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Bits & Pieces

iMedEquip, LLC v. Pharmacists Mut. Ins. Co.

United States District Court for the Northern District of Alabama, Southern Division
February 7, 2022, Decided; February 7, 2022, Filed
Case No. 2:20-cv-683-GMB

Reporter
2022 U.S. Dist. LEXIS 21337 *; 2022 WL 364021
IMEDEQUIP, LLC, Plaintiff, v. PHARMACISTS MUTUAL INSURANCE COMPANY, Defendant.
Prior History: IMedEquip, LLC v. Pharmacists Mut. Ins. Co., 2020 U.S. Dist. LEXIS 250178 (N.D. Ala., Oct. 20, 2020)
Core Terms

inventory, warehouse, missing, concentrators, oxygen, physical evidence, summary judgment, happened, shortage, Machine, inspection, housings, stolen, nonmovant, genuine, insurer, walk, proof of loss, mechanical, contracts, scheduled, insurance claim, material fact, ambiguous, employees, delivery, parties, visual, theft
Counsel: [*1] For Imedequip LLC, Plaintiff: Andrew Phillip Campbell, LEAD ATTORNEY, CAMPBELL PARTNERS LAW, LLC, Birmingham, AL; Cason M Kirby, LEAD ATTORNEY, CAMPBELL PARTNERS, Birmingham, AL; Sarah Beth Kimbrell Sanders, LEAD ATTORNEY, CAMPBELL PARTNERS, LLC, Birmingham, AL; Joel S Isenberg, Seth T Hunter, ELY & ISENBERG LLC, Birmingham, AL.
For Pharmacists Mutual Insurance Company, Defendant: Graham R Pulvere, LEAD ATTORNEY, LLOYD, GRAY, WHITEHEAD & MONROE, PC, Birmingham, AL; Jessica Ann Hornbuckle, LEAD ATTORNEY, Birmingham, AL; Carleton P Ketcham , III, LLOYD GRAY WHITEHEAD & MONROE, Birmingham, AL.
Judges: GRAY M. BORDEN, UNITED STATES MAGISTRATE JUDGE.
Opinion by: GRAY M. BORDEN
Opinion

MEMORANDUM OPINION
Plaintiff iMedEquip, LLC (“iMed”) filed this lawsuit in the Circuit Court of Jefferson County, Alabama alleging claims for breach of contract and bad faith against Defendant Pharmacists Mutual Insurance Company (“PMIC”). Doc. 1-2 at 10-12. PMIC timely removed the action to this court. Doc. 1. Now under consideration is PMIC’s motion for summary judgment on all claims. Doc. 33. The parties have consented to the jurisdiction of a United States Magistrate Judge pursuant to 28 U.S.C. § 636(c). Doc. 16. After careful consideration of the parties’ [*2] submissions and the applicable law, and for the reasons that follow, the court concludes that the motion for summary judgment is due to be granted.

I. STANDARD OF REVIEW
Summary judgment is appropriate “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). “Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986). A dispute of material fact is genuine only if “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id.
The moving party “always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, which it believes demonstrate the absence of a genuine [dispute] of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986) (internal quotation marks omitted). In responding to a properly supported motion for summary judgment, the nonmoving party “must do more than simply show that there is some metaphysical doubt as to the material fact.” [3] Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986). Indeed, the nonmovant must “go beyond the pleadings” and submit admissible evidence demonstrating “specific facts showing that there is a genuine [dispute] for trial.” Celotex, 477 U.S. at 324 (internal quotation marks omitted). If the evidence is “merely colorable, or is not significantly probative, summary judgment may be granted.” Anderson, 477 U.S. at 249 (citations omitted). When a district court considers a motion for summary judgment, it “must view all the evidence and all factual inferences reasonably drawn from the evidence in the light most favorable to the nonmoving party, and must resolve all reasonable doubts about the facts in favor of the nonmovant.” Rioux v. City of Atlanta, Ga., 520 F.3d 1269, 1274 (11th Cir. 2008) (citation and internal quotation marks omitted). The court’s role is not to “weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial.” Anderson, 477 U.S. at 249. “If a reasonable fact finder evaluating the evidence could draw more than one inference from the facts, and if that inference introduces a genuine issue of material fact, then the court should not grant summary judgment.” Allen v. Bd. of Pub. Ed. for Bibb County, 495 F.3d 1306, 1315 (11th Cir. 2007) (citation omitted). Importantly, if the nonmovant “fails to adduce evidence which would be sufficient . . . to support a jury finding for [the nonmovant], [4] summary judgment may be granted.” Brooks v. Blue Cross & Blue Shield of Fla., Inc., 116 F.3d 1364, 1370 (11th Cir. 1997) (citation omitted).

