SETTLEMENTS & RELEASES – Hold harmless, indemnity, and applicability to PIP claims: Myanh Coleman v. Bee Line Courier Service, Inc. (SC 5/21/2009)

Myanh Coleman v. Bee Line Courier Service, Inc.
2007-SC-000628-DG May 21, 2009

Opinion of the Court. Justice Abramson not sitting.

Coleman suffered injuries in an accident involving a vehicle owned by Bee Line. She received $5,737 in basic reparation benefits (BRB) from her insurer, Nationwide, before settling with Bee Line for $6,500. As part of the settlement with Bee Line, Coleman signed a release in which he agreed to indemnify Bee Line for all claims “against the proceeds of the settlement.” Nationwide then sought reimbursement of its BRB payment from Bee Line in arbitration proceedings. After agreeing to pay Nationwide $4,737, Bee Line demanded indemnity from Coleman. When she refused, Bee Line filed suit. The trial court awarded summary judgment to Bee Line, holding she was contractually obligated to reimburse Bee Line for the payment. The Court of Appeals affirmed.

The Supreme Court reversed, holding that the language of the agreement limited indemnity to “claims against the proceeds of the settlement” of personal injury tort claims and did not include BRB benefits. The Court declined to address the issue of whether a sufficiently specific agreement to indemnify the tortfeasor for BRB recoupment claims would contravene the purposes of Kentucky’s Motor Vehicle Reparations Act.

Justice Noble (joined by Justice Venters) concurred in result only, contending that the Court should have addressed the “next question” regarding the propriety of tortfeasors extracting BRB recoupment agreements when settling claims. The minority asserted that the legislative intent and public policy behind the MVRA prohibit such agreements.