Oct. 12, 2012 Court of Appeals Minutes – Re consumer protection act; review of arbitration awards; UIM and loss of consortium; Graves Amendment and rental car company

Oct. 12, 2012 Court of Appeals Minutes
Nos. 908-940 (33 decisions;  8  To Be Published)

The Tort Report – The Court of Appeals addressed torts, insurance and civil procedure:

 Sandoz v. Commonwealth, COA, PUB, interpreted “average wholesale price” within context of Kentucky Consumer Protection Act and Medicaid fraud.

Swetnam Design v. Barbara Sauer, COA, PUB, reviewed standards for when arbitration award are reviewable.

Hoskins v. Kentucky Farm Bureau Mut. Ins. Co. , COA, PUB,examined policy language and held that Although Tamra and Bernard’s claims derive from the same injury, there is no provision in the insurance agreement stating that recovery for loss of consortium or other derivative claims is barred if the underlying claim is excluded under the terms of the policy.

BLUM V. MULLINS COA NPO addressed a pro se appeal against attorney by client dismissed at trial and was affirmed on appeal.

FULLER V. KFBM COA NPO applied the Graves Amendment etc. permitting rental car company to shift tort liability by contract to renter.

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Published Cases of COA:

908.  CRIMINAL LAW.  Probation revocation.
MBAYE (AMADOU)
VS.
COMMONWEALTH OF KENTUCKY
OPINION VACATING AND REMANDING
KELLER (PRESIDING JUDGE)
TAYLOR (CONCURS) AND LAMBERT (CONCURS)
2009-CA-001134-MR
TO BE PUBLISHED
BOONE

909.  ADMINISTRATIVE LAW.  NATIONAL LANDMARKS REGISTRATION.  Motions to dismiss.
NORTON (THOMAS), ET AL.
VS.
KENTUCKY HERITAGE COUNCIL, ET AL.
OPINION AND ORDER REVERSING AND REMANDING
CAPERTON (PRESIDING JUDGE)
ACREE (CONCURS) AND LAMBERT (CONCURS)
2009-CA-002343-MR
2009-CA-002394
TO BE PUBLISHED
FAYETTE

STDS OF REVIEW:

When a trial court is presented with a Kentucky Rules of Civil Procedure (CR) 12.02 motion to dismiss, the court must take every well-pleaded allegation of the complaint as true and construe it in the light most favorable to the opposing party. Gall v. Scroggy, 725 S.W.2d 867 (Ky.App. 1987). As such, “[t]he court should not grant the motion unless it appears the pleading party would not be entitled to relief under any set of facts which could be proved in support of his claim.” Pari–Mutuel Clerks’ Union of Kentucky, Local 541, SEIU, AFL–CIO v. Kentucky Jockey Club, 551 S.W.2d 801, 803 (Ky. 1977).

910.  KENTUCKY CONSUMER PROTECTION ACT. AWP and average wholesale prices.
SANDOZ INC.
VS.
COMMONWEALTH OF KENTUCKY
OPINION REVERSING AND REMANDING
LAMBERT (PRESIDING JUDGE)
COMBS (CONCURS) AND MOORE (CONCURS)
2010-CA-000626-MR
2011-CA-000225
TO BE PUBLISHED
FRANKLIN

LAMBERT, SENIOR JUDGE: Sandoz, Inc., AstraZeneca Pharmaceuticals, LP, and AstraZeneca LP appeal in this consolidated appeal from judgments of the Franklin Circuit Court upon adverse jury verdicts. Following a jury trial, Sandoz was found liable to the Commonwealth under the Kentucky Medicaid Fraud Statute, KRS 205.8463(4), the Kentucky False Advertising Statute, KRS 517.030, and the Kentucky Consumer Protection Act, KRS 367.170, for misrepresenting the “average wholesale prices” of its prescription drugs. In a separate trial, AstraZeneca was found liable to the Commonwealth under the Kentucky Medicaid Fraud Statute and the Kentucky Consumer Protection Act for misrepresenting the “average wholesale prices” of its prescription drugs. After a thorough consideration of the record and the issues at law, we reverse the judgments of the Franklin Circuit Court.

