JEFF GARRETT v. GRANGE MUTUAL CASUALTY COMPANY
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RENDERED: JUNE 8, 2001; 10:00 a.m.
NOT TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO.
2000-CA-001354-MR
JEFF GARRETT
v.
APPELLANT
APPEAL FROM MUHLENBERG CIRCUIT COURT
HONORABLE DAVID H. JERNIGAN, JUDGE
ACTION NO. 99-CI-00550
GRANGE MUTUAL CASUALTY COMPANY
APPELLEE
OPINION
REVERSING AND REMANDING
** ** ** ** **
BEFORE:
BUCKINGHAM, EMBERTON, AND HUDDLESTON, JUDGES.
BUCKINGHAM, JUDGE: Jeff Garrett appeals from a summary judgment
awarded by the Muhlenberg Circuit Court in favor of Grange Mutual
Casualty Company.
Because we believe there is a genuine issue of
material fact to be resolved, we reverse and remand.
Grange Mutual issued an automobile insurance policy to
Garrett which provided coverage from September 23, 1998, through
September 23, 1999, on three vehicles owned by him.
Garrett
married on August 21, 1999, and he and his wife went to the Eaves
Insurance Agency on August 23, 1999, for the purpose of putting
Mrs. Garrett’s name on the policy as a named insured.
According
to an affidavit filed by Garrett in this case, he asked an Eaves’
employee if the policy was up to date and if he owed any money.
Garrett further stated in the affidavit that “the answer was that
everything was paid up until September 23, 1999.”
On the following day, one of Garrett’s vehicles listed
on the policy was involved in an accident and sustained damage.
Grange denied coverage, claiming that the policy had lapsed on
August 5, 1999, due to nonpayment of the premium.
Garrett then
filed a complaint seeking damages in the Muhlenberg Circuit
Court.
It was undisputed that Garrett had not paid the premium
on the policy.
Grange filed a motion for summary judgment
alleging that it had given proper and timely notice of the
cancellation of the policy to Garrett.
The motion was
accompanied by a copy of a letter addressed to Garrett and dated
July 31, 1999, which stated that the policy would be canceled on
August 19, 1999, for nonpayment of the premium.
A copy of a
letter addressed to Garrett and dated August 20, 1999, confirming
cancellation of the policy due to nonpayment of the premium was
also attached to Grange’s motion.
In addition, affidavits from
two Grange employees in Columbus, Ohio, were filed in support of
the motion.
On May 3, 2000, an order was entered by the trial court
that granted Grange’s summary judgment motion and denied
Garrett’s.
The order stated in pertinent part as follows:
IT IS ORDERED AND ADJUDGED that the
Motion of the Defendant for Summary Judgment
is SUSTAINED since there is no coverage under
Defendant’s policy as said policy had lapsed
for non-payment of premiums on August 19,
1999. As a matter of law, adequate notice of
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cancellation of the policy was mailed to
Plaintiff. The case relied upon by the
Plaintiff of Kentucky Farm Bureau Insurance
Company v. Gearhart, Ky. App., 853 S.W.2d 907
(1993) is distinguishable and is not
applicable law to the facts of this case.
This appeal by Garrett followed.
The main issue in this case is whether or not Grange
mailed notice of its intent to cancel the policy to Garrett in
the manner prescribed by Kentucky law.
KRS1 304.20-040(3)
provides as follows:
No notice of cancellation of a policy to
which subsection (2) of this section applies
shall be effective unless mailed or delivered
by the insurer to the named insured at least
twenty (20) days prior to the effective date
of cancellation; provided, however, that
where cancellation is for nonpayment of
premium, at least fourteen (14) days’ notice
of cancellation accompanied by the reason
therefor shall be given. This subsection
shall not apply to renewals.
KRS 304.20-040(9)(b) provides that “[p]roof of mailing of notice
of cancellation or of intention not to renew or of reasons for
cancellation or nonrenewal to the named insured at the address
shown in the policy shall be sufficient proof of notice.”
