Opinion
NO. 2018-CA-001186-MR
04-10-2020
WESTERN HERITAGE INSURANCE COMPANY APPELLANT v. COFFMAN WELDING & METAL WORK, INC. APPELLEE
BRIEFS FOR APPELLANT: Aaron M. Cole Cincinnati, Ohio BRIEF FOR APPELLEE: Elizabeth Teel Russellville, Kentucky
NOT TO BE PUBLISHED APPEAL FROM LOGAN CIRCUIT COURT
HONORABLE TYLER L. GILL, JUDGE
ACTION NO. 16-CI-00251 OPINION
AFFIRMING
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BEFORE: KRAMER, MAZE, AND L. THOMPSON, JUDGES. MAZE, JUDGE: Appellant, Western Heritage Insurance Company, appeals the Logan Circuit Court's order, which denied its motion for summary judgment and dismissed its complaint against Appellee, Coffman Welding & Metal Work, Inc. For the following reasons, we affirm.
BACKGROUND
On July 11, 2014, Coffman's employee painted the bell at Russellville High School. While Coffman performed the paint job, eight vehicles arrived and parked in the school's parking lot. These eight vehicles were damaged by paint overspray from Coffman's painting of the bell.
Overspray is paint the wind picks up and carries off during spray painting.
Coffman was insured by Western Heritage under a Commercial General Liability Policy ("policy"). The damaged vehicles' owners each filed insurance claims and submitted repair estimates to Western Heritage. Eight vehicles were damaged, but only seven claims resulted because one entity owned two of the damaged vehicles. The repair estimates were attached to Western Heritage's motion for summary judgment and each was labeled with the same claim number of W1000202.
The policy states the deductible amount "applies to all damages sustained by one person or organization as the result of any one claim."
Western Heritage paid the seven claims, which exceeded $1,000 each, and then billed Coffman a $1,000 deductible for each of the seven insurance claims filed against the policy, for a total of $7,000. Coffman disputed the amount, contending it only owed a single deductible of $1,000. As a result, Western Heritage filed suit against Coffman to recover the $7,000.
After some discovery, Western Heritage filed a motion for summary judgment claiming the policy required Coffman to pay a $1,000 deductible for each claim filed. In response, Coffman argued the policy did not state it could be liable for more than the $1,000 deductible amount for a single occurrence.
After hearing oral arguments, the trial court entered an order finding Coffman only owed Western Heritage one deductible, in the amount of $1,000, for the entire paint overspray event. The trial court held that the policy was ambiguous because it stated the deductible was "per claim," but did not define the term "per claim." The trial court then relied on the ACORD General Liability Notice of Occurrence/Claim Form ("claim form") to find the deductible applied "per occurrence." Determining that the deductible provisions in the policy and claim form were contradictory, the trial court construed the policy in favor of the insured, Coffman.
ACORD stands for Association for Cooperative Operations Research and Development and, based on the website, www.acord.org, ACORD is a creator of standard forms used in the insurance industry.
Western Heritage then filed a motion to reconsider. Coffman did not file a response. Once again, the trial court heard oral arguments. Thereafter, the trial court denied Western Heritage's motion and dismissed its complaint against Coffman based on the same reasoning as its previous order. This appeal followed.
STANDARD OF REVIEW
In reviewing a grant of summary judgment, our inquiry focuses on "whether the trial court correctly found that there were no genuine issues as to any material fact and that the moving party was entitled to judgment as a matter of law." Scifres v. Kraft, 916 S.W.2d 779, 781 (Ky. App. 1996); Kentucky Rules of Civil Procedure (CR) 56.03. Only when the nonmoving party appears to be unable to produce evidence at trial warranting a judgment in their favor should summary judgment be granted. Steelvest, Inc. v. Scansteel Service Center, Inc., 807 S.W.2d 476, 480 (Ky. 1991). Further, "a party opposing a properly supported summary judgment motion cannot defeat it without presenting at least some affirmative evidence showing that there is a genuine issue of material fact for trial." Id. at 482. "An appellate court need not defer to the trial court's decision on summary judgment and will review the issue de novo because only legal questions and no factual findings are involved." Hallahan v. The Courier-Journal, 138 S.W.3d 699, 705 (Ky. App. 2004).
