Opinion
NO. 2017-CA-000082-MR
04-27-2018
LINDA G. STORY, AS EXECUTRIX OF THE ESTATE OF BOBBY G. STORY; AND LINDA G. STORY, INDIVIDUALLY APPELLANTS v. AMERICAN NATIONAL PROPERTY AND CASUALTY CO. (A/K/A AMERICAN NATIONAL INSURANCE SERVICE COMPANY) APPELLEE
BRIEFS AND ORAL ARGUMENT FOR APPELLANTS: G. Eric Long Benton, Kentucky BRIEF AND ORAL ARGUMENT FOR APPELLEE: Van F. Sims Paducah, Kentucky
NOT TO BE PUBLISHED APPEAL FROM LIVINGSTON CIRCUIT COURT
HONORABLE CLARENCE A. WOODALL, III, JUDGE
ACTION NO. 15-CI-00068 OPINION
AFFIRMING
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BEFORE: DIXON, JOHNSON, AND TAYLOR, JUDGES. TAYLOR, JUDGE: Linda G. Story, as Executrix of the Estate of Bobby G. Story, and Linda G. Story, individually, (collectively referred to as appellants) bring this appeal from a December 19, 2016, order of the Livingston Circuit Court. We affirm.
On August 2, 2014, Bobby Story was operating a 2009 Yamaha motorcycle when he was struck by an uninsured motorist. Bobby died as a result of injuries he suffered from the accident. The Yamaha motorcycle was owned by both Bobby and his wife, Linda Story, and insured by a motor vehicle policy issued by Grange Insurance. However, Bobby had rejected uninsured motorist (UM) coverage, so the insurance policy provided no UM coverage.
Bobby and Linda also possessed a motor vehicle insurance policy issued by American National Property and Casualty Company. Under this insurance policy, Bobby and Linda were listed as named insureds, and two automobiles were listed as insured vehicles. However, this insurance policy did provide UM coverage. It is undisputed that the Yamaha motorcycle was not listed as an insured vehicle in the American National insurance policy.
Following the accident, appellants sought payment of UM benefits under the insurance policy issued by American National. Eventually, American National denied UM coverage because the motorcycle was not listed as an insured vehicle thereunder.
On June 23, 2015, appellants filed a declaratory judgment action in the Livingston Circuit Court against American National. Appellants asserted that UM coverage existed under the American National insurance policy, and American National improperly denied UM coverage. Additionally, appellants claimed that American National violated the unfair claims settlement practice statute codified in Kentucky Revised Statutes (KRS) 304.12-230.
American National filed an answer and eventually filed a motion for summary judgment. In the motion, American National maintained that appellants were not entitled to UM coverage for damages arising out of the motorcycle accident under the plain and unambiguous terms of the insurance policy. In support thereof, American National cited to UM policy language that excluded coverage if the insured was occupying a vehicle owned by the insured but not listed as an insured vehicle under the insurance policy. American National pointed out that Linda and Bobby owned the Yamaha motorcycle, but it was not an insured vehicle under the insurance policy.
Appellants also filed a motion for summary judgment arguing that the UM exclusion in the American National insurance policy was contrary to public policy and unenforceable. In support thereof, appellants argue that Bobby possessed a reasonable expectation of UM coverage under the insurance policy issued by American National.
By order entered February 25, 2016, the circuit court granted American National's motion for summary judgment and denied appellants' motion for summary judgment. In so doing, the circuit court concluded:
In citing prior cases, the Court relied on the "reasonable expectations" of insureds to obtain coverage for which they had paid a premium, even if that amounted to double coverage. The decision was based upon "illusory" coverage and it is clear that the Court wanted to prohibit "what is given with one hand is taken away with the other leaving the insured with one or more policies which pay no benefits."
