SAMUEL L. MITCHELL V. MIDWEST MUTUAL INSURANCE CO.; AMERICAN INDEPENDENT INSURANCE CENTERS; and RICHARD BAKER
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RENDERED: OCTOBER 8, 1999; 10:00 a.m.
NOT TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO.
1998-CA-001121-MR
SAMUEL L. MITCHELL
V.
APPELLANT
APPEAL FROM JEFFERSON CIRCUIT COURT
HONORABLE STEPHEN P. RYAN, JUDGE
ACTION NO. 97-CI-1545
MIDWEST MUTUAL INSURANCE CO.;
AMERICAN INDEPENDENT INSURANCE
CENTERS; and RICHARD BAKER
APPELLEES
OPINION AFFIRMING
* * * * * * * *
BEFORE:
GUDGEL, Chief Judge; HUDDLESTON and KNOPF, Judges.
GUDGEL, CHIEF JUDGE:
This is an appeal from a summary judgment
entered by the Jefferson Circuit Court.
Appellant Samuel L.
Mitchell contends that the court erred by finding that a
liability insurance policy, which he purchased from appellee
Midwest Mutual Insurance Co. (Midwest), was validly canceled due
to the nonpayment of premiums due.
We disagree.
Hence, we
affirm.
It is undisputed that on or about April 19, 1996,
Mitchell telephoned several insurance agencies, including
appellee American Independent Insurance Centers (American),
concerning the purchase of a liability insurance policy providing
coverage on a motorcycle he intended to purchase.
After American
quoted him the lowest premium, Mitchell went to American's
offices and obtained from its employee, Theresa Cole, a written
premium quote of $1,462.89 for a one-year policy which was to be
underwritten by Midwest.
Relying upon the quote, Mitchell
obtained a loan and purchased the motorcycle.
He then returned
to American's offices, where he and Cole completed an application
for insurance.
Mitchell made a down payment on the premium due
in the amount of $487.63, and Cole issued him temporary proof of
insurance cards which were valid for a one-month period.
Several weeks later, Midwest sent Mitchell an insurance
policy and a premium statement for a one-year period commencing
April 19, 1996.
However, the statement listed a total premium of
$2,573.39, rather than the quoted amount of $1,462.89.
Mitchell
contacted Cole concerning the additional premium charged and she
referred him to Lou Lyndon at Midwest, who in turn referred him
back to Cole.
Finally, Cole advised Mitchell that she would
check into the matter and call him back.
Mitchell claims that he
told Cole he had received lower premium quotes from other
insurers, and that if the premium charged him was correct, he
wanted his initial premium payment refunded so that he could
obtain less-expensive insurance elsewhere.
According to
Mitchell, Cole reassured him that the original quote was correct,
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that his insurance was in force, and that he need not worry about
the amount of the premium listed on the statement from Midwest.
After Mitchell received another statement from Midwest
indicating that he owed a balance on the premium in the amount of
$2,085.76, he again spoke with Cole and Lyndon.
Mitchell claimed
that he was reassured by Cole during the conversation that his
insurance was still in force and that she would check into the
matter, but that he did not hear from her again.
Mitchell
neither made nor tendered any additional premium payments.
On or about September 16, 1996, Mitchell's motorcycle
was stolen.
His subsequent claim for the loss under the Midwest
policy was denied on the ground that the policy had been canceled
due to the nonpayment of premiums due.
This action alleging
fraud, bad faith, and negligence followed.
Subsequently, the
trial court granted appellees a summary judgment, and this appeal
followed.
First, Mitchell contends that a genuine issue of
material fact existed as to whether he was mailed a notice of
cancellation which precluded a summary judgment.
We disagree.
A motorcycle is not a type of vehicle which can be
covered by an automobile liability insurance policy.
304.20-040(1)(a).
KRS
Rather, it must be insured under a casualty
insurance policy covering vehicles other than those described in
KRS 304.20-040(1)(a).
See KRS 304.5-070(1)(a).
The cancellation
of such a policy is governed by KRS 304.20-320(2), which states
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that a policy providing casualty insurance may be canceled as
follows:
(a)
A notice of cancellation of insurance
subject to KRS 304.20-300 to 304.20-350
by an insurer shall be in writing, shall
be delivered to the named insured or
mailed to the named insured at the last
known address of the named insured,
shall state the effective date of the
cancellation, and shall be accompanied
by a written explanation of the specific
reason or reasons for the cancellation;
and
(b)
The notice of cancellation referred to
in paragraph (a) of this subsection
shall be mailed or delivered by the
insurer to the named insured at least
fourteen (14) days prior to the
effective date of the cancellation if
the cancellation is for nonpayment of
premium or occurs within sixty (60) days
of the date of issuance of the policy.
Such notice of cancellation shall be
mailed or delivered by the insurer to
the named insured at least seventy-five
(75) days prior to the effective date of
the cancellation if the policy has been
in effect more than sixty (60) days.
Here, the record includes a copy of a
properly-addressed letter from Midwest to Mitchell, which was
marked as having been mailed on June 10, 1996.