Moreover, interpretation and construction of an insurance contract is a matter of law for the court. See Morganfield National Bank v. Damien Elder & Sons, 836 S.W.2d 893, 895 (Ky. 1992). Accordingly, we review the trial court's order de novo and we have no obligation of deference to the lower court. Dowell v. Safe Auto Ins. Co., 208 S.W.3d 872, 875 (Ky. 2006).
ANALYSIS
The issue in this case is whether the policy required Coffman to pay a $1,000 deductible for each individual claim filed for a single occurrence or pay a single $1,000 deductible, regardless of the number of individual claims filed resulting from that occurrence. Western Heritage argues the policy requires Coffman to pay $1,000 for each claim submitted because Coffman's policy is "per claim" instead of "per occurrence." Coffman, on the other hand, argues the policy is a "per occurrence" policy with a limit of $1,000,000 and the deductible payment can be no greater than $1,000 per occurrence, regardless of the number of individual claims submitted for an occurrence. The parties agree that this issue appears to be a case of first impression in Kentucky.
The trial court examined both the policy itself and the claim form to conclude that the deductible provision is ambiguous and, thus, must be construed in favor of Coffman's position that a single $1,000 deductible was owed. In reaching this conclusion, the trial court noted the policy did not define the term "claim," but did define the term "occurrence."
In the policy, "occurrence" is defined as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions." The trial court found the overspray incident met the policy's definition of "occurrence." Neither party disagrees with this finding.
Turning to the deductible provision, the policy states that the deductible for property damage liability is "$1,000 per claim." The policy further states a deductible applies "to all damages sustained by one person or organization as the result of any one claim." As stated, the policy does not define "claim" or "per claim." So, recognizing that Kentucky courts have yet to rule on the proper application of the term "claim" as it relates to the number of deductibles owed, the trial court relied on the claim form to find the deductible provision ambiguous and then held the deductible should be applied "per occurrence."
As an initial matter, we conclude that the trial court mistakenly relied on the "policy type" section of the claim form to find an ambiguity. A claim form is a document used to report a claim or occurrence. Here, the claim form at issue contains Tony Coffman's report of the overspray incident. No evidence was introduced as to who prepared the claim form, but Eaves Insurance Agency, LLC, in Greenville, Kentucky, is listed as the "agency" on the claim form. Eaves Insurance also appears in the fax header across the top of the claim form. Eaves Insurance further appears in Coffman's policy itself, listed as the agent for Western Heritage to whom notice of all accidents or occurrences must be given. Evidently, Eaves Insurance is Coffman's insurance agent and Coffman obtained its policy with Western Heritage through that agent.
The claim form's purpose is explained by the affidavit of Western Heritage's "recovery rep," Essence Goodman, which was attached to Western Heritage's motion to reconsider. Goodman attested that "an Acord (the claim form) is a document commonly used in the insurance industry to notify a (sic) insurer of a claim or occurrence and can be completed by anyone at any time (sic) and is in no way indicative of the actual terms of an insured's policy." Apparently, Coffman reported the overspray incident to someone at Eaves Insurance who completed the claim form and submitted it to Western Heritage.
The significance of the claim form being used to find an ambiguity is based on a box being checked "occurrence" on the claim form. To explain, the claim form contains several fields that can be filled out, such as "date of claim," "location of occurrence," "policy information," "policy type," etc. In its order, the trial court specifically mentioned that the claim form listed the "policy type" as per "occurrence" as opposed to per "claims made." Seizing upon this indication of "occurrence" in the "policy type" field, the trial court held the deductible should be applied per occurrence as opposed to per claim. The fallacy in this reasoning, however, is that the term "occurrence" has a specific meaning when defining the "policy type" that does not relate to the deductible.
On page two of its order, the trial court states: "The General Liability Notice of Occurrence/Claim form ("Claim Form"), dated July 22, 2014, and submitted as Plaintiff's Exhibit B, indicates the Defendant's policy type is per "occurrence," as opposed to per "claims made." By quoting "claims made" and specifically referencing the "policy type," we assume the trial court was focusing on the "policy type" field on the claim form in its analysis.
