United States District Court, W.D. Kentucky, Bowling Green Division
MEMORANDUM OPINION AND ORDER
Brent Brennenstuhl United States Magistrate Judge
the Court are motions for summary judgment filed by each of
the parties. Plaintiff Guywanna Brown's motion for
summary judgment is filed at ¶ 35. Defendant
TrustgardInsurance Company's motion is filed at
¶ 36 and Defendant Assured Partners NL, LLC is filed at
¶ 37. Responses (DN 39, 40, 41) and replies (DN 43, 44,
45) have been filed as to each dispositive motion. Because
the motions are related, this order addresses all three.
of the Case
Guywanna Brown and her husband Mike Brown were insured under
a policy of automobile insurance issued by Trustgard and
serviced by the Assured agency. Their friend Andy Perkins
worked for a competitor agency and they decided to purchase a
policy through him to replace the Trustgard policy. On
September 17, 2015 Mr. Brown spoke with an agent at Assured
and advised her they wished to cancel the Trustgard
policy. On September 25, 2015 Assured e-mailed the
Browns a cancellation request form for their signature. The
request form listed September 17, 2015 as the effective date
Browns did not immediately return the cancellation form, and
Trustgard continued to debit the Browns' bank account for
monthly premiums. Because Assured had not received the
cancellation form back from the Browns, the agent sent Mr.
Brown an e-mail advising him that Assured was still awaiting
the return of the form and attached another form. Mr. Brown
has testified that he failed to note that Trustgard was
continuing to deduct premium payments from his bank account
and did not know if he received either of Assured's
e-mails to him. When the policy reached its expiration date,
Trustgard issued a renewal policy and continued to
automatically debit the Browns' bank account for the
renewal policy monthly premiums.
Brown eventually called Assured to inquire about the status
of his premium refund. He was advised he needed to return the
cancellation request and Assured sent a third copy of the
form, this time by postal mail. Mr. Brown signed the
cancellation request form and sent it to Assured on May 11,
2016, over seven months after initially notifying Assured
that he wished to cancel the policy. As with the first form
Assured sent him, the form Mr. Brown signed designated
September 17, 2015 as the effective date of cancellation.
19, 2016, nine days after Mr. Brown signed and sent the
cancellation request form to Assured, Mrs. Brown was injured
in a motor vehicle accident. The parties dispute whether Mr.
Brown notified Assured of the accident at that time. On May
24, 2016 an Assured agent signed the cancellation request
form and forwarded it on to Trustgard. Trustgard required
verification that the Browns had secured replacement coverage
before it would agree to backdate the cancelation as
indicated on the cancellation request. Trustgard received
verification from Assured on May 27, 2016, issued a notice of
cancelation as of February 12, 2016 and mailed a refund check
to the Browns. Trustgard issued a second notice of
cancellation on June 7, 2016 with an effective date of
September 23, 2015 and mailed another refund check to the
Browns. The two cancellation notices and different effective
dates were because both the original and renewal policies
were canceled. (DN 37-10, Emily Foster depo., p. 9, Tr. p.
35). Mrs. Brown subsequently sought underinsured motorist
benefits under the Trustgard policy for injuries sustained in
the May 19, 2016 accident. Trustgard denied her claim on the
basis that the policy was cancelled prior to the date of the
Browns brought this action against Trustgard for a
declaration that the policy of insurance was effective on the
date of Mrs. Brown's accident and that she is entitled to
underinsured motorist coverage. The Browns' claims
against Assured sound in negligence in the handling of their
for Summary Judgment
the Plaintiff and Trustgard move for summary judgment on the
issue of whether the Trustgard policy of insurance was in
effect on the date of Plaintiff's accident. Assured joins
in Trustgard's position, making essentially the same
arguments. Plaintiff advances four arguments in support of
her position that the policy was in effect at the time of the
accident. First, she contends that, although Mr. Brown had
submitted the written request to cancel the policy before
Mrs. Brown's accident, Trustgard did not process the
request and issue a notice of cancelation until after the
accident, thus there was no meeting of the minds between the
parties that the policy would be cancelled until after
Trustgard's liability under the policy vested.