913.  ARBITRATION.  Reviewability of.
SWETNAM DESIGN CONSTRUCTION, INC.
VS.
SAURER (BARBARA), ET AL.
OPINION REVERSING AND REMANDING
CAPERTON (PRESIDING JUDGE)
DIXON (CONCURS) AND STUMBO (CONCURS)
2010-CA-002267-MR
TO BE PUBLISHED
JEFFERSON

CAPERTON, JUDGE: Swetnam Design Construction, Inc. (hereinafter “Swetnam”) appeals from the trial court’s order and judgment of November 23, 2010, whereby the court confirmed the modification to arbitrator’s award dated August 6, 2010. On appeal, Swetnam argues that there was no ground for modification of the original arbitration award and, thus, the trial court’sconfirmation of the modification of arbitrator’s award was in error. After a thorough review of the parties’ arguments, the record, and the applicable law, we agree with Swetnam that there was not a ground for modification of the original arbitrator’s award and, thus, the arbitrator exceeded his powers in so modifying the award. Accordingly, we reverse the trial court’s confirmation of the modification of the award and remand this matter to the trial court with instructions to vacate the order modifying.

916. CRIMINAL LAW
GENTRY (TIMOTHY MONTAZ)
VS.
COMMONWEALTH OF KENTUCKY
OPINION AFFIRMING
ACREE (PRESIDING JUDGE)
VANMETER (CONCURS) AND CAPERTON (CONCURS AND FILES SEPARATE OPINION)
2011-CA-000141-MR
TO BE PUBLISHED
FAYETTE

ACREE, CHIEF JUDGE: The issue before us is whether a person enjoys a reasonable expectation of privacy in his or her license plate and, if so, whether a random check thereof constitutes an unreasonable search in violation of the Fourth Amendment. We answer both questions negatively and affirm the Fayette Circuit Court’s August 24, 2010 order.

917.  CONTRACTS
SPEARS (TIMOTHY A.)
VS.
KENTUCKY INSURANCE AGENCY, INC., ET AL.
OPINION AFFIRMING
VANMETER (PRESIDING JUDGE)
ACREE (CONCURS AND FILES SEPARATE OPINION) AND MOORE (DISSENTS AND FILES SEPARATE OPINION)
2011-CA-000481-MR
TO BE PUBLISHED
MADISON

VANMETER, JUDGE: Timothy Spears appeals the judgment of the Madison Circuit Court granting summary judgment in favor of Kentucky Insurance Agency, Inc., Morgan J. Moore, and John J. Luddy (hereinafter collectively referred to as “Kentucky Insurance”). After a careful review of the record, we affirm.

925.  FORECLOSURE.
MAREMA (RANDY A.), ET AL.
VS.
FIRST FEDERAL SAVINGS BANK OF ELIZABETHTOWN, INC.
OPINION AFFIRMING
DIXON (PRESIDING JUDGE)
MOORE (CONCURS) AND THOMPSON (CONCURS)
2011-CA-000995-MR
TO BE PUBLISHED
HARDIN

927.  LOTTERY.  TERMS.
COLLINS (REGINA A.), ET AL.
VS.
KENTUCKY LOTTERY CORPORATION
OPINION AFFIRMING
COMBS (PRESIDING JUDGE)
CLAYTON (CONCURS) AND THOMPSON (CONCURS)
2011-CA-001073-MR
TO BE PUBLISHED
JEFFERSON

934.  UNDERINSURED MOTORIST BENEFITS AND POLICY INTERPRETATION RE LOSS OF CONSORTIUM.
HOSKINS (TAMRA)
VS.
KENTUCKY FARM BUREAU MUTUAL INSURANCE COMPANY
OPINION REVERSING AND REMANDING
LAMBERT (PRESIDING JUDGE)
NICKELL (CONCURS) TAYLOR (DISSENTS)
2011-CA-001454-MR
TO BE PUBLISHED
LINCOLN

LAMBERT, JUDGE: Tamra Hoskins appeals from an order dismissing Kentucky Farm Bureau Mutual Insurance Company as a defendant in her action to recover damages for loss of spousal consortium. We reverse and remand for further proceedings.

The resolution of this appeal hinges on the interpretation of the Hoskins’ Farm Bureau insurance policy. “[I]nterpretation of an insurance contract is a matter of law for the court.” Stone v. Kentucky Farm Bureau Mutual Ins. Co., 34 S.W.3d 809, 810 (Ky.App. 2000). “Terms of insurance contracts have no technical meaning in law and are to be interpreted according to the usage of the average man and as they would be read and understood by him in the light of the prevailing rule that uncertainties and ambiguities must be resolved in favor of the insured.” Kentucky Ass’n of Counties All Lines Fund Trust v. McClendon, 157 S.W.3d 626, 630 (Ky. 2005) (citation omitted).

The UIM clause of the policy provides as follows:

A. We will pay compensatory damages which an insured is legally entitled to recover from the owner or operator of an underinsured motor vehicle because of bodily injury:

1. Sustained by an insured; and 2. Caused by an accident.

The owner’s or operator’s liability for these damages must arise out of the ownership, maintenance or use of the underinsured motor vehicle.