II. FACTUAL BACKGROUND

A. iMed
iMed is durable medical equipment distributor. Doc. 34-2 at 4. iMed stores its inventory of durable medical equipment and related supplies primarily in its Birmingham, Alabama warehouse. Doc. 34-2 at 14. The Birmingham warehouse is 20,000 square feet, some of which is available for other companies to lease. Doc. 34-2 at 15. Of iMed’s portion of the warehouse, it uses 5,000 square feet for its corporate office, business office, light inventory, and some equipment, and the remaining space for inventory. Doc. 34-2 at 15. The office and warehouse areas have designated entrances and are separated by a wall. Doc. 34-8 at 62. iMed also stores inventory in various satellite warehouses. Doc. 34-2 at 18-22.
When iMed receives equipment from a supplier, its employees check the shipment by hand against the appropriate invoice, and then sign off on the bill of lading and packing slip. Doc. 34-2 at 28. They then store the equipment in one of iMed’s warehouses. Doc. 34-2 at 28. When transferring an item from the Birmingham warehouse to a satellite warehouse, employees may exchange text messages, emails, or prepare notes [*5] based on visual inspections, but they do not prepare any formal documentation. Doc. 34-2 at 34. In the same way, iMed does not have a company-wide system for tracking inventory while items simply remain in the same warehouse other than periodic visual observation. Docs. 34-8 at 15-16, 34-2 at 28 & 34-3 at 20. Once equipment is distributed to patients or health care providers, technicians track deliveries and returns by manually recording the items’ serial numbers on delivery and discharge tickets, which they upload to a cloud-based software system. Doc. 34-2 at 27 & 33.

B. The Missing Oxygen Concentrators
Between August and September 2016, iMed began acquiring medical equipment in preparation for some large hospice contracts. Doc. 34-7 at 2;1 Doc. 34-8 at 67-8. Specifically, iMed purchased approximately 300 oxygen concentrators, along with other items like mattresses and hospital beds. Docs. 34-2 at 22, 34-8 at 68 & 39-5. iMed’s order should have arrived in installments over time, but the supplier, Drive Medical, delivered a large shipment of supplies, including oxygen concentrators, during a shorter timeframe. Docs. 34-2 at 22, 34-8 at 5, 39-5 & 39-8. As a result, iMed unexpectedly had [6] to find room in its warehouse for these pallets of equipment. Docs. 34-2 at 31 & 34-8 at 5. According to Lonnie Dorcey, iMed’s owner, the Drive Medical delivery caused the warehouse to look like a “maze” where workers could not “see over the pallets” and had “only narrow rows to walk through.” Doc. 34-2 at 31. Dorcey did not routinely enter the warehouse because he did not have to walk through it on the way to his office (Doc. 34-8 at 64), but around the end of 2016 he periodically walked through the warehouse to observe inventory because of the disarray caused by the Drive Medical shipment. Doc. 34-3 at 20. During one visit before leaving for Christmas break in 2016, Dorcey saw the oxygen concentrators in the warehouse. Doc. 34-3 at 20. Dorcey returned to the warehouse in January 2017 (Docs. 34-3 at 20 & 34-8 at 65) to “take stock of our oxygen concentrators” in preparation for fulfilling the new hospice contracts. Docs. 34-7 at 2, 34-8 at 67-68 & 34-9 at 34-35. He immediately noticed that “what should have been three hundred, roughly, concentrators, there was less than thirty.” Doc. 34-8 at 68.2 There is no evidence establishing precisely when the remaining oxygen concentrators [7] went missing. Doc. 34-9 at 12. There was no sign of forced entry at the warehouse (Doc. 34-7 at 5), and none of iMed’s employees were aware that a large amount of oxygen concentrators had gone missing until Dorcey noticed their absence. Doc. 34-8 at 78.
After his discovery, Dorcey called the police and reported the incident as a theft. Docs. 34-9 at 7 & 8-9 & 34-10. The police investigation closed without an arrest. Docs. 34-9 at 7 & 34-13. iMed did a physical inspection of the warehouse, searched delivery receipts, electronic records, and interviewed staff. Docs. 34-3 at 35 & 34-9 at 15. Dorcey reviewed historical records of the warehouse’s alarm system but did not find anything of note. Doc. 34-8 at 60. To date, iMed has been unable to locate the missing oxygen concentrators. Docs. 34-8 at 79, 34-9 at 46 & 34-2 at 10.3

C. iMed’s Insurance Claim
iMed filed an insurance claim with PMIC relating to the oxygen concentrators. Docs. 34-11 at 2 & 34-12 at 2. iMed is covered by PMIC’s Business Owner’s Policy (“BOP”) and Inland Marine Floater (“IMF”) policy. Doc. 34-14 at 1. The BOP is an all-risk policy for direct physical loss or damage to covered property on the insured premises. Doc. 34-16 [8] at 23; Doc. 40-1 at 21 & 22. The IMF policy provides coverage for iMed’s scheduled property. Doc. 34-17 at 13-14. The parties do not dispute that the loss of the oxygen concentrators is covered by the BOP and IMF policies unless the Missing Property Exclusions contained in each policy apply to iMed’s claims. The BOP exclusion states: “We” do not cover missing property where the only proof of loss is unexplained or mysterious disappearance, shortage discovered upon taking inventory, or any other instance where there is no physical evidence to show what happened to the property. Doc. 34-16 at 26. Similarly, the IMF exclusion states: “We” do not pay for missing property where the only proof of loss is unexplained or mysterious disappearance of covered property, or shortage of property discovered on taking inventory, or any other instance where there is no physical evidence to show what happened to the property. Doc. 34-17 at 19. PMIC denied iMed’s claims under both policies based on these exclusions (Docs. 34-14 & 39-11), concluding “that there is no physical evidence to show what happened to the missing property and that instead the shortage was discovered upon the conducting of an inventory.” [9] Doc 34-15 at 2.