Plaintiff's second argument is that KRS 304.20-030
prohibits retroactive cancellation of an automobile insurance
policy after an accident has occurred. Plaintiff's third
argument looks to language in the policy regarding
Trustgard's obligation to provide notice in advance of
any cancellation. Her fourth argument is a similar one, this
time looking to Trustgard's internal policy requiring
advance notification before cancelling a policy.
arguments are the inverse of Plaintiff's. Trustgard
contends that cancellation of the policy was effective as of
Mr. Brown's execution of the written cancelation request,
which specifically set forth an effective date of
cancelation. Trustgard also points to Mr. Brown's
testimony that it was never his intention to carry duplicate
insurance coverage and he intended no overlap between the
Trustgard policy and the replacement policy he obtained from
Plaintiff's claims against Assured sound in negligence,
Assured's motion for summary judgment contends that the
evidence in the case demonstrates that it did exactly what
the Browns asked it to do, namely secure cancellation of the
Summary Judgment Standard
grant a motion for summary judgment, the Court must find that
there is no genuine dispute as to any material fact and that
the moving party is entitled to judgment as a matter of law.
Fed.R.Civ.P. 56(a). The moving party bears the initial burden
of identifying the basis for its motion and the parts of the
record that demonstrate an absence of any genuine issue of
material fact. See Celotex Corp. v. Catrett, 477
U.S. 317, 322 (1986). The Court must determine whether
“the evidence presents a sufficient disagreement to
require submission to a jury or whether it is so one-sided
that one party must prevail as a matter of law.”
Patton v. Bearden, 8 F.3d 343, 346 (6th Cir. 1993)
(quoting Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 251-52 (1986)). The evidence, all facts, and inferences
that may be drawn from the facts must be viewed in the light
most favorable to the nonmovant. See Matsushita Elec.
Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587
(1986). Once the moving party shows there is an absence of
evidence to support the nonmoving party's case, the
nonmoving party must present “significant probative
evidence” to demonstrate that “there is [more
than] some metaphysical doubt as to the material
facts.” Moore v. Phillip Morris Cos., 8 F.3d
335, 339-40 (6th Cir. 1993).
faced with cross motions for summary judgment, a district
court is authorized to ‘assume the there is no evidence
which needs to be considered other than that which has been
filed by the parties.' However, the standards upon which
the court evaluates the motions for summary judgment do not
change. Instead, the court must evaluate each party's
motion on its own merits, taking care in each instance to
draw all reasonable inferences against the party whose motion
is under consideration.'” Carolina Cas Ins. Co.
v. KLLM, Inc., No. 3:00-CV-199-S, 2001 U.S. Dist. LEXIS
11245, *4 (W.D. Ky. Aug. 1, 2001) (citations omitted).
as here, summary judgment involves interpretation of a
contract, “a contract can be interpreted by the court
on summary judgment if (a) the contract's terms are
clear, or (b) the evidence supports only one construction of
the controverted provision, notwithstanding some
ambiguity.” Gencorp, Inc. American Int'l
Underwriters, 178 F.3d 804, 818 (6th Cir. 1999).
Plaintiff's argument that KRS 304.20-030 prohibits
backdating of the cancellation.
304.20-030, titled “Retroactive annulment of liability
policies prohibited” provides as follows:
No insurance contract insuring against loss or damage through
legal liability for the bodily injury or death by accident of
any individual, or for damage to the property of any person,
shall be retroactively annulled by any agreement between the
insurer and insured after the occurrence of any such injury,
death, or damage for which the insured may be liable, and any
such annulment attempted shall be void.
argues this statute precludes Trustgard's retroactive
cancellation of the insurance policy because it is one
“insuring against loss or damage through legal
liability for the bodily injury or death by accident of any
individual, or for damage to the property of any
person.” Trustgard responds by noting that the
statutory prohibition only extends to instances in which an
injury, death or damage has occurred “for which the
insured may be liable.” This, Trustgard contends, means
the prohibition speaks to instances of third party claims.
