ALLEN V. LAWYERS MUTUAL INS. CO. OF KY.  (LMICK)
BUSINESS:  Notes on demand
2005-CA-002397
PUBLISHED: AFFIRMING (KNOPF) (note 2 of the 3 judges, including KNOPF are senior status judges!)
DATE RENDERED: 2/16/2007

In 1987, appellee Lawyers Mutual Insurance Company (LMICK)  began issuing 6% Subordinated Surplus Certificates, Series A, as a means of raising capital to enable the company to operate as a mutual insurance company offering professional liability insurance to Kentucky lawyers, and every lawyer insured by LMICK was required as a condition precedent to acquiring professional coverage from Lawyers Mutual.

On October 20, 1989, appellant David B. Allen, an attorney, signed a subscription agreement for the purchase of a certificate.  Upon his retirement, he asked to redeem the certificate.  LMICK said no.

The COA examined the certificate for ambiguity, and noted where there is no ambiguity, a written instrument is to be strictly enforced according to its terms which are to be interpreted “by assigning language its ordinary meaning and without resort to
extrinsic evidence.” Island Creek Coal Co. v. Wells, 113 S.W.3d 100, 104 (Ky. 2003).

The COA rejected Allen’s argument that because the certificate specifically states that Lawyers Mutual is indebted to the “registered holder” of the certificate, it must be
redeemable during his lifetime which was contrary to the Board’s current policy of redeeming the  certificates only when a lawyer becomes a judge or dies.

Similarly there was no error in the trial court’s resolution of Allen’s claim that Lawyers Mutual breached an implied covenant of good faith by failing to redeem his certificate as an an implied covenant of good faith will not override express contract terms.  Thus, the trial judge relied upon the “business judgment rule” in enforcing the contract according to its stated terms.

As said in Simpson on Contracts, 2nd Ed, page 86 – "‘The fairness of an exchange is legally irrelevant. So long as a man gets what he has bargained for, and it is of some value in the eyes of the law, the courts will not inquire whether it is of any value to him, or whether its value is in any way proportionate to his promise given in return."

Digested by Michael Stevens