The letter bore
the caption of "notice of cancellation" and specified that it
concerned a "motorcycle."
The letter further advised Mitchell
"in accordance with the terms and conditions of the mentioned
policy that your insurance is canceled effective" June 27, 1996,
"for non-payment of premium," but that coverage could be
continued before then by paying the entire premium balance due of
$2,085.76.
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The record also includes, both in Midwest's response to
Mitchell's first set of interrogatories and elsewhere, copies of
a form which was inscribed with the heading of "CANCELLATION
NOTICES MAILED 06-10-96 POST OFFICE RECEIPT."
Listed beneath the
caption of "INSURED'S NAME AND ADDRESS" on that sheet were the
names and addresses of nine insureds, including Mitchell.
Each
of those entries included a notation regarding a twenty-cent fee,
and the page was marked with both a June 10 postage meter stamp
in the amount of $1.80 (i.e., nine times twenty cents) and a June
10 postmark.
The foregoing unrefuted evidence established that a
cancellation notice was mailed to Mitchell on June 10, 1996, and
there is no claim that Mitchell could adduce contrary evidence at
a trial.
Moreover, as KRS 304.20-320(2) does not require proof
to be adduced to show that Mitchell or the Department of
Transportation received the cancellation notice or the
information contained therein, Mitchell's argument that a summary
judgment could not be granted absent such proof is without merit.
Further, contrary to Mitchell's argument, a different result is
not compelled by our decision in Osborne v. Unigard Indemnity
Co., Ky. App., 719 S.W.2d 737 (1986), as the court therein
specifically noted that, unlike the matter now before us, its
decision was not governed by KRS 304.20-320(2) because that
statute became effective after the insured loss occurred.
Next, Mitchell contends that even if a notice of
cancellation was mailed to him, a genuine issue of material fact
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existed as to whether that notice was valid and effective.
We
disagree.
In the first place, contrary to Mitchell’s contention,
KRS 304.20-040(2) is not applicable herein since a motorcycle
does not constitute a motor vehicle for purposes of that statute.
More important, the notice of cancellation mailed to Mitchell
complies with the requirements of KRS 304.20-320(2)(a) and
(2)(b), as set out above.
We therefore conclude that there was
no genuine issue of material fact as to whether the notice of
cancellation satisfied statutory requirements.
Further, there is no merit to Mitchell's contention
that, pursuant to Kentucky Farm Bureau Insurance Co. v. Gearhart,
Ky. App., 853 S.W.2d 907 (1993), a material issue of fact exists
as to whether the notice of cancellation was ineffective for
failing to adequately identify the vehicle to which it applied.
In Gearhart, the insured had three separate automobile liability
policies with the insurer.
When Gearhart sold an Isuzu vehicle
and purchased a Ford van, the insurer issued a temporary
certificate of insurance on the Ford which bore the same policy
number as that previously used for the Isuzu.
Gearhart allegedly
was told that he owed no premium for the Ford because of a credit
due from the cancellation of insurance on the Isuzu.
Although
Gearhart subsequently received premium and cancellation notices,
he made no payments since the notices specifically referred to
the Isuzu rather than to the Ford.
Subsequently, the Ford was
involved in an accident and the insurer denied coverage based
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upon a claim that the premiums due were not paid.
A panel of
this court, however, concluded that the cancellation notice
failed to properly designate the covered vehicle and therefore
was inadequate as a matter of law.
Here, by contrast, there is no suggestion of any
confusion as to what vehicle was covered by the Midwest policy.
The policy was new, it covered only the motorcycle, and the
notice clearly referred to a "motorcycle."
Further, there is no
suggestion that Mitchell had either another motorcycle or another
Midwest policy which could have been confused with those at
issue.
It follows, therefore, that there was no genuine issue of
material fact as to whether the cancellation notice adequately
designated the covered vehicle.
Finally, Mitchell contends that the court erred by
failing to find that a genuine issue of material fact existed as
to whether appellees were estopped to assert that the policy was
canceled.
We disagree.
Clearly, Midwest did not cancel Mitchell's policy
without notice.
Moreover, even if we assume without deciding for
purposes of this opinion that Cole reassured Mitchell that the
original quoted premium was correct, that he had coverage, and
that he should not pay a higher premium, the fact remains that
Mitchell paid only the initial one-third of the original quoted
premium.
Further, Mitchell stated in his deposition that since
he paid one-third of the year's premium, "it would be logical to
assume” that the policy was in effect for only one-third of the
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year.
Mitchell's claim did not arise until some five months
after the initial one-third premium was paid, and Mitchell
clearly was notified that the policy would expire on June 27
unless he paid the remainder of the premium due.
Because
Mitchell did not pay the additional sum, we conclude that
appellees cannot be estopped to deny Mitchell coverage for his
claim which arose on September 16.
For the reasons stated, the court's summary judgment is
affirmed.
ALL CONCUR.
BRIEF FOR APPELLANT:
BRIEF FOR APPELLEES:
David S. Sprawls
Louisville, KY
Debbie D. Sandler
Louisville, KY
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