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Day v. Personal Service Insurance Co.

United States District Court, E.D. Kentucky, Northern Division, Covington

December 5, 2014

TASHA DAY, Plaintiff,
v.
PERSONAL SERVICE INSURANCE COMPANY, ET AL., Defendants.

MEMORANDUM OPINION AND ORDER

WILLIAM O. BERTELSMAN, District Judge.

This case is before the Court on Defendants' Motion to Bifurcate (Doc. 8) and Defendants' Motion for Summary Judgment (Doc. 13).

The Court previously heard oral argument on these motions, after which it took them under advisement. (Doc.). After further study, the Court now issues the following Memorandum Opinion and Order.

I. Factual and Procedural Background

On January 13, 2011, Plaintiff was involved in a car accident in Campbell County, Kentucky when Lynn Siebler improperly changed lanes on Interstate 471. Plaintiff drove onto the shoulder of the Interstate in an effort to avoid a collision with Siebler. Because it had recently snowed, and the snow had been plowed onto the shoulder of the Interstate, Plaintiff was unable to avoid hitting a snow bank and ice. Plaintiff's car spun out of control, crossed three lanes of traffic, and crashed down a hillside into a ditch in the median. Plaintiff's car was totaled, and Plaintiff suffered serious injuries.

Prior to the accident, Defendant issued Plaintiff an automobile policy ("Policy"). The Policy insured three vehicles: a 2001 Ford Ranger, a 2001 Pontiac Grand Am, and a 1998 Jeep Grand Cherokee. The Policy provided for Underinsured Motorist ("UIM") benefits in the amount of $12, 500 per person, $25, 000 per occurrence, and all three vehicles carried separate premiums. The Policy contained anti-stacking and set-off provisions. The Policy also contained a notice provision that required Plaintiff to provide written notice to Defendant of any legal action against an underinsured motor vehicle operator.

Plaintiff filed a lawsuit against Siebler after the accident and settled with Siebler's insurer for Siebler's policy limit of $100, 000 on August 1, 2013. Plaintiff executed a Settlement and Release Agreement ("Settlement") to document the settlement with Siebler's insurer. The Settlement released Siebler, her insurer, and "all other persons, firms, or corporations liable... from any and all claims... as the result of an accident." (Mot. for Summ. J. at 3). There is no evidence of record that Plaintiff notified Defendant of the Settlement prior to its execution. The funds received from the Settlement did not cover all of Plaintiff's damages from the accident.

Plaintiff requested that Defendant pay her UIM benefits in the amount of the damages she suffered in excess of the funds that she received from the Settlement. Defendant refused, and Plaintiff brought this action alleging breach of contract and bad faith.

Defendant has filed a motion to bifurcate the proceedings and hold in abeyance Plaintiff's bad faith claim. Defendant has also filed a motion for summary judgment on all claims.

II. ANALYSIS

A. Ohio Law's Applicability to the Policy

Defendant argues that Ohio law should govern the Policy because Kentucky courts have recognized, using the "most significant relationship" test, that the law of the residence of the named insured will determine the scope of the coverage. Defendant argues that because Plaintiff is an Ohio resident, Ohio law should govern the Policy.

Plaintiff argues that Kentucky law does not apply the traditional "most significant relationship" test when applying another state's law would violate Kentucky's public policy. Plaintiff argues that applying Ohio law would violate Kentucky's public policy against set-off and anti-stacking provisions in automobile insurance policies.

In order to determine which law applies, the modern test is which state has the most significant relationship to the transaction and the parties. Lewis v. Am. Family Ins. Grp., 555 S.W.2d 579, 581 (Ky. 1977) (citation omitted) (internal quotation marks omitted). Using this test, in most cases the law of the residence of the named ...


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