The "policy type" could be either "occurrence" or "claims made" and, as stated, the "occurrence" box is checked in this case. The trial court's order and Coffman's brief suggest this means the policy was intended to be a "per occurrence" policy when applying the deductible and, thus, Coffman only owed a single deductible of $1,000 for the overspray occurrence. This suggestion is incorrect. An "occurrence" policy type means it covers claims resulting from an injury or event occurring during the policy term, while a "claims made" policy type means it covers claims made during the policy term. For instance, in an "occurrence" policy type with a term of January 1-December 31, 2019, if an injury occurs on December 15, 2019, but is not filed with the insurance company until January 15, 2020, that claim will still be covered because the injury occurred during the policy term. However, in a "claims made" policy type with the same policy term, injury date, and claim date, the claim will not be covered by that policy because the claim was not made until after the policy term. See, e.g., Meyers v. Kentucky Medical Ins. Co., 982 S.W.2d 203 (Ky. App. 1997). Therefore, the word "occurrence" in the "policy type" field has no bearing on the issues in this case and was mistakenly relied upon to find an ambiguity regarding the deductible provision. Having concluded the "policy type" field on the claim form was improperly used to find an ambiguity, we must determine if an ambiguity existed otherwise.
Western Heritage contends the term "per claim" is susceptible to but one reasonable meaning and, therefore, is unambiguous. Western Heritage relies on the policy language, which states the "deductible amount applies to all damages sustained by one person or organization as the result of any one claim" and the policy states that Coffman's liability is "$1,000 per claim." Based on this language, Western Heritage argues the policy is clear and the deductible applies per claim even if multiple claims result from one occurrence.
In response, Coffman argues that Western Heritage drafted the policy and failed to define "claim" or "per claim," even though it defined nearly every other word in the policy. Accordingly, Coffman reasons the policy could be interpreted to mean it owed one deductible for a single occurrence or multiple deductibles for a single occurrence. Because the policy is susceptible to two reasonable interpretations and the operative terms were not defined, Coffman claims the policy is ambiguous. Moreover, Coffman claims the policy provides an "Each Occurrence Limit" of $1,000,000 and, under the policy, the limit applies "regardless of the number of: a. Insureds; b. Claims made or 'suits' brought; or c. Persons or organizations making claims or bringing 'suits.'" Coffman also relies on the claim form, which states the limit applies for "EACH OCCURRENCE" and then lists the deductible as $1,000, to argue the deductible is per occurrence.
The "policy information" on the claim form states, in relevant part:
| EACH OCCURRENCE | FIRE DAMAGE | MEDICAL EXPENSES | DEDUCTIBLE |
| 1,000,000 | 100,000 | 5,000 | 1000 |
When a policy is "susceptible to two (2) or more reasonable interpretations," an ambiguity exists. True v. Raines, 99 S.W.3d 439, 443 (Ky. 2003). The insurer, such as Western Heritage, is ultimately responsible for the policy language, especially because parties to an insurance contract inherently have unequal bargaining power. St. Paul Fire & Marine Ins. Co. v. Powell-Walton-Milward, Inc., 870 S.W.2d 223, 227 (Ky. 1994). "Since the policy is drafted in all details by the insurance company, it therefore must be held strictly accountable for the language used." Id. (citation omitted). "A policy of insurance is to be construed liberally in favor of the insured and if, from the language, there is doubt or uncertainty as to its meaning, and it is susceptible to two interpretations, one favorable to the insured and the other favorable to the insurer, the former will be adopted." Id. (citing Koch v. Ocean Accident & Guar. Corp., 313 Ky. 220, 230 S.W.2d 893 (1950)).
As the trial court acknowledged in its order, while other jurisdictions have found the term "per claim" to be unambiguous, even when the term is not defined in the policy, like here, no Kentucky case has found the term "claim" or "per claim" unambiguous when applied to a deductible provision.
"An ambiguity may either appear on the face of the policy or . . . when a provision is applied to a particular claim." Id. at 227. When applying the deductible provision to the facts of this case, an ambiguity appears. We conclude that Western Heritage's failure to define "claim" or "per claim" or explain how a deductible could be applied multiple times for the same occurrence when the policy is a "per occurrence" policy, as Western Heritage admits in the Goodman affidavit, makes the deductible provision ambiguous.