III. DISCUSSION
At this stage in the proceedings, the court’s only task it to determine whether iMed’s loss of the concentrators is excluded from coverage under the PMIC policies. For the reasons to follow, the court finds that the missing property exclusions apply as a matter of law because iMed discovered the oxygen concentrator shortage while taking inventory and has offered no physical proof of what happened to the missing equipment.
Under Alabama law,4 the burden is on the insured to prove that its loss is covered by the policy at issue. E.g., Pa. Nat. Mut. Cas. Ins. v. Roberts Bros., Inc., 550 F. Supp. 2d 1295, 1303 (S.D. Ala. 2008). Where the insurer argues that coverage is barred by a policy exclusion, however, the insurer carries the burden of proving the applicability of the exclusion. Id. The courts must construe insurance contracts in a manner that gives effect to the intentions of both parties. Jay v. United Servs. Auto. Ass’n, 2021 Ala. LEXIS 58, 2021 WL 2492739, at *2 (Ala. June 18, 2021) (citing Atty. Ins. Mut. of Ala., Inc. v. Smith, Blocker & Lowther, P.C., 703 So. 2d 866, 870 (Ala. 1996)). Where the language of an exclusion is ambiguous, the court construes the exclusion narrowly “so as to limit the exclusion to the narrowest application reasonable under the wording.” Id.
However, a difference of opinion on the interpretation of an exclusion does not make it ambiguous. 2021 Ala. LEXIS 58, [WL] at *3 (“The fact that the parties interpret the insurance policy [*10] differently does not make the insurance policy ambiguous.”); see also Mid-Century Ins. Co. v. Watts, 323 So. 3d 39, 50 (Ala. 2020) (“A policy is not made ambiguous by the fact that the parties interpret the policy differently or disagree as to the meaning of a written provision in a contract.”). The language is ambiguous only if it is reasonably susceptible to two or more constructions or there is reasonable doubt or confusion as to its meaning. Porterfield v. Audubon Indem. Co., 856 So. 2d 789, 799 (Ala. 2002). Clear and unambiguous provisions must be given their plain and commonly understood meanings. Mid-Century, 323 So. 3d at 49.
Here, the missing property exclusions are unambiguous because they are reasonably susceptible to only one construction. See ACR Machine, Inc. v. Hartford Mut. Ins. Co., 2006 U.S. Dist. LEXIS 37677, 2006 WL 1517293, at *3 (E.D. Pa. May 31, 2006) (finding that “taking inventory” is an unambiguous phrase as a matter of law); Better Env., Inc. v. ITT Hartford Ins. Group, 96 F. Supp. 2d 162, 168 (N.D.N.Y. 2000) (same). The BOP provision states that PMIC does not cover “missing property where the only proof of loss is . . . shortage discovered upon taking inventory.” Doc. 34-16 at 26. The IMF provision uses the functionally identical phrase “shortage of property discovered on taking inventory.” Doc. 34-17 at 19. An inventory is “an itemized list of current assets,” such as “a list of goods on hand.” Inventory, Merriam-Webster Dictionary, available at https://www.merriam-webster.com/dictionary/inventory (last visited [*11] Feb. 2, 2022). In the business context then, “taking inventory” is making an itemized list of goods on hand. Therefore, the issue before the court is whether PMIC has shown that iMed’s only proof of loss is a shortage discovered while making an itemized list of the oxygen concentrators on hand.