The policy also contains the following exclusion from UIM coverage:

A. We do not provide Underinsured Motorists Coverage for bodily injury sustained by any insured:

.. .

4. While occupying or operating a motorcycle owned by any insured.

The policy defines “bodily injury” as “bodily harm, sickness or disease, including death that results.”

Tamra argues that the plain language of the insurance policy unambiguously provides UIM coverage for her claim, since the phrase “because of bodily injury” in the general UIM clause encompasses her claim, as distinguished from the “for bodily injury” language in the motorcycle clause that excludes Bernard’s claim. She disputes the trial court and Farm Bureau’s view that the viability of her claim for UIM coverage is dependent on Bernard’s claim, contending that she is entitled to recover because loss of consortium is an independent cause of action authorized by Kentucky Revised Statutes (KRS) 411.145(2). “A loss of consortium action can continue even when the injured spouse or the estate has settled or otherwise been excluded from an action, because there is not a ‘common and undivided interest’ in the spouse’s claim for loss of consortium and the underlying tort claim.” Martin v. Ohio County Hosp. Corp., 295 S.W.3d 104, 109 (Ky. 2009).

Farm Bureau agrees that a loss of consortium claim is independent to the extent that a separate party may pursue the claim regardless of the settlement of the spouse’s direct injury claim, but that the loss of consortium claim is nonetheless derivative or based upon the spouse’s bodily injury for the purposes of the insurance policy limits and exclusions. Farm Bureau argues that because Tamra’s claim is based on an excluded injury, it is not covered under the policy.

We are well aware that “the existence of a cause of action for damages does not mean that those damages are ipso facto recoverable from a particular policy of insurance.” Daley v. Reed, 87 S.W.3d 247, 249 (Ky. 2002). Nonetheless, the plain language of the policy in this case provides that an insured (i.e. Tamra) may recover damages to which that insured is “legally entitled” to recover (i.e. damages for loss of consortium) because of bodily injury sustained by an insured (i.e. Bernard). The policy does not specify that the underlying bodily injury from which the loss of consortium claim is derived must be one that is covered under the terms of the policy. “[U]insured motorist coverage applies whenever an insured person would be entitled to recover damages but for the uninsured status of the negligent motorist.” Dupin v. Adkins, 17 S.W.3d 538, 543 (Ky.App. 2000). “To be enforceable, Kentucky law requires a limitation of insurance coverage . . . to be clearly stated in order to apprise the insured of such limitations. [N]ot only is the exclusion to be carefully expressed, but . . . the operative terms clearly defined.” Bidwell v. Shelter Mut. Ins. Co., 367 S.W.3d 585, 588-589 (Ky. 2012) (quotation and citation omitted). Farm Bureau was free to specify that derivative claims were included in the motorcycle exclusion, but did not do so. Although Tamra and Bernard’s claims derive from the same injury, there is no provision in the insurance agreement stating that recovery for loss of consortium or other derivative claims is barred if the underlying claim is excluded under the terms of the policy.

Farm Bureau’s reliance on the holdings of Moore v. State Farm Mutual Ins. Co., 710 S.W.2d 225 (Ky. 1986), and Daley v. Reed, 87 S.W.3d 247 (Ky. 2002), is misplaced. Those cases stand for the proposition that, under the specific terms of the insurance agreements at issue, an individual suffering bodily injury and a spouse (or child) suffering a consequential loss of consortium share the “each person” automobile insurance coverage limits, rather than the higher “each accident” coverage limits. The Moore and Daley courts were asked to determine whether the loss of consortium claim was part of the underlying claim for purposes of determining the maximum recovery available, not whether the derivative claim was excluded from coverage.

For the foregoing reasons, the order dismissing Farm Bureau as a defendant is reversed and the matter is remanded to the Lincoln Circuit Court for further proceedings.

TORT REPORT  FOR NONPUBLISHED DECISIONS (MINUS WORKERS COMP):

931.  PRO SE CLAIM AGAINST ATTORNEY.
BLUM (JEFFREY M.)
VS.
MULLINS (KRIS D.)
OPINION AFFIRMING
LAMBERT (PRESIDING JUDGE)
NICKELL (CONCURS) AND TAYLOR (CONCURS)
2011-CA-001216-MR
NOT TO BE PUBLISHED
FAYETTE

LAMBERT, JUDGE: This is an appeal brought by an attorney, Jeffrey M. Blum, pro se, against another attorney, Kris Mullins. Blum alleges that Mullins committed fraud and/or negligent misrepresentation in the course of representing another client in a case that involved both attorneys. The Fayette Circuit Court found that Blum’s claims are barred by the doctrine of res judicata and the applicable statute of limitations and dismissed the lawsuit by order entered May 9,2011. Subsequently, Blum filed a motion to reconsider, and the trial court denied that motion by order entered June 10, 2011. Because the trial court properly determined that Blum’s claims are barred by the issue of res judicata, we affirm.