Such ambiguities are sometimes referred to as "patent" or "latent." A patent ambiguity is one evident on the face of the contract, while a latent ambiguity arises when a contract that is unambiguous on its face becomes uncertain when applied to the subject matter. See State Farm Mut. Auto Ins. Co. v. Slusher, 325 S.W.3d 318, 322-23 (Ky. 2010). --------
Because an ambiguity exists, we turn to the doctrine of "reasonable expectations" to cure the ambiguity. Kentucky Employers' Mutual Insurance v. Ellington, 459 S.W.3d 876, 883 (Ky. 2015). Before applying this doctrine, however, we address Western Heritage's argument that we must reverse solely because the trial court failed to apply this doctrine to give the term "claim" or "per claim" a reasonable meaning as used in Coffman's policy. Specifically, Western Heritage complains that Ellington requires a two-step analysis in which the courts determine what the policy states and whether it includes an ambiguity. Then, if an ambiguity is found, the courts must use standard tools of interpretation to determine what coverage the policy provides. For our review, however, whether the trial court did or did not apply the reasonable expectations doctrine makes no difference. As stated, this Court owes no deference to the trial court's findings because we can interpret an insurance contract as a matter of law. Therefore, we turn back to the question of what Coffman reasonably expected as the deductible in the policy he bought from Western Heritage.
Under the reasonable expectations doctrine, "terms should be interpreted in light of the usage and understanding of the average person." Stone v. Kentucky Farm Bureau Mut. Ins. Co., 34 S.W.3d 809, 811 (Ky. App. 2000). And, the doctrine "resolves an insurance-policy ambiguity in favor of the insured's reasonable expectation[.]" True, 99 S.W.3d at 443. Reasonable is to be judged from the perspective of an ordinary layman, "rather than considering the policyholder's subjective thought process regarding his policy." Sparks v. Trustguard Ins. Co., 389 S.W.3d 121, 128 (Ky. App. 2012); see also Marcum v. Rice, 987 S.W.2d 789, 791 (Ky. 1999) ("The reasonable expectations of an insured are generally determined on the basis of an objective analysis of separate policy items and the premiums charged for each.").
Thus, under this doctrine, "the insured is entitled to all the coverage he may reasonably expect to be provided under the policy." Simon v. Cont'l Ins. Co., 724 S.W.2d 210, 212 (Ky. 1986) (citation omitted). Essentially, "an insurance company should not be allowed to collect premiums by stimulating a reasonable expectation of risk protection in the mind of the consumer, and then hide behind a technical definition to snatch away the protection which induced the premium payment." Aetna Cas. & Sur. Co. v. Commonwealth, 179 S.W.3d 830, 837 (Ky. 2005) (quoting Moore v. Commonwealth Life Ins. Co., 759 S.W.2d 598, 599 (Ky. App. 1988)).
Given this doctrine, Western Heritage argues that the term "per claim" has an understood meaning in the insurance industry and Coffman, as an ordinary business, could reasonably expect to owe a deductible per claim, not per occurrence. Indeed, Western Heritage contends that, if Coffman's deductible was $1,000 per occurrence, then the policy would have said so. Moreover, Western Heritage argues, by ruling the deductible applied per occurrence, the trial court effectively assigned the definition of "occurrence" to the term "per claim."
Coffman, on the other hand, argues that Western Heritage's interpretation of the deductible provision only benefits Western Heritage, which is exactly the type of misrepresentation the reasonable expectations doctrine was designed to prevent. By failing to define "claim," Coffman argues that Western Heritage created a technical loophole to reduce the amount of coverage available to its insureds. Instead of Coffman paying the first $1,000 and Western Heritage paying for the damages which exceed that amount, Western Heritage is reducing Coffman's insurance coverage by claiming Coffman owes the first $7,000 before Western Heritage is obligated to pay. The policy uses the singular form of "deductible" when stating that Western Heritage's "obligations under the coverages afforded by this policy to pay damages on behalf of the insured apply only to the amount of damages in excess of the deductible amount stated above." This implies Western Heritage will pay for everything above $1,000 up to the policy limits of $1,000,000, which is what Coffman expected. Also, while Coffman's policy limits coverage to $1,000,000 per occurrence, no matter how many claims are made against the policy, Western Heritage would have the number of deductibles owed directly dependent on the number of claims made, even if they stem from the same occurrence, which Coffman argues is unreasonable. For instance, if Russellville High School owned the eight vehicles damaged in the overspray incident, then Coffman would only owe one deductible, for $1,000. Yet, because the vehicles were owned by seven different owners, Coffman owes seven deductibles for the same overspray incident, for $7,000. Additionally, Coffman argues the seven claims should be considered one claim because Western Heritage considered them one claim when assigning the same claim number to each vehicle repair estimate claim. Finally, Coffman argues Western Heritage set a precedent for considering multiple damaged vehicles as one claim. While eight vehicles were damaged, Western Heritage considered two of them as the same claim because they were owned by the same person or organization, which Coffman contends demonstrates that one deductible for a single occurrence is not an unreasonable expectation for the insured.
