APPEAL FROM HARDIN CIRCUIT COURT HONORABLE KEN M. HOWARD, JUDGE ACTION NO. 10-CI-01748
BRIEF FOR APPELLANT: Timothy R. McCarthy Louisville, Kentucky
BRIEF FOR APPELLEE: Kim F. Quick Elizabethtown, Kentucky
BEFORE: ACREE, CHIEF JUDGE; TAYLOR AND VANMETER, JUDGES.
ACREE, CHIEF JUDGE
By order entered February 6, 2012, the Hardin Circuit Court found Appellant Lonnie Riggs' claim for underinsured motorist (UIM) benefits against Appellee, State Farm Automobile Insurance Company, to be contractually time-barred, and granted summary judgment in State Farm's favor. The issue before this Court is the reasonableness of the limitation provision in the parties' insurance contract requiring any action for UIM benefits be brought within two years of the date injury or the last basic reparations benefit paid, whichever is later. For the reasons set forth in this opinion, we find such a provision unreasonable. Accordingly, we reverse and remand for additional proceedings consistent with this opinion.
I. Facts and Procedure
On August 26, 2008, Riggs was a police officer with the City of Vine Grove. While on duty, Riggs was injured in an automobile collision with Phillip Richards. Riggs received workers' compensation benefits for his injuries; he did not seek or receive basic reparation benefits. His vehicle was insured by State Farm; his insurance policy included UIM coverage.
Nearly two years after the accident, on August 5, 2010, Riggs filed suit against Richards alleging negligence and commenced discovery. Thereafter, on August 26, 2011, with leave of court, Riggs amended his complaint to assert a claim against State Farm for UIM benefits.
Prior to trial, Richards' liability insurance carrier, Allstate Insurance Company, settled Riggs' negligence claim against Richards for $100, 000.00, Richards' liability policy limits. Riggs communicated this to State Farm, who elected to waive its subrogation rights against Richards.
Despite the settlement between Riggs and Richards, Riggs' contractual claim for UIM benefits against State Farm remained. Because Riggs believed his damages exceeded the amount of his settlement with Richards, he continued to pursue the UIM claim. Discovery ensued. On December 2, 2011, State Farm moved for summary judgment asserting Riggs' UIM claim was time-barred pursuant to a contractual limitation clause contained in Riggs' insurance policy with State Farm. That clause states:
There is no right of action against us [State Farm]: . . . under uninsured motor vehicle coverage and underinsured motor vehicle coverage unless such action is commenced not later than two (2) years after the injury, or death, or the last basic or added reparation payment made by any reparation obligor, whichever later occurs.
State Farm pointed out that the accident occurred on August 26, 2008, but Riggs chose not to sue State Farm for UIM benefits until August 26, 2011, three years later. Consequently, State Farm argued, Riggs filed his UIM claim outside the two-year contractual limitations period, rendering his UIM claim time-barred. The circuit court agreed and granted State Farm's summary-judgment motion, relying squarely on an opinion of the United States Court of Appeals for the Sixth ...