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Ostrom v. Farm Bureau Financial Services

United States District Court, D. Kansas

June 4, 2018

KYLE OSTROM, Plaintiff,
v.
FARM BUREAU FINANCIAL SERVICES, et al., Defendants.

          MEMORANDUM AND ORDER

          JOHN W. BROOMES UNITED STATES DISTRICT JUDGE.

         This case comes before the court on Defendants' motion to dismiss Plaintiff's amended complaint for failure to state a claim. (Doc. 25.)[1] The motion has been fully briefed and is ripe for decision. (Docs. 10, 17, 26, 30.) Defendants' motion is GRANTED for the reasons set forth herein.

         I. Motion to Dismiss Standards

         In order to withstand a motion to dismiss for failure to state a claim, a complaint must contain enough allegations of fact to state a claim to relief that is plausible on its face. Robbins v. Oklahoma, 519 F.3d 1242, 1247 (10th Cir. 2008) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1974 (2007)). All well-pleaded facts and the reasonable inferences derived from those facts are viewed in the light most favorable to Plaintiff. Archuleta v. Wagner, 523 F.3d 1278, 1283 (10th Cir. 2008). Conclusory allegations, however, have no bearing upon the court's consideration. Shero v. City of Grove, Okla., 510 F.3d 1196, 1200 (10th Cir. 2007). In the end, the issue is not whether Plaintiff will ultimately prevail, but whether he is entitled to offer evidence to support his claims. Beedle v. Wilson, 422 F.3d 1059, 1063 (10th Cir. 2005).

         II. Facts

         Plaintiff worked for Trash-B-Gone in Hays, Kansas, as a “trash-collector” and a “trash-truck operator.” (Doc. 24 at ¶ 20.) On July 7, 2015, Plaintiff was injured in the regular course of his employment. Id. As a result of his injuries, Plaintiff has incurred medical bills which have not been paid.

         Plaintiff alleges that at some point, prior to July 7, 2015, “Justin Ziegler, David Stecklein and/or John Ziegler, ” who are owners or agents of Trash-B-Gone, “entered into a written and/or oral contract” with “Farm Bureau Agent Tina Quigley and/or other agent, servant and/or employee” of Defendants “Farm Bureau Financial Services, Farm Bureau Property & Casualty Insurance and/or Western Agricultural Insurance Company.” (Doc. 24 at ¶ 8.) The insurance contract was to provide worker's compensation coverage for Trash-B-Gone. Plaintiff further alleges that Defendants failed to procure the worker's compensation insurance as required by the contract.

         Additionally, Plaintiff alleges that Quigley - or another agent of Defendants - made fraudulent representations regarding the insurance coverage. In paragraph 29 of the amended complaint, Plaintiff alleges that there were oral representations made by an agent of Defendants to Justin Ziegler, David Stecklein and/or John Ziegler in which it was represented that Defendants would obtain a valid policy of worker's compensation insurance to indemnify Trash-B-Gone for any employee injuries that occurred during the course of employment. These representations were either made at the offices of Defendants or the offices of Trash-B-Gone on an unknown date prior to July 7, 2015. In paragraph 30, Plaintiff alleges that Quigley and other agents fraudulently represented to Justin Ziegler and/or other Trash-B-Gone owners or representatives that Plaintiff and/or the employees were “listed on the [Trash-B-Gone Worker's Compensation] policy” or were “covered.” (Doc. 24 at ¶ 30.) These representations were allegedly made by telephone, at the offices of Defendants, or at the offices of Trash-B-Gone on an unknown date prior to July 7, 2015.

         Although the representations were not made to Plaintiff, Plaintiff alleges that the representations were “repeated by Trash-B-Gone to its employees including the Plaintiff.” (Doc. 35 at ¶ 30.) Plaintiff further alleges that Defendants fraudulently omitted the fact that Trash-B-Gone's employees were not covered by a worker's compensation policy. These omissions allegedly occurred prior to July 7, 2015.

         Plaintiff contends that Defendants' actions have caused damages due to unpaid medical bills and poor credit. Additionally, Plaintiff allegedly suffered bodily injuries as a result of his severe mental anguish when he realized that he did not have insurance to pay the medical bills. (Doc. 24 at ¶ 41.) On or about August 26, 2015, Plaintiff filed a worker's compensation claim with the Kansas Department of Labor, Division of Workers Compensation. (See Doc. 226, exh. 1.)[2]

         On July 7, 2017, Plaintiff filed this diversity action against Defendants. (Doc. 1.) Plaintiff was granted leave to amend and filed his amended complaint on January 24, 2018. (Doc. 24.) In his amended complaint, Plaintiff brings several claims against Defendants which all stem from Defendants' alleged failure to procure worker's compensation insurance for Trash-B-Gone.

         III. Analysis

         I. Counts I and IV

         Defendants move to dismiss counts I (failure to procure insurance) and IV (breach of contract) on the basis that Plaintiff cannot state a claim against Defendants until a final determination is made on his worker's compensation claim, citing Keith v. Schiefen Stockham Ins. Agency, Inc., 209 Kan. 537, 498 P.2d 265 (1972). In Keith, the Kansas Supreme Court recognized that an employee has a cause of action against an insurance broker for failing to procure insurance for worker's compensation liability. The plaintiffs in Keith brought an action against the insurer after the conclusion of a worker's compensation proceeding in which it was determined that the employer did not have insurance coverage. The Court held that the “plaintiffs were effectively prevented from suing defendants until it was finally determined in Otta v. Johnson, supra [the worker's compensation ...


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