So the issue for decision is whether Mr. Story had a reasonable expectation of coverage and whether the answer to this question determines whether the policy language is void as against the public policy.February 25, 2016, Order at 4-5. The court also determined that Linda's loss of consortium claim was derivative of Bobby's claim and, likewise, excluded under the terms of the insurance policy issued by American National. Subsequently, by order entered December 19, 2016, the circuit court dismissed appellants' claim for violation of the Unfair Claims Settlement Practice Act. This appeal follows.
The major difference between this case and other reported cases is that Mr. Story specifically rejected UM coverage. He signed a clear statement doing so in the Grange policy which covered this motorcycle and had also done so previously with another motorcycle.
This indicates that Mr. Story could have had no reasonable expectations of coverage under his policy with American National. Both Chaffin [v. Kentucky Farm Bureau Insurance Companies, 789 S.W.2d 754 (Ky. 1990)] and Hamilton [v. Allstate Insurance Company, 789 S.W.2d 751 (Ky. 1990)] found similar language void as against public policy because of the "illusory coverage" which an insured thought he or she was purchasing and which the insurance company denied by exclusory language. This is not the case for Mr. Story since he specifically chose not to insure the motorcycle for uninsured motorist coverage.
UM coverage is personal, not attached to a vehicle, and the person, Mr. Story, voluntarily elected not to pay a premium for UM coverage on his motorcycle policy. He could not therefore reasonably expect to get something for nothing in the American National Policy which did not insure the motorcycle.
This Court believes that the Chaffin and Hamilton holdings that the language was void as against public policy was not a blanket prohibition of the language so as to make it apply in a situation like this one.
The facts not being in dispute, the provision does not violate public policy in this case and [American National] is entitled to judgment as a matter of law.
To begin, summary judgment is proper where there exists no material issue of fact and movant is entitled to judgment as a matter of law. Steelvest, Inc. v. Scansteel Serv. Ctr., Inc., 807 S.W.2d 476 (Ky. 1991). All facts and inferences therefrom are to be viewed in a light most favorable to the nonmovant. Id. Our review proceeds accordingly.
Appellants initially contend that the circuit court erred by rendering summary judgment concluding that UM coverage was excluded under the insurance policy issued by American National. Appellants argue that Bobby purchased UM coverage and possessed a reasonable expectation of UM coverage under the American National insurance policy. Additionally, appellants maintain that the policy exclusion precluding UM coverage is offensive to public policy and unenforceable. For the reasons hereinafter set forth, we are of the opinion that the circuit court properly determined that UM coverage was excluded under the plain terms of the insurance policy.
The American National insurance policy contained the following relevant exclusion as to UM coverage:
There is no coverage under COVERAGE J - UNINSURED MOTORIST:
(1) for bodily injury to an insured person while occupying, or when struck by, a motor vehicle owned
by you or a relative for which insurance is not afforded under this Part[.]Under the above UM exclusion and relevant to this appeal, an insured is not entitled to UM coverage if occupying a vehicle he owns but not insured under the policy. This UM exclusion is plain and unambiguous. Under its terms, Bobby is clearly not entitled to UM coverage as the Yamaha motorcycle was not an insured vehicle under the American National insurance policy.
Appellants counter that Bobby should be extended UM coverage due to his reasonable expectation of coverage under the American National insurance policy. However, a reasonable expectation of coverage under an insurance policy is not based upon the "subjective belief" of the insured. Sparks v. TrustGuard Insurance Co., 389 S.W.3d 121, 128 (Ky. App. 2012). Rather, reasonable expectations are gleaned from a reading of the policy language as a whole and will only be triggered where actual ambiguities are found in the policy. Philadelphia Indemnity Ins. Co., Inc. v. Tryon, 502 S.W.3d 585 (Ky. 2016). Our Supreme Court has set forth the doctrine of reasonable expectations in connection with an insurance policy as follows:
The gist of the doctrine is that the insured is entitled to all the coverage he may reasonably expect to be provided under the policy. Only an unequivocally conspicuous, plain and clear manifestation of the company's intent to exclude coverage will defeat that expectation.
....