A. Taking Inventory
The court first finds that Dorcey made the discovery while taking inventory. Although they were delivered on a compressed timeline, iMed ordered such a large quantity of oxygen concentrators because it anticipated that it would need them to fulfill its hospice contracts. As the time for performance on those contracts approached, Dorcey decided to “take stock” of the oxygen concentrators in the Birmingham warehouse. To do so, he walked from his office space to the warehouse floor so that he could see how many concentrators iMed had on hand. If iMed had maintained an electronic system for tracking these items, Dorcey might not have needed to walk through the warehouse. But iMed had not implemented such a system, choosing instead to rely on periodic visual inspections for tracking the equipment stored in its warehouse. Upon arriving in the section of the warehouse where he had [*12] seen the oxygen concentrators only a few weeks before, Dorcey noticed that many of them were missing. Under these facts, the only reasonable interpretation is that Dorcey made this discovery while “taking inventory” within the meaning of the missing property exclusions.
Although not binding on this court, the decision in ACR Machine, 2006 U.S. Dist. LEXIS 37677, 2006 WL 1517293, supports this conclusion. In that case, the plaintiff, ACR Machine, operated a machine shop. 2006 U.S. Dist. LEXIS 37677, [WL] at *1. After a cancelled contract, ACR Machine had to store approximately 100 mechanical housings at the machine stop until it could locate a buyer. Id. A few months later, ACR Machine identified an aerospace company as a potential buyer for the mechanical housings. 2006 U.S. Dist. LEXIS 37677, [WL] at *2. When the aerospace company expressed interest, an ACR Machine employee went to the area in the shop where the housings had been stored to see how many were on hand and to confirm they had been completed. 2006 U.S. Dist. LEXIS 37677, [WL] at *3. He immediately realized that some of the housings were missing. Id. ACR Machine eventually determined that 61 mechanical housings were not accounted for, so it made a claim against its insurer, who denied the claim under an exclusion for “‘[p]roperty that is missing, where the only evidence of the loss or damage [*13] is a shortage disclosed on taking inventory.'” Id. ACR Machine contended that its employee “‘went to the area where the missing items were stored in an attempt to get them ready for an inspection by a potential buyer,’ not to take inventory.” 2006 U.S. Dist. LEXIS 37677, [WL] at *4 (quoting ACR Machine’s brief). The court flatly rejected this claim, finding that the employee’s purpose was “to count the number of mechanical housings and to determine the stage of machining for each piece—in other words, to take an inventory.” There is no daylight between these facts and those now before the court. Both employees conducted visual inspections for the specific purpose of determining the quantity of products on hand. Both were taking inventory when they discovered that some of those products were missing.
In an attempt to avoid this conclusion, iMed claims that Dorcey discovered the loss while he “was walking through the warehouse, not during a regularly scheduled, formal inventory,” and that he did so “as a way to quantify iMed’s loss, not to discover the loss.” Doc. 40 at 26. This argument grafts an additional requirement onto the exclusionary language and mischaracterizes the record evidence. iMed relies on Betco Scaffolds Company, Incorporated v. Houston United Casualty Insurance Company, 29 S.W. 3d 341, 347 (Tx. Ct. App. 2000), for the proposition [14] that Dorcey’s inspection was not an inventory count unless it had been regularly scheduled or formalized in some way. The Betco court did find that the relevant insurance policy excluded “a loss or shortage which comes to the attention of the insured solely by reason of taking a regularly scheduled, i.e., periodic, physical inventory,” but the court had not been called upon to differentiate an informal or impromptu inventory from a scheduled and formal one. Id. Instead, the issue in Betco was the applicability of an exclusion for a “shortage disclosed upon taking inventory,” id. at 345, when the plaintiff completed an investigation of two burglaries, initially elected not to make an insurance claim because it determined that the loss did not exceed its deductible, but two months later conducted an annual inventory that revealed missing items of sufficient value to justify an insurance claim. Id. at 347. Betco thus lends no support to the claim that Dorcey’s physical inspection could not have been an inventory count if it was not scheduled in advance or in some other way formalized. This is especially true when there is no evidence that iMed conducted regular inventories of the equipment stored in its warehouses other [15] than visual inspections like Dorcey’s. Moreover, the claim that Dorcey was quantifying a known loss cannot be reconciled with his testimony that he discovered the missing oxygen concentrators while walking through the warehouse and later confirmed that none of his employees had noticed they were missing. For all of these reasons, the court concludes that Dorcey was taking inventory when he discovered iMed’s missing concentrators.

