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Metropolitan Direct Property and Casualty Insurance Co. v. Farmer

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

July 29, 2019

METROPOLITAN DIRECT PROPERTY AND CASUALTY INSURANCE COMPANY, Plaintiff,
v.
LARRY FARMER, Defendant.

          OPINION AND ORDER

          KAREN K. CALDWELL, UNITED STATES DISTRICT COURT CHIEF JUDGE

         This matter is before the Court on Metropolitan Direct Property and Casualty Insurance Company's (“Metropolitan”) Motion for Summary Judgment. (DE 29.) For the reasons set forth below, Metropolitan's Motion for Summary Judgment (DE 29) is DENIED. Larry Farmer has also filed a Motion Under Fed.R.Civ.P. 56(d) for Additional Time to Take Discovery (DE 34). Based on the analysis below, that Motion (DE 34) is DENIED AS MOOT.

         I. BACKGROUND

         Larry Farmer claims that on October 1, 2015, he was hit by a car while walking near a Kroger in Lexington, Kentucky. (DE 33 at 2.) Farmer asserts he tried to avoid being run over by bracing himself against the front of the vehicle. (DE 29-2 at 9.) He landed on the hood and banged on it to get the driver's attention. (DE 29-1 at 2.) The driver stopped and spoke with Farmer following the incident. (DE 33 at 2.) However, Farmer did not exchange information with the driver, and the driver remains unidentified. (DE 33 at 3.) Farmer claims that he did not realize he was injured at the accident scene, but that he told co-workers about the accident and subsequent shoulder pain in the following days. (DE 33 at 2-3.)

         Several weeks later, on November 16, 2015, Farmer went to his family physician for a three-month check-up. (DE 29-10 at 1.) During that visit, Farmer informed his doctor about the accident and subsequent shoulder pain. (See DE 29-10 at 1.) Farmer was referred to a physical therapist for treatment. (DE 29-10 at 5.) Farmer failed physical therapy and had an MRI in March 2016, which revealed a massive tear in his rotator cuff. (DE 33 at 3.) In April 2016, Farmer was informed that he would need surgery to repair his rotator cuff, and in May 2016, Farmer underwent surgical repair. (DE 33 at 3.)

         At the time of the alleged incident, Farmer was insured by Metropolitan under a policy that included uninsured motorist benefits and basic reparation benefits (“BRB”). (See DE 1 at 2.) Farmer never reported the accident to the police, and he did not report the incident to Metropolitan until almost seven months after the accident. (DE 33 at 4.)

         When Farmer reported the incident to Metropolitan, he asserted a claim for uninsured motorist benefits, which was denied because the incident was neither reported to the police within twenty-four hours nor reported to Metropolitan within thirty days. (State Court Compl. DE 12-2 at ¶ 13.) Metropolitan relied on the notice provision pertaining to hit and run accidents in denying his request. (See 29-6 at 13.)

         Metropolitan filed this action under Federal Rule of Civil Procedure 57 and 28 U.S.C. § 2201 seeking a declaratory judgement regarding its obligation to Farmer under his insurance policy. (DE 1 at 1.) Thereafter, Farmer filed an action in Fayette Circuit Court seeking a declaratory judgment that the subject-insurance contract was in full effect and available to pay any judgment rendered. (State Court Compl. DE 12-2 at ¶ 2.)

         Metropolitan now moves for summary judgment asserting that Farmer is not eligible for coverage under the insurance policy because he failed to comply with the notice requirements of his insurance contract, and as a result, Metropolitan suffered substantial prejudice. (DE 29-1 at 3.) Farmer's policy provides multiple notice provisions potentially applicable to the present case. First, Farmer's policy provides that if an accident or loss occurs, “[y]ou or someone on your behalf must notify us as soon as possible of any accident or loss.” (DE 29-6 at 23.) This overarching-notice provision applies to all accidents and losses. Second, the policy's coverage for hit and run accidents under the uninsured motorist benefits section requires that the accident be reported to a law enforcement within twenty-four (24) hours and Metropolitan within thirty (30) days of the accident. (DE 29-6 at 13.) Third, coverage under the BRB section requires that notice of claims must be given “as soon as practicable.” (DE 29-6 at 34.)

         Metropolitan asserts that Farmer failed to provide timely notice under all notice provisions in his insurance policy, and as a result, it has suffered substantial prejudice. (DE 29-1 at 3.) Farmer asserts that (1) the notice provision applicable to hit and run accidents does not apply because the subject-accident was not a “hit and run;” (2) Metropolitan did not meet its burden in showing substantial prejudice; and (3) Metropolitan has failed to show the absence of a material fact concerning its alleged prejudice. (DE 33.) The Court considers the parties' arguments below.

