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Consolidated Insurance Co. v. Slone

Court of Appeals of Kentucky

January 5, 2018

CONSOLIDATED INSURANCE COMPANY APPELLANT
v.
CHRISTOPHER LEE SLONE; JESSICA CANTRELL; NANCY PERKINS, AS MOTHER, NATURAL GUARDIAN, AND NEXT FRIEND OF RAYMOND MITCHELL KEETON, AN INFANT; RAMONA CONLEY, AS MOTHER, NATURAL GUARDIAN, AND NEXT FRIEND OF SAMANTHA CONLEY, AN INFANT; RAMONA CONLEY, AS MOTHER, NATURAL GUARDIAN, AND NEXT FRIEND OF KAYLEE CONLEY, AN INFANT; CRYSTAL HALL, AS MOTHER, NATURAL GUARDIAN, AND NEXT FRIEND OF KATILYNN D. HALL, AN INFANT; PATRICIA RUSSELL, AS MOTHER, NATURAL GUARDIAN, AND NEXT FRIEND OF TARAH RUSSELL, AN INFANT; PATRICIA RUSSELL, AS MOTHER, NATURAL GUARDIAN, AND NEXT FRIEND OF TATEM RUSSELL, AN INFANT; HEATHER POE, AS PARENT AND NATURAL GUARDIAN OF RHYLEE POE, AN INFANT; BENNIE POE, AS PARENT AND NATURAL GUARDIAN OF RHYLEE POE, AN INFANT; DAVID BLEVINS, AS GRANDFATHER, CUSTODIAN, AND NEXT FRIEND OF THE INFANT, PEYTON ELKINS; DEWAYNE DAVIS; LINDA HOWARD; BILLIE RAMEY; JUDY FRANCIS, AS GUARDIAN AND NEXT FRIEND OF KENNA ISAAC, AN INFANT; SHERRI ARNETT, AS NATURAL GUARDIAN AND NEXT FRIEND OF CHRISTINA ARNETT, AN INFANT; ASHLEY ARNETT, AS NATURAL GUARDIAN AND NEXT FRIEND OF JACKLYN ARNETT, MADISON ARNETT, AND ALEXIE ARNETT, INFANTS; SHANNON VANHOOSE, AS NATURAL GUARDIANS AND NEXT FRIENDS OF LINZIE VANHOOSE, AN INFANT; JERRY VANHOOSE, AS NATURAL GUARDIANS AND NEXT FRIENDS OF LINZIE VANHOOSE, AN INFANT; DUNCAN VANHOOSE, AN INFANT; CLARISSA WELLS, AS NATURAL MOTHER AND NEXT FRIEND OF MICHAEL WELLS, MATTHEW WELLS AND JONATHAN WELLS; MANDY BUTCHER, AS NATURAL MOTHER AND NEXT FRIEND OF LAKEN BUTCHER, JENNIE BUTCHER AND HANNAH BUTCHER; ALEX HOWARD, BY AND THROUGH HIS NEXT FRIENDS, BEN HOWARD AND DEBBIE HOWARD; GUNNER CARTY, BY AND THROUGH HIS NEXT FRIENDS, GARRETT WARD AND WILMA WARD; RYAN GAUSE, BY AND THROUGH HIS NEXT FRIEND, DONNA DANIELS; ELSIE BAILEY, AS NEXT FRIEND OF JEFFREY BAILEY; STACY RUSSELL, AS NEXT FRIEND OF ERICA AND DESTINY RUSSELL; KATILYNN D. HALL; SAMANTHA PERKINS, AS MOTHER AND NEXT FRIEND OF DOMINICK PERKINS AND DAKOTA PERKINS; SANTANA ALLEN, AS MOTHER AND NEXT FRIEND OF DAKOTA BURCHETT AND JASON ALLEN; SHAWN HOWARD, BY AND THROUGH HIS NATURAL PARENT AND NEXT FRIEND, CATHRINE CASSADY HOWARD; JOEY DOTSON; KAYLEE DOTSON; KYLE CASEBOLT; MICHAEL SUMMERS; JOZIE DOBBINS; MEGAN HOWARD; JAMES MEADE; JONBONET STEVENS; GROVER J. ALLEN; LINDSEY B. RUSSELL; BREANNE MORRISON, THROUGH HER FATHER, JAMES MORRISON; KAYLEIGH ARNETT, THROUGH HER MOTHER, VIRGINIA MURRELL; ODELL PYLES; GEICO GENERAL INSURANCE COMPANY; TWIN CITY FIRE INSURANCE COMPANY; KEMI; NATIONWIDE PROPERTY AND CASUALTY INSURANCE COMPANY; AND DWAYNE DAVIS APPELLEES