B. Physical Evidence
Although iMed discovered its loss while taking inventory, the missing property exclusions do not apply unless the inventory count is iMed’s “only proof of loss.” Docs. 34-16 at 26 & 34-17 at 19. And the exclusionary language also makes clear that the policies consider a discovery while taking inventory to be an “instance where there is no physical evidence to show what happened to the property.” Docs. 34-16 at 26 & 34-17 at 19. For this reason, the plain language of the exclusions requires iMed to come forward with some physical evidence to prove what happened to the concentrators.
The Eleventh Circuit’s decision in Seagull Enterprises, LLC v. Travelers Property Casualty Company of America, 366 F. App’x 979 (11th Cir. 2010) (per curiam), is closely analogous. In that case, the insured, Seagull, filed an insurance claim after discovering that flooring [16] supplies were missing from its warehouse. Id. at 980. Seagull claimed “that these items were stolen from the warehouse over the course of 2007, but [did] not know what exactly happened to the inventory, since there were no signs of breaking and entering, no damaged locks, and no broken doors or glass.” Id. at 981. The insurer denied the claim under a missing property exclusion requiring “physical evidence to show what happened to the property,” and the district court agreed that the exclusion applied. Id. at 980-81. On appeal, Seagull argued that “‘physical evidence,’ as used in the policy exclusion, can consist of the absence of massive items where the circumstances clearly point to theft” or the testimony of an employee “that he knew who stole some merchandise but refused to say who stole it.” Id. at 981. The Eleventh Circuit dispatched Seagull’s “mere absence” argument, rejecting any claim that Seagull presented physical evidence of the disposition of the missing property “simply because the items are large—especially where, as here, the record shows that the items are consumable and did not have a specific location on the floor, indicating that they could have been misplaced, or even used.” Id. The court further observed [17] that Seagull “has offered nothing to show that [the employee’s] statement to the insurance investigators constitutes ‘physical evidence,’ under the plain meaning of the term,” and contrasted the employee’s unsworn and unrecorded statement with evidence like fingerprinting and photographs. Id. at 982 (citations omitted). Even so, the Eleventh Circuit considered the statement but observed that the employee also said “there was no way the large amount of product allegedly stolen could have been stolen, and if it was, it would have had to have been stolen over a period of time longer than a year, the amount of time in which Seagull alleges the flooring was taken.” Id. at 981-82. The court thus found that “Seagull has not raised any issues of fact—beyond mere speculation—to suggest that there is ‘physical evidence to show what happened to the [allegedly stolen] property.'” Id. (citation omitted).
To show that the oxygen concentrators were stolen, iMed relies on packing slips, bills of lading, invoices, delivery tickets, a spreadsheet identifying the location of the oxygen concentrators by serial number, photographs of the layout of the warehouse, and a police report. Docs. 34-10, 39-3, 39-4, 39-5, 39-6, 39-7, [18] 39-8, 39- 7, 39-8, 39-9 & 39-10, 40 at 17 & 40-1 at 23. iMed has not provided the court with any binding authority for the proposition that this documentary evidence amounts to physical evidence within the meaning of the policy exclusions. However, at least the photographs align with the Eleventh Circuit’s interpretation of physical evidence in Seagull Enterprises, albeit in dicta. See Seagull Enterprises, LLC, 366 F. App’x at 982 (noting the Supreme Court’s definition of “real or physical evidence” in Schmerber v. California, 384 U.S. 757, 764, 86 S. Ct. 1826, 16 L. Ed. 2d 908 (1966), which included “fingerprinting, photographing, or measurements”). But the problem for iMed is not so much a lack of physical evidence as it is a lack of any evidence of what happened to its missing property. Even if this court were to consider the proffered documentary evidence, iMed has offered no more than “mere speculation” that the concentrators were stolen and not misplaced or used. Id. For all relevant purposes, iMed’s evidence establishes only that it received the oxygen concentrators at its warehouse and later determined that they were gone. This is not enough. See W.L. Petrey Wholesale Co., Inc. v. Great Am. Ins. Co., 622 F. App’x 849, 852 (11th Cir. 2015) (rejecting an insured’s reliance on order and sales records without independent evidence of the disposition of the missing property). iMed may believe that it has been a victim [19] of theft, but it has not come forward with any evidence of an unauthorized entry to its warehouse, forced or otherwise, that would support a reasonable inference of theft. Cf. ACR Machine, Inc., 2006 U.S. Dist. LEXIS 37677, 2006 WL 1517293, at 4 (finding evidence of theft based on testimony “that boxes which had previously contained mechanical housings were empty, that the alleged thieves had removed the castings and restacked the boxes to cover up the disappearance, and that the thieves only took the mechanical housings from the inside of the stacked pallets so that it was difficult to detect the loss”). iMed’s evidence does not show with any precision when the concentrators went missing, whether they disappeared in one day or over the weeks separating Dorcey’s warehouse walkthroughs, or ultimately whether they were stolen at all. The court cannot conclude on these facts that iMed has created a fact question as to the applicability of the missing property exclusions. Because iMed cannot show physical proof of loss independent of taking inventory, the missing property exclusions apply and there is no genuine dispute of fact as to iMed’s claims for breach of contract. In addition, because PMIC has not breached its contracts with iMed, the claims for bad [20] faith refusal to pay also must fail. Crook v. Allstate Indem. Co., 314 So. 3d 1188, 1198 (Ala. 2020) (affirming summary judgment in favor of defendant on plaintiff’s bad faith claim because defendant did not breach the policy).

IV. CONCLUSION
For these reasons, the court finds that Defendant’s Motion for Summary Judgment (Doc. 33) is due to be granted. A final judgment will be entered.
DONE and ORDERED on February 7, 2022.
/s/ Gray M. Borden
GRAY M. BORDEN
UNITED STATES MAGISTRATE JUDGE

FINAL JUDGMENT
In accordance with the Memorandum Opinion entered this date, it is ORDERED as follows:
(1) With respect to all claims in this action against Defendant, judgment is ENTERED in favor of Defendant and against Plaintiff, with Plaintiff taking nothing by its claims.
(2) Costs are TAXED as paid.
(3) The Clerk is DIRECTED to enter this document on the civil docket sheet as a Final Judgment pursuant to Federal Rule of Civil Procedure 58 and to close the file.
DONE and ORDERED on February 7, 2022.
/s/ Gray M. Borden
GRAY M. BORDEN
UNITED STATES MAGISTRATE JUDGE

Kirby v. Broken Skull Trucking Inc.