Mrs. Brown's claim under the policy for underinsured
motorist benefits would be a first-party claim by an insured.
undersigned agrees with Trustgard's argument. The
intention of KRS 304.20-030 is to protect innocent
third-parties from being deprived of the benefits of
statutorily mandated liability coverage. “[W]e conclude
that the compulsory automobile statutes, when read together,
abrogate the right of an insurer to rescind automobile
liability insurance so as to deny recovery to an innocent
third-party claimant.” National Ins. Ass'n v.
Peach, 926 S.W.2d 859, 863 (Ky. App. 1996) (emphasis
added). UIM coverage is optional and not compulsory under
Kentucky law. Ward v. Nationwide Assur. Co., No.
2012-CA-000809-MR, 2014 Ky. App. Unpub. LEXIS 1006, at *13-14
(Ky. App. Dec. 24, 2014).
interpretation is supported by the language of the statute,
which specifies that the prohibition against retroactive
cancellation of coverage only applies to accidents “for
which the insured may be liable” (emphasis added). Here
Mrs. Brown is the insured under the Trustgard policy. Mrs.
Brown was the operator of her insured vehicle (DN 35-4, p.
5). Mrs. Brown cannot be liable to herself under UIM
Plaintiff's argument that Trustgard's internal policy
required twenty days advance notice of cancellation.
has attached as an exhibit to her motion Trustgard's
internal policies regarding cancellation (DN 35-5) and
directs attention to the portion regarding cancellation of
Kentucky automobile policies after the initial underwriting
period. The internal policy requires that notice of
cancellation must be given “14 5 days for nonpayment;
20 5 days for all other reasons” (DN 35-5, p. 11).
She argues that Trustgard's internal policy thus required
it to give her at least 20 days advance notice before any
policy cancellation could be effective.
argues in response that the notice requirement only speaks to
instances in which Trustgard has elected to involuntarily
cancel a contract. The undersigned concurs. Reviewing the
internal policy as a whole, it addresses reasons why
Trustgard may elect to unilaterally terminate an insurance
policy. These include non-payment of premiums, suspension of
an insured's driver's license, discovery of fraud or
misrepresentation in procuring the policy or invalidity of a
policy by decision of the Insurance Commissioner
(Id.). The internal policy is silent as to matters
involving an insured's unilateral decision to cancel the
policy. It is illogical to read the internal policy as
requiring Trustgard to give an insured twenty days notice of
a cancellation when the insured has requested termination.
Certainly, Trustgard cannot compel an insured to continue to
maintain insurance coverage for an additional twenty days
after requesting cancellation.
Plaintiff's argument that the insurance policy requires
advance notice of cancellation.
makes a similar argument with reference to language in the
directs attention to the policy provision which provides:
2. We may cancel by mailing to the named insured shown in the
Declarations at the address shown in the policy:
a. at least 14 days notice if cancellation is for nonpayment
of premium; or
b. at least 20 days notice in all other cases, including if
notice is mailed during the first 60 days this policy is in
effect and this is not a renewal or continuation
(DN 35-2, p. 53).
Trustgard's internal policy, she argues that the
insurance policy required Trustgard to give her at least
twenty days notice in advance of any policy cancellation. Her
argument ignores the existence of the policy provision
immediately preceding the one she quotes, which provides:
1. The named insured shown in the Declarations may cancel by:
a. returning this policy to us; or
b. giving us advance notice of the date cancellation is to
policy provision appears standard in nature. “A
cancellation provision not infrequently found in liability
insurance policies is to the effect that the policy may be
cancelled by the insured by mailing to the insurer written
notice stating ‘when thereafter such cancellation shall
be effective.' Generally speaking, a notice in order to
comply with such cancellation provision must under all
circumstances contain a definite date on which the
cancellation shall become ...