In its order, the trial court relied on an annotation to find that Kentucky courts have not interpreted the term "claim" when applied to the number of deductibles owed. See Michael P. Sullivan, Annotation, Liability insurance: what is "claim" under deductibility-per-claim clause, 60 A.L.R.4th 983 (1988). That Annotation analyzes cases in which other courts have decided what activity constitutes a single "claim," "occurrence," "accident," or the like, within the meaning of the deductible clause in a policy.
In its briefing, Western Heritage cites cases from other jurisdictions, some of which are discussed in the Annotation cited by the trial court's order, to support its position. We examine those cases below.
The first case cited by Western Heritage actually involved Western Heritage. In Western Heritage Insurance Co. v. Love, 24 F.Supp.3d 866 (W.D. Mo. 2014), the court examined how a deductible applied to a class action member's claim. The policy at issue had a $1,000 per claim deductible, but "claim" was not defined, much like this case. Id. at 880. Also, the policy did not discuss how a per claim deductible applied to a class action. Id. The court held the policy provision was not ambiguous because, under Missouri law, it was neither difficult to understand nor duplicitous. Id. Thus, the deductible applied to each claimant separately, even though the claims arose out of the same occurrence. Id. at 880-81.
The second case cited by Western Heritage involved an overspray occurrence, like the present situation. In General Casualty of Wisconsin v. Diversified Painting Service, Inc., 603 N.E.2d 1389 (Ind. Ct. App. 1992), the insured's policy had a $250 deductible and over fifty cars were damaged. The insured argued that the overspray incident was one occurrence and the policy stated the limits of insurance, applicable to each occurrence, shall be reduced by the amount of the deductible. Id. at 1391. So, the insured argued the term "occurrence" created an ambiguity. Although the insured won at the trial court level, the Indiana Court of Appeals reversed, holding the term "occurrence" was defined and, thus, the policy was clear and unambiguous because it stated the $250 deductible applied to each claim. Id.
The third case cited is Kent Insurance Co. v. Capitol Maintenance, Inc., 433 So.2d 1295 (Fl. Dist. Ct. App. 1983). In Kent, several cars were damaged by an overspray incident during the painting of a bridge. Many of the car owners' own insurance companies paid for their damages. Then, two of those insurance companies subrogated to 127 individuals' claims and sued the insured. A corporation that owned thirty-three of the damaged cars and in which sixteen of its employees owned damaged cars also joined the suit to recover damages against the insured. The insured argued only three deductibles should apply: one for each of the two subrogees and one for the corporation. Meanwhile, the insurer argued a separate deductible applied to each damaged vehicle because the policy had a $1,000 per claim deductible. In that case, the policy clearly defined a "per claim basis" deductible versus a "per occurrence basis" deductible. The policy defined "per claim basis" as:
If the deductible is on a "per claim" basis, the deductible amount applies under the Bodily Injury Liability or Property Damage Liability Coverage, respectively, to all damages because of bodily injury sustained by one person, or to all property damage sustained by one person or organization, as the result of any one occurrence.Id. at 1296-97 (emphasis original). In contrast, the policy defined "per occurrence basis" as:
If the deductible is on a "per occurrence" basis, the deductible amount applies under the Bodily Injury Liability or Property Damage Liability Coverage, respectively, to all damages because of all bodily injury or property damage as the result of any one occurrence.Id. at 1296 (emphasis original). Because these terms were defined and explained, the court held the per claim deductible provision was unambiguous. Id. at 1297. Moreover, the court relied on the fact that the policy offered the insured the choice between a "per claim" deductible and a "per occurrence" deductible, and the insured presumably chose the "per claim" deductible to keep the premiums low. Id. at 1296. The appellate court also affirmed the lower court's decision that the corporation's claim for its thirty-three vehicles was only one claim. Id. at 1297.
