Missing a two-year insurance deadline by days can cost you your entire lawsuit.

Record source: CourtListener

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF KENTUCKY NORTHERN DIVISION AT ASHLAND CIVIL ACTION NO. 25-85-DLB-EBA JAMES “JR” KINSTER, et al. PLAINTIFFS v. MEMORANDUM OPINION AND ORDER STATE AUTO PROPERTY & CASUALTY INSURANCE COMPANY, et al. DEFENDANTS * * * * * * * * * * * * * * * * This matter is before the Court upon Defendants’ Motion to Dismiss Complaint for Failure to State a Claim (Doc. # 4). Plaintiffs have responded to the motion (Doc. # 7) and Defendants have filed a reply (Doc. # 8). Therefore, the motion is ripe for review. For the reasons set forth herein, the Court will grant Defendants’ motion to dismiss. I. FACTUAL AND PROCEDURAL BACKGROUND This case arises from a fire on May 17, 2023, which is alleged to have caused damage to Plaintiffs’ place of business, its contents, and, ultimately, its earnings. At the time of the fire, the business was subject to a policy of insurance issued by State Auto Property & Casualty Insurance Company (“State Auto”), Policy Number BOP 2565366.1 (Doc. # 4-1). The policy contains the following limitations clause: E. Property Loss Conditions … 4. Legal Action Against Us. No one may bring a legal action against us under this insurance unless: 1 Although named as Defendants, there are no claims alleged separately or individually against State Auto Insurance Company or Liberty Mutual Insurance Company. According to State Auto, “State Auto Insurance Company “is merely a trade name and not a legal entity which is subject to suit. State Auto further states that Liberty Mutual is not a real party in interest having not issued the subject policy. a. There has been full compliance with all of the terms of this insurance; and b. The action is brought within 2 years after the date on which the direct physical loss or damage occurred. Id. (emphasis added). On August 5, 2025, Plaintiffs commenced this civil action against State Auto in Elliott Circuit Court, seeking compensatory damages as well as attorney’s fees and costs. (Doc. # 1-1). In their Complaint, they allege that “on or about the 17th day of May 2023, [they] suffered a loss at their place of business when a fire broke out and destroyed their business and the building in which their business was located.” Id. at ¶ 3. Plaintiffs allege that Defendants “failed and refused to pay Plaintiffs for the items of damages” resulting from the fire. Id. at ¶ 8. State Auto filed a timely Notice of Removal matter pursuant to 28 U.S.C. § 1441 and 1446 based upon diversity of citizenship as set forth in 28 U.S.C. § 1332. (Doc. # 1). State Auto now seeks dismissal of all claims alleged herein, arguing that Plaintiffs claims are barred by the subject policy’s 2-year limitations clause. II. STANDARD OF REVIEW Federal Rule of Civil Procedure 12(b)(6) tests whether the plaintiff has “‘state[d] a claim for relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is plausible “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. A complaint does not have to show that liability is probable, but the plausibility standard “asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. (quoting Twombly, 550 U.S. at 557). If a reasonable court “can draw the necessary inference from the factual material stated in the complaint, the plausibility standard has been satisfied.” Keys v. Humana, Inc. 684 F.3d 605, 610 (6th Cir. 2012) (quoting Iqbal, 556 U.S. at 678). In adjudicating a motion to dismiss, a court should accept the plaintiff’s allegations as true and then determine whether the plaintiff has pled sufficient “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 663. In short, a claim cannot survive a motion to dismiss if the plaintiff has not pled sufficiently plausible facts to support a “viable legal theory” with respect to all material elements of each claim. Eidson v. State of Tenn. Dept. of Children’s Servs., 510 F.3d 631, 634 (6th Cir. 2007). Pertinent here, dismissal under Rule 12(b)(6) is appropriate where the allegations in the complaint affirmatively show that the claim is time-barred. Gibson v. American Bankers Ins. Co., 91 F.Supp.2d 1037, 1040–41 (E.D.Ky.2000). Additionally, federal courts apply the substantive law of the forum state in diversity actions. See City of Wyandotte v. Consol. Rail Corp., 262 F.3d 581, 585 (6th Cir. 2001) (citing Hanover Ins. Co. v. Am. Eng'g Co., 33 F.3d 727, 730 (6th Cir. 1994)). Therefore, Kentucky substantive law will apply to Plaintiffs’ claims. That said, federal pleading standards still control. See Lee v. Vand. Univ., No. 22-5607, 2023 WL 4188341, at *3 (6th Cir. June 22, 2023) (citing Wilkey v. Hull, 366 F. App’x 634, 637 (6th Cir. 2010)); see also Red Hed Oil, Inc. v. H.T. Hackney Co., 292 F.Supp.3d 764, 771-72 (E.D. Ky. 2017). III. ANALYSIS State Auto contends that dismissal is warranted as Plaintiffs did not bring this action within two years as required by the subject policy. Indeed, Plaintiffs allege claims based on a May 17, 2023, fire loss but did not file their Complaint until August 5, 2025. As such, Plaintiffs did not bring the lawsuit “within 2 years after the date on which the direct physical loss or damage occurred” as required under the State Auto Policy and this lawsuit is, thus, time barred. Plaintiffs insist that their action was timely filed because it “was actually loaded into the system on May 16 [2025].” (Doc. # 7, pg. 1). Without further argument or any reference to applicable case law, Plaintiffs conclude that State Auto’s motion lacks merit. Id. at pg. 2. According to Plaintiff’s counsel’s Affidavit, he gave the Complaint to an associate for electronic filing on May 16, 2025, who converted it to PDF and e-filed with the Elliott Circuit Clerk. (Doc. # 7-1, ¶ b and d.). There is no such sworn statement from the associate. However, according to the state court record, summons was not issued until August 5, 2025. Simply “loading” a pleading “into the system” is not sufficient to commence a civil action. Kentucky law clearly and repeatedly provides that “[a]n action shall be deemed to commence on the date of the first summons or process issued in good faith from the court having jurisdiction of the cause of action.” KRS 413.250. Similarly, Kentucky Rule of Civil Procedure (“CR”) 3.01 provides: “[a] civil action is commenced by the filing of a complaint with the court and the issuance of a summons or warning order thereon in goo

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