932.  LIABILITY INSURANCE AND RENTAL CARS.  GRAVES AMENDMENT.
FULLER (DEANA D.), ET AL.
VS.
ENTERPRISE RENT-A-CAR COMPANY OF KENTUCKY, LLC, ET AL.
OPINION AFFIRMING
COMBS (PRESIDING JUDGE)
CLAYTON (CONCURS) AND THOMPSON (CONCURS)
2011-CA-001301-MR
NOT TO BE PUBLISHED
JEFFERSON

Fuller first argues that Kentucky law does not allow Enterprise, as the owner of the car, to shift its tort liability to the renter/driver. We disagree.

Fuller urges us to apply Kentucky Farm Bureau Mut. Ins. v. Shelter Mut. Ins. Co., 326 S.W.3d 803 (Ky. 2010). That case holds that “where both the vehicle owner and non-owner driver are separately insured, the vehicle owner’s insurance shall be primary.” Id. at 811. However, as the Supreme Court itself later pointed out, the holding in Shelter is only applicable in cases involving excess coverage; i.e., when the insurance policies of both parties claim to provide only excess coverage. Progressive Max Ins. Co. v. National Car Rental Systems, Inc., 329 S.W.3d 320, 323 (Ky. 2011).

The sole issue in the case before us is tort liability insurance rather than excess coverage. Shelter recognized that insurance coverage is subject to modification by contractual agreements as long as it comports with the statutory scheme of the Motor Vehicle Reparation Act (MVRA). Shelter, supra. The MVRA at Kentucky Revised Statute[s] (KRS) 304.39-110 mandates that insurance be carried for tort liabilities. It allows “the requirement of security for payment of tort liabilities [to] be met by a contract.” KRS 309.39-110(2). This language is known as an “escape clause.” Rees v. U.S. Fidelity and Guar. Co., 715 S.W.2d 904, 906 (Ky. 1986). In Rees, the court held that the escape clause permits contractual shifting of tort liability – but not of BRB’s. Id.

Fuller further argues that the Kentucky Administrative Regulations (KAR) dictate that Enterprise, as a self-insured entity, is solely responsible for tort liability insurance. 806 KAR 39:050(2) provides that applicants for self insurance must agree “to pay all tort liability and basic reparation benefits incurred and required by KRS Chapter 304, Subtitle 39[.]” As we pointed out, KRS 304.39-110 permits contractual shifting of tort liability, as acknowledged by our Supreme Court in Rees. KRS 304.39-080 requires self-insured entities to pay “tort liabilities or basic reparation benefits, or both[.]” (Emphasis added). By employing the disjunctive or, KRS 304.39-080 allows for contractual flexibility while still complying with the mandate of KRS 304.39-110 that coverage for BRB’s cannot be shifted or avoided.

As the trial court noted, Congress in 2005 enacted a law (the Graves Amendment) which exempts car rental companies from tort liability. 49 U.S.C.A. § 30106(a)(1). However, Fuller argues that the Graves Amendment is inapplicable because it provides that it does not supersede any state laws that deal with financial responsibility or liability insurance requirements of the law. 49 U.S.C.A. § 30106(b). While this may be a valid analysis, it does not apply to the particular facts of this case and is not pertinent to our resolution of the matter. Kentucky’s statutory scheme does not mandate that car rental companies be solely responsible for tort liability insurance and allows for contractual shifting of liability for them to create their own exemption. Essentially, the Graves Amendment was a federal codification of the already existing Kentucky law on this issue.

There is no question that Kelly signed a contract with Enterprise that shifted tort liability from Enterprise to Kelly’s insurance. That contract is permitted by Kentucky law. Enterprise paid the BRB’s, which it could not and did not attempt

-5-to void. Thus, Enterprise satisfied its only liability. Therefore, the court did not commit error in dismissing Fuller’s claims against Enterprise.

We affirm the Jefferson Circuit Court.

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One thought on “Oct. 12, 2012 Court of Appeals Minutes – Re consumer protection act; review of arbitration awards; UIM and loss of consortium; Graves Amendment and rental car company

  1. Looks like a miskey.

    ________________________________

    FULLER V. KFBM COA NPO applied the Graves Amendment etc. permitting rental car company to shit tort liability by contract to renter.

    ———————————-
    Thanks Loyd. That one looked bad. Will correct and preserve my PG-13 status.
    mike stevens