We find the foregoing cases distinguishable because the courts in those cases found no ambiguity in the policy, whereas we have already concluded Coffman's deductible provision is ambiguous.
First, the Love court found no ambiguity because, under Missouri law, the policy was neither difficult to understand nor duplicitous. In contrast, under Kentucky law, Coffman's policy is ambiguous because the deductible provision is susceptible to more than one reasonable meaning. See True, 99 S.W.3d at 443.
Second, the General Casualty of Wisconsin court found no ambiguity because the term "occurrence" was defined in the policy. Also, the parties in General Casualty of Wisconsin did not dispute the term "claim" or how it should apply to the deductible provision for a single occurrence. In contrast, these issues are in dispute here.
Finally, the Kent court found no ambiguity because the policy defined the two types of deductibles ("per occurrence basis" and "per claim basis") and described how they applied. Although Western Heritage relied on Kent and, in its briefing, described how two types of deductibles exist in the insurance industry and explained each in detail, it failed to include such definitions or explanations in Coffman's policy. Coffman's policy cannot be construed as unambiguous like the Kent policy because Western Heritage did not write the policy with a definition of "claim" or "per claim" or explain how the deductibles work, especially when applied to multiple claims stemming from the same occurrence.
We are more persuaded by the recent Kentucky case, Davis v. Kentucky Farm Bureau Mutual Insurance Co., 495 S.W.3d 159 (Ky. App. 2016), where a panel of this Court had to decide if multiple claims of negligence could count as multiple occurrences to increase the amount of coverage available under an insurance policy. In that case, a child swallowed and choked on a push-pin while in daycare. The child's estate alleged a direct negligence claim against the daycare, as well as a vicarious negligence claim against the daycare for its employees' actions or inactions. The daycare had a policy for $500,000 per occurrence. The child's estate argued the two negligence claims amounted to two occurrences, which would allow it to recover $1,000,000 under the policy. The insurer, on the other hand, argued the negligent acts combined to form a single occurrence resulting in the death of the child. The Court held the policy was unambiguous because "occurrence" was defined as an "accident" under the policy. Id. at 167. The Court concluded that, regardless of the number of negligent acts combining to cause a single injury and regardless of the number of theories of liability against the daycare and its employees, only one accident occurred (the child choking on the push-pin) and the individual acts of negligence were not separate occurrences. Id. at 166-67. If we held a policy was unambiguous so that a child's estate could not recover for two claims resulting from the same occurrence, then we should not allow Western Heritage to charge a deductible per claim when the claims result from the same occurrence, especially when "occurrence" is defined in Coffman's policy but "claim" or "per claim" is not and no explanation is provided in the policy for how the deductible provision applies.
Accordingly, we conclude the ambiguity of the "per claim" deductible provision in a "per occurrence" policy should be resolved in favor of Coffman's reasonable expectations. An ambiguity is strictly construed against the drafter and when this rule is used in conjunction with the doctrine of reasonable expectations, ambiguities should be interpreted from the perspective of an ordinary layman. Sparks, 389 S.W.3d at 128. Coffman expected to pay one deductible for the overspray occurrence, which is reasonable as the policy is written.
For its public policy argument, Western Heritage warns that, if the Court interprets the policy as having a "per occurrence" deductible, this will have "disastrous ripple effects on the insurance industry throughout Kentucky" and millions of insureds will evade their deductible requirements to argue an ambiguity. According to Western Heritage, a "per claim" deductible inherently limits an insurance company's liability by determining in advance what portion of certain damages the insured will be required to pay. Due to this limit of liability, Western Heritage argues "per claim" policies are cheaper than "per occurrence" policies.
With such "disastrous ripple effects" at stake, however, Western Heritage offers no evidence to distinguish the deductible amounts or premium payments that may exist in a "per occurrence" versus a "per claim" policy. How would Coffman's $1,000 deductible amount be affected if, as Western Heritage argues, Coffman had a "per occurrence" deductible? Similarly, how would Coffman's $3,825.20 premium payment be affected? Western Heritage does not answer these questions. More importantly, Western Heritage fails to present any evidence that Coffman was offered a choice between these two types of policies, as the insured in Kent was presumably offered, much less an explanation of the difference between the two types of policies when Coffman bought the policy.