Kirby v. Broken Skull Trucking Inc.
United States District Court for the District of Kansas
February 9, 2022, Decided; February 9, 2022, Filed
Case No. 21-1238-JWB-GEB

Reporter
2022 U.S. Dist. LEXIS 23581 *; 2022 WL 392298
NORMAN KIRBY, Plaintiff, v. BROKEN SKULL TRUCKING INC., et al., Defendants.
Core Terms

allegations, immaterial, Trucking, scandalous, Defendants’, motion to strike, plaintiff’s claim, convictions, disputed, criminal history, tractor-trailer, prejudicial, screenshot, inclusion, stricken, motor carrier, degrade[s, reasons
Counsel: [*1] For Norman Kirby, Plaintiff: Bradley A. Pistotnik, Tony L. Atterbury, LEAD ATTORNEYS, Bull Attorneys, PA, Wichita, KS.
For Broken Skull Trucking, Inc., A Foreign Corporation, Jason J. Spotanski, An Individual, Defendants: J. Philip Davidson, Paul J. Skolaut, LEAD ATTORNEYS, Hinkle Law Firm LLC, Wichita, KS.
For Blase Trucking, LLC, A Foreign LLC, Defendant: Allison L. Greenfield, Derek H. Mackay, LEAD ATTORNEYS, Knight Nicastro MacKay, LLC, Kansas City, MO; Killian Walsh, LEAD ATTORNEY, Knight Nicastro MacKay – STL, Saint Louis, MO.
For Eric A. Blase, An Individual, Defendant: Derek H. Mackay, LEAD ATTORNEY, Knight Nicastro MacKay, LLC, Kansas City, MO; Killian Walsh, LEAD ATTORNEY, Knight Nicastro MacKay – STL, Saint Louis, MO.
Judges: GWYNNE E. BIRZER, United States Magistrate Judge.
Opinion by: GWYNNE E. BIRZER
Opinion

MEMORANDUM AND ORDER
This matter is before the Court on Defendants Blase Trucking, LLC and Eric Blase’s Motion to Strike (ECF No. 27) portions of Plaintiff’s Complaint (ECF No. 1). On February 4, 2022, the Court held scheduling conference and discussed with counsel the pending motion. Neither Broken Skull Trucking, Inc. nor Jason J. Spotanski filed a brief taking any formal position on the pending motion. [*2] After review of the parties’ briefing (ECF Nos. 27, 33, 36) and considering the arguments of counsel, the Blase Defendants’ Motion to Strike (ECF No. 27) is DENIED in part and GRANTED in part as explained below.

I. Background1
Plaintiff Norman Kirby, a resident of Goodland, Kansas, was severely injured in a motor vehicle accident which occurred when his vehicle collided with a tractor-trailer. The lead tractor-trailer, driven by defendant Jason Spotanski, was driving in a convoy of three tractor-trailers, heading into a high wind and severe weather area. Plaintiff alleges the trailer drivers informed their dispatch, through defendants Blase Trucking and Eric Blase, they believed they were heading into a tornado. However, the tractor-trailers continued through the storm, and the truck Spotanski was driving was blown left of center, causing the head-on collision with Plaintiff’s vehicle. Plaintiff claims the three tractor-trailers violated multiple industry standards of care, and the convoy was dispatched by Eric Blase and Blase Trucking operating under a bill of lading identifying Blase Trucking, LLC as the motor carrier. (ECF No. 1; see also Plaintiff’s Summary, Parties’ Planning Report.) [3] Plaintiff brings multiple claims of negligence, vicarious liability and wanton conduct against four named Defendants, grouped into two categories: 1) the Broken Skull Defendants: Broken Skull Trucking, Inc., and Jason J. Spotanski; and 2) the Blase Defendants: Blase Trucking, LLC, and Eric A. Blase. The Blase Defendants contend Blase Trucking is owned by Eric Blase, but Blase Trucking leased its trailer to Broken Skull Trucking for the subject job. They maintain their lease agreement requires Broken Skill to indemnify Blase Trucking from any claims arising from Broken Skull’s use of the trailer, and Blase Trucking cannot be held liable for the negligence of Broken Skull or Spotanski. (See Answers, ECF No. 30, 31.) The Broken Skull Defendants deny any negligence and dispute the nature and extent of Plaintiff’s damages. (See Answer, ECF No. 13.) This matter was set for scheduling following the Answers by all Defendants. As noted above, prior to the scheduling conference the undersigned U.S. Magistrate Judge had the opportunity to review both the briefing on the issue and the pleadings themselves and was prepared to rule at the conference. For the reasons set forth below, the Court denied [4] in part and granted in part the motion.