Garrett argues that the trial court erred in awarding
summary judgment to Grange and finding as a matter of law that
adequate notice of cancellation of the policy had been mailed to
him.
He asserts that there is, at the very least, a fact issue
concerning whether Grange mailed the notice.
He argues in this
regard that Grange’s motion was not adequately supported so as to
warrant a summary judgment in its favor and that the affidavits
1
Kentucky Revised Statutes.
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in support of his response to the summary judgment motion clearly
created a fact issue.
In support of Grange’s motion, it attached the
affidavit of Tamara Smith, an employee of Grange in Columbus,
Ohio.
In her affidavit, Smith made no mention of the
cancellation notice being mailed to Garrett.
She merely asserted
that the policy did not provide coverage for Garrett’s loss since
it had lapsed five days before the accident.
She further stated
that no payment had been made to reinstate the policy.
Grange also submitted the affidavit of Earl Blair, an
assistant vice-president of process accounting for Grange in
Columbus, Ohio.
He stated in his affidavit that Grange had
mailed a notice of cancellation to Garrett on July 31, 1999, and
a confirmation of cancellation to Garrett on August 20, 1999.
also stated in his affidavit as follows:
5.
Grange mails thousands of notices per
day. We are not required to send notices by
certified mail. Obviously, Grange does not
retain a copy of the stamped, addressed
envelopes for their files.
6.
Grange does retain a copy of the notice
document in their files but does not create a
separate document to verify that the first
document was mailed.
7.
However, the affiant is confident that
the notices were mailed to Jeff Garrett at
the address on his policy in accordance with
the standard operating procedures of Grange
Mutual Casualty Company.
8.
Based upon the affiant’s 33 years of
experience at Grange, the presence of the
notice in Jeff Garrett’s file at the home
office is proof that it was indeed mailed.
9.
Furthermore, the Eaves Insurance Agency
has informed me that they received their
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He
“Agent’s Copy” of the notice sent to Jeff
Garrett.
On the other hand, Garrett stated in his affidavit that
he had never received the cancellation notice from Grange.
He
and his wife also stated in their affidavits that they were told
by an Eaves’ employee on August 23, 1999, that they did not owe
anything on the policy and that it was effective through
September 23, 1999.
In support of his argument, Garrett cites Goodin v.
General Accident Fire & Life Assur. Corp., Ltd., Ky., 450 S.W.2d
252 (1970).
In Goodin, the insured’s policy had been canceled by
the insurer prior to an accident.
The insurer denied coverage,
but the insured alleged that he had not received the notice of
cancellation and that the insurer had failed to adequately prove
the mailing of the cancellation notice.
Id. at 254.
Although
this case does not involve the applicability of KRS 304.20-040(3)
and (9)(b), it does involve the applicability of a policy
provision which provided that upon “notice of cancellation mailed
to the address of the insured stated in this contract, proof of
mailing from the office of the insurer shall be sufficient
notice[.]” Id. at 255.
The court in Goodin noted that where this
standard contract provision is present, “proof of mailing from
the office of the insurer is sufficient to sustain a finding that
the notice was effective without proof that such notice was
received by the insured and even though the insured denies
receipt of the communication.”
Id.
In affirming the judgment of the trial court that the
policy had been effectively canceled by the insurer prior to the
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accident, the court noted the testimony of the insurer’s
employee.
Id.
Her testimony was that the mailing was
accomplished in accordance with regular company procedure.
She
further stated that the notice of cancellation was prepared and
certificates which recited that the original notice had been sent
to the named insured by first-class mail were attached to copies
of it.
A post office receipt was required, and its existence was
recited on the company voucher forms.
The employee also
testified the notices were then delivered by her to another
employee whose duty it was to deliver the mail to the post
office, procure a receipt stamp on the post office receipt form,
and return it to the local state company office.
The company’s
procedure was that the original cancellation voucher with the
post office receipt be sent to the company’s headquarters in
Chicago, Illinois, and that a copy of the cancellation voucher
was retained in the local state office of the insurer.