The doctrine of reasonable expectations is used in conjunction with the principle that ambiguities should be
resolved against the drafter in order to circumvent the technical, legalistic and complex contract terms which limit benefits to the insured.Simon v. Continental Ins. Co., 724 S.W.2d 210, 212-13 (Ky. 1986) (quoting R.H. Long's, The Law of Liability Insurance, § 5.10B).
In this case, the UM exclusion is plain and unambiguous. The UM exclusion constitutes a "plain and clear manifestation" of American National's intent to exclude UM coverage for an insured who suffers bodily injury while occupying a vehicle owned but not insured under the policy. As the UM exclusion is unambiguous and plain in its terms, we cannot conclude that Bobby possessed a reasonable expectation of UM coverage while riding his Yamaha motorcycle. See Sparks, 389 S.W.3d 121; Tyron, 502 S.W.3d 585; Simon, 724 S.W.2d 210.
We also reject appellants' argument that the UM exclusion is violative of public policy and unenforceable per Chaffin v. Kentucky Farm Bureau Insurance Companies, 789 S.W.2d 754 (Ky. 1990). We do not view Chaffin as controlling. In Chaffin, the Supreme Court was faced with the validity of an UM anti-stacking exclusion contained in three motor vehicle insurance policies. The Supreme Court held that the UM anti-stacking exclusion was contrary to the reasonable expectations of the insured as the insured paid for three separate policies of insurance with the insurer. The Court concluded that the UM "coverage bought, paid for and reasonably expected is illusory. Such is contrary to the public policy of Kentucky." Id. at 757-58.
By contrast, we do not believe the reasonable expectations of Bobby compelled coverage in this case as hereinbefore discussed. Moreover, it is clear that UM coverage under American National insurance policy was not illusory. Appellants were entitled to UM coverage while occupying a non-owned vehicle, an owned-insured vehicle, or as a pedestrian.
Accordingly, we hold that the circuit court properly determined that the UM exclusion was valid and operated to exclude UM coverage to Bobby for bodily injury he sustained as a result of the motorcycle accident.
Appellants also contend that the circuit court erred by rendering summary judgment as to Linda's loss of consortium claim. Appellants particularly argue that entitlement to UM coverage for Linda's loss of consortium claim is separate and independent from the Estate's entitlement to UM coverage for Bobby's claim. Therefore, even if the Estate's claim for UM coverage is excluded under the policy, appellants argue it does not necessarily follow that Linda's claim for loss of consortium is, likewise, excluded. Appellants maintain that Linda's loss of consortium qualified as compensable bodily injury within the terms of the American National insurance policy. Appellants specifically point to the following policy provision:
LIMITS OF LIABILITY
The limits of liability in the Declarations apply, subject to the following:
(1) the limit for "each person" is the maximum we will pay as damages for bodily injury, including damages for
care and loss of services or consortium, to one person in one accident[.]Appellants' Brief at 9 (citation omitted) (emphasis in original).
In its summary judgment, the circuit court concluded that Linda's loss of consortium claim was not compensable under American National Insurance policy:
Since this Court believes, as set out above, that the policy does not provide UM coverage for [Bobby], the Court likewise believes it does not provide coverage for [Linda] on her derivative loss consortium claim. Neither does the Court believe there is a separate contractual obligation to [Linda] for UM coverage. There being no genuine issue of material fact, [American National] is entitled to judgment as a matter of law.February 25, 2016, Order at 6. We agree with the circuit court that there exists no contractual duty to provide Linda with UM coverage for damages arising from her loss of consortium claim under the terms of the American National insurance policy. Thus, we hold that the circuit court properly rendered summary judgment dismissing Linda's loss of consortium claim.
For the foregoing reasons, the order of the Livingston Circuit Court is affirmed.
ALL CONCUR. BRIEFS AND ORAL ARGUMENT
FOR APPELLANTS: G. Eric Long
Benton, Kentucky BRIEF AND ORAL ARGUMENT
FOR APPELLEE: Van F. Sims
Paducah, Kentucky