II. Motion to Strike (ECF No. 27)
The Blase Defendants seek to strike multiple paragraphs from the Complaint, including ¶¶ 12, 13, 14, 17,49, 51, 52, 53, 54, 106, 107, 108, 109, 110, 111, 121 (A-E, O), 123, and 133. (ECF No. 27 at 2.) They claim the paragraphs contain numerous immaterial and scandalous allegations against Defendants that do not relate to Plaintiff’s claims. They argue the paragraphs should be stricken for three reasons: 1) because they reference defendant Spotanski’s criminal history; 2) because the screenshots from the website “Safer Web” are immaterial and not sufficiently tied to Plaintiff’s allegations; and 3) a screenshot from defendant Spotanski’s Facebook page is also immaterial to the claims alleged. (ECF No. 27.) The Blase Defendants request the paragraphs be stricken because they are immaterial and may cause prejudice to defendant Spotanski.
In response, Plaintiff argues the facts alleged in his Complaint are essential to his case. He claims Spotanski’s criminal history is relevant to his claims in two respects. He claims Spotanski’s child abuse and domestic assault convictions referenced in paragraph 14 are relevant because [5] Spotanski was on probation for those convictions and was granted early release when he applied for Department of Transportation authority to operate a vehicle for Broken Skull. (ECF No. 33 at 4-5.) Plaintiff also claims Spotanski’s convictions of Nebraska motor carrier regulations are relevant to their claims of the Blase Defendants’ negligent selection, hiring, training, supervision, and retention of defendants Spotanski and Broken Skull Trucking and negligent entrustment of a tractor-trailer to Spotanski, as well as his punitive damages claim. (Id. at 6-7.) Plaintiff draws attention to the fact only the Blase Defendants objected to the inclusion of this criminal history, yet Spotanski did not himself object. Although unflattering, Plaintiff contends the criminal history of Spotanski is not scandalous or included with the intent to prejudice Defendants. Plaintiff also argues Defendants’ “Safer Web (the FMCSA Safety and Fitness Electronic Records System)” ratings, or lack thereof, are relevant to this case. He contends “information from the FMCSA’s website helps explain that Defendant Broken Skull and the Blase Defendants selected and hired a ‘New Entrant’ unrated motor carrier to drive [6] in hazardous high wind conditions with cattle trucks.” (Id. at 11-12.) Again, Plaintiff contends while the allegations may be unflattering, they are material and do not rise to the level of scandalous.
Finally, Plaintiff argues the content of Spotanski’s Facebook profile is relevant to his claims, because the screenshot of the Facebook profile “appears to show that, at the time the screenshot was taken, Spotanski was a hired hand of Blase Farms, LLC.” (Id. at 12.) Plaintiff again draws attention to the fact that “Spotanski, whose Facebook profile is at issue, admitted its accuracy and authenticity, and took absolutely no issue with its inclusion in Plaintiff’s Complaint.” (Id. at 13, citing Spotanski’s Answer, ECF No. 13, ¶ 49.) Plaintiff asserts the Facebook allegations are relevant and material to the Defendants’ joint venture relationship, as well as the possible “reasons why the Blase Defendants chose to enter into a business relationship with Broken Skull and Spotanski.” (ECF No. 33 at 13.)
Plaintiff maintains the Blase Defendants failed to meet their burden to prove the disputed allegations are either immaterial or prejudicial, even though they must establish both in order for [*7] the paragraphs to be stricken. Plaintiff believes the allegations are neither scandalous nor harassing, and they are legitimately offered to support his theories of the case. The applicable legal standards and the parties’ arguments are addressed in turn.

A. Legal Standard
Fed. R. Civ. P. 12(f) allows the court to “strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” This rule permits the Court to strike the information on its own, or act pursuant to a motion made by a party either prior to responding to the pleading, or if no response is permitted, within 21 days of being served with the pleading.2
Rule 12(f) presents two bases for striking an allegation from a pleading. First, a defense is considered insufficient “if it cannot succeed, as a matter of law, under any circumstances.”3 This first basis is not applicable here. But, applicable to this dispute is the second basis: an allegation “is considered redundant, immaterial, impertinent, or scandalous if it is ‘so unrelated to plaintiff’s claims as to be unworthy of any consideration . . . and . . . [its] presence in the pleading throughout the proceeding will be prejudicial to the moving party.'”4
“Immaterial matter” is further defined as “that which has no essential or important relationship to the claim for relief, or a statement of unnecessary particulars in connection with that which is material.”5 Although some courts have stricken immaterial matter that “may” also be prejudicial,6 the prevailing approach in this District requires more. Most courts consider immateriality alone to be insufficient “to trigger the drastic remedy of striking parts of a pleading; the allegation must also be prejudicial” to the moving party.7 “Prejudice occurs when the challenged pleading or allegation confuses the issues or is so lengthy and complex that it places an undue burden on the responding party.”8 Courts have described “scandalous” material to be that which is “irrelevant and ‘degrade[s] defendants’ moral character, contain[s] repulsive language, or detract[s] from the dignity of the court.'”9
Ultimately, the purpose of a Rule 12(f) motion to strike “is to avoid the expenditure of time and money that must arise from litigating spurious issues by dispensing with [*9] those issues prior to trial.”10 But the striking of allegations is a drastic remedy. Motions to strike are “generally disfavored, and are usually not granted absent a showing of prejudice to the moving party.”11 The court has discretion to decide whether to strike a matter under Rule 12(f),12 and “any doubt concerning the import of the allegations to be stricken weighs in favor of denying the motion to strike.'”13 The party seeking to strike portions of a pleading “has a ‘demanding burden’ to show adequate grounds under Rule 12(f).”14

