly, had' the Kentucky legislature wished the statute of limitations to have run from the time the loss occurred, it could have — and presumably would have-said so directly. It did not, instead rather unambiguously opting to begin the statute of limitations from the “time when the cause of action accrues.” For a federal appellate court sitting in diversity to effect a judicial amendment to this statute does violence not only to notions of judicial deference. to legislative policy decisions, but also to notions of federal-state comity.
In light of the clear language of KRS § 304.14-370 and the absence of any legislative history or Kentucky case law construing the ,-statute to mean something other than what it plainly says, I would reverse the district, court’s dismissal of Plaintiffs’ contract claim as time-barred.

. There is no Kentucky case law which interprets the phrase "from the time when a cause *409of action accrues” to mean "from the time when loss occurs.”

. To be sure, the Smiths were dilatory in complying with the policy terms which accounted for some of the delay in the processing of their claim: They did not promptly provide Allstate with their proof-of-loss statements nor did they promptly provide the insurer with additional requested deposition information. And, there is some evidence suggesting that the Smiths might well have realized at some point before Allstate's formal denied of their claim that their claim would not be honored. But . Allstate is not entirely blameless, either. The insurer delayed the claim process by changing deadlines and postponing the Smiths’ depositions. In any event, the parties' dilatory conduct should not countenance a bright line ruling that the statute of limitations begins to run on the date of the loss. At best, it suggests that the case should be remanded to the district court to ascertain when, under the circumstances presented, the Smiths' cause of action should be deemed to have accrued.