         II. ANALYSIS

         Summary judgment is appropriate where the “movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The moving party bears the initial burden and must identify “those portions of the pleadings . . . which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (internal citations omitted). Once the movant meets the initial burden, the opposing party “must set forth specific facts showing that there is a genuine issue for trial.” Fed.R.Civ.P. 56(e). “The evidence, all facts, and any inferences that may permissibly be drawn from the facts must be viewed in the light most favorable to the nonmoving party.” Combs v. Meijer, Inc., No. 5:12-CV-209-KSF, 2012 WL 3962383, at *2 (E.D. Ky. Sept. 10, 2012) (citing Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)).

         It is undisputed that the subject-insurance policy is governed by Kentucky law. (See DE 29-1 at 4; DE 33 at 5.) Under Kentucky law, “the construction and legal effect of an insurance contract is a matter of law for the court.” Bituminous Cas. Corp. v. Kenway Contracting, Inc., 240 S.W.3d 633, 638 (Ky. 2007).

         Farmer has made a claim for two types of benefits under different sections of his insurance policy: (1) Uninsured Motorist (“UM”) benefits (see DE 29-6 at 12); and (2) Basic Reparation Benefits (“BRB”) (see DE 29-6 at 30). The Court construes the policy below and determines that parts of both sections are applicable. The Court finds that Farmer has not complied with the required notice provisions in his insurance policy. However, there is a genuine issue of material fact regarding whether Metropolitan was substantially prejudiced by the delay of notice.

         A. Uninsured Motorist Benefits.

         Farmer is eligible for UM benefits under the subject-insurance policy based on the “hit and run definition” of “uninsured motor vehicle.” Farmer's insurance policy provides: We will pay damages for bodily injury sustained by:

1. you or a relative, caused by an accident arising out of the ownership, maintenance, or use of an uninsured motor vehicle, which you or a relative are legally entitled to collect from the owner or driver of an uninsured motor vehicle; or
2. any other person caused by an accident while occupying a covered automobile, who is legally entitled to collect from the owner or driver of an uninsured motor vehicle.
We will also pay damages to any person for damages that person is entitled to recover because of bodily injury sustained by anyone described in 1. or 2. above.

(DE 29-6 at 13-14.)

         The policy further provides four possible definitions for “uninsured motor vehicle:”

1. a motor vehicle for which, at the time of the accident, there is no insurance policy or other financial security applicable to the owner, or operator, or any other liable person or organization.
2. a motor vehicle which has a bodily injury liability bond or insurance policy in effect at the time of the accident, but the amount of bodily injury coverage under such bond or insurance policy is less than the minimum financial security requirements of the state in which the covered automobile is principally garaged.
3. a motor vehicle which has a bodily injury liability bond or insurance policy in effect at the time of the accident, but the company writing such bond or policy denies coverage, or is or becomes insolvent.
4. a hit and run motor vehicle which causes bodily injury to a person covered under this section as the result of striking that person or a motor vehicle which that person is occupying at the time of the accident, if:
a. the identity of the driver and the owner of the hit and run vehicle is unknown;
b. the accident is reported within 24 hours to a police officer, a peace or judicial officer, or the Commissioner or Director of Motor Vehicles;
c. the injured person or someone on their behalf files with us within 30 days of the accident a statement under oath that the injured person or their legal representative has a cause of action due to the accident for damages against someone whose identity is unknown; and
d. the injured person or their legal representative makes available for inspection by us, when requested, the motor vehicle occupied by that person at the time of the accident.

(DE 29-6 at 12-13.)

         Metropolitan asserts that only definition “4.” (the “hit and run definition”) of “uninsured motor vehicle” is applicable to the facts of this case. (DE 29-1 at 6.) Farmer asserts that the “hit and run” definition of uninsured motor vehicle is not applicable, and instead this case fits under definition “1.” (DE 33 at 7.) The Court construes the policy below and finds that the at-fault driver who struck Farmer only fits under the “hit and run definition” of “uninsured motor vehicle.”

         1. The “hit and run definition” of “uninsured motor vehicle” applies to the facts of this case.

         Under the “hit and run definition” the policy states that an uninsured motor vehicle includes “a hit and run vehicle that causes bodily injury…as the result of striking that person.” (DE 29-6 at 13.) The policy then conditions that definition by stating that it only applies: (a) if the identity of the driver is unknown; (b) if the accident is reported to law enforcement within twenty-four (24) hours; (c) if the accident is reported to Metropolitan within thirty (30) days; (d) if the injured person makes available for inspection, the motor vehicle occupied by that person at the time of the accident. (DE 29-6 at 13.) Even though the policy provides certain conditions for coverage to apply, it does not otherwise define “hit and run.”

         i. The policy's use of the phrase “hit and run” is ambiguous, and consequently, the Court construes it in favor of coverage.