         APPEAL FROM MAGOFFIN CIRCUIT COURT HONORABLE KIM C. CHILDERS, JUDGE ACTION NO. 14-CI-00298

          BRIEFS FOR APPELLANT: Charles H. Cassis Aaron J. Silletto Chandler M. Hardin Prospect, Kentucky.

          ORAL ARGUMENT FOR APPELLANT: Charles H. Casis Chandler M. Hardin Prospect, Kentucky.

          BRIEF FOR APPELLEES: CHRISTOPHER LEE SLONE; JESSICA CANTRELL; NANCY PERKINS, AS MOTHER, NATURAL GUARDIAN, AND NEXT FRIEND OF RAYMOND MITCHELL KEETON, AN INFANT; RAMONA CONLEY, AS MOTHER, NATURAL GUARDIAN, AND NEXT FRIEND OF SAMANTHA CONLEY, AN INFANT; RAMONA CONLEY, AS MOTHER, NATURAL GUARDIAN, AND NEXT FRIEND OF KAYLEE CONLEY, AN INFANT; CRYSTAL HALL, AS MOTHER, NATURAL GUARDIAN, AND NEXT FRIEND OF KATILYNN D. HALL, AN INFANT; PATRICIA RUSSELL, AS MOTHER, NATURAL GUARDIAN, AND NEXT FRIEND OF TARAH RUSSELL, AN INFANT; PATRICIA RUSSELL, AS MOTHER, NATURAL GUARDIAN, AND NEXT FRIEND OF TATEM RUSSELL, AN INFANT; HEATHER POE, AS PARENT AND NATURAL GUARDIAN OF RHYLEE POE, AN INFANT; BENNIE POE, AS PARENT AND NATURAL GUARDIAN OF RHYLEE POE, AN INFANT; AND DAVID BLEVINS, AS GRANDFATHER, CUSTODIAN, AND NEXT FRIEND OF THE INFANT, PEYTON ELKINS Jennifer L. Connor John C. Collins Salyersville, Kentucky.

          BRIEF FOR APPELLEES: DEWAYNE DAVIS; LINDA HOWARD; BILLIE RAMEY; JUDY FRANCIS, AS GUARDIAN AND NEXT FRIEND OF KENNA ISAAC, AN INFANT; SHERRI ARNETT, AS NATURAL GUARDIAN AND NEXT FRIEND OF CHRISTINA ARNETT, AN INFANT; ASHLEY ARNETT, AS NATURAL GUARDIAN AND NEXT FRIEND OF JACKLYN ARNETT, MADISON ARNETT, AND ALEXIE ARNETT, INFANTS; SHANNON VANHOOSE, AS NATURAL GUARDIANS AND NEXT FRIENDS OF LINZIE VANHOOSE, AN INFANT; JERRY VANHOOSE, AS NATURAL GUARDIANS AND NEXT FRIENDS OF LINZIE VANHOOSE, AN INFANT; DUNCAN VANHOOSE, AN INFANT C. Graham Martin G. Todd Martin Salyersville, Kentucky ORAL ARGUMENT FOR APPELLEES: Kellie Collins Jack Collins Lexington, Kentucky.

          BEFORE: CLAYTON, J. LAMBERT AND THOMPSON, JUDGES.

          OPINION

          THOMPSON, JUDGE.

