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Adkins v. Shelter Mutual Ins. Co.

United States District Court, E.D. Kentucky, Central Division, Lexington

July 28, 2015

KAYLA ADKINS, Plaintiff,
v.
SHELTER MUTUAL INS. CO., Defendant.

OPINION AND ORDER

KAREN K. CALDWELL, Chief District Judge.

This matter is before the Court on the motions for summary judgment (DE 184 and 185) filed by both parties. By prior opinion (DE 198), this Court determined that the plaintiff Kayla Adkins' bad faith claim against the defendant Shelter Mutual Ins. Co. must be tried before a jury. On the motions currently before the Court, the parties each ask for judgment in their favor on Adkins' various claims of negligence and fraud. For the following reasons, Adkins has failed to present sufficient evidence to support these claims and they must be dismissed.

I. Background

On October 25, 2008, the plaintiff, Kayla Adkins, was in an automobile accident. She was 17 years old at the time. The accident was caused by another driver, Anthony Mason, who was insured by defendant Shelter.

Adkins' mother, Jessica Collins, filed a claim with Shelter for property damage to her car and that claim was settled on November 17, 2008. (DE 116-50, Notes.) Shelter adjuster Linda Yates noted on that same date that she was waiting on Adkins to return medical authorizations. (DE 116-50, Notes.) On December 11, 2008, Yates noted that Adkins still had not returned medical authorizations and she phoned Collins. (DE 116-3, Notes.)

Yates' notes reflect that Collins informed Yates that Adkins was "fine." Collins stated that Adkins had experienced only "bruising and soreness" and that she had not gone for any follow-up medical care. Yates informed Collins that Kayla Roe, the passenger in Adkins' car, had retained an attorney. Collins stated that Adkins was "only bruised and she is not pursuing any claim." (DE 116-3, Notes.)

About a week later, Yates phoned Collins again and explained that Adkins was entitled to a bodily injury settlement from Shelter even though she was not pursuing a claim and offered her $500. (DE 116-4, Notes.) Collins accepted and, in return, she signed a document provided by Shelter called "Indemnifying Release (Minors)." The release can be reasonably interpreted to release Shelter and Mason from all claims, including any claims Adkins herself may have, stating:

[W]e, individually and as a parents, release [Mason and Shelter] from any and all claims, demands, damages, actions, causes of action, or suits of whatever kind or nature, including bodily injuries sustained by Kayla Adkins, a minor... or arising out of damages or direct or indirect loss we sustained from an accident on the 25th day of October, 2008... [W]e agree to hold [Mason and Shelter] harmless for any claim for the minor or any other party resulting from the minor's injury in this accident, and to reimburse any loss, damage, or costs that [Mason or Shelter] pays if any litigation arises from these injuries. This release fully settles and discharges all claims against [Mason and Shelter]... I/We have fully read, understand, and voluntarily accept this agreement to fully and finally compromise all claims, disputed or not, based on the injuries and damages from this accident.

(DE 82-4, Release) (emphasis added.)

Collins testified that, at the time she signed the release, Adkins "was not showing any health problems." (DE 116-5, Collins Dep. at 17.)

While the release can reasonably be interpreted to settle all claims against Shelter and Mason, Shelter's Casualty Claims Adjusting Guidelines state that it "releases the parent or guardians' claim but not the minor's claim." The guidelines continue, however, that if the minor "should later pursue his or her injury claim, any amount paid in addition to the amount paid for this release could be claimed from the party signing this release." (DE 121-1, Guidelines at CM-ECF p. 14.) In other words, if the minor should assert her rights as an adult, the parent would ultimately have to pay what the minor is due.

No party sought court approval of the settlement. A Kentucky statute, KRS § 387.280, mandates court approval for certain settlements with minors but does not state which party must obtain it. Lawson v. Dawson, No. 2003-CA-00448-MR, 2004 WL 1909357 at *5 (Ky. App. 2004) ("Neither in the statutes or the case law is it stated on whom the burden rests to ensure that a settlement on behalf of a minor is correctly executed.")

Adkins agrees that the statute does not make clear which party should obtain court approval. (DE 118, Response at 13.) Shelter's position is that Collins, as Adkins' custodian, was the party who was required to obtain approval. (DE 116-1, Mem. at 20.) Regardless, "[t]he case law makes clear that any settlement on behalf of a minor without the approval of the court and appointment of a guardian is subject to collateral attack." Lawson, 2004 WL 1909357 at *5 (discussing KRS §§ 387.280 and 387.125(6)).

Adkins turned 18 in April 2009. On October 26, 2009, she filed suit against Mason - Shelter's insured - seeking additional compensation for her alleged injuries. Adkins and Mason eventually settled that claim in January 2012 for $12, 000. Adkins testified that the settlement adequately compensated her for her injuries. (DE 39, Adkins Dep. at 24-25.)

In April 2012, Adkins filed this action against Shelter. In her second amended complaint, Adkins asserted two claims: a claim under Kentucky's Unfair Claims Settlement Practices Act ("UCSPA"), KRS § 304.12-230, and a common law bad faith claim. (DE 1-7, Second Amended Complaint.) Adkins then filed a third amended complaint which added claims for fraud in the inducement, fraud, negligence, gross negligence, negligent misrepresentation, negligent training and supervision, and intentional misrepresentation. She deleted the common law bad faith claim contained in the second amended complaint.

Adkins argues that that Shelter wrongfully paid her mother $500 without adequately investigating her injuries and that it failed to obtain court approval of the settlement as required. She further argues that Shelter falsely represented that the release signed by her mother barred any future claim by her as an adult. She submits evidence that this conduct extended beyond her. The evidence indicates that from 2008 to 2011, Shelter settled at least 94 other claims involving injuries to minors and that, in each such case, Shelter presented the minor's parent or guardian with a release containing the same representations as that signed by Collins. Adkins submits evidence that, of these minors, she is the only person who asserted a claim against Shelter after turning 18.

She alleges this amounted to a "coordinated and companywide scheme meant to deprive policy holders and/or third party beneficiaries of said policies, the full exercise of rights and benefits...." (DE 129, Third Amended Complaint ¶ 30.)

The parties previously moved for summary judgment on the UCSPA claim contained in the third amended complaint. The Court denied both motions. The parties now move for ...


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