Also, we are not persuaded by Western Heritage's argument that having a "per occurrence" policy limit with a "per claim" deductible encourages Coffman to minimize damages during an occurrence to avoid paying multiple deductibles. Such logic assumes Coffman would intentionally throw caution to the wind, or paint in this case, and damage as many vehicles as possible during an occurrence because Coffman would only owe one deductible. Ordinary laymen understand that an insurance premium payment usually increases the following year when multiple claims are made against a policy. Or worse, the insurance company may not renew the policy the following year. An insured has many reasons to minimize damages other than the threat of paying multiple deductibles for the same occurrence.
Western Heritage's final argument is that the trial court erred by dismissing its complaint when Coffman admitted, at a minimum, it owed Western Heritage $1,000 for the deductible. Western Heritage reasons that, even if the policy is ambiguous and the deductible provision should be construed as $1,000 per occurrence, the order should be reversed and remanded with directions for the trial court to enter judgment for $1,000. In response, Coffman argues the trial court only has jurisdiction over matters exceeding $5,000 and, upon a ruling that the amount in controversy is limited to $1,000, the trial court no longer had jurisdiction over this case pursuant to Kentucky Revised Statutes (KRS) 24A.120.
Coffman's reasoning is incorrect. The amount in controversy claimed at the time the action is instituted determines the jurisdiction of the court. 21 C.J.S. Courts §32 (2006). Once a court acquires jurisdiction, such jurisdiction is generally not lost or defeated by subsequent events. Id. So, the finding that Coffman owes $1,000 for the deductible does not mean the circuit court lost jurisdiction of the action at that time. Nevertheless, dismissal of the complaint is proper because Western Heritage, as the plaintiff, lost on summary judgment and no issues remain for the trial court to resolve.
In its motion to reconsider, Western Heritage specifically requested the trial court to make its order final and appealable. The trial court honored that request because the parties agreed no issue of material fact remained and this case could be decided as a matter of law. Thus, when the trial court denied Western Heritage's motion for summary judgment, it also dismissed Western Heritage's complaint, including any allegations seeking a money judgment. Moreover, if Western Heritage truly sought a judgment for $1,000 then it should have raised this issue in its motion to reconsider, but it did not. Therefore, we affirm the trial court's final order denying Western Heritage's motion for summary judgment and granting judgment for Coffman dismissing the complaint.
CONCLUSION
For the foregoing reasons, we affirm the Logan Circuit Court's order.
THOMPSON, L., JUDGE, CONCURS.
KRAMER, JUDGE, DISSENTS AND FILES A SEPARATE OPINION. KRAMER, JUDGE, DISSENTING: Respectfully, I dissent from the majority's thoughtful opinion. My view is aligned with that of Western Heritage's in that the insurance policy is not ambiguous when the term "claim" is given its plain meaning. Terms of a contract are "interpreted in light of the usage and understanding of the average person." Stone v. Kentucky Farm Bureau Mut. Ins. Co., 34 S.W.3d 809, 811 (Ky. App. 2000). "The mere fact that [a party] attempt[s] to muddy the water and create some question of interpretation does not necessarily create an ambiguity." Kentucky Ass'n of Counties All Lines Fund Trust v. McClendon, 157 S.W.3d 626, 633-34 (Ky. 2005) (quoting True v. Raines, 99 S.W.3d 439, 443 (Ky. 2003)). While ambiguous terms are to be construed in favor of the insured, "we must also give the policy a reasonable interpretation, and there is no requirement that every doubt be resolved against the insurer." Stone, 34 S.W.3d at 811. The common meaning of words is often determined by reference to dictionary definitions. Department of Revenue, Finance and Administration Cabinet v. Shinin' B Trailer Sales, LLC, 471 S.W.3d 309, 311 (Ky. App. 2015) (citing Jefferson Cty. Bd. of Educ. v. Fell, 391 S.W.3d 713, 719 (Ky. 2012)). The term "claim" is defined as "a demand for something due or believed to be due." https://www.merriam-webster.com/dictionary/claim (Merriam-Webster online dictionary last visited March 23, 2020). This plain meaning is different from the term "occurrence" as defined in the policy as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions." Hence, in my view, the insurance contract is unambiguous in that an "occurrence" is what leads to a "claim." Thus, I would reverse. BRIEFS FOR APPELLANT: Aaron M. Cole
Cincinnati, Ohio BRIEF FOR APPELLEE: Elizabeth Teel
Russellville, Kentucky