The insurer’s employee in Goodin also testified that
the post office receipt was returned stamped by the post office,
evidencing receipt of the notice of cancellation.
She further
testified that the original post office receipt had been retained
at the insurer’s home office in accordance with regular company
procedure.
Although she stated on cross-examination that she had
no independent recollection of this particular mailing, she
stated on redirect examination that the cancellation voucher had
refreshed her recollection and that she could positively state
that the notices were mailed.
Id.
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In affirming the trial court’s findings that the
insurer had complied with the notice provision of the policy, the
appellate court held that “since mere mailing of a notice of
cancellation is sufficient to cause cancellation of insurance
protection with an attendant impact of possible economic disaster
to the insured, the proof of mailing of such notice should be of
a definite and specific character.”
Id. at 256.
The court also
held
Therefore, the proof of mailing may be
satisfied by showing compliance with business
usage. Provided, however, the business usage
relied upon must embody sufficient
evidentiary safeguards to satisfy the need
for protection of the affected party in the
particular transaction concerned. (Citation
omitted.) The business usage in this case
satisfies the requirements which are
necessarily high in the instance of insurance
cancellation. A postal receipt is required.
A record certification is required. A return
address on the envelop is required. Firstclass mail is the means of transmittal.
Id. at 257.
Other than the Goodin case, neither party has cited any
case which states the degree or type of proof necessary to show
that the notice of cancellation was mailed by the insurer.2
In
fact, Grange’s response in its brief to Garrett’s argument on
this issue was merely that it had mailed the cancellation notice
to the address on the policy.
It merely asserts that it complied
with the statutory notice requirements and that Garrett’s “flimsy
2
See Acree v. E.I.F.C., Inc., Ky., 502 S.W.2d 43 (1973),
where the court followed the standard to establish proof of
mailing stated in Goodin. Acree, 502 S.W.2d at 46.
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claim that he never received notice is suspicious, desperate, and
self-serving.”
On the basis of the holding of the court in the Goodin
case, we conclude that Grange’s proof of mailing the cancellation
notice was not of “a definite and specific character.”
256.
Id. at
Furthermore, the business usage relied upon by Grange to
prove mailing did not “embody sufficient evidentiary safeguards
to satisfy the need for protection of the affected party in the
particular transaction concerned.”
Id. at 257.
The affidavit of
Tamara Smith made no mention of the mailing whatsoever, and the
affidavit of Earl Blair was insufficient under the Goodin
standards.
In short, we conclude that there was a fact issue
concerning whether Grange had mailed the notice.
Summary judgment “shall be rendered forthwith if the
pleadings, depositions, answers to interrogatories, stipulations,
and admissions on file, together with the affidavits, if any,
show that there is no genuine issue as to any material fact and
that the moving party is entitled to a judgment as a matter of
CR3 56.03.
law.”
“The record must be viewed in a light most
favorable to the party opposing the motion for summary judgment
and all doubts are to be resolved in his favor.”
Steelvest, Inc.
v. Scansteel Service Center, Inc., Ky., 807 S.W.2d 476, 480
(1991).
Because there was a fact issue regarding whether Grange
had mailed the cancellation notice, the trial court erred in
awarding summary judgment in its favor.
3
Kentucky Rules of Civil Procedure.
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The trial court’s summary judgment in favor of Grange
is reversed, and this case is remanded for a factual
determination in accordance with this opinion.4
ALL CONCUR.
BRIEF FOR APPELLANT:
BRIEF FOR APPELLEE:
Patricia Creager
Central City, Kentucky
Jason B. Bell
Elizabethtown, Kentucky
4
Garrett also argued even if he received timely notice of
cancellation, the notice itself was legally insufficient. In
support of his argument, he cited Kentucky Farm Bureau Ins. Co. v
Gearhart, Ky. App., 853 S.W.2d 907 (1993). Although we doubt the
validity of his argument, we find it unnecessary to address it in
light of our reversal on other grounds.
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