         When a term is not defined by the insurance policy, it is afforded its ordinary meaning, if that meaning is not ambiguous. Cincinnati Ins. Co. v. Motorists Mut. Ins. Co., 306 S.W.3d 69, 73 (Ky. 2010), as corrected (July 19, 2011). When a term in an insurance policy is fairly susceptible to two different constructions, such that “reasonably intelligent men would honestly differ as to the meaning thereof, ” the term is ambiguous. Gill v. Fid. Phenix Fire Ins. Co., 5 F.Supp. 1, 3 (E.D. Ky. 1933). An ambiguous term in an insurance policy shall be liberally construed in favor of coverage. See Dowell v. Safe Auto Ins. Co., 208 S.W.3d 872, 878 (Ky. 2006); Gager v. Cincinnati Ins. Co., No. 4:14-CV-00036-JHM, 2015 WL 1438259, at *3 (W.D. Ky. Mar. 27, 2015).

         Farmer asserts that since the phrase “hit and run” is not ambiguous and not otherwise defined by the policy, it should be afforded its ordinary meaning. (DE 33 at 7.) Farmer contends that the common understanding of the phrase “hit and run” refers to a vehicle that has left the scene of the accident without stopping. (DE 33 at 7.) Farmer uses Merriam-Webster's Collegiate Dictionary (10th Ed.) to support his assertion, which defines “hit and run” as “being or involving a motor-vehicle driver who does not stop after being involved in an accident.” Metropolitan argues that the policy provides “clarification” of the meaning of “hit and run.” Metropolitan asserts:

the policy clearly states that an uninsured motor vehicle includes a ‘hit and run motor vehicle which causes bodily injury to a person covered…as a result of striking that person' if ‘the identity of the driver and the owner of the hit and run vehicle is unknown' and other conditions are satisfied, including the reporting of the accident to police.

(DE 36 at 3.)

         Metropolitan further argues that the policy does not require that a person “leave the scene without stopping.” (DE 36 at 3.) Although Metropolitan's argument is that the policy does sufficiently define “hit and run, ” Metropolitan and Farmer ultimately disagree over the meaning of the phrase “hit and run.”

         Courts across the United States also disagree on the meaning of the phrase “hit and run.” Some courts have determined that the phrase “hit and run” encompasses an accident where the at-fault operator does not immediately flee the scene, but nevertheless leaves the accident without being identified. See, e.g., Grimmett v. Farmers Ins. Exch., No. 321492, 2015 WL 5826821, at *1 (Mich. Ct. App. Oct. 6, 2015) (“[F]or purposes of the policy, a “hit-and-run” accident does not just encompass an accident where the other motorist immediately flees the scene-it also includes accidents where the other driver does not immediately flee the scene, but nonetheless fails to provide his contact and identification information to the policy holder or the authorities after the accident occurs.”); Wilson v. Progressive N. Ins. Co., 868 A.2d 268, 275 (N.H. 2005); Zarder v. Humana Ins. Co., 782 N.W.2d 682, 692 (Wis. 2010). Some courts agree, but only where the injured individual does not know of any injury at the time of the accident. See, e.g., Pilgrim Ins. Co. v. Molard, 897 N.E.2d 1231, 1239 (Mass. App. Ct. 2008); Riemenschneider v. Motor Vehicle Acc. Indemnification Corp., 232 N.E.2d 630, 632 (N.Y. 1967) (“An injured person who is not aware of his injury until it is too late to take steps to make the necessary identification is in precisely the same situation of deprivation of remedy as he would be if he knew he was hurt but the other driver left the scene without opportunity to identify him.”) Some courts additionally consider whether the injured person made reasonable attempts to identify and locate the offender. See Jones v. Unsatisfied Claim & Judgment Fund Bd., 273 A.2d 418, 421 (Md. 1971). Other courts require that the driver flee the scene post-accident for the accident to be considered a “hit and run.” See, e.g., Sylvestre v. United Servs. Auto. Ass'n Cas. Ins. Co., 678 A.2d 1005, 1008 (Conn. App. Ct. 1996), aff'd, 692 A.2d 1254 (Conn. 1997) (“Because the driver of the vehicle that struck the plaintiff stopped to render assistance and because the plaintiff affirmatively acted to dismiss the driver from the scene of the accident, we conclude that the plaintiff was not struck by a hit and run vehicle.”); Kasid v. Country Mut. Ins. ...


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