946 F. Supp. 2d 695
W.D. Ky.2013Background
- This case arises from financing-premium life insurance schemes sold by American General and its agent Rasche.
- Plaintiffs allege deceptive premium financing, misrepresentations, and negligent supervision in the sale and financing of policies.
- Financing involved banks and letters of credit; plaintiffs executed loan documents and trust arrangements under Rasche’s direction.
- Eight causes of action are asserted across multiple defendants; prior decisions dismissed others, leaving Rasche and American General.
- Court grants in part and denies in part defendants’ summary judgment motions, with several claims proceeding to trial.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| KCPA privity and statute of limitations | Plaintiffs argue privity extends to Rasche and tolling may apply | Rasche contends no privity and claims-time bar | Count One dismissed for lack of privity; statute of limitations not reached argument deferred |
| KRS 304.12-010 causation for misrepresentation | Misrepresentations caused damages despite bank decisions | Fundamental financing is legitimate; causation weak | Issues of causation intact; summary judgment denied for Count Two |
| KRS 304.12-090 inducement/rebates | Defendants improperly offered valuable consideration not in contract | Loans/deferred interest not rebates under statute | Count Three granted summary judgment for Rasche and American General |
| Negligent misrepresentation by Rasche | Rasche provided expert financing advice; relied upon for decisions | Statements about future financing are not actionable; relied on written disclosures | Partial denial of summary judgment; questions remain as to present/preexisting misrepresentations and collateral representations |
| Negligent supervision and agency liability | Employer liable for Rasche’s conduct under Restatement and statute | No duty to supervise; no knowledge of risk | Genuine issues of material fact; summary judgment denied for Count Six (and related agency liability considerations) |
Key Cases Cited
- Stevens v. Motorists Mut. Ins. Co., 759 S.W.2d 819 (Ky. 1988) (insurance purchase qualifies as a service under KCPA)
- Anderson v. National Sec. Fire and Cas. Co., 870 S.W.2d 432 (Ky. Ct. App. 1993) (insured may sue insurer for unfair practices without direct privity)
- Skilcraft Sheetmetal, Inc. v. Kentucky Machinery, Inc., 836 S.W.2d 907 (Ky. Ct. App. 1992) (privity requirement for KCPA actions against insurers/agents)
- Mullins v. Commonwealth Life Ins. Co., 839 S.W.2d 245 (Ky. 1992) (duty to advise may arise from special relationship or course of dealing)
- Roethke, 30 S.W.3d 128 (Ky. 2000) (agency liability of insurers to supervise agents (KRS 304.9-035 context))