FROM MARION CIRCUIT COURT HONORABLE ALLAN RAY BERTRAM, JUDGE
ACTION NOS. 12-CI-00312 & 13-CI-00096
FOR APPELLANT STEVEN C. CALL CAMPBELLSVILLE, KENTUCKY
FOR APPELLEE SCOTT WHITE LEXINGTON, KENTUCKY
BEFORE: COMBS, DIXON, AND TAYLOR, JUDGES.
Auto-Owners Insurance Company, appeals from an order of the
Marion Circuit Court granting summary judgment in favor of
Appellee, Sharon Spalding, in this Declaration of Rights
action. For the reasons set forth herein, we reverse and
remand for further proceedings.
April 19, 2011, a vehicle operated by Bashia Robinson struck
a moped operated by Appellee. There is no dispute that
Robinson was at fault in causing the accident. As a result,
Appellee suffered a badly broken arm that required surgery,
and she incurred substantial medical bills. According to the
record, Appellee suffers from some degree of dementia and
memory loss, which pre-existed the accident.
subsequently retained attorney Dallas George to represent her
in any claims arising from the accident. George investigated
the matter and determined that Robinson had automobile
insurance through Kentucky Farm Bureau with statutory limits
of $25, 000/$50, 000. In addition, George learned that
Appellee had motor vehicle insurance that had been purchased
through Energy Insurance Agency of Lebanon ("Energy
Insurance"), which is owned by Brenda
Spalding. Appellee's moped was insured under a
policy issued by Progressive Insurance Company that did not
provide Underinsured Motorist Coverage ("UIM").
George's paralegal, Gloria George, allegedly contacted
Spalding to inquire as to whether Appellee had UIM coverage
under any other policy. Gloria later testified that Spalding
responded that Appellee did not have such coverage. Based
upon that information, George secured a $25, 000 settlement
with Kentucky Farm Bureau on the liability claim against
Robinson. On September 6, 2011, Appellee signed a release in
favor of Robinson in exchange for Kentucky Farm Bureau's
around the end of March 2012, over six months after the
settlement agreement was signed, Appellee came to
George's office to receive the settlement funds after
resolution of several medical liens. Appellee was accompanied
by her sister, Mary Lou Merrett, who expressed shock at the
amount of the settlement and was adamant that there should
have been additional coverage. Merrett thereafter went to
Energy Insurance Agency and learned that Appellee had another
policy issued by Appellant that provided UIM coverage limits
of $100, 000/$300, 000.
April 2012, George submitted a claim for UIM coverage to
Appellant. Shortly thereafter, Appellant's
representative, Terry Harrison, sent a letter to George
indicating that Appellant was investigating coverage and
needed certain documentation concerning the moped. After
receiving the required documentation, Harrison sent a second
letter to George indicating that there would be coverage for
a policyholder injured in a motor vehicle accident while
occupying the moped because the operator of the moped would
be considered a pedestrian. However, Appellant subsequently
denied Appellee coverage on the grounds that upon reaching
the settlement with Kentucky Farm Bureau, Appellee failed to
give the required notice to Appellant as her UIM carrier.
See Coots v. Allstate Insurance Company, 853 S.W.2d
895 (Ky. 1993).
October 2, 2012, Appellant filed the instant declaratory
action against Appellee in the Marion Circuit Court seeking a
ruling that it did not owe Appellee coverage pursuant to
Coots and KRS 304.39-320(3). Thereafter, on April 2,
2013, Appellee filed a separate action against Energy
Insurance Agency and Spalding, asserting claims of
negligence, breach of contract and bad faith. The crux of
Appellee's action was that she did not give the required
Coots notice because Spalding, as Appellant's
agent, provided misinformation to Gloria regarding the
availability of any UIM coverage. Appellee claimed that such
misinformation led her to settle her accident claim without
further reviewing or inquiring about additional coverage. The
two actions were later consolidated.
point Energy Insurance Agency and Spalding moved to file a
third-party complaint against George alleging that he had a
professional obligation to request copies of the policies to
make an independent coverage determination. Appellee chose
not to pursue a legal malpractice claim against George and he
was dismissed from the litigation. In the agreed order, the
trial court did note that fault could be apportioned to
George at trial.
parties thereafter filed cross-motions for summary judgment.
On September 25, 2014, the trial court granted summary
judgment in favor of Appellant, finding that "the notice
requirements of the statute are mandatory" and that
Appellant did not owe Appellee coverage under Coots.
Appellee's separate claims against Energy Insurance
Agency and Spalding were dismissed by agreed order in May
thereafter appealed the trial court's decision to this
Court. On January 29, 2016, we rendered an opinion reversing
the summary judgment and remanding the matter for further
proceedings. Spalding v. Auto-Owners InsuranceCompany, ...