B. Discussion
As noted, the first basis on which the Court could strike portions of the Complaint is if the disputed material equates to an insufficient defense that could not succeed as a matter of law under any circumstance.15 Here, there are no such arguments presented, and the Court finds this basis inapplicable.
The focus of the Court here is to examine whether the disputed paragraphs are “redundant, immaterial, impertinent, or scandalous.”16 The Blasé Defendants claim the information is both immaterial and scandalous.
As to Plaintiff’s Complaint paragraphs which reference Defendant Spotanski’s criminal history (paragraphs 14, 50, 51, 52, 53 and 54, 109, 121, 123), the Court is [10] split on its decision. The Court finds the timing of Spotanski’s request for early release from probation and his history of violating motor carrier regulations relevant and material to Plaintiff’s claims and denies the Blase Defendants’ motion on those allegations. However, the Court finds the mention of Spotanski’s specific child abuse and domestic assault conviction in ¶ 14 of the Complaint is a statement of unnecessary particulars, making it immaterial to the claims at issue in this case, and grants the Blase Defendants’ motion only as to these specifics. The Court takes note defendant Spotanski did not formally respond to the briefing on this issue; however, finding the specificity of these two criminal convictions unnecessary and immaterial, the Court does not engage in a full prejudice analysis. Suffice it to say, though, the Blase Defendants, as the moving parties, do not appear prejudiced by the mention of Spotanski’s criminal history, particularly when Spotanski himself does not oppose its inclusion. As for Plaintiff’s allegations regarding the “Safer Web” ratings (paragraphs 12, 13, 17, 106 – 111), the Court finds the allegations relevant and material to Plaintiff’s claims. [11] A significant portion of Plaintiff’s claims relies on the allegation defendant Broken Skull and the Blase Defendants selected and hired a “New Entrant” unrated motor carrier to drive in hazardous high wind conditions with cattle trucks, which these allegations attempt to support. The Court is persuaded by Plaintiff’s arguments, and finds the information is not so unrelated to the claims in this case “as to be unworthy of any consideration”17 and is therefore sufficiently material to avoid being stricken. And, the Court does not find the allegations rise to the level of prejudicial. These allegations do not confuse the issues, nor are they so lengthy and complex they place any undue burden on the Blase Defendants.
Plaintiff’s inclusion of a screenshot of Spotanski’s public Facebook page is also permitted. The Court agrees with Plaintiff’s contention the information is relevant and material to Plaintiff’s allegations of a joint venture relationship between Spotanski and the Blase Defendants. The inclusion of the information does not rise to the level of prejudicial or scandalous. In fact, again, defendant Spotanski admitted the accuracy and authenticity of the screenshot and took no formal [12] position on its inclusion in the Complaint. (See Answer, ECF No. 13 ¶ 49.) Therefore, the Court is hard-pressed to ascertain any prejudice from the information remaining as alleged in the Complaint. In order for the Court to strike any of the allegations disputed, the material must be both immaterial and so scandalous they prejudice Defendants. All disputed allegations, except the specificity of defendant Spotanski’s prior abuse and assault convictions, have been found to bear relevance to Plaintiff’s theories and therefore material. Additionally, to be considered scandalous, the allegations must be “irrelevant and ‘degrade[s] defendants’ moral character, contain repulsive language, or detract from the dignity of the court.”18 But the only Defendant who may consider the information degrading did not formally oppose its inclusion. Although the information may shed a negative light on Defendants, such negativity is all too common in litigation, but does not rise to the level of degrading any Defendant’s moral character. For all of these reasons, the Court does not find the material to be scandalous. In declining to strike the disputed allegations, the Court notes it is not ruling on their [13] later admissibility. Other courts in this District have found a motion to strike to be an inappropriate forum to prematurely determine the admissibility of evidence.19 The District Judge will later decide which information is admissible at trial. Having already found the allegations not otherwise immaterial or scandalous, the Court will not strike the information based upon a prediction of its eventual admissibility at this stage of litigation.

C. Conclusion
Exercising its discretion, the Court finds the information in the disputed paragraphs to largely bear materiality to the Plaintiff’s claims presented, with one exception. As discussed in the conference, the Court finds the circumstances of Spotanski’s prior convictions of abuse and assault immaterial and requires Plaintiff to amend his complaint, paragraph 14, to simply reference Spokanski’s prior convictions generally rather than including that detail. The remaining allegations do not rise to the level of degradation or indecency to be considered scandalous. Aside from this amendment, the Court resolves any doubt about the importance of the information at issue in favor of the Plaintiff and finds the Blase Defendants [*14] failed to meet their heavy burden to demonstrate prejudice. For these reasons, the Blase Defendants’ Motion to Strike (ECF No. 27) is DENIED in large part and GRANTED in part.
IT IS THEREFORE ORDERED that Blase Defendants’ Motion to Strike (ECF No. 27) is DENIED in large part and GRANTED in part as set forth herein.
IT IS FURTHER ORDERED that Plaintiff must amend his Complaint, no later than February 24, 2022, to account for the rulings herein.
IT IS SO ORDERED.
Dated at Wichita, Kansas this 9th day of February, 2022.
/s/ Gwynne E. Birzer
GWYNNE E. BIRZER
United States Magistrate Judge

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