         Consolidated Insurance Company appeals from an order of the Magoffin Circuit Court declaring that the appellees are entitled to stack the underinsured motorist coverages (UIM) provided in a vehicle insurance policy issued to the Magoffin County Board of Education. The primary issue presented is whether an anti-stacking provision in the Consolidated policy limits the total UIM coverage available to $500, 000. We conclude that the provision precludes the appellees, who are insureds of the second class, from stacking the UIM coverages. We further conclude that any alleged misrepresentation made by a Consolidated insurance agent regarding stacking to the Magoffin County Board of Education does not estop Consolidated from enforcing the anti-stacking provision.

         The appellees include 31 students, a bus monitor, and a bus driver (collectively the bus occupants) who claim they sustained injuries when an automobile operated by Odell Pyles rear-ended a Magoffin County school bus. The bus occupants filed an action against Pyles alleging negligence in causing the accident. Pyles had a minimum limits insurance policy of $25, 000 per person, $50, 000 per accident. The bus occupants later amended their complaint to add a cause of action seeking a declaratory judgment as to the limits of UIM coverage available under the Consolidated policy issued to the Magoffin County Board of Education.

         The policy issued by Consolidated listing the Magoffin County Board of Education as the named insured is a fleet policy providing coverage for 63 school buses owned by the Board with an individual premium schedule for each vehicle for a total premium for UIM coverage of $5, 049. As stated in the "schedule of coverages, " it provides UIM coverage up to $500, 000 per accident. If the named insured is a partnership, limited liability corporation or any other form of organization, the underinsured motorists endorsement includes within the definition of "insured" "[a]nyone 'occupying a covered auto."' It also contains an anti-stacking provision which states as follows:

         D. Limit of Insurance

1. Regardless of the number of covered "autos", "insureds", premiums paid, claims made or vehicles involved in the "accident", the most we will pay for all damages resulting for any one "accident", is the limit of Underinsured Motorists Insurance shown in the Schedule or Declarations. If there is more than one covered "auto", our limit of insurance for any one "accident", if the "bodily injury" is sustained by an individual Named Insured or any "family member", is the sum of the limits applicable to each covered "auto". Subject to this maximum limit of liability for all damages:
a. The most we will pay for damages sustained in such "accident" by an "insured" other than an individual Named Insured or any "family member" is that "insured's" pro rate share of the limit shown in the Schedule or Declarations applicable to the vehicle that "insured" was "occupying" at the time of the "accident".
b. An Individual Named Insured or any "family member" who sustains "bodily injury" in such "accident" will also be entitled to a pro rate share of the limit described in Paragraph a. above.
A person's pro rata share is the proportion that that person's damages bear to the total damages sustained to all "insured".
2. If the "bodily injury" is sustained by any "insured", other than the individual Named Insured or any "family member", in an "accident" in which neither such Named Insured nor any "family member" sustained "bodily injury", the limit of liability shown in the Schedule or Declarations for this coverage is our maximum limit of liability for all damages resulting from any such "accident".

         The bus occupants sought a declaration that UIM coverages on each of the 63 school buses listed on the Consolidated policy can be stacked for a total combined policy limit of $31, 500, 000. Consolidated argued the bus occupants are insureds of the second class and, therefore, may not stack the UIM coverages. The bus occupants argued that pursuant to the reasonable expectations doctrine, the coverages may be stacked; that ambiguous language in the policy requires it be construed in their favor to permit stacking; and Consolidated was estopped from denying stacking because of representations made to the Magoffin County Board of Education by an insurance agent that the UIM coverages could be stacked. In support of their arguments, the bus occupants attached an affidavit of Rodney Ward stating that the Magoffin County Board of Education informed its insurance agent, Curneal and Hignite Insurance, that it wanted high coverage limits because of the large number of uninsured motorists or those with only minimum liability limits in Magoffin County and its agent represented that the UIM coverage was stackable.

         The trial court issued an order declaring the $500, 000 UIM limit on each of the 63 school buses owned by the Magoffin County Board of Education could be stacked. It found the bus occupants had a reasonable expectation that the policy was stackable based on the separate premiums paid for each bus and the policy language. The court further found Consolidated was estopped from denying ...


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