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State Farm Mutual Automobile Insurance Co. v. Adams

Supreme Court of Kentucky

August 24, 2017

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY APPELLANT
v.
RONIESHA ADAMS F/K/A RONIESHA SANDERS; AND RONIESHA ADAMS, AS MOTHER AND GUARDIAN OF B.A., A MINOR CHILD APPELLEES

         ON APPEAL FROM COURT OF APPEALS CASE NO. 2013-CA-002152-MR JEFFERSON CIRCUIT COURT NO. 12-CI-006500

          COUNSEL FOR APPELLANT: Raymond G. Smith Richard W. Edwards Jared Lee Downs John Lott Hardesty Boehl, Stopher 8b Graves, LLP

          COUNSEL FOR APPELLEES: Aaron Michael Murphy Murphy & Associates PLC

          COUNSEL FOR AMICUS CURIAE, COALITION AGAINST INSURANCE FRAUD; AND, NATIONAL INSURANCE CRIME BUREAU: Matthew Jon Smith Neil Baine Smith Rolfes & Skavdahl, Co., LPA

          OPINION

          KELLER JUSTICE.

         REVERSING

         State Farm Mutual Automobile, Insurance Company appeals from the opinion of the Court of Appeals, which reversed the circuit court's declaratory and summary judgment in favor of State Farm. The only issue before us is whether State Farm is permitted unilaterally to require-that a person seeking coverage undergo questioning under oath. Having reviewed the record, we reverse the Court of Appeals and reinstate the circuit court's judgment.

         I. BACKGROUND.

         The underlying facts are not in dispute. Milton Mitchell owned a late model KIA, which he insured through State Farm. The State Farm policy provided basic reparation benefits (BRB) and uninsured motor vehicle coverage.

         On April 3, 2012, Roniesha Adams (Adams), her son, BA, and BA's father, Barry Adams, Sr. (Barry) were passengers in Mitchell's car. While they were stopped at a red light, another vehicle struck Mitchell's car from the rear. That vehicle, which no one in the Mitchell car could identify, fled the scene. Following the accident, Adams, who was pregnant, BA, and Barry were transported to the hospital by ambulance. Mitchell and his three passengers asserted claims against State Farm, seeking PIP and uninsured motorist benefits. State Farm made initial payments of PIP benefits but, after an investigator took recorded statements from Mitchell, Barry, and Adams, State Farm suspended any additional payments. According to State Farm, Adams, Barry, and Mitchell gave inconsistent statements about where they were going that day, where they had been, and what happened when they were hit. State Farm also perceived inconsistencies between the statements and the police report and noted that Adams and Barry had been involved in a number of motor vehicle accidents in the preceding year. Because of these perceived inconsistencies, State Farm identified four "substantive issues" that it needed to clarify before it could continue to extend coverage:

Whether the bodily injury or property damage was caused by the accident.
Whether the injury was caused by a hit-and-run motor vehicle, so as to qualify as an uninsured motor vehicle under the Uninsured Motor Vehicle coverage.
Whether the accident arose out of the ownership, maintenance, or use of an uninsured motor vehicle as defined in the policy.
If [Mitchell, Adams, or Barry] . . . has made false statements with the intent to conceal or misrepresent any material fact or circumstance in connection with any claim under this policy.

         In order to resolve these issues, State Farm advised Mitchell, Adams, and Barry that, pursuant to a provision in the policy, they were required to submit to questioning under oath.[1] Mitchell submitted to questioning under oath and State Farm extended coverage to him. However, Adams and Barry refused to submit to questioning under oath and State Farm refused to pay any additional benefits. Adams and Barry then filed suit against State Farm, and State Farm filed a counterclaim seeking a declaratory judgment that it did not have to provide coverage because Barry and Adams failed to cooperate with its investigation. Following discovery, which included the depositions of Adams and Barry, each party moved for summary judgment. State Farm also moved the court for a declaratory judgment that it had no obligation to extend coverage to Adams or Barry. The circuit court granted State Farm's motions finding that "[u]nder the terms of the policy, the plaintiffs failed to cooperate in the investigation of their claims, thus their claims for BRB and uninsured motorist benefits are barred."

         Adams, in her individual capacity, and as mother and guardian of BA, appealed to the Court of Appeals. For reasons that are not clear in the record, Barry did not appeal. The Court of Appeals reversed, holding that State Farm had to obtain a court order before it could require Adams to submit to questioning under oath. State Farm sought discretionary review, which we granted.

         II. STANDARD OF REVIEW.

         The issue before us is one of law, which we review de novo. Cumberland Valley Contractors, Inc. v. Bell Cnty Coal Corp., 238 S.W.3d 644, 647 (Ky. 2007).

         III. ANALYSIS.

         At the outset, we note that Adams sought coverage under the BRB and uninsured motor vehicle provisions of State Farm's policy. Those types of coverage are governed by separate statutory provisions; however, KRS 304.20-020, the uninsured motor vehicle coverage statute, "must be construed in light of and in accord with" KRS 304.39-010, et seq., the Motor Vehicle Reparations Act (the MVRA). Countryway Ins. Co. v. United Fin. Cos. Ins. Co.,496 S.W